Scaling Your Business at the Speed of Cashflow

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Unknown
Oh, hey. Oh, hey.

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Speaker 2
All right everybody, welcome to the Blue Collar Startup podcast where hard work meets big ideas. This is your home for real talk, real stories and real strategies from the front lines of the business of the trades. I’m your host or one of your hosts, I should say Mike Nelson from Five Towers Media.

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Speaker 1
You are the host, Mike. I’m just the co-host.

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Speaker 2
I’m one of the hosts.

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Speaker 1
And I’m the co host. Derek. Derek Foster over at Daigle Cleaning Systems. Now we do. Mike do good, man.

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Speaker 2
Doing good. You know, like we were talking about before it today was one of those days where I don’t know, man. I think I’m sure this happens. Everybody. But definitely when you’re a business owner. But every single action I’ve taken this morning or this today, it’s to 230. Almost every single thing I’ve attempted to do today has been met with adversity, like, you know, just living things easy.

00;01;04;04 – 00;01;21;09
Speaker 2
Not a single big bro like from the standpoint of woke up this morning and had to feed the animals, realized I was out of grain. So somehow I had finished off the grain last night, not realizing it. So I came out to an empty container this morning and then, like, go to get the grain, run it.

00;01;21;09 – 00;01;36;13
Speaker 2
You know, store’s not open till 8:00. So I got to sit in the parking lot for 30 minutes and I come home. I, I came into the house before going out to the barn real quick, and then when I got out there, the grain was in my truck, realized that the truck was locked. So I had to come back to that.

00;01;36;13 – 00;01;53;16
Speaker 2
You know, it was just like everything. Like there was some little extra step was added. And folks, I’m here to tell you, every single one of those issues were ones that I created for myself. So it’s, you know, we talk about, accountability. Man. I can only look at myself in the mirror to see who’s to blame for it all.

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Speaker 2
But it was just like, wow, man, my head is so far up my ass today. And getting into my own way is amazing. Absolutely.

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Speaker 1
Yeah. You got to feed the. You must have had a bunch of angry animals that were staring you down. What do you got back?

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Speaker 2
Well, fortunately, it it wasn’t that bad because I was still feeding around the time I normally feed. Yeah. So it wasn’t like, like, if I get out there, there’s been 2 or 3 mornings over the last year where, for whatever reason, I’m not able to get out to feed the animals till like nine, nine, 30. Then they’re they’re upset with me.

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Speaker 2
But this was still like. It was like 830. So they were, they were not too upset with me there, but they were hungry. They were still.

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Speaker 1
You got you got to feed them is don’t you have, some available for sale?

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Speaker 2
I do, yeah, yeah, we’ve got, seven feeders. I got three of them sold. I got four of them. I still got to sell it. It’s funny too, because I was reaching out to my customers from my last batch, and they’re like, I still got pork in the freezer. I got them, like, all right, all right.

00;02;53;29 – 00;02;57;20
Speaker 2
Well, I got to find some new customers then, but,

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Speaker 1
So just, you know, we’ve talked about this before, how it’s, it’s challenging for small farms to get out to people. But how do people reach you if they want to? They want to buy some meat.

00;03;08;07 – 00;03;26;25
Speaker 2
Yeah. You can, you know, shoot me an email on my farm. Email, which is C House farm at gmail.com. You got to be local, though, guys. We’re not shipping this stuff. It’s way too much pain in the ass for me to ship a whole or half pig. But, if you want to, you want some fresh, pastured pork, reach out.

00;03;26;27 – 00;03;40;25
Speaker 2
There you go. I’m sure. I’m sure we’ll we’ll get them sold. We typically, don’t don’t run into any issues there. There’s always, always new people in the market. And right now we got that whole Maha initiative with, real food. And this is about as real as it gets.

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Speaker 1
So awesome stuff.

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Speaker 2
Yeah. Yeah. Yeah. So. All right where are we going next year. New episode formats. Guys. If you have not listened recently you’re going to hear some different formats that we’re doing. Obviously we have the Let’s Ask Bill episode, which is also affectionately called The Lab with Bill Tansy from the OP shop. Bill just comes with so much knowledge and experience and expertise, from his career path that he’s done over the last 25, 30 years.

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Speaker 2
So very, very fortunate to have these episodes with him. We actually work with him as a company. He’s been doing so much good for us and really helping us out a lot. So excited to have Bill on those shows. Catamount Roundtable. Derek did an episode with the team over at Catamount Consulting, recently about personal professional development.

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Speaker 2
We’re going to be getting into some mindset stuff with those guys as well as some other topics. You know, just appreciate those guys to know. And I can’t say enough about how much they do for the show on and off the air. Also, Stacy from Catamount is coming on, with some women in the trades. She’s coming on as guest host, bringing some guests, people that she knows, contacts she had.

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Speaker 2
She has from, women that are in the trades. You can kind of talk a little bit about, what life in the trades is like from their point of view, their perspective, what they see on a day to day basis. So really excited to get those out. And then, of course, we’ve got the, interviews from the field.

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Speaker 2
And that’s where we’re sitting down with blue collar business owners, talking about how they grew their business, what they do, trials, tribulations, and then, of course, moving on over to the Patreon side of things with real world usable information that can help you grow your business. So if you have not checked out our Patreon yet, there’s a link in the show notes pretty much of every episode.

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Speaker 2
Now we do a little bit of extra episode or extra content each episode that we put in there and like I said, real usable stuff. I mean, the questions and conversations we’re having over there are specifically around if you are a business owner in the trades, trying to grow your business, the things that we’re talking about on the Patreon side are for specifically for you.

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Speaker 2
It’s, you know, in some of the main episode stuff, we talk a lot more concept, we talk a lot more philosophy. And then in the Patreon, we want to make sure that we had a place where the rubber meets the road, and you guys can get real usable information. So please check out the Patreon. Subscribe. It’s a huge $5 a month.

00;06;04;12 – 00;06;10;18
Speaker 2
So while it made sense, you know, you might have to skip a meal once in a while to pay for it. Well worth it in the end.

00;06;10;20 – 00;06;30;09
Speaker 1
Yeah. And just a quick shout out to all our sponsors who helped make the, the show possible. We got people Lee’s, MLB construction, Martin Electric, but not Joe Construction, Michaels Group, Catamount Consulting, the Northeast Construction Trades Workforce Coalition, my team over at Daigle Cleaning Systems, and of course, Mike’s team over at Five Towers Media.

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Speaker 2
Yeah. Thanks, everybody. Appreciate all the support you give us.

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Speaker 1
What we’re talking about we.

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Speaker 2
Are talking about scaling your business at the speed of cash flow. We’re talking about to trade line or not trade line. We’re talking about do you go in debt. Do you get a small business loan. Do you throw it on credit cards or you just do what you can do with the cash you have available to you? We’re talking about scaling.

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Speaker 2
You’re talking about cash or debt. And we’re going to talk about the, pros and cons for both sides, I think.

00;07;04;20 – 00;07;31;22
Speaker 1
Yeah. You know, I think a good starting point, Mike, is just, you know, to, every situation is different. And I think the different industries and businesses are different and require different amounts of cash, to start up. I mean, I can speak from, my personal experience and starting up in an industry that was a lower barrier to entry, I was able to put a couple thousand dollars on the credit card and have that paid back in six months with no interest.

00;07;31;25 – 00;08;03;08
Speaker 1
But what I didn’t realize it at that time is by doing that, I was also able to pay off that credit card and start building business credit. And I think that’s a very important thing for people to understand that in order to go to a bank and take out a line of credit or a term loan or any sort of loan, you have to have some sort of credit behind your name, especially for, you know, a lot of the young folks that are out there and want to go into business and are maybe considering that route.

00;08;03;11 – 00;08;29;02
Speaker 1
But you got to be careful. You don’t want to overextend yourself. You don’t want to put yourself in a position to where you’re locked in or, you have a huge cloud of debt hanging over your head to where it restricts you from being able to make the right decisions. It’s always good. And in my opinion, and from what I’ve learned over the years to, you know, balance that debt with what the numbers tell you.

00;08;29;05 – 00;08;55;03
Speaker 1
And make sure before you do take on the debt, you have the revenue coming in the door. I think some, some folks get themselves in, hot water, so to speak, when they get the idea of, oh, I’m going to go buy a fancy new piece of equipment because it looks cool. It fits in with what they do, but what’s the plan to pay for that?

00;08;55;03 – 00;09;27;24
Speaker 1
And how much revenue does that actually return? And generate off of that monthly payment? You know, you got to consider, you know, you might buy a $300,000 dump truck or piece of equipment and, you know, take out a loan to do that. But that makes total sense. If you know your business plan or your business, you have the opportunity to do, you know, $50,000 a month in revenue with that piece of equipment, right, or $100,000 per month for that piece of equipment.

00;09;27;24 – 00;09;44;13
Speaker 1
The return should be there. So again, you have to factor in all of the different things at play. But not putting the cart before the horse and making sure that you have the revenue that is set in and coming in. Before you go and sign your name on that line.

00;09;44;15 – 00;09;59;22
Speaker 2
Well, and that’s that’s the risky part, right. Like and I you know, we were talking a little bit about, before the show about this kind of stuff. I mean, you know, personally, I had an experience, early in my career, one of my first businesses where, you know, we’re like, oh, we gotta we gotta trade line, man.

00;09;59;22 – 00;10;21;02
Speaker 2
We’ll, we’ll we’ll throw the trade line money at this problem. That’ll it’ll allow us to do this. And then and then we’ll do this and cash flow wise. And you know, what ended up happening was business did not take off the way that we had planned. You know, I think as entrepreneurs, we can sometimes be a little too optimistic about what’s going to happen and how it’s going to take shape.

00;10;21;04 – 00;10;41;23
Speaker 2
And so, you know, next thing you know, we’ve got a business that’s struggling and struggling even harder because there’s this debt hanging over our heads. And so, you know, I say that because obviously there’s there’s definitely still a place. And people do this all the time right where they’re whether it’s a credit card, an SBA loan, a trade line, and they’re incurring debt to help them grow.

00;10;41;24 – 00;11;00;11
Speaker 2
I know plenty of companies that have done this and navigated those waters successfully. I guess, you know, as I’m listening to you talk, the my question is and why I set it up that way. It’s just like, how do you balance with how much without going too far? You know, without spending too much money before you make it right?

00;11;00;11 – 00;11;17;16
Speaker 2
Like, how do you look at that skid steer to say, all right, I’m going to spend 50 grand on this skid? Do I need to know that I’ve got contracts in place? I mean, it can’t just be guesswork, right? Like you can’t just go by a skid with the idea that, oh, well, somehow I’m going to sell enough work to use this thing and make it worth it.

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Speaker 2
Right? Because I’ve,

00;11;18;03 – 00;11;27;25
Speaker 2
I’ve seen plenty of guys do that. And the skid steer just sits there for a year and a half just soaking up their profits. How do you look at that? Like, what do you say to that?

00;11;27;25 – 00;11;53;15
Speaker 1
Hey, everybody, just taking a quick break to talk to you about one of our sponsors, Curtis Lumber. Curtis Lumber is the professional’s choice for home improvement from windows and doors, roofing and siding, decks and building packages to floors and more. Trust the pros at Curtis Lumber for expert advice and daily delivery for locations, visit Curtis lumber.com. That’s Curtis lumber.com.

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Speaker 2
I’ve seen plenty of guys do that. And the skid steer just sits there for a year and a half just soaking up their profits. How do you look at that? Like, what do you say to that?

00;12;03;29 – 00;12;31;03
Speaker 1
Depends on the industry again. But if there’s a piece of equipment that you can rent for 1 or 2 jobs to get you through those 1 or 2 jobs. Yeah, it might cost you a little bit more than if you owned it outright. And you don’t have that deductible asset on a yearly basis, but you also, if you need a bigger piece of equipment on the next job, you also have the flexibility to go and rent that bigger piece of equipment if you need it.

00;12;31;06 – 00;12;51;13
Speaker 1
Where if you now have a loan tied to your name for, you know, a piece of equipment that is there, then you’re stuck with it, you know, you have to operate and be able to make money with that piece of equipment. Yeah. So I think you know funding assets with, with debt makes sense if you have the sale.

00;12;51;13 – 00;13;08;18
Speaker 1
So perfect example for you know the the listeners when we were first starting and I went and realized that we could shampoo carpets and I had no idea, you know, how to do that. I figured it out. Right. You know.

00;13;08;21 – 00;13;09;12
Speaker 2
Yeah.

00;13;09;14 – 00;13;39;07
Speaker 1
You know, I learned and researched and did what I had to do. And then I went out and I sold a couple of carpet jobs and, you know, having, not having that asset or a loan tied to having to buy that piece of equipment, you know, it allowed me the flexibility to look for good opportunities that would then allow me to say, okay, this makes sense to do, and then go purchase the piece of equipment.

00;13;39;10 – 00;13;55;12
Speaker 1
Now that’s a small scale example. But before I spent the money to go buy it, I then used that to buy a carpet extractor. Right. But I made sure I had the work. So that way the equipment was paid off in the job or to if that makes sense.

00;13;55;14 – 00;14;12;11
Speaker 2
No, I listen, I’ve got a I’ve got you mentioned that was a small example. I’ve got a big example of the exact same thing. And I’m and I didn’t think about it until you said that. So I know, snow and ice Company and these guys are a big player in the market, at least in this market. And they’re nothing.

00;14;12;11 – 00;14;43;12
Speaker 2
I mean, they’re regional anyway. They’re pretty big operation. And these guys, I think for the first ten, 15 years that they were in business, owned no equipment, they rented every loader, every backhoe, every skid steer they owned none of it. Yeah. And but it gave them a huge advantage because every single year if people are in that industry, they’ll know that every single year you don’t necessarily have a contract, a multi-year contract.

00;14;43;15 – 00;15;05;18
Speaker 2
Or if you do, maybe it’s for two years, maybe it’s for three years if you’re lucky, but certainly not the life of alone that you’re going to be financing a loader or an excavator or anything like that. Right? So these guys didn’t have very long term contracts. And so every single year, by leasing their equipment rather than owning it, they got to either shrink or expand to exact capacity.

00;15;05;20 – 00;15;27;09
Speaker 2
So if a contract didn’t renew, they weren’t stuck with equipment that they didn’t need. They just wouldn’t rent those pieces that year. And it was such an amazing like, yeah, they paid more to to lease it. But again, they were never in danger financially because of their equipment and because of overhead. Every single year they expanded. They rented more equipment.

00;15;27;14 – 00;15;44;18
Speaker 2
If they shrunk down, lost some accounts, they they’d they leased less equipment, equipment. On top of that, they didn’t have to worry about wear and tear, things breaking. They didn’t have to worry about, you know, there was almost always newer loaders and newer equipment as opposed to you buy one. Now, you had it for ten years and it’s all beat the shit.

00;15;44;18 – 00;16;06;15
Speaker 2
Like, I’m so glad you said that about renting the champers, because it there is an example at any scale of business. And I mean, these guys were running hundreds of pieces of equipment at one point in time. You know, we’re talking 100 loaders and backhoes and all these other things like not a small scale operation at all. And and doing, you know, millions of dollars in revenue, all on not owning any equipment.

00;16;06;22 – 00;16;09;04
Speaker 2
So amazing example, Nate, right. Yeah.

00;16;09;04 – 00;16;31;17
Speaker 1
And we did, you know, the same thing with VCT foreign. We got into stripping, waxing, flooring and we would go I would I would sell the job, secure the work. And then if it was a big enough project, say, okay, that makes sense, then I’ll buy that piece of equipment. And while we’re doing that work, so let’s say, you know, big construction company, you know, is debating whether to buy an excavator or a plumbing company, a backhoe.

00;16;31;19 – 00;16;49;07
Speaker 1
So they can they can charge for it and, you know, build out their machinery. You know, they they may want to wait for a big project that might be a year in duration where they’re going to need that piece of equipment for a long period of time. They can buy that piece of equipment, use it on that project.

00;16;49;07 – 00;17;10;10
Speaker 1
So now they’re paying a little bit less because and they own it, they can take the deduction. And then while that project’s going on, they can then secure another job to follow that up. So that way they don’t have that downtime with the piece of equipment. I, I think there’s, there’s definitely, a use for debt for sure.

00;17;10;13 – 00;17;33;13
Speaker 1
You know, especially when especially working with larger businesses, corporations, government entities, you don’t get paid on those projects for a long period of time. Yeah. So that’s the other component with this, where, you know, a line of credit or a bank loan shouldn’t be to go out and, you know, buy a bunch of fancy equipment and hope that sales catch up.

00;17;33;13 – 00;17;57;22
Speaker 1
I think to your original example, I think that’s where people can get in trouble because you can’t you can’t bank that those sales are going to go up. Covid can happen again, right? Like you don’t know. There’s too many external factors. So you know, for me, I think it’s if you have something that’s solid concrete, you’re doing the work and waiting for payment.

00;17;57;25 – 00;18;13;26
Speaker 1
So the work’s been done, the payments have been approved. They’re just being processed. That’s where you may want to tap a line of credit and float some of that payroll and other expenses, but you know that you’re going to get paid on it on the back end. Yeah.

00;18;13;28 – 00;18;32;15
Speaker 2
I just saw a question that I want to write down. Because I want to cover it on the Patreon side. Talking about the, capacity versus output equation, So let me just write this down. Yeah.

00;18;32;15 – 00;18;58;07
Speaker 1
Lisa. Lisa’s our another example. Mike. The perfect. You know, I operated out of a garage and then a storage unit. Right. And that was, what, $100 a month or. Yeah, or $20 a month. And then eventually, as as you continue to grow, you keep your overhead manageable for what volume of work they have. And, you know, now we’re we’re in a larger office set up.

00;18;58;07 – 00;19;19;00
Speaker 1
But it’s you have to get to that point and make sure that, you know, you have the consistent sales to be able to sustain that. Yeah. Some people will sign a lease before or signing signing a lease before you even start a business. Like you have to pay that rent every single month, regardless of whether you make any money or not.

00;19;19;02 – 00;19;38;28
Speaker 1
Yeah. So, you know, that’s another thing. Like if you can get away with the resources that you have and yeah, maybe it’s not ideal, but if you can operate out of your garage or, you know, rent, rent, a storage unit or, some parking spaces for your equipment rather than going and signing a big lease for a big building.

00;19;39;00 – 00;19;42;09
Speaker 1
Yeah. It it would make sense to do that.

00;19;42;12 – 00;20;03;26
Speaker 2
Yeah. I think there’s, I think that there’s a a string to pull there in that a lot of people, they especially entrepreneurs, especially early on when we’re first we have that business idea and we’re launching and we’re already counting the trillions of dollars that we’re going to make because this idea is so amazing. And we got such a clever name, and I.

00;20;03;26 – 00;20;05;25
Speaker 1
Got to have this fancy office and.

00;20;05;25 – 00;20;26;29
Speaker 2
Yes, absolutely right. They go out and they just they spend the money before and I spend money before they make it. And I think that this is such an important thing for people to understand in business, especially if you’re just starting your business. Is that you? I don’t know if there’s any I don’t know if there’s any exception to this rule.

00;20;26;29 – 00;20;53;23
Speaker 2
I think everyone has to realize that you have to be humble, and you have to be as cheap as possible for as long as possible and and be as thrifty as you can. Be creative to not spend money and find ways to do like the leasing. Instead of buying the loader like that, you have to be creative in order to fund what you’re doing because it’s just so easy to get on the wrong side of that equation.

00;20;53;23 – 00;21;18;03
Speaker 2
And I’m. And speaking from personal experience, more than once, where I, you know, too optimistic that sales are going to come through or like, I even did it recently to some extent, where I had a client that was rah, rah, rah, we’re going to increase the work we’re doing with you next quarter by tenfold. And so I’m like, sweet man, hire an employee to make sure I have capacity for that.

00;21;18;05 – 00;21;38;10
Speaker 2
That client and then we get into the get into the the month when we’re supposed to start all this work. And I’ve got my teammate ready and they’re all trained up and radio silence from the client. Right. So I’m like, well, I got this employee I promise is work to now my client’s not answering my calls. Now, that’s a small example and easy for me to move.

00;21;38;10 – 00;22;05;02
Speaker 2
This employee into other work. But like at the same time, if that was a loan as opposed to an employee, and now that client is radio silent, I mean, there’s no contract. There’s just a quote unquote promise of more work that happens to every business. Yeah. So it’s like trying to, you know, go back to pulling that string, trying to make sure that you’re just you’re as thrifty as possible, as much as possible at really any size business.

00;22;05;02 – 00;22;07;29
Speaker 2
I mean, that’s for people.

00;22;08;02 – 00;22;36;19
Speaker 1
Yeah. Looking for opportunities to be creative and, you know, not overextend yourself. So for example, when we moved down here to Albany, like that was a huge decision for us. I think we got we were about 40 employees or so. We’re operating out of a small office suite and space in the basement. Yeah, Woodson’s parking spots. I’ve been up in Clifton Park and, the other tenants in the building absolutely hated us because we would, you know, people would make noise going in and out.

00;22;36;19 – 00;22;55;08
Speaker 1
And, you know, it just got to a point where, okay, enough was enough. And we were fortunate enough to find a space where, you know, the landlord was able to let us take a small portion of it. And then, okay, we’re going to do a one year lease and then expand. Right. If we needed that extra space, it was still there in that building.

00;22;55;08 – 00;23;21;19
Speaker 1
But I didn’t sign the lease for the entire space upfront. Right. So you work your way into it as you grow and, and, not overextend yourself, but, you know, back to the original point. Credit is not a bad thing. And, you know, all the young folks listening, you need to build it. And the only way to do that, an easy way to do that is to to put some of your monthly expenses on a credit card and pay it off every month.

00;23;21;26 – 00;23;43;12
Speaker 1
You know, and gradually you’ll build credit. So then when you do need to go get a loan for a vehicle or, a line of credit for your business because those are all personally guaranteed, no, something falls through. You know, you’re still on the hook for whatever is owed or whatever is owed. You know, that personal guarantee they’re going to they’re going to pull all of your personal credit and they’re going to pull that history.

00;23;43;12 – 00;23;50;27
Speaker 1
So you have to make time. You have to make sure that you’re making on time payments and that you’re helping to build build that credit. In the meantime.

00;23;50;29 – 00;24;13;26
Speaker 2
Yeah. And I, you know, it’s it’s it’s such an interesting conversation too, because there is you know, there’s the only do what you can afford to do with cash mentality, which is kind of like where I’m at at this point, just because I have made mistakes with over leveraging myself in the past and then spending years taking care of that debt.

00;24;13;28 – 00;24;37;15
Speaker 2
And then the other side of it is there’s plenty of people that use debt wisely and are able to use it to grow their businesses and, you know, they’re going to tell you all day long, yeah, you got to do it. And then there’s that thing in between, you know, it’s it’s just such an interesting conversation about who should do what and when and why you should use this option versus that option.

00;24;37;18 – 00;24;59;20
Speaker 2
I, you know, before we before we start making that jump over to the Patreon side, like, is there any if someone’s looking at that, do I, do I stay with what cash I have available and grow at the speed of the cash I have available? Do I do the other side of the spectrum, which is I’m going to get loans or grants or not grants, loans or trade lines or in the middle.

00;24;59;20 – 00;25;16;08
Speaker 2
Maybe I’m using a little bit of the cash I have. I’m using a couple of credit cards, like is there any kind of, litmus test for that or any kind of words that you of wisdom you would give someone to help them decide which one of those paths they should take?

00;25;16;10 – 00;25;46;04
Speaker 1
That is not all bad. I don’t want to give that that impression. Right. But it depends on what you’re buying. So really, the magnitude of what you’re buying and then how much money, what you’re buying can make you over that debt. So real estate’s a perfect example. You know, if you buy, if you use the bank’s money to buy, you know, a large property that is going to generate huge cash flow for you on a monthly basis, that’s going to clear the debt it makes sense to do.

00;25;46;07 – 00;26;06;23
Speaker 1
But if you’re spending and taking out that loan on an asset that just like if if the real estate’s not rented for a month or two, you’re still on the hook for that payment, right? So same thing with, an excavator or a loader. How much money could that make you on a monthly basis? But what are you going to do in the winter when you can’t when you can’t run it?

00;26;06;26 – 00;26;27;25
Speaker 1
Right. So I think the excitement and looking forward, you have to factor those things in and you have to factor in enough downtime to make sure that it makes sense to actually sign your name on that line, take out the loan in that it’s going to pay for itself, and you’re going to have enough in reserves to to be okay.

00;26;27;28 – 00;26;39;24
Speaker 1
I would, I would suggest using debt only for purchasing assets and being able to use those assets to continue to grow and make more money.

00;26;39;26 – 00;26;51;18
Speaker 2
And would you say that because if things go south and they don’t go in the direction you’re hoping, you can at least sell those assets and recoup part of or all of absolutely that you have.

00;26;51;21 – 00;27;19;07
Speaker 1
Yeah, absolutely. Yeah. And, you know, everybody has a different philosophy depending upon what it is. I know there’s a lot of companies that have great lease programs on trucks and fleets and but again, what happens if you no longer need that vehicle? So, you know, now you’re you still have to make lease payments. It’s part of your package and you can’t do anything or get out from under that debt.

00;27;19;10 – 00;27;34;11
Speaker 2
So I guess, to sum it up before we jump over to Patreon, if what I hear you saying is, no matter which of those paths you decide to take, you need to make sure you’re not being emotional about it, right? So you’re not making an emotional decision.

00;27;34;11 – 00;27;36;05
Speaker 1
Don’t get excited by the shiny object.

00;27;36;05 – 00;27;56;05
Speaker 2
Don’t get excited and make sure that you have a plan for if things don’t work out correct. Like right. Like you’ve got to go into it with the confidence that it’s going to work out, but you really also need to have a plan for what you’re going to do with that debt, how you’re going to take care of that debt if it doesn’t work out.

00;27;56;08 – 00;27;56;29
Speaker 1
Absolutely.

00;27;56;29 – 00;27;57;26
Speaker 2
That fair. All right.

00;27;58;01 – 00;28;20;07
Speaker 1
And then, you know, the other side of it, like do you buy new or used. Yeah. So like there’s a whole there. I’m sure we could do a whole show just on that. Right. So just like the rental piece of it, can you go out and buy a piece of equipment that has, $500 on it and already took that initial depreciation hit?

00;28;20;10 – 00;28;31;03
Speaker 1
Yeah, some assets hold their value better than others. So again towards the exit strategy. If you sell this two years down the road, are you going to be able to get your money out of it. Yeah.

00;28;31;05 – 00;28;34;01
Speaker 2
Or are you still going to be upside down and still be in debt.

00;28;34;03 – 00;28;35;10
Speaker 1
Yeah exactly.

00;28;35;12 – 00;28;41;27
Speaker 2
Perfect. All right everybody we are going to jump over to the Patreon side.

00;28;42;00 – 00;29;06;28
Speaker 2
So many thoughts swimming around my brain. I got a couple of questions that we’re going to, I’m gonna throw a D here when we jump over. Specifically, one of them is going to be about that capacity and output ratio. If you’ve never heard us talk about that, it’s the, you know, how much capacity do you have to how much output do you need, where that ratio is and how it tells you whether or not to spend money, get debt, hire people, all that fun stuff.

00;29;07;01 – 00;29;26;18
Speaker 2
That’s one of them. That’s been kicking around my mind as we’ve been going through this conversation. You know, again, check us out on Patreon. Everybody. Really appreciate everybody. Support everybody listening. Find us on Blue Collar Startup that o. Of course the podcast is on Apple Spotify, Rumble and YouTube. I think we gotta we gotta really look at our YouTube here, guys.

00;29;26;18 – 00;29;40;03
Speaker 2
So if you’re listening on audio, do us a favor. Go over to YouTube, hit the subscribe button on blue collar start up. We’ve got some some things that we’re trying to work on over there. So thanks everybody for listening and we’ll see you on the Patreon side.

00;29;40;03 – 00;30;08;08
Speaker 1
And that wraps up another episode of Blue Collar Startup. A big thank you to our sponsors, Five Towers Media, Daigle Cleaning Systems, Daigle Fire Solutions, The Michaels Group, Martin Electric, MLB construction, Pinocchio Construction People, and Catamount Consulting for making this podcast possible. And thank you for tuning in. If you learned something or felt inspired. Connect with us on our website at Blue Collar Startup Bio or email us at hardhat Dot CSU at gmail.com.

00;30;08;08 – 00;30;20;29
Speaker 1
We’d love to hear your questions and topic ideas. Help us spread the word by sharing the show and following us on social media for updates. Until next time, keep on building. Keep on dreaming and keep hustling like your future depends on it.

00;30;20;29 – 00;30;36;09
Unknown
Oh, hey. Oh, hey.

00;31;10;24 – 00;31;26;04
Unknown
Oh, hey. Oh, hey.

00;31;26;04 – 00;31;31;25
Speaker 1
I’m trying not to tell people exactly what to do because every situation is different, you know? Yeah, but just don’t be stupid.

00;31;31;27 – 00;31;41;16
Speaker 2
Yeah, well, that’s that was one thing they kept jumping out. My head was like, all right, so just be smart. No matter which one you’re going to do, just be smart about it. And that that’s that’s the thing, right?

00;31;41;16 – 00;31;52;19
Speaker 1
Like people get that picture in their mind. Like they see they see a company that’s got all the shiny chunks, you know, they got the new excavators and all of that. Well, they probably been around for 30 years, right?

00;31;52;21 – 00;32;09;11
Speaker 2
They didn’t see the first ten years. You know, I think of, Mike, they check when we when we did the, Z check interview he was talking about when they, when they first started their business, you know, he was driving around a piece of shit pickup truck and an old trailer, and, things were falling apart.

00;32;09;11 – 00;32;20;22
Speaker 2
And I think it might have been him that one of the interviews we had, they were talking about a piece of equipment. They had that would only go left. I can’t remember if it was Mike or somebody else, but like.

00;32;20;25 – 00;32;22;04
Speaker 1
Yeah, I mean, that’s.

00;32;22;06 – 00;32;45;15
Speaker 2
You know, that their first excavator was it would only go left like that was it. It would, it wouldn’t go right for whatever reason. So whatever they had to do, they had to plan on only going left. Maybe that was, it wasn’t a check because he’s, he’s welding and, it was. Oh, my God, the excavation company that’s up my plant.

00;32;45;17 – 00;32;46;09
Speaker 1
Was it right and broken?

00;32;46;12 – 00;32;54;19
Speaker 2
No. Not right. Fromberg. Does, he use the operations manager? Who’s third or fourth generation? I can’t believe I’m blanking on his name right now.

00;32;54;19 – 00;32;56;21
Speaker 1
Oh, Kaluza. DeLucia, right?

00;32;56;23 – 00;33;09;29
Speaker 2
Yeah. I think he was telling me that, his grandfather is dad. When they started the company, like they had an excavator. That was like it would only go left or something along those lines. Just like hilarious stuff. But, All right,

00;33;09;29 – 00;33;15;28
Speaker 2
so, and Taylor, you can include all that stuff. By the way, let’s just keep rolling here.

00;33;16;01 – 00;33;44;09
Speaker 2
So the, you know, you and I have talked about this in the past and, you know, I, I it’s something that I look at all the time and I don’t know if this is right or wrong, but essentially in some cases, people are thinking about going into debt because they, they think they need more labor force, but they can’t afford cash wise yet to hire that employee that they want for whatever reason.

00;33;44;09 – 00;34;08;22
Speaker 2
But they feel they need that employee to be able to, to hire. And so, like what I always think about in that situation, I and I’d love to get your thoughts on this is I look at how much capacity my team has versus how much output we need, and I actually try to have our output above our capacity before I hire anybody.

00;34;08;24 – 00;34;33;04
Speaker 2
And what I mean by that is if my full capacity per employee for per full time employee is 40 hours, I want each one of my team members working 45 hours before I start looking at hiring another employee, because if I have a bunch of team members that are only working 30 hours and each one of them still has ten hours of capacity, well, then I’m underwater with my output.

00;34;33;04 – 00;34;59;28
Speaker 2
I don’t have enough output, right? So and so. Before I increase capacity, I need to be able to say like, no, we have no more capacity left. And then I hire someone knowing that, like, I already have five hours capacity per person that I can move over for output for this new employee. So like that might be a 20 hour a week starting thing, and then I’ve got 20 hours of capacity for that employee that I got to fill.

00;35;00;02 – 00;35;12;19
Speaker 2
Now that’s my business in the way that my business runs and it seems to work. I’m just curious. Obviously, your business is larger, it’s faster paced. I’d love to hear your thoughts on that scenario.

00;35;12;21 – 00;35;38;21
Speaker 1
Well, I think you’re you’re 100% correct. People can only stretch themselves in so many different directions, including yourself as as the business owner. But before. So this is what is, if you if you do this the right way, it can also be a huge benefit. And we’re talking about it before the show started, before you do hire because remember that employee you’re going to invest a lot of time, resources, energy.

00;35;38;24 – 00;36;05;29
Speaker 1
And, you know, they may or may not work out depending on the background skill set. You know, if they have a good track record, you know, you’re you’re taking a gamble, so to speak. Right? But look at all of your systems and processes and see where the inefficiencies lie. We I can tell you that, you know, we do this once or twice a year where, you know, old ways of doing things don’t work anymore.

00;36;06;01 – 00;36;34;08
Speaker 1
And there’s with technology advancing as fast as it is, you know, and AI being everywhere, just in our company alone, I’ve had my team had come to the conclusion because we had been trying to to hire and fill an admin position, basic tasks. And it’s proven very challenging to fill that role and find somebody that fits with with our culture and values.

00;36;34;10 – 00;36;54;11
Speaker 1
And my team came to me and they said, I’d rather not. We we can do this. We can do things better. And over the course of, you know, the last year, that’s been something that we’ve really focused on. What can we be more efficient at doing and how can we look at some of those systems and processes and streamline it.

00;36;54;11 – 00;37;21;05
Speaker 1
So that way it makes and alleviates some of the burden of those repetitive day to day tasks and things that used to take a lot of time. How can we plug in? I to help solve some of those problems? Right. So there’s other alternatives rather than just hiring the employee. But when you absolutely have to, maybe you start them part time instead of offering them a full time position.

00;37;21;12 – 00;37;41;09
Speaker 1
You know, the best thing you could do is, is, I think, limit your liability. And I’ve learned that the hard way. You give somebody an opportunity and minimize what potential negative effects that could have if it did go sideways. So you you had your bets and anticipate the worst and then hope for the best. Start them off part time.

00;37;41;09 – 00;37;54;03
Speaker 1
Let them prove themselves for a month. Maybe it’s not a good fit for them, you know what I mean? Maybe they can’t keep up with the tasks that you give them, but you’re minimizing the amount of time and and effort that they’re putting into it.

00;37;54;05 – 00;38;20;08
Speaker 2
Well, and that’s that’s how we look at it as well. Like and again this works with our business model. This will not work for everyone’s business model. But like because for us most of the time what we’re selling is billable time, right. So it’s like, I know if I’ve got four team members that are working 45 hours of billable hours, they can’t take on, they have no more capacity left, which means my output cannot grow as a company.

00;38;20;10 – 00;38;38;00
Speaker 2
So now, in order to increase the amount of output I have going out the door, I need to increase capacity. So how I look at it is now I’ve got five hours, four times that I’m going to take from each employee. So that’s 20 hours a week that I’m going to take. I know I’ve got that output available, right?

00;38;38;03 – 00;38;55;07
Speaker 2
I hire an employee and that I, to your point to what you just said is why I’m saying this. I tell that new employee, hey, I have 20 hours a week for you coming in the door. That’s what I will guarantee you for the next 30 to 60 days. In the meantime, I’m going to be looking as we’re getting you trained up.

00;38;55;07 – 00;39;20;23
Speaker 2
I’m going to be looking to sell more work so that you are getting more hours. And that’s how we attack it, and that’s how we are able to increase employees without worrying about trade lines, without worrying about debt. And for us, we’re scaling at the speed of cash. However, I will say that does slow us down considerably. Yeah, because it’s it’s such a slow process.

00;39;20;23 – 00;39;37;29
Speaker 2
It’s like you get your team, you get them up to speed, you then you get them up to 40 hours, then you get them up above 40 hours. We do that for a few employees and then it’s like, okay, now we’re ready. Now we got start this and it’s it’s so slow going compared to what other industries do and how they do it.

00;39;37;29 – 00;39;54;03
Speaker 2
And I’m sure if we wanted to just say, hey, we’re just going to hire this full time person and just use a trade line until, you know, we can get enough work sold for that person. It’s just, I don’t know. I just.

00;39;54;06 – 00;40;06;13
Speaker 2
It’s like a warm blanket knowing that, I’m not incurring any debt with that employee. And if they don’t work out, the worst thing that’s going to happen is I’m going to move those that workload back to my team members that had it before temporarily until we can refill the position.

00;40;06;13 – 00;40;28;17
Speaker 1
But yeah, I mean, you know, one recommendation I would have and the people that are going to be working with that individual, I’ve found and I’ve had a lot of luck with our staff because they’ve been with us for so long that they understand, you know, the culture and the values and what we’re looking for and involve them in the process.

00;40;28;20 – 00;40;42;21
Speaker 1
You know, and they very well, you know, may just say, hey we can handle this and you might not, you might not realize it or don’t realize that they have that capacity. But sometimes moving a couple things around you can freeze some of the time. Yeah.

00;40;42;21 – 00;40;49;18
Speaker 2
Yeah. That’s pretty amazing actually with your team saying like, hey, we wanted to hire somebody. We can just we can figure out another way.

00;40;49;20 – 00;40;51;29
Speaker 1
Yeah, there’s a better way to do it. Yeah.

00;40;52;01 – 00;40;59;19
Speaker 2
And they were they’re going to be the ones that come up with it. Right? Like it’s got to be that way.

00;40;59;21 – 00;41;19;07
Speaker 2
Yeah. And it’s also interesting too, as we’re talking about this, it makes me think, you know, to kind of give a little shout out to Bill Tansey, like, and and going back to our, our org chart conversations like as you’re looking to scale and grow your business. That org chart has been such a huge tool for me lately.

00;41;19;09 – 00;41;42;01
Speaker 2
Because like in that scenario, we, we everyone was getting pretty close to capacity and we had to start figuring out like, all right, how do we streamline our operations right now to be able to move some work around between our current labor force to either make it better so we don’t need to hire someone, or to make it easier on whoever we hire to come into that new role.

00;41;42;04 – 00;42;02;19
Speaker 2
And I’ll tell you, the org chart was instrumental in that. Like, yep, we’re we’re we’re now not hiring a person because I was able to use that org chart in the work that we’ve been doing with Bill to be able to be like, no, actually these three things over here should actually be with this person over here based on what our org chart is and why Rebecca is even doing them.

00;42;02;19 – 00;42;14;29
Speaker 2
I don’t even know, you know, like just one of those silly things. But without that org chart and having it set up and really clear and functional accountability set up, like, I don’t know if we ever would have figured that out.

00;42;15;01 – 00;42;35;01
Speaker 1
Yeah. I mean, you know, you can always be honest with the team too and say, look, we got this. We got potential opportunity to to bring somebody in. You know, what do you think about it? I have a couple opportunities that we’re waiting to have, you know, come on, this might be a bigger workload on everybody. But it’s going to keep the company in a really good position to continue to grow.

00;42;35;03 – 00;42;43;11
Speaker 1
What do you think we should do? And how do you think we should handle that and see what they come back to you? Yeah.

00;42;43;13 – 00;42;55;14
Speaker 2
I guess one last, thought or a question. You know, in the main episode, we were talking about those three different paths of growth, the speed of cash, which can be slow.

00;42;55;17 – 00;43;21;27
Speaker 2
Go into big time debt, which can be risky. And then middle path, a little bit of cash and a little bit of debt to try to hedge your bets a little bit. What? And I know we talked to a little bit about it in the main episode, but I guess, you know, as you’re looking at your business, you know, I kind of said from from my scale of business, you know, we’ve got eight employees total here.

00;43;21;29 – 00;43;34;24
Speaker 2
From our employee account, we’re not very large. So we’re we’re slowly scaling at the speed of cash. You’re sitting on a couple hundred employees, right and right. Are you at about 200 these days?

00;43;34;26 – 00;43;58;11
Speaker 1
Yeah, we’re a little bit over. But I want to point out something that you said, Mike, what I do, it’s no, no, it it’s it’s supposed to be slow. Right? It’s like it’s a process because I think what happens and part of what we talked about in the main episode, the bright, shiny object and all the grand ideas and the vision can get in the way.

00;43;58;13 – 00;44;19;29
Speaker 1
And people think by buying a big, shiny piece of equipment, they’re going to be able to skip all the steps. Yeah, work that way. You’re still going to have to suffer through the the trials, the tribulations, and nothing happens as fast as we expect it to. Right? Just like you were saying that how that how quickly that sale is going to come through or that next sale, it might not it might.

00;44;19;29 – 00;44;53;29
Speaker 1
It’ll happen, but it might not happen when you want it to happen or need it to happen. Right. And I think that’s that’s part of the that’s part of the journey. And, and there’s no way to skip it. Yeah. So I think it’s a normal thing. But I think you’re doing it the right way. You know, you’re you’re not putting yourself in a position to where now you’re, you’re you’re struggling and putting yourself in, you know, and setting yourself back essentially in the long run.

00;44;54;01 – 00;45;12;17
Speaker 1
Yeah. You’re taking that time. And then when the time is right and you have that, that client or group of clients that you know, you know, has been with you for a while now, you’re you’re continuing to grow and scale that and you’re seeing your sales grow. Okay. Now let’s, let’s bring somebody up or let’s invest in that piece of equipment.

00;45;12;17 – 00;45;14;18
Speaker 1
So I think you’re doing it the right way.

00;45;14;20 – 00;45;35;27
Speaker 2
Well thank you I you know, we’re trying I you know, I like to make mistakes and I like to make them over and over and over again before I learn lessons. But, I, you know, it’s I got to just one more thing, and I know we gotta jump off, but you’ve said this before, and I love it, by the way, and but it every time you’ve talked about it, you have been so, like, adamant about it.

00;45;35;27 – 00;46;03;23
Speaker 2
And so I just feel like we should touch on it real quick. But you talk about like you got to go through the steps and you can’t skip it and there’s no shortcuts. Can you just unpack that? Just I know that we got to go, but just unpack that a little bit. So people because I again, I’ve heard you talk about this and say that exact statement multiple times over the last few years, and I feel like, I don’t know if there’s there’s a book you read or a workshop you went to or an experience you had or a mentor that said that.

00;46;03;24 – 00;46;10;27
Speaker 2
But like, I can tell that this is so ingrained in your thinking and I think it’s amazing. Can you can you just kind of speak to that a little bit?

00;46;11;00 – 00;46;30;15
Speaker 1
Well, I listen to a lot of stuff and, and read a lot of good content, as well. But it’s also seeing the reality play out over the course the last 15, 15, 16 years. Yeah. And making a lot of the mistakes, you know, as, as you did.

00;46;30;18 – 00;46;32;13
Speaker 2
As I do not did I do.

00;46;32;13 – 00;46;50;28
Speaker 1
The same. Right. But that’s the that’s the thing. Right. You finally you learn from one set of mistakes and then you make another. Yeah. That’s part of growth and that’s part of I think that’s part of the fun in it. You know, where we don’t know what what could happen tomorrow good or bad. That’s a good deal. Right.

00;46;51;01 – 00;47;17;00
Speaker 1
So you know we all have the same 24 hours and everybody’s got the same opportunity. What are you going to do with that time and how are you going to how are you going to progress and show up on the bad days? Because I’ve made all the same mistakes and I, I talk about some of the, the, you know, the, the, the points in the main episode because I, I’ve made those mistakes.

00;47;17;00 – 00;47;42;05
Speaker 1
I bought a piece of equipment that sat on the shelf. You know, luckily in our, our industry, it’s a, there’s smaller ticket items to where you know okay, I can I can I can absorb that. But it’s still killing me that I can’t have that piece of equipment out and using it to, to generate revenue. Right. So I’ve made those mistakes.

00;47;42;08 – 00;47;56;10
Speaker 1
But yeah, it’s all part of the journey. You take three steps forward and something is going to happen that, you know, might set you back a step. And it’s, you know.

00;47;56;12 – 00;47;59;21
Speaker 2
Oh, man, what a game.

00;47;59;24 – 00;48;05;00
Speaker 1
Well, it’s but it’s, it’s it’s fun and.

00;48;05;02 – 00;48;25;01
Speaker 1
I think that’s, that’s how you grow is just getting out of your comfort zone and being able to, to do that. I was listening to Andy for Silver’s podcast. I know we mentioned him, you know, quite a bit on the on the show, and he had Tim Grover on, I don’t know if he’s familiar with Tim Grover, but he’s an exceptional, mindset coach.

00;48;25;01 – 00;48;29;06
Speaker 1
And he’s got a book out called relentless. I haven’t read it yet, but.

00;48;29;08 – 00;48;35;03
Speaker 2
I just actually recently in the past couple months, I, I do the audiobook most of the time, but I.

00;48;35;06 – 00;48;47;16
Speaker 1
Was familiar with it. Oh, yeah. Very much. Yeah. Yeah. So he was on and, you know, his take is, it’s it’s pretty phenomenal. And I mean, he’s working with Michael Jordan. He’s worked with some of the best athletes in the world.

00;48;47;16 – 00;48;51;09
Speaker 2
Kobe, Jordan, Dwayne, you name it. Yeah. All the good.

00;48;51;09 – 00;49;27;21
Speaker 1
And yeah. And he’s helped a ton of people. But you know, it’s some of that it it’s not it’s just my experience and my philosophy. You know, it just you know, I hear that stuff and I’m like, oh, that makes sense, because I’ve. I’ve had to deal with a lot of that, you know? So I think if you keep moving, keep learning from mistakes and, and trust the, the overall process, as long as you’re working hard and making good decisions and doing things, the right way and that aligned with your values, you’re going to be okay in the long run.

00;49;27;24 – 00;49;31;18
Speaker 1
I love it to.

00;49;31;21 – 00;49;34;08
Speaker 2
I think that’s perfect spot that.

00;49;34;11 – 00;49;35;13
Speaker 1
Sounds good, man.

00;49;35;16 – 00;49;39;14
Speaker 2
All right. Thanks everybody for listen the appreciate you obviously appreciate it.

00;49;39;17 – 00;49;41;19
Speaker 1
Likewise.

00;49;41;22 – 00;50;05;11
Speaker 2
Guys thanks for listening. Thanks for being our Patreon members and, you know, supporting the show and doing everything you do. Please make sure to, you know, help us out a little bit. If you don’t mind a little bit more, I should say. And, you know, send the shows to a friend if, if you if you know a business owner in the trades that, maybe could use some help or someone that’s thinking about going into the trades and launching their own business, you know, we’ll come up with our show, how you connect with us.

00;50;05;12 – 00;50;10;16
Speaker 2
You know, we’re happy to help anybody any way we can. And, you’ll hear from us next week. Thanks, everybody.

00;50;10;16 – 00;50;38;21
Speaker 1
And that wraps up another episode of Blue Collar Startup. A big thank you to our sponsors, Five Towers Media, Daigle Cleaning Systems, Daigle Fire Solutions, The Michaels Group, Martin Electric, MLB construction, Pinocchio Construction People, and Catamount Consulting for making this podcast possible. And thank you for tuning in. If you learned something or felt inspired. Connect with us on our website at Blue Collar Startup Bio or email us at hardhat Dot CSU at gmail.com.

00;50;38;21 – 00;50;51;12
Speaker 1
We’d love to hear your questions and topic ideas. Help us spread the word by sharing the show and following us on social media for updates. Until next time, keep on building. Keep on dreaming and keep hustling like your future depends on it.

00;50;51;12 – 00;51;06;24
Unknown
Oh, hey. Oh, hey.