Mastering Your Financials: Insights from Kristen Deese with Virtual CFO for the Trades

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When you look at a profit and loss statement, what are the top three things you look at?
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A gross profit margin tells us whether or not our labor is in check and or our
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materials are in check or if one of them is out of whack because that sets us
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up for whether or not there's going to be enough funds to cover the overhead.
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Welcome to the Home Service Hacks podcast, the show for contractors who refuse to settle for average.
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Hosted by Bill Brown, licensed HVAC contractor, AI and automation expert,
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and founder of Service Titan Hacks Community.
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Each episode features real conversations with contractors, tech founders,
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and innovators who are reshaping the trades from AI and automation to pricing,
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marketing, and management.
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If it's working in the field, you'll hear about it here.
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Let's get into it. Let's start over then. Welcome back to the Home Service Business
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Hacks podcast. Today, I'm joined by Kristen Deese, founder of Virtual CFO for The Trades.
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She's helped contractors all over the country get control of their numbers,
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fix broken financial systems, and grow with clarity.
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If financials stress you out and you're not sure which KPIs actually matter
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for your team, this episode is for you.
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Kristen's all about making the numbers simple, actionable, and aligned with real business growth.
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So let's get into it. Kristen, thanks for joining me today.
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Thank you. That was an awesome intro.
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Great. Thanks. So could you tell me a little about your background and how you
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became the virtual CFO for contractors?
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Yeah, sure. So about 20 years ago, my husband and I started,
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actually my husband started our first home service business.
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And then a few months after that started, I kind of got pulled into it.
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I think like a lot of entrepreneur couples do.
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I have a background to my accounting or my degree is in accounting.
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So it was pretty natural for me to take over the accounting,
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like all the money side of things of our own business.
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I functioned in that role for a long time in our own businesses.
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And over the years, we bought and sold and started and did all kinds of things in home services.
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And then a couple of years ago, I worked myself out of the day-to-day.
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So I was performing high functioning CFO stuff, but I was not really in the
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day-to-day and it freed up my time.
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And I started doing a lot of training for myself on coaching,
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adult learning, human behavior, all kinds of
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really cool things and then that opened up
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the door to start doing some coaching and consulting work in
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home services and then I had
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a former client reach out one day and say hey I have this guy and I think he
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would be really good in the accounting department but he doesn't know anything
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about accounting and I don't know anything about accounting do you think you
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could train him and as any good entrepreneur I was like sure sounds good let's
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do it how hard could it be I know, of course, you know, figure it out.
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And that's kind of how the virtual CFO started.
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And then it really morphed into the realization that a lot of business owners
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just don't feel comfortable with their numbers.
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They don't know what they're looking at. They don't know what reports to look
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at. Even if they are looking at the reports, they don't know what they say or what they mean.
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And they're running their business with their bank account and whether or not
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there's enough money to cover payroll.
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And so when that realization that that the need for this virtual CFO service
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was out there specifically in the trades, that's kind of how it how it took
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off. from here. That's awesome. It's great. That's a great backstory.
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And I like that you have that experience in home services.
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And I'll tell you, how helpful was it for you and your husband that you have
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that accounting background?
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Because so many contractors, they don't have that.
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I mean, that's just not like a core competency of a technician.
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And most trades are started by good technicians.
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They're great at their craft. Then they say, I'm going to go do it on my own.
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And then the whole business revolves around these numbers and you don't know
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them and now you have to learn them as you're running a business and that's
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got to be really stressful.
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What do you think, why do you so many contractors like avoid learning this or
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misunderstand their numbers?
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Why do they struggle with this so much? I think it's because they don't,
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they lack the confidence in their own ability to be able to understand it.
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The accounting seems really threatening and confusion confusing,
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especially when we start using words like journal entries and debits and credits
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and balance sheets and, and all these things.
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And it does not have to be that complicated or that confusing.
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So I spent a lot of time just really simplifying the entire process and not
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talking to people like an accountant, talking to people like a business owner
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who needs to know their numbers.
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A lot of it is just the, well, I'm not an accountant.
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I'm never going to be an accountant. I don't want to be an accountant,
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so I'm not even going to look at it at all.
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And that's death right there, right? Right. Not looking at it.
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Yeah. Or what they'll do is they'll...
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There's a lot of education around the difference between a CPA and a CFO.
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So a lot of them will say, well, I have a CPA, but I don't feel like they're
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really giving me any guidance on anything.
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They're just either giving me my financials and saying, here you go,
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or they're prepping my taxes.
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There's some education that needs to come around the difference between a CPA
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that is hired to do taxes and a CFO who is looking at the same set of numbers
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as your CPA is, but is looking at them through a different lens.
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So most CPAs are looking at your numbers through the lens of how do I reduce
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the net income low enough so low that you don't have to pay as much taxes, right?
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The virtual CFO or the CFO position in general is looking at operations and
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profitability and efficiencies and saying, how can we maximize your net income?
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And so we're looking at the same set of numbers, but with two totally different
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motives. And so therefore, we're looking at different pieces of the business.
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There's a lot of times that CPAs don't know what your cost of goods sold should
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be or even what should be in there.
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They're not necessarily equipped to be able to provide the feedback that the
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business owner is wanting from that standpoint. And so, you know,
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a business owner might get frustrated with a CPA that they're not getting enough
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information, but it might be that they're looking to the wrong person for that information.
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I've experienced that personally. And I wish my CPA would have said,
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look, it's my responsibility to reduce your tax burden. That's what I do.
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You're going to want somebody like this to analyze your financials so that they make sense to you.
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But CPAs that I've talked to kind of play in the game of coaching,
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but they're not very helpful with it.
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I've had CPAs every quarter that want to talk to me about how my business is
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going, but they didn't have the knowledge, the industry knowledge of what we
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should measure and how we could get there.
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So I was relying on them to do a job that they maybe pretended that they could
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do or I'm not I'm not sure how they made the decision to advise me when really they shouldn't have.
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But I've had that happen with many CPAs. So it's interesting to hear that that's
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happened with a lot of other contractors as well.
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And so what you're really looking for is a CFO. Yeah.
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Yes. Yeah. So when you think about the accounting department in general can
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be compared to the technician track of growth, right?
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So in the, on the technical side of things, we have the technician and then
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we'll usually have like a lead tech and then we'll have a service manager and then we'll have a GM.
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Like you can kind of see it go up the chart of, not the chart of accounts,
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the organizational chart.
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So in so in the in the
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accounting side of things you kind of have a similar hierarchy there and
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each position is really we want to make
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sure that we're relying on each position for the appropriate things so that
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hierarchy on the accounting side would be data entry slash bookkeeping which
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anybody can call themselves a bookkeeper there is no special certification or
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anything for that you're not so it's definitely very data entry heavy bookkeeping
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is is data entry then then we have a controller.
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So the controller is, their main responsibility is ensuring accuracy in the
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data entry, preparing the reports. It's still pretty data entry,
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but it's more of a higher level.
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We're overseeing a bigger process. Still very tactical though.
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The next step then is the CFO.
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Most people will have some sort of bookkeeping CFO or bookkeeping controller
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in place, whether it's internal or external,
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they may be relying on those positions for that strategic CFO thing,
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but they might not necessarily be getting it.
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But it's very much that lead tech service manager, bookkeeper, controller, CFO.
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It's a very similar comparison there.
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Okay. So for contractors who are just starting out,
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for me, it's easiest for me to drive off in my own experience,
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but I hired a external bookkeeper early on.
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So first, when I first started, I did it myself and it was very tedious, but it was accurate.
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And I knew I had went to school and I had some accounting courses and bookkeeping courses.
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So it was pretty easy for me when I handed it off to a bookkeeper,
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just as you said, anybody could call themselves a bookkeeper.
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They messed it up so bad
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and it wasn't it was like a botched
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hvac installation i had to go back and fix the
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books and so i went back and
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fixed the books hired another bookkeeper that person messed it up and this was
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a cycle that lasted multiple times before i found a really good bookkeeper i
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can't believe how long it took me to find one so if you're a contractor and
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you're looking for or a bookkeeper.
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How do you find that? Because it seems to me like you need that first before,
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in order for you to be able to do your job, right? You're going to need these accurate books.
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How do we find that person? So, well, the virtual CFO provides bookkeeping,
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but here's what we're looking for in terms of what we consider good bookkeeping in our industry.
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So there's cash basis accounting and there's accrual basis accounting.
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And without getting too theoretical here, most bookkeepers will do their job
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on cash basis, which just essentially means that they are taking the transactions
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that are running in and out of your bank account all month and in and out of
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your credit card statements all month.
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And they're just duplicating that information into QuickBooks.
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Accrual is more involved than that.
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Accrual is identifying the difference between an expense where we used a card
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and it was a point of sale purchase from a bill from a vendor.
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So we might buy from a supplier and then we pay them 30 days later.
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There's a difference in the way that we need to be handling that in our QuickBooks.
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Similarly with revenue, we're not counting revenue when we get the money,
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We're counting revenue when the job is done.
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And there are additional steps and things that need to happen within the bookkeeping
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in order to get all of that right.
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The other thing that we want our bookkeeper to do is departmentalize our numbers
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so that we can see a gross profit margin between service and install if we are in HVAC.
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It's not quite as easy to do that on plumbing.
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Sometimes plumbing is just easier
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as plumbing, but maybe if you do drain cleaning and plumbing service.
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Right and so so we want to be able to
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utilize classes to be able to get to gross
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profit margin by department so it's just
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it's just more involved so if you can find a bookkeeper who
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is going to do accrual basis accounting for you
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who is going to utilize your classes in a way that you can get a gross profit
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margin by department and is going to do all of that by around the 10th of the
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month assuming that they have all the information that they need it good that's
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good obviously the it's because it's just more time intensive,
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there's going to be a price difference.
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So if you have somebody who says, oh, yeah, I'm going to do all of that and
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it's going to cost you $200 a month, that's a flag, right? Right.
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What can a contractor kind of expect to pay?
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Let's say you're just starting out maybe a couple of years in,
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you do a half a million dollars in annual revenue as a residential heating and
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air conditioning contractor. What kind of...
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Budget should they have for a book of this kind of bookkeeping service on a month basis?
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So I would say if you're a couple of years in, I hope you're greater than a
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half a million dollars in revenue, but let's just pretend that you are.
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That's just how old I am, right? Because when I started, gosh,
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I really, I just felt aged right there.
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When I started a half a million dollars was a lot more than it was today.
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So let's just say, all right, you're three weeks in and you're a half a million
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dollars in revenue and you're struggling because a package of hot dogs is $16 now.
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So you're going and you're ready to hire your first bookkeeper,
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which hopefully is day one, unless you can do it yourself, right?
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But what's kind of the going rate, the budget?
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For a company that size, I might say, because there's not a ton of transactions
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that are happening in a company that size.
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So, you know, $800 to $1,000, maybe you're going to find a lot of price range
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differences in these services.
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A lot of times what will happen is bookkeepers, the ones who are doing like
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the accrual, the full out stuff, a lot of times what they'll do is base the
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price based on like the number of accounts that you have.
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So if you are, let's say you're a profit first, you want to follow profit first
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and profit first suggests that you have like six bank accounts or something.
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Because you have so many bank accounts, it's that many more bank reconciliations that need to be done.
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It's that many more items that need to be watched throughout the month.
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And so there's a lot of times that bookkeepers will price based on the number
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of accounts you have and or a rough number of the number of transactions that
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are being dealt with on a monthly basis between entering bills and entering
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expenses and deposits in the full nine yards.
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So you will find a range of pricing for bookkeeping.
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A lot of times what will happen is we will see a cusp in the size of the growth
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where it makes more sense to be pulling that stuff in-house instead of having
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a third party do it. And usually that's like.
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$3 million a year in revenue, when you kind of get to that point,
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it's more beneficial to have that in-house because if you have a person in-house
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that's doing that, there's also other things that they can be doing.
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Because while the accounting tasks might not be full-time, there's other things
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that that personality type might be really good at that other people in the
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business don't really like to do, like warranties, permits, HR stuff,
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all the things that people don't really love to do.
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The accounting person has the personality for that.
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They could probably do good at purchasing and stuff like that.
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Maybe some inventory stuff. Yeah, it's a specific characteristic.
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It's attention to detail. It's a rule follower.
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It's like, you know, you can build out the ideal profile of somebody who would
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be good at the accounting stuff.
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And there's a handful of other things in the business that they would also be good at.
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We do not want to have them be a CSR part-time, right? Like that's a different personality.
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But there are things in the business that they could do. So you kind of get
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to a point where you're like, all right, I'm paying, you know,
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$2,000 or $3,000 a month for bookkeeping. If I were to bring that in-house,
00:15:25.080 --> 00:15:26.580
what else could I get that?
00:15:26.720 --> 00:15:28.680
It would cost me a little bit more to have a full-time person,
00:15:28.780 --> 00:15:33.140
but what else am I getting for that too? Yeah, that makes sense.
00:15:33.799 --> 00:15:42.039
So what's your go-to method for making these financial reports feel less overwhelming for contractors?
00:15:43.159 --> 00:15:47.719
We do a review every month. Every single month when the books are done and the
00:15:47.719 --> 00:15:51.999
numbers are ready, we take an hour and a half and we go down through the three
00:15:51.999 --> 00:15:56.139
main reports, which is the P&L, the balance sheet, and the statement of cash flows.
00:15:56.399 --> 00:15:59.619
Most people are pretty familiar with their P&L. That's the one that they focus
00:15:59.619 --> 00:16:03.319
in on the most. We definitely look at that. We look at it in a variety of different
00:16:03.319 --> 00:16:06.979
ways, filter it in a few different ways so that we can see all kinds of really
00:16:06.979 --> 00:16:08.059
cool information from it.
00:16:08.519 --> 00:16:12.959
And then we also spend time looking at, talking about, understanding the balance
00:16:12.959 --> 00:16:16.339
sheet, what it tells us, what a bank would be looking for if you're trying to
00:16:16.339 --> 00:16:19.059
get a loan, what PE would be looking for if you're trying to sell.
00:16:19.199 --> 00:16:22.959
The other one is the statement of cash flows, which almost everybody that I
00:16:22.959 --> 00:16:26.339
talk to is like, I didn't even know that report existed, let alone look at it.
00:16:26.339 --> 00:16:31.299
It is wild, though, that of the three financial statements, that the cash flow
00:16:31.299 --> 00:16:34.039
statement is like completely ignored.
00:16:34.319 --> 00:16:38.139
The balance sheet is something you open up and you're like, what is this?
00:16:38.319 --> 00:16:42.679
And the P&L is just something it's so much easier to get comfortable with right away.
00:16:43.019 --> 00:16:48.359
You know, well, it makes more sense. Yeah, it makes more sense. It's more logical.
00:16:48.779 --> 00:16:55.179
You can start to see faster how what you're doing in operations affects the P&L.
00:16:55.339 --> 00:16:58.819
A lot of times, especially when we first get started, a client will say about
00:16:58.819 --> 00:17:02.479
their balance sheet, well, I mean, there's so many things on here that aren't
00:17:02.479 --> 00:17:04.139
right, and I don't even know how to fix them.
00:17:04.299 --> 00:17:07.139
That hasn't been a thing for seven years or whatever.
00:17:07.399 --> 00:17:12.379
Right. And they're like, we just don't know what to do, so we don't do anything
00:17:12.379 --> 00:17:16.999
until they go to want to do something with a balance sheet like get a loan or,
00:17:16.999 --> 00:17:20.879
you know, if they're being seriously looked at to be purchased,
00:17:21.079 --> 00:17:22.099
then it becomes important.
00:17:22.299 --> 00:17:25.479
But that statement of cash flow helps them to connect with.
00:17:25.886 --> 00:17:31.766
The things that jump right over the P&L that never show up on the P&L, but are affecting cash.
00:17:32.246 --> 00:17:36.526
So a lot of times you'll be like, oh, well, I have 10% net income on my P&L,
00:17:36.646 --> 00:17:39.666
but I don't feel like I have any money in the bank and I'm still struggling
00:17:39.666 --> 00:17:41.666
to figure out how to make payroll.
00:17:41.946 --> 00:17:47.026
Well, we can go right into that cash flow statement and usually pinpoint what's happening.
00:17:47.766 --> 00:17:50.606
Yeah, that makes sense. thing yeah i have not
00:17:50.606 --> 00:17:55.886
looked i did not look at that cash flow statement as much as the other two but
00:17:55.886 --> 00:18:00.286
as the owner was funny because i felt like i could always feel what that statement
00:18:00.286 --> 00:18:08.166
was going to show it was like it was like a it was just a validation of what of reality you know so.
00:18:09.226 --> 00:18:14.166
No go ahead well i was going to say the cash flow statement will give you to
00:18:14.166 --> 00:18:18.426
a certain extent what your real break-even point is, because break-even point
00:18:18.426 --> 00:18:19.626
is not always going to be $0.
00:18:19.926 --> 00:18:24.166
If you are a company that has a lot of vehicles on loan, you're taking a lot
00:18:24.166 --> 00:18:25.346
of distributions out of the company.
00:18:25.766 --> 00:18:28.966
All of the principal payments and the distributions from the company do not
00:18:28.966 --> 00:18:30.346
show up as an expense on the P&L.
00:18:30.726 --> 00:18:34.726
So let's say that you've got a whole fleet of vehicles that are on loan,
00:18:34.866 --> 00:18:40.246
and each month it's $15,000 of principal payments that you're making each month.
00:18:40.866 --> 00:18:45.506
Your break-even point is now not zero, it's $15,000 because you have to make
00:18:45.506 --> 00:18:49.346
sure that you're generating enough net income on the P&L to cover what you know
00:18:49.346 --> 00:18:53.866
is going to be coming out of the bank account in the form of principal payments on loans.
00:18:54.146 --> 00:18:56.846
And that's usually the connection that
00:18:56.846 --> 00:19:00.446
is missed until you really start understanding what that statement is.
00:19:00.666 --> 00:19:04.426
You start seeing it every month. Yeah, that makes sense. So could you tell me
00:19:04.426 --> 00:19:09.346
the story that where you were able to help a contractor kind of turn the lights
00:19:09.346 --> 00:19:11.826
on in their business through better financial insight.
00:19:12.410 --> 00:19:15.570
Yes, there's a lot of them. There's one in particular, though,
00:19:15.730 --> 00:19:20.410
who he is a fantastic human being, very good at running his business,
00:19:20.790 --> 00:19:24.970
grew his business to, I want to say $6 or $7 million by the time I got involved
00:19:24.970 --> 00:19:27.150
with him. And it was almost accidental.
00:19:27.430 --> 00:19:33.350
Accidentally got to a $6 or $7 million business, but just really did not have
00:19:33.350 --> 00:19:37.530
a clue in terms of numbers or financials or reports or any of the things.
00:19:37.530 --> 00:19:41.390
Started working with him, worked a lot on just understanding all of it,
00:19:41.470 --> 00:19:45.090
how important it is, how to tie it back into operations, and then see the changes
00:19:45.090 --> 00:19:48.930
that you've done in operations and how it reflects on your financials.
00:19:49.350 --> 00:19:52.750
And then a couple of years later, he was able to sell his business to private
00:19:52.750 --> 00:19:57.090
equity for a ton of money that he never would have been able to do prior.
00:19:57.330 --> 00:20:00.510
He was generating a lot of revenue, but his net income wasn't great,
00:20:01.010 --> 00:20:03.730
right? So he was really good at generating revenue. He had a great culture.
00:20:03.990 --> 00:20:07.230
Customers were happy, you know, all the stars. But then at the end of the day,
00:20:07.350 --> 00:20:12.350
you're like, I'm working so, so, so hard, but my net income is 2%. Why am I doing this?
00:20:13.230 --> 00:20:18.230
Yeah, you can have, and I think that's common in the home service space where
00:20:18.230 --> 00:20:21.950
you could have a company that's generating a great amount of income,
00:20:22.250 --> 00:20:27.130
has happy customers, happy employees, everyone's paid well, everything looks great.
00:20:27.130 --> 00:20:32.090
And then the owner is not making any money and the business is not making any money.
00:20:32.230 --> 00:20:37.790
They're just treading water continuously, just kind of being ignorant.
00:20:38.130 --> 00:20:44.510
And that actually might be more common than a well-oiled machine, you know?
00:20:44.510 --> 00:20:50.210
So I see online, and I'm specifically not calling anybody out,
00:20:50.290 --> 00:20:56.250
but I've always seen, especially during COVID, a lot of contractors would post their revenue.
00:20:56.250 --> 00:20:59.970
They'd put a snapshot of Service Titan and say, look at all this revenue.
00:21:00.410 --> 00:21:03.110
And for me, the way I look at it is...
00:21:03.867 --> 00:21:06.747
I don't really care. What's the profit? What's the cash generated?
00:21:07.047 --> 00:21:11.307
I just make the assumption that if the revenue is going up, if everything's
00:21:11.307 --> 00:21:13.187
correct, so is cash generated.
00:21:13.567 --> 00:21:19.747
But I know that some of these companies could be in low single digit revenue.
00:21:20.087 --> 00:21:23.207
And I always thought like, or I'm sorry, profit. And I always thought like.
00:21:24.047 --> 00:21:32.747
Man, generating $10 million worth of business and then walking away with $300,000
00:21:32.747 --> 00:21:39.047
of paper profit and then zero by the time you're done paying on debts and things like that.
00:21:39.187 --> 00:21:41.467
It's just, that's really bad.
00:21:41.627 --> 00:21:43.587
It's exhausting is what it is.
00:21:45.027 --> 00:21:48.787
It's a grind to be able to generate big revenue numbers like that.
00:21:48.887 --> 00:21:52.987
You got to have a lot of trucks on the road. You got to have a lot going on from that standpoint.
00:21:53.407 --> 00:21:57.867
So to put all that work and time and effort and energy into it and then not
00:21:57.867 --> 00:21:59.127
make any money on the bottom line.
00:21:59.507 --> 00:22:02.767
It hurts my stomach to think about it.
00:22:03.207 --> 00:22:07.267
But here's what happens, though, is companies, they don't have a good foundation,
00:22:07.867 --> 00:22:10.347
right? And so they're struggling when they're small.
00:22:10.827 --> 00:22:14.847
And the knee-jerk reaction is, if I just get more sales, it will be better.
00:22:15.147 --> 00:22:18.707
If I just get more sales, it will be better. Everything will fix itself and it will be better.
00:22:19.107 --> 00:22:22.407
But really, what's happening is they don't have a strong gross profit margin.
00:22:22.527 --> 00:22:23.847
Their overhead is already too high.
00:22:24.027 --> 00:22:27.747
And they are piling revenue on top of a failing foundation.
00:22:28.007 --> 00:22:30.227
And it's just exacerbating the situation.
00:22:30.547 --> 00:22:33.827
So sales does cover some sins, but not all of them.
00:22:34.007 --> 00:22:38.267
And there's a lot of times where you just make the problems worse.
00:22:38.267 --> 00:22:43.287
I would much rather have a company that does $5 million in revenue and 25% net
00:22:43.287 --> 00:22:46.007
than $10 million in revenue and 5% net.
00:22:46.574 --> 00:22:49.954
Right. Right. There's twice the headaches, twice the people,
00:22:50.154 --> 00:22:52.774
twice the HR liabilities, all that.
00:22:53.214 --> 00:22:56.334
Yeah. I've always felt personally, and we're going to get into KPIs,
00:22:56.494 --> 00:23:02.434
but I always felt the amount of money that, that a amount of cash that a business
00:23:02.434 --> 00:23:03.714
generates is everything.
00:23:03.714 --> 00:23:09.634
I always thought if you were generating a good amount of cash in your business at the end of the day,
00:23:09.794 --> 00:23:16.194
that that's a good business and that everything else is maybe the other KPIs
00:23:16.194 --> 00:23:23.254
and metrics are more for larger corporations that have investors and sell public
00:23:23.254 --> 00:23:24.454
stock and things like that.
00:23:24.454 --> 00:23:29.134
But I always came back to cash generated as being the best KPI.
00:23:29.694 --> 00:23:33.914
Now, I'm sure that you've seen millions of KPIs, way too many,
00:23:34.194 --> 00:23:39.154
so many that it confuses everybody. But for you, let's start with the profit and loss.
00:23:39.254 --> 00:23:43.694
When you look at a profit and loss statement, what are the top three things
00:23:43.694 --> 00:23:47.454
you look at right when you look at one as far as KPIs?
00:23:47.774 --> 00:23:50.874
Yeah, the first thing I'm going to is the gross profit margin and whether or
00:23:50.874 --> 00:23:52.734
not the gross profit margin is where it needs to be.
00:23:52.734 --> 00:23:57.194
Gross profit margin tells us whether or not our labor is in check and or our
00:23:57.194 --> 00:24:00.394
materials are in check or if one of them is out of whack because that sets us
00:24:00.394 --> 00:24:03.154
up for whether or not there's going to be enough funds to cover the overhead.
00:24:03.414 --> 00:24:05.494
So gross profit margin, that's always going to be number one.
00:24:05.634 --> 00:24:08.054
It does not even matter what size company it is.
00:24:08.214 --> 00:24:11.994
Small company, big company, it doesn't matter which industry within home services
00:24:11.994 --> 00:24:14.534
they're in. That's always number one.
00:24:15.274 --> 00:24:19.994
Number two then would be our percentage of overhead labor.
00:24:20.214 --> 00:24:25.734
So our non-revenue generators and their labor wages and what a percentage of
00:24:25.734 --> 00:24:28.694
revenue is for that. I'm looking for 10% or better.
00:24:28.854 --> 00:24:30.294
I'm not counting benefits and
00:24:30.294 --> 00:24:33.254
taxes and retire. I'm not counting any of that, just straight up wages.
00:24:33.854 --> 00:24:37.474
Straight wages. Okay. Just straight wages. Are we at 10% or better?
00:24:37.594 --> 00:24:42.054
Gross profit margin, by the way, should be at least 50%, but depending on the industry, closer to 60.
00:24:42.334 --> 00:24:45.814
Blended across all departments, 50%. Correct. Correct. Correct. Yep.
00:24:46.718 --> 00:24:52.218
The third one then would probably be advertising if I were to go there.
00:24:52.438 --> 00:24:54.858
This is also assuming that we're profitable.
00:24:55.178 --> 00:24:58.818
So, you know, if we're not profitable, then of course we're looking at net income.
00:24:59.138 --> 00:25:04.958
But advertising tends to be the next one because it can be very good for you, right?
00:25:05.158 --> 00:25:10.738
And it can also be a giant money suck depending on how it's getting, how it's being spent.
00:25:10.738 --> 00:25:17.218
And the amount of money that we're spending on marketing doesn't determine always
00:25:17.218 --> 00:25:21.338
whether or not our marketing company is doing well without looking at our own
00:25:21.338 --> 00:25:23.058
booking rate, conversion rate, and average ticket.
00:25:23.378 --> 00:25:28.158
If those three numbers aren't good, we cannot blame our marketing company for
00:25:28.158 --> 00:25:29.078
not generating enough leads.
00:25:29.198 --> 00:25:32.858
But it's so much easier to be a marketing company. Right?
00:25:33.078 --> 00:25:36.598
Right? Look, I gave you all this. I gave you $5,000.
00:25:36.838 --> 00:25:42.138
My expectation is that that turns into $50,000. Right? Why isn't it?
00:25:42.318 --> 00:25:46.038
Well, you didn't answer the phone 25% of the time.
00:25:47.038 --> 00:25:50.998
Then just get me more leads, but I'm not paying you any more than the $5,000.
00:25:51.378 --> 00:25:58.938
Yeah, we like more leads in marketing to make up for sins in the CSR arena, right?
00:25:59.138 --> 00:26:07.758
So you said that 10% wages to overall revenue in the company.
00:26:07.758 --> 00:26:13.238
So if you have a million dollar shop, That means you can pay $100,000 in wages
00:26:13.238 --> 00:26:15.498
for everyone that's not in the field.
00:26:16.038 --> 00:26:17.818
Is that pretty much how it works?
00:26:19.178 --> 00:26:25.338
So, again, we're just wages. A million-dollar shop, you should not need a whole lot of overhead.
00:26:25.958 --> 00:26:30.518
That's not a 3CSR, a whole accounting person, you know, whatever.
00:26:30.718 --> 00:26:34.138
And what happens, here's what happens with that too, is it's called,
00:26:34.238 --> 00:26:39.098
I call it a variable expense, which means that it is level until you add a person,
00:26:39.238 --> 00:26:42.638
then it jumps up, then it's level, then you add a person, then it jumps up, it's level, okay?
00:26:42.978 --> 00:26:49.798
So what we see with that percentage is that we're trucking along and we're probably
00:26:49.798 --> 00:26:51.718
a little bit over for a while.
00:26:51.898 --> 00:26:55.778
And then our revenue is increasing, so it's bringing that percentage down.
00:26:55.818 --> 00:26:58.158
As the revenue increases, it brings that percentage down.
00:26:58.498 --> 00:27:04.618
And then when it's down below 10% in like the 7% or 8% range for an extended period of time,
00:27:04.778 --> 00:27:08.278
we start to hear from our admin team, we're overwhelmed,
00:27:08.278 --> 00:27:11.078
there's not enough time we start
00:27:11.078 --> 00:27:15.818
to hear the clues that it's time that we need to add another person to the team
00:27:15.818 --> 00:27:21.578
then when we add another person to the team we go up above that 10% but we should
00:27:21.578 --> 00:27:25.358
be continuing to generate more and more and more revenue which then again brings
00:27:25.358 --> 00:27:29.058
that percentage down so we've leveled that out again and then,
00:27:29.713 --> 00:27:33.493
It gets to a point where we start hearing the words of, I didn't have enough
00:27:33.493 --> 00:27:37.593
time, or I don't have enough time, or I'm overwhelmed, or things start getting
00:27:37.593 --> 00:27:42.973
dropped, overlooked, and then we need to reevaluate as to whether or not we're getting too lean.
00:27:43.633 --> 00:27:47.453
All the while, we're looking for ways to be as efficient as possible.
00:27:47.653 --> 00:27:53.673
How can we incorporate automations in order to make our CSRs and our admin team's job easier?
00:27:53.673 --> 00:27:59.233
The more automations that become available in the world, the easier it will
00:27:59.233 --> 00:28:02.953
be to be able to keep our admin percentages where they need to be.
00:28:03.093 --> 00:28:09.513
But where they used to be doing the task, now they're monitoring the task.
00:28:09.773 --> 00:28:13.513
They're monitoring the system that has been put in place to make it more efficient.
00:28:14.533 --> 00:28:18.193
Yeah. And Tersh and Josh will talk about that a lot, right?
00:28:18.393 --> 00:28:25.113
About automations and everything. Tersh is a big, big automation and AI nerd, just like me.
00:28:25.333 --> 00:28:30.333
I love it. I think about automating. That's it. Automate and AI everything.
00:28:30.833 --> 00:28:34.853
Yes. Everything. Which it doesn't eliminate all the human aspect of it because
00:28:34.853 --> 00:28:37.993
somebody still has to monitor the process, make sure all of the automations
00:28:37.993 --> 00:28:40.293
are working correctly and the whole nine yards.
00:28:40.293 --> 00:28:46.413
But there's so much room to gain efficiency there that it's over time going
00:28:46.413 --> 00:28:51.513
to make it easier and easier to stay in that, you know, 10 percent range on your admin wages.
00:28:52.473 --> 00:28:57.153
Right. Which helps. And it's nice because the automations and increase in efficiency
00:28:57.153 --> 00:29:02.193
allows you to have less people and pay the people that you do have more money.
00:29:02.193 --> 00:29:06.353
Now, does that help the economy as a whole? That's a whole different podcast.
00:29:06.653 --> 00:29:11.073
But I've always wanted, when I had my company, I always wanted to have,
00:29:11.213 --> 00:29:15.873
I always leaned on technology first to be as to maximize efficiency.
00:29:15.873 --> 00:29:19.913
So can a computer program, can an automation do this?
00:29:20.093 --> 00:29:27.153
And then after that, relying on humans to monitor or work that technology, work that process.
00:29:27.153 --> 00:29:32.873
And it left me with a lot less people in my company, but I could pay the most
00:29:32.873 --> 00:29:35.713
in the city because I had less people.
00:29:35.913 --> 00:29:38.693
I had a one CSR.
00:29:39.463 --> 00:29:43.723
Full-time CSR and one part-time one in the summer when we were at three and
00:29:43.723 --> 00:29:49.583
a half million in revenue because of utilizing automations back then.
00:29:49.723 --> 00:29:53.123
AI wasn't a big thing, but I just tried to automate everything.
00:29:53.323 --> 00:29:55.623
So that will help your KPIs.
00:29:55.983 --> 00:30:02.443
But with that, what are some KPIs that people obsess over that don't matter from what you've seen?
00:30:05.303 --> 00:30:09.323
Or they're just, they do, but they're so low on the list and they,
00:30:09.483 --> 00:30:13.043
for some reason, they just think so much of this KPI when it's really,
00:30:13.283 --> 00:30:16.623
no, there's a bunch of them. These other ones that you should look at first.
00:30:16.943 --> 00:30:19.343
Oh, this is probably going to start a little bit of a controversy,
00:30:19.343 --> 00:30:24.343
but I would probably say recall rate only because it's very important,
00:30:24.343 --> 00:30:29.383
but there's a handful of ones above that, that might be slightly more important than your recall rate.
00:30:29.543 --> 00:30:34.303
Here's what happens honestly with KPIs is we're either, we either don't look
00:30:34.303 --> 00:30:38.983
at any KPIs at all, or we get super gung-ho on one to monitor 45 of them at one time.
00:30:39.563 --> 00:30:44.983
Okay. So really, really what needs to happen is we're going to pick the five
00:30:44.983 --> 00:30:47.683
ones that are going to make the biggest impact on the business.
00:30:47.803 --> 00:30:51.663
And we're going to dial them in, get them to where they need to be,
00:30:51.983 --> 00:30:54.883
get them consistent, like focus on those five.
00:30:55.505 --> 00:30:58.265
Once those five are consistently in a place where they need to be,
00:30:58.425 --> 00:31:04.425
then we start adding on some other ones that are important, but you can't turn the Titanic in a day.
00:31:04.585 --> 00:31:08.245
So if we start watching 35 KPIs today and we try to make them all perfect at
00:31:08.245 --> 00:31:11.205
once, nothing is going to get better, really.
00:31:11.565 --> 00:31:16.565
So it's more about saying, OK, these KPIs are important, but we're going to
00:31:16.565 --> 00:31:18.365
dial in these handful first.
00:31:18.525 --> 00:31:22.305
Those handful are most definitely going to be your booking rate,
00:31:22.425 --> 00:31:26.185
your conversion rate, your average tickets. And then once we are looking at
00:31:26.185 --> 00:31:30.905
that, then and those are in a fantastic spot, then we're also looking at tech generated leads.
00:31:31.065 --> 00:31:34.145
If we are selling tech company, then we're starting to look at,
00:31:34.285 --> 00:31:35.325
you know, what are our reviews?
00:31:35.445 --> 00:31:38.425
We're looking at our recall rate. We're bringing in all these other ones,
00:31:38.425 --> 00:31:42.885
but we need to make sure like the main four or five are being hit consistently
00:31:42.885 --> 00:31:43.945
where they need to be first.
00:31:44.465 --> 00:31:49.285
For sure. Yeah, that's great advice. And it's I've always been a big dashboard
00:31:49.285 --> 00:31:53.725
guy, which is, you know, the visual representation of these KPIs.
00:31:53.925 --> 00:31:56.905
And I remember when I first started to put dashboards together,
00:31:57.305 --> 00:32:02.225
like if you ever looked at like snapshots of like a Microsoft BI dashboard on
00:32:02.225 --> 00:32:06.085
online, how there are so many metrics on it.
00:32:06.285 --> 00:32:11.905
It looks like a like a Fox News ticker going across. There's so much stuff on it.
00:32:12.025 --> 00:32:16.285
And I always thought when it comes to KPIs that like less is more.
00:32:16.385 --> 00:32:22.665
Like, yeah, put my feeling on a dashboard is that you should be able to walk
00:32:22.665 --> 00:32:27.905
by it and just at a glance know whether or not it's good or bad.
00:32:28.065 --> 00:32:30.345
And I kind of look at KPIs that way.
00:32:30.625 --> 00:32:36.325
Really, really focus on just a couple that are going to make the biggest the
00:32:36.325 --> 00:32:41.725
biggest impact in your business, like utilizing the Pareto principle, that 80-20 rule.
00:32:42.005 --> 00:32:46.045
Right. Now, if you were to look at just one, I'm going to only give you one,
00:32:46.145 --> 00:32:51.005
Kristen, to look at in an HVAC company, what would it be? Just one. One KPI.
00:32:51.565 --> 00:32:55.645
Yeah. Which isn't fair, but. Probably total revenue.
00:32:56.325 --> 00:32:59.045
Total revenue? Right. Probably total revenue. Yeah.
00:32:59.225 --> 00:33:03.345
Because, I mean, you're seeing that change like multiple times a day.
00:33:03.345 --> 00:33:08.085
So going back to your dashboard and like who's watching what and when and how
00:33:08.085 --> 00:33:10.125
many of the things, I really do,
00:33:10.625 --> 00:33:17.265
I would find value in a very detailed KPI dashboard like that,
00:33:17.425 --> 00:33:20.745
but not for everybody in the position. I mean, not for everybody in the company.
00:33:21.205 --> 00:33:25.225
Okay. So customized to each individual role, depending on what you're saying. Sort of.
00:33:25.425 --> 00:33:32.225
And where they are on the organizational chart. So if they are the baseline
00:33:32.225 --> 00:33:35.365
of the organizational chart, so tech, CSR, dispatcher, right?
00:33:35.565 --> 00:33:40.225
They're probably really only should be watching like two or three or four max
00:33:40.225 --> 00:33:41.705
KPIs that are their things.
00:33:42.745 --> 00:33:46.285
That's what they're focused on. The next level, your service manager,
00:33:46.425 --> 00:33:47.805
your install manager, your office manager.
00:33:48.492 --> 00:33:52.772
They're watching that plus a couple of more that matter. But because they are
00:33:52.772 --> 00:33:56.172
in a managerial position, it's OK to have a responsibility for them to have
00:33:56.172 --> 00:33:57.412
more KPIs that they're watching.
00:33:57.972 --> 00:34:01.372
And then above that, we might have like an ops manager or a general manager.
00:34:01.592 --> 00:34:05.592
And so that position then is going to be watching all of the ones below them,
00:34:05.752 --> 00:34:08.512
plus a handful of other ones that are probably important, too.
00:34:08.512 --> 00:34:13.692
You can see as you get higher on the organizational chart, there are more things
00:34:13.692 --> 00:34:17.132
that you do need to be watching and keeping your finger on to make sure the
00:34:17.132 --> 00:34:20.292
whole business is operating in harmony.
00:34:20.592 --> 00:34:25.572
So the business owner or basically the highest person in charge of operations
00:34:25.572 --> 00:34:30.292
probably does need that really detailed dashboard, but everybody does not need that one.
00:34:31.132 --> 00:34:35.072
So maybe not put that. But like if we're putting it in a conference room or
00:34:35.072 --> 00:34:36.912
we're putting it in the hallway or putting in the front thing,
00:34:37.212 --> 00:34:40.592
we're not putting that one up there. We're putting like the main five up there.
00:34:41.132 --> 00:34:46.632
Yeah. Do you guys help customize dashboards for people, for contractors or?
00:34:47.032 --> 00:34:49.332
No, that is very. Try to stay out of that realm.
00:34:49.772 --> 00:34:52.832
Well, so that's it gets into a little bit too much computer programming,
00:34:53.092 --> 00:34:55.412
which I'm not. That's not my I'm not good at that.
00:34:55.572 --> 00:34:59.052
But helping you decide which ones you should be monitoring and which position
00:34:59.052 --> 00:34:59.972
should be looking at what.
00:35:00.332 --> 00:35:03.752
Absolutely. Building a beautiful dashboard, I leave that to the pros.
00:35:05.172 --> 00:35:10.072
No problem. But knowing which metrics should go on there is more important than
00:35:10.072 --> 00:35:11.912
having something. Than how pretty it is.
00:35:12.912 --> 00:35:17.432
Boy, that is really pretty and on brand. But the numbers on it are inaccurate
00:35:17.432 --> 00:35:19.552
and they don't matter. Or they're horrible.
00:35:20.092 --> 00:35:23.292
Or your call booking rate is 32%. Let's fix that.
00:35:24.472 --> 00:35:29.712
Oh you saw you probably saw my post on call booking rate how i how i do not
00:35:29.712 --> 00:35:33.552
believe service titan calculates that accurately it's very frustrating for me
00:35:33.552 --> 00:35:38.692
there was that was the most popular post that that group has ever had in the
00:35:38.692 --> 00:35:42.552
two years that i've had the group so yeah i just i i don't,
00:35:43.127 --> 00:35:46.347
That's a whole different thing, but call booking rate and service tighten is
00:35:46.347 --> 00:35:47.847
not accurate. That's all I'll tell you.
00:35:48.687 --> 00:35:52.007
It's just, it isn't. We'll leave it at that. We'll just leave it at that.
00:35:52.107 --> 00:35:53.987
I believe they could do it better. Definitely.
00:35:54.507 --> 00:35:59.767
So you, you guys offer this business clarity audit, right?
00:35:59.987 --> 00:36:04.647
And so can you tell me a little bit more about that?
00:36:04.847 --> 00:36:08.927
So if somebody were listening to this and they, and they thought that they might
00:36:08.927 --> 00:36:12.187
need your services, what, that would be how it would start. you guys would go
00:36:12.187 --> 00:36:13.107
through this clarity audit?
00:36:13.287 --> 00:36:16.467
There's a couple of different ways. So the clarity audit is,
00:36:16.647 --> 00:36:19.427
that is something that we do with people who are interested.
00:36:19.627 --> 00:36:24.867
It is, we send out extremely detailed questionnaire asking about all different
00:36:24.867 --> 00:36:26.047
kinds of things around their business.
00:36:26.367 --> 00:36:30.467
We take the answers back in, read over all of them, and then come up with a
00:36:30.467 --> 00:36:34.667
handful of recommendations of, you know, these are some areas that I saw based
00:36:34.667 --> 00:36:38.907
on your answers that might be opportunities for you to be able to plug a hole
00:36:38.907 --> 00:36:40.607
or tighten some things up or whatever.
00:36:41.047 --> 00:36:43.647
And then so we provide a ton of recommendations and then at the
00:36:43.647 --> 00:36:46.707
end we say all right well based on all of that if it
00:36:46.707 --> 00:36:50.187
was my business these are the three things that I would focus on the first
00:36:50.187 --> 00:36:53.227
these are the highest priorities these are the things that are going to make the biggest
00:36:53.227 --> 00:36:57.547
impact on your business the fastest that is there's a lot of times the feedback
00:36:57.547 --> 00:37:01.667
that we get on those is I did not there was you don't know what you don't know
00:37:01.667 --> 00:37:04.827
or I never really thought about that piece of the business or I never really
00:37:04.827 --> 00:37:10.667
thought about it in that way or whatever that's a lot of times the response that we'll get from it.
00:37:10.847 --> 00:37:14.607
And then the other thing is helping them to distill.
00:37:15.518 --> 00:37:18.798
Down to the couple of things that are the highest priority now.
00:37:19.438 --> 00:37:23.718
A lot of times what will happen is we'll go, let's say we go to an event and
00:37:23.718 --> 00:37:27.018
we come back with all these 4 million wonderful ideas of things that we want to implement.
00:37:27.438 --> 00:37:30.778
And we are either really good at picking one or two of them and implementing
00:37:30.778 --> 00:37:34.838
them, or it's, we don't do any of them because there's too many,
00:37:34.918 --> 00:37:36.798
or we try to do them all at once and they don't get finished.
00:37:36.958 --> 00:37:41.998
Right. So we will like put out a bunch of recommendations, but then say, all right, cool.
00:37:42.418 --> 00:37:45.378
Let me make the decision for you and say, these are the three that you need
00:37:45.378 --> 00:37:49.418
to focus on. That's one way to kind of get started, I guess you could say.
00:37:49.718 --> 00:37:55.558
The virtual CFO side of things is really very much, I've identified that numbers
00:37:55.558 --> 00:37:57.958
are not my strengths. I really want to know more about it.
00:37:58.038 --> 00:38:00.378
I want to understand it better. I want to make more money.
00:38:00.878 --> 00:38:05.378
Let's just book a discovery call and see whether or not this is something that
00:38:05.378 --> 00:38:09.218
is like a relationship that's going to work. And then we just kind of take it from there.
00:38:09.418 --> 00:38:12.738
So definitely two ways to kind of get started.
00:38:13.238 --> 00:38:19.178
Do you guys have contractors who are just starting out utilize the virtual CFO
00:38:19.178 --> 00:38:24.758
or do they usually get to some point in growth where it's time to bring that service on?
00:38:25.098 --> 00:38:28.598
Yeah, there's a couple different levels of service from the virtual CFO and
00:38:28.598 --> 00:38:33.538
there is one level of service that is very attainable for a smaller business
00:38:33.538 --> 00:38:37.998
to be able to just really start wrapping their head around like the numbers
00:38:37.998 --> 00:38:40.678
and what that even means, what the books mean.
00:38:41.378 --> 00:38:43.398
And yeah, pretty much from any
00:38:43.398 --> 00:38:47.398
size business, that level is pretty much anybody can step into that one.
00:38:47.578 --> 00:38:51.818
There are some more advanced, higher touch, more involved levels of virtual
00:38:51.818 --> 00:38:55.498
CFO that may not be right for the really small business or the new startups,
00:38:55.758 --> 00:38:57.758
but yeah, there is one for them.
00:38:58.658 --> 00:39:04.958
Okay. So what is one financial process that every business should tighten up
00:39:04.958 --> 00:39:09.418
this month if they had one action to take for July of 2025.
00:39:10.258 --> 00:39:13.538
Give me one financial process they should tighten up.
00:39:14.491 --> 00:39:18.831
Receipts slash documentation of expenses.
00:39:20.071 --> 00:39:25.611
Okay. Okay. So we got credit cards for all of our technicians and they ran to
00:39:25.611 --> 00:39:27.871
Home Depot and they got blah, blah, blah part.
00:39:28.911 --> 00:39:31.231
And the receipt never got turned
00:39:31.231 --> 00:39:34.591
in. So we don't really know what they purchased for what job or why.
00:39:35.131 --> 00:39:38.531
If we had that information and we saw that they were purchasing something that
00:39:38.531 --> 00:39:41.151
was in the warehouse that they should have had on their truck before they went
00:39:41.151 --> 00:39:44.151
to the job site, we have now paid them to go to the store.
00:39:44.151 --> 00:39:48.191
We've paid the increased price to buy the retail price of the thing,
00:39:48.211 --> 00:39:50.431
as opposed to the supply house price of the thing.
00:39:50.771 --> 00:39:54.951
And then we've paid them to come back to the job and get reorganized and redone the job.
00:39:55.131 --> 00:40:01.371
So a lot of times what we're purchasing, aka through the receipts, doesn't get reviewed.
00:40:01.651 --> 00:40:06.311
And we find a lot of opportunity to capture some more funds through that.
00:40:07.051 --> 00:40:12.171
Yeah, that's right. I have experienced that myself when I had all of our technicians
00:40:12.171 --> 00:40:14.691
that had credit cards, it got a little messy.
00:40:15.371 --> 00:40:21.831
And yeah, all you get on the credit card statement is Lowe's $160.
00:40:22.431 --> 00:40:25.811
And it's like, hmm, they could have snuck something. They could have snuck a
00:40:25.811 --> 00:40:27.311
gift card for themselves in there.
00:40:27.671 --> 00:40:31.611
And then we got them- Or a monster and some Doritos and some beef jerky.
00:40:32.031 --> 00:40:35.611
Sure, something little, something little, right? Like what we do when we go
00:40:35.611 --> 00:40:36.871
buy stuff. Right, exactly.
00:40:37.411 --> 00:40:42.411
Right, that's what we do. I'm the only one that's allowed to put that stuff in the business name.
00:40:42.691 --> 00:40:48.571
And then we switched to a PECS card that was like a spend card.
00:40:48.791 --> 00:40:53.491
So it wasn't a credit card. It was a debit card. And it had some tighter controls
00:40:53.491 --> 00:40:55.551
on it more than a credit card did.
00:40:55.791 --> 00:41:01.071
And then it required them to upload their receipts. But we got it to the point
00:41:01.071 --> 00:41:05.411
where we had turned their cards off so they couldn't buy anything until they
00:41:05.411 --> 00:41:10.711
called because what I wanted was I wanted them to tell me why they were at Lowe's.
00:41:11.171 --> 00:41:15.411
You know, why are you at Lowe's? I don't want to find out that they bought something
00:41:15.411 --> 00:41:19.331
and then just see a receipt because you're right. That that's a truck stock item.
00:41:19.731 --> 00:41:24.551
So what, what broke down in the process that we're, that we're spending $10
00:41:24.551 --> 00:41:30.331
on a two inch PVC hub fitting when I buy them for six all day.
00:41:30.491 --> 00:41:33.551
And there's 10 of them in the shop, by the way, what happened? And,
00:41:33.611 --> 00:41:36.571
and the time that you paid them to go and whatever like
00:41:36.571 --> 00:41:39.771
all all the things it's those those types of purchases
00:41:39.771 --> 00:41:42.711
yeah it eats up it eats into your gross profit margin
00:41:42.711 --> 00:41:45.391
which eats into your net profit and it's a
00:41:45.391 --> 00:41:51.291
silent killer yeah until you shine some light on it there's times where we'll
00:41:51.291 --> 00:41:57.151
pop open the materials purchases for the month and there'll be 50 home depot
00:41:57.151 --> 00:42:00.691
trips across the board and you're like do you have any idea how much that's
00:42:00.691 --> 00:42:04.231
actually costing you no no way more than the part price.
00:42:04.891 --> 00:42:08.231
It's hard because the metrics that are in that are hidden.
00:42:08.802 --> 00:42:11.642
They are hidden crafts, like you said. You don't really know.
00:42:11.842 --> 00:42:16.122
It's just it does translate over to labor. But the nice thing that I like that
00:42:16.122 --> 00:42:17.542
I really liked about Service Titan,
00:42:17.742 --> 00:42:22.882
and you'll see me crap on Service Titan continuously online because coming from
00:42:22.882 --> 00:42:26.882
an engineering computer programming background, we're all about talking about
00:42:26.882 --> 00:42:28.282
the problems with things,
00:42:28.502 --> 00:42:30.682
not celebrating the good things.
00:42:30.802 --> 00:42:36.362
But what they do really good is they do have good labor and hour tracking detail.
00:42:36.362 --> 00:42:42.922
So it is nice to know exactly all that, that payroll that went out to that technician,
00:42:43.222 --> 00:42:46.122
exactly what was he doing for all that.
00:42:46.242 --> 00:42:50.662
And I was able to, to see that with some technicians about how some were more
00:42:50.662 --> 00:42:54.002
efficient with their time versus others because of Service Titans,
00:42:54.042 --> 00:42:55.502
really good time tracking. Right.
00:42:56.062 --> 00:42:59.762
Well, and the other thing, too, like the rebuttal that I've heard to that,
00:42:59.962 --> 00:43:02.842
that whole like, let's say the technician is performance based pay.
00:43:03.162 --> 00:43:08.302
So they it's their own time that they're using in order to go run to Home Depot
00:43:08.302 --> 00:43:09.582
and get whatever it is that they need.
00:43:10.022 --> 00:43:15.162
So I would say yes. And if that's happening multiple times a day or multiple
00:43:15.162 --> 00:43:19.442
times a week, how many additional jobs could they have done for the company
00:43:19.442 --> 00:43:21.042
and for themselves? Correct.
00:43:21.762 --> 00:43:25.862
That we're missing out on because they spent, you know, a combined four hours.
00:43:25.962 --> 00:43:28.842
If they spent a combined four hours in the vehicle going back and forth to Home
00:43:28.842 --> 00:43:32.662
Depot throughout the week, maybe they could have picked up one or two more jobs
00:43:32.662 --> 00:43:34.462
and that would have helped them and the company.
00:43:34.702 --> 00:43:41.042
So it's very hidden cost, but it's very real and it gets overlooked regularly.
00:43:41.391 --> 00:43:46.131
A lot, a lot, a lot. Yeah, we had some installers that were on piece rate pay.
00:43:46.331 --> 00:43:49.211
In fact, I moved all of them over to piece rate pay.
00:43:49.571 --> 00:43:53.531
And some of them would get done with their jobs at two or three o'clock,
00:43:53.731 --> 00:43:55.691
installing a full HVAC system.
00:43:56.031 --> 00:44:00.471
In Ohio, it was just furnace and AC, and typically the furnace was in a basement.
00:44:00.671 --> 00:44:04.711
And then I had other ones that would be seven or eight o'clock at night.
00:44:05.751 --> 00:44:11.071
And management, it was tough because I would tell management, talk to them about it.
00:44:11.131 --> 00:44:14.891
I said, They still shouldn't be done at eight o'clock at night,
00:44:15.291 --> 00:44:20.131
every night, even though we're paying them the same as we're paying somebody
00:44:20.131 --> 00:44:24.111
who gets done at two to three because they're going to be more fatigued.
00:44:24.191 --> 00:44:26.311
The customer is going to be a little bit crankier.
00:44:26.531 --> 00:44:30.311
And then when it comes time for Saturday, if we wanted to pick up an additional
00:44:30.311 --> 00:44:33.391
install, they're not going to have the energy to do it because they've been
00:44:33.391 --> 00:44:36.751
working so late because of their inefficiencies.
00:44:36.751 --> 00:44:43.031
So with you on that, just because we're trying to cover up those inefficiencies
00:44:43.031 --> 00:44:47.071
and not incur those costs, there's hidden costs within that.
00:44:48.371 --> 00:44:52.031
It's really just it's opportunity cost. And it's,
00:44:52.411 --> 00:44:57.311
you know, we got to do everything we can to help these technicians be as efficient
00:44:57.311 --> 00:45:04.791
as possible, even if it doesn't direct, even if we can't immediately see how much money that costs.
00:45:04.791 --> 00:45:09.251
I think that that's the responsibility of management, ownership,
00:45:09.431 --> 00:45:14.871
and leadership is to continuously refine and improve processes and just see
00:45:14.871 --> 00:45:16.811
where they break. Become elite.
00:45:17.211 --> 00:45:21.411
Become elite. That's right. That's right. So awesome.
00:45:21.991 --> 00:45:24.491
So keep track of your receipts.
00:45:25.358 --> 00:45:30.118
Stop buying Pringles. Look at them. What are they seeing? What are they buying? That's right.
00:45:30.498 --> 00:45:34.578
Look at the receipts. And there's no reason not to do that today with technology.
00:45:34.818 --> 00:45:37.538
Everybody has an iPad or a smartphone.
00:45:37.838 --> 00:45:42.178
There's no way that they can't capture these receipts. You just have to be watching
00:45:42.178 --> 00:45:44.558
the guys and make sure that it gets done.
00:45:44.758 --> 00:45:47.118
Right? Right. So that's awesome.
00:45:48.478 --> 00:45:51.338
So what else do you want to talk about with me today, Kristen? What do you got?
00:45:51.458 --> 00:45:53.718
What else do you got? Because I'm kind of flying through it.
00:45:53.718 --> 00:45:58.498
But I could talk about this kind of stuff all day and nerd out on it. I know.
00:45:58.918 --> 00:46:03.678
So are you guys going to any events coming up soon? Yes. Are you guys going
00:46:03.678 --> 00:46:05.718
to Pantheon in September?
00:46:06.858 --> 00:46:11.878
Yes, I definitely am going to Pantheon. We are waiting for – I applied to speak,
00:46:11.918 --> 00:46:15.218
so we're waiting for the decision there.
00:46:15.838 --> 00:46:18.898
Awesome. Spoke a couple of years ago, which was super awesome,
00:46:18.898 --> 00:46:25.098
and have been to Pantheon for the last couple of years, which is my favorite show, I must say.
00:46:25.518 --> 00:46:27.998
It's so over the top. It is. They really do a good job with that,
00:46:28.098 --> 00:46:29.538
don't they? It really is.
00:46:29.758 --> 00:46:35.078
It's a very, I don't know. It's just, it's impressive. So we've done our own events, right?
00:46:35.238 --> 00:46:37.638
And you look at that and you look at something like Pantheon and you're like,
00:46:37.718 --> 00:46:42.498
I just can't even imagine all of the pieces that go into creating a show that's
00:46:42.498 --> 00:46:45.938
that big, that's that bright, that's that, you know, whatever.
00:46:46.138 --> 00:46:50.398
So we're super excited about that. I think we're going to Resideo this year.
00:46:50.658 --> 00:46:52.978
I'm going to be out. There's a couple that I wanted to go to,
00:46:53.098 --> 00:46:56.238
but I can't because I'm going to be hiking the Grand Canyon for a couple of
00:46:56.238 --> 00:46:58.398
days in October. So there you go.
00:46:58.678 --> 00:47:01.238
Hopefully, hopefully we're waiting on the permits to come in for that.
00:47:01.438 --> 00:47:04.138
So, so yeah. Do you guys do a lot of shows?
00:47:04.318 --> 00:47:07.478
Do you like, is that where you find a lot of your clients? Do you guys set up
00:47:07.478 --> 00:47:12.298
a booth at these shows or do you normally just attend as like guests and things
00:47:12.298 --> 00:47:14.138
like that? Honestly, we've attended as guests.
00:47:14.318 --> 00:47:17.758
We've done booths and we've been speakers And when we speak,
00:47:17.938 --> 00:47:22.498
that's usually when we have the most engagement that's happening after that.
00:47:23.090 --> 00:47:27.910
My marketing for the virtual CFO is word of mouth referrals and speaking.
00:47:28.150 --> 00:47:31.870
So those two are the two things that really drive the business forward.
00:47:32.050 --> 00:47:36.490
So I try to speak whenever, whenever there's an opportunity.
00:47:36.730 --> 00:47:41.510
And, and, but there's a lot of times like Pantheon, I got a lot of clients who are in service site.
00:47:41.590 --> 00:47:45.070
And so I like to go and see them in person and hang out with them and,
00:47:45.210 --> 00:47:46.090
you know, that kind of stuff too.
00:47:46.270 --> 00:47:50.890
So there's very much that human aspect of that is also a draw to go to shows like that.
00:47:51.390 --> 00:47:54.310
It's one of the rare times that you get to see all of
00:47:54.310 --> 00:47:57.350
your customers from around the country right right i liked
00:47:57.350 --> 00:48:00.210
i thought pantheon was one of the better shows that i attended i'm
00:48:00.210 --> 00:48:03.070
gonna go again this year i was able to sneak
00:48:03.070 --> 00:48:06.270
some some free tickets in but i told service titan
00:48:06.270 --> 00:48:09.470
i said look i feel like i'm keeping your customers
00:48:09.470 --> 00:48:12.250
engaged enough that you can hook me up with
00:48:12.250 --> 00:48:15.410
a free ticket to pantheon so good
00:48:15.410 --> 00:48:18.590
for you if you were able to get them to agree with that i was
00:48:18.590 --> 00:48:21.330
able to i was able to sneak one in there though but
00:48:21.330 --> 00:48:24.690
good for you going and doing the speaking engagements that's
00:48:24.690 --> 00:48:27.530
a little outside my comfort zone to sit
00:48:27.530 --> 00:48:31.970
in front of a bunch of contractors so that would be the computer programmer
00:48:31.970 --> 00:48:37.250
engineer type person in me that that makes gives me a little bit of a little
00:48:37.250 --> 00:48:42.710
bit of a little anxiety there sweaty hands a little anxiety so you as an accountant
00:48:42.710 --> 00:48:45.090
being able to do that. Good for you.
00:48:45.610 --> 00:48:49.170
That's not a typical accountant thing. You're right. So you must really be in
00:48:49.170 --> 00:48:50.510
your, you're in your zone.
00:48:50.950 --> 00:48:54.650
I had to work on it. I had to work on it a lot. It was, I was terrified the
00:48:54.650 --> 00:48:56.610
first couple of times that I spoke to people.
00:48:56.630 --> 00:49:00.530
And then I realized that I kind of liked it and have worked on it and coached
00:49:00.530 --> 00:49:05.870
and learned and done a whole bunch of things in order to try to be good at it. Right. Yeah.
00:49:06.490 --> 00:49:11.850
And so, so I enjoy it now, but there was the majority of my professional career,
00:49:12.190 --> 00:49:15.330
there's not a chance that I was going to be getting up in front of people.
00:49:16.190 --> 00:49:19.990
So we can learn, right? We still can learn. That's awesome.
00:49:20.290 --> 00:49:24.310
So what's the biggest crowd that you've ever spoken in front of? Yeah.
00:49:24.890 --> 00:49:30.870
Um, we were keynote speakers at Service Expo, Service Nation Expo last year.
00:49:31.230 --> 00:49:35.410
That was a pretty big, pretty big room. And then my Pantheon room,
00:49:35.530 --> 00:49:38.990
I was a breakout room, but it, there was people in the hallway.
00:49:39.250 --> 00:49:40.770
So that was really cool to be
00:49:40.770 --> 00:49:42.830
able to fill up the room and then have them spilling out in the hallway.
00:49:42.990 --> 00:49:47.590
That was very humbling experience, but, but really cool.
00:49:47.970 --> 00:49:51.190
Those were probably the two biggest. We did the Roto-Rooter conference.
00:49:51.190 --> 00:49:54.010
They do an annual conference we spoke for
00:49:54.010 --> 00:49:57.050
them last year so yeah a couple
00:49:57.050 --> 00:50:00.350
hundred that's awesome great well everybody
00:50:00.350 --> 00:50:05.330
can learn from the information that you guys have because yeah i know that it's
00:50:05.330 --> 00:50:11.950
a huge gap in what's needed in this industry versus what we have we just just
00:50:11.950 --> 00:50:16.510
don't get into business with that knowledge it's and it's not it's something
00:50:16.510 --> 00:50:19.590
that you get i would say you could get it from college classes,
00:50:19.870 --> 00:50:23.250
but where else are you going to get that kind of knowledge about accounting
00:50:23.250 --> 00:50:27.170
and bookkeeping and things like that without really studying it?
00:50:27.290 --> 00:50:30.670
You know, you don't get that in HVAC school. I'll tell you that, you know?
00:50:31.190 --> 00:50:36.670
So great. Awesome. Well, thanks for being a guest on the show today.
00:50:37.050 --> 00:50:39.450
And I really appreciate it.
00:50:39.970 --> 00:50:44.630
Yeah, absolutely. So just to do a little bit of a plug.
00:50:44.830 --> 00:50:49.090
So I can be reached at kristindies.com, www.kristindies.com.
00:50:49.270 --> 00:50:53.830
If anybody wants to reach out or connect or whatever, I'm also on social media as myself.
00:50:54.130 --> 00:50:59.750
So, you know, certainly reach out and I am happy to talk numbers at any point.
00:51:00.930 --> 00:51:05.130
Fantastic. Well, thanks for joining us. Absolutely. Thank you so much for having me.
00:51:07.030 --> 00:51:11.250
Thanks for listening to the Home Service Hacks podcast. Be sure to subscribe
00:51:11.250 --> 00:51:15.090
on your favorite podcasting platform so you never miss a future episode.
00:51:15.390 --> 00:51:19.890
For more information or to connect with Bill, you can check us out on Facebook
00:51:19.890 --> 00:51:25.250
at Service Titan Hacks or visit our website at servicetitanhacks.com.
00:51:25.290 --> 00:51:26.870
We'll see you next time.
00:51:32.720 --> 00:51:37.086
Music.