How to Actually Sell a Blue-Collar Company with Shenar Wood

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Unknown
Oh, hey. Oh, hey.

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Speaker 3
Welcome, everybody, to Blue Collar Startup podcast, where hard work meets big ideas. This is your home for real talk in real strategies. From the frontlines of life and the business of the trades. I’m your host, Eric Foster Daigle, cleaning systems.

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Speaker 4
I’m one of your hosts, Mike Nelson from Five Towers Media.

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Speaker 3
Let’s get to work.

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Speaker 4
Yeah, man.

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Speaker 3
Somebody, you know, just, out there, catching up from from everybody being off for two weeks, but, but a busy start to the year. So, just just grinding it out and, looking forward to to everything that’s going to happen this year. Yeah, man, I think I see you’re right. You’re in the car. Make sure you’re driving safe.

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Speaker 4
As as our guest said, he’s familiar with this office. Yeah, I’m in the car. This is one of those days where, I’m all over the place, and there’s a podcast with smack dab in the middle. So, you know, got to do what you got to do, I guess.

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Speaker 3
Absolutely. Yeah. And we’re super excited. And you know, for our guest today who actually reached out, found us online and, you know, got a great story. So really excited to, to introduce you and are here in a second. But, before we do is I wanted to remind all of our listeners about, the new episode formats that we have out this year.

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Speaker 3
So this is our traditional, business interview from the field, where we bring on folks who have, who work in or have built the business in the trades and, you know, come on to the show to share their story and tell our listeners about what they’ve been able to build and accomplish, and lessons that they’ve learned along the way.

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Speaker 3
We also have a format, we like to call the lab where we, ask Bill, Bill Tansey from the spec shop, a bunch of, good questions on, building and scaling businesses. And, we’re very fortunate to be able to bring him on to the show to do that. We also have Catamount Consulting the team coming on for some roundtable discussions, on leadership training development.

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Speaker 3
And then also our women in the trade segment, which is new this year. So Stacy Spector of Catamount Consulting is going to be joining us, with, some of our women in the trades guests. So we’re really excited to, to showcase, some of those hard working women out there. As a reminder to everybody, we also have our Patreon segment of the episode.

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Speaker 3
So, we’re going to go through and listen to, our guests and what they have to say and share their story. And then we have a bonus segment, so to speak. It’s a whopping $5 a month to join the Patreon account, so please help support the show and jump on there to to hear some extra, extra nuggets and extra sauce.

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Speaker 3
So, without further ado, I do want to introduce our guest today, Sean Harwood.

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Speaker 2
Hey, thanks for having me on, guys.

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Speaker 3
Absolutely. To have him.

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Speaker 4
Thanks for the time.

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Speaker 2
Yeah, yeah, sorry for the audio problems there to kick it off with, but, I think we got a stream down now.

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Speaker 3
That’s what we do. We sell problems, right?

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Speaker 1
That’s right.

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Speaker 2
In the.

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Speaker 4
Where would we be? Where would we be without our obstacles, guys.

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Speaker 2
That’s it, that’s it.

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Speaker 3
So, shiner, why don’t you tell the listeners a little bit about, what what you’ve done and what you’ve built? Really excited, to have you on here. And, thank you again for joining us. So take it away.

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Speaker 2
Yeah, yeah. So, my name is John Harwood. President of Donna Tech Solutions started the company back in 2014. And what Donetsk Solutions does is, we work with the power utility companies, around the, the southeast here and pretty much all over during storm season as well, where we really focus on converting overhead power lines to underground.

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Speaker 2
So we’re pretty niche in that sense. Was able to grow the company out, like I said, from 2014, two years ago, I recently sold to private equity, and I’m on the tail end of that. And, it’s just been a journey and something that, I’d like to try to pay forward to guys that are in the trades don’t really understand that world, but, looking for an exit and and what that would look like and how to, exit from from your business.

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Speaker 3
I got to ask, how did you get into converting overhead power grids to underground utilities? Like, how did you get into that and start down in tech?

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Speaker 2
Yeah. So, very unorthodox way. My whole career has been, unorthodox, to say the least. So, I was going to college. But I was broke, like every other college student. But my brothers were in the trade, and so I’m like, hey, you know, can I come work for a semester or something or get some money?

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Speaker 2
And they were like, yeah. So during college, from 97 or, excuse me, 98, all the way up to 2001, I was in and out of college. I would go into the trade field and learn as much as I could for a semester or two semesters, come back to college. Then 9/11 happened, and I dropped out altogether from the workforce and went enlisted into the military.

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Speaker 2
Done that for four years. And I was I was getting out the 0607 market was crash. And I was like, probably not the best time to get out of the military right now because I’ve got a, a stable job and career. So I finished my degree, and got picked up for flight school, flew, Apaches, Blackhawks for another six years, and then I was like, hey, you know, between the deployments, I’m like, either I got to do this for another ten years or I’ve got to get out.

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Speaker 2
And I decided to exit. And then when I got out, I’m like, I don’t really have a job. And I’ve kind of miss, you know, the corporate ladder and everything else. And the only thing I knew was this trade. And so I was like, you know what? Let me just start my own business. So I went and bought a directional drill, like a lot of blue collar trades and went in there and like, oh, crap, how am I going to get out from underneath all this debt?

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Speaker 2
And it’s like, you know, I gotta grow this thing out and try to sell it. Because I think the one thing that we all realize is it’s nice to see all the trucks, the equipment has the big yellow iron or whatever it is, and your career field or your trade. But at the end of the day, that’s pennies on the dollar at the at the auction house.

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Speaker 2
Right. So how do you build a portfolio and how do you sell it, you know, and have your books in order to show that, you know, you’ve actually built something that you can sell to someone else and they can scale it out past that.

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Speaker 1
It’s end up like.

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Speaker 3
Making the decision to to pull the trigger and purchase that equipment, because we just recently talked about that. Yeah. I wrote about an episode.

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Speaker 2
Yeah. So mine was, burned the bridges mentality. I got out of the military and I didn’t have a job, so I was like, what is the quickest path to cash? And I was like, I will buy a drill and I’ll go get a, you know, subcontracting, type agreement set up with somebody. And I knew enough people in the industry that I could probably land a subcontracting type work, and bought one drill, and I was like, hey, this is great.

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Speaker 2
But again, I don’t want to these are not types of jobs or careers. Like, I’m going to pass off to my two girls, right? Like it’s probably not going to be fair to those sick my girls to to be married to this business. So that’s like, hey, I’ve really got to grow this out. Like, it can’t just be the one drill because we can have that lifestyle business that you’re working in your business or you work working on your business.

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Speaker 2
And so you got to change that mindset of like, I got to grow this out so that I can get out from underneath it. And to do that, you got to go deeper and deeper in debt.

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Speaker 1
Do you do a lot of this out? So you get how.

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Speaker 2
Do you deal with that?

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Speaker 1
That’s amazing.

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Speaker 4
How do you when you were thinking about growing it out like that, like you’re obviously you’ve got to have the revenue coming in and support it. I’m just I’m curious how you manage that equation of I need to grow this out. So I need to buy more equipment, but I also need to make sure I got business coming in.

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Speaker 4
I mean, did you already know that the business was there if you scaled? Or was it like, I need to scale both my sales and marketing and my production?

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Speaker 2
Yeah. So we’re unique and somewhat insulated in the, the power space, in that we’re dang near recession proof. Everybody’s gotta have power. Now, what you you’re not able to see is the amount of work load. But if they’re telling you, like, hey, you know, could you add another drill? Could you add another crew? The answer is always yes.

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Speaker 2
And the pushback is like, well, how much work can you give me to support that, that extra drill or that extra crew, you know, and if you’re comfortable, usually with the power companies, like if they’re telling you that or asking you that, chances are that they’re going to take care of you and continue to grow you out. I mean, the power companies have the ability to grow any business out, just because they don’t want all the CapEx on their books.

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Speaker 2
So they’re they’re happy to shift that to the contractors, where we started thinking asymmetrical about this was like, hey, there’s a lot of good companies out there that do overhead work, but not a lot of companies focus on the underground portion of it. And so that was my little niche of like, hey, we’re going to do we’re going to be really good at the underground portion and then hopefully and eventually grow into the overhead side.

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Speaker 3
So are there are there things that you did when you were in the business? Because I’m assuming that some of you are, and correct me if I’m wrong, some of your contacts that you built were from your time in the trade and in learning the business. What was that like as as an employee and how did you build those contacts in that network to be able to then leverage that down the road?

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Speaker 2
So I’ll use a military analogy, right. Like we all start out as, and I was never a lieutenant, but everybody starts out as a lieutenant, but eventually a lieutenant becomes a general. And so as these guys are young in, in the trade that ten years a as a way in the military, a lot of those guys continue to sit on that trade and they just moved up in the organizations or in different organizations, but stayed in the trade.

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Speaker 2
And I still kept in contact with a lot of those individuals. And so, when I got out and before I went and bought the drill, I knew that I could get a subcontract. And, I was able to land a subcontract up in Lexington, Kentucky, and stayed up there for about nine months until I got back into the power space and was able to, you know, transition back into power as opposed to the telecommunications up in Kentucky.

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Speaker 3
Okay. Very interesting. So how how did you then take that? You bought the drill. And were you doing a lot of the work yourself in the beginning, or did you have a team that you had already kind of put together before jumping into it?

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Speaker 2
Yeah, this is the part where it’s like every other blue collar trade. You’re on the drill that day and at night you’re in the books, like you’re getting your invoicing out. You’re you’re doing your air, you’re marketing your dot, whatever. You know, all the other admin functions that are out there that that are in this line of work, you’re doing that at night, you know, maybe it’s from 6 to 10, six sell out in 6 to 12 at night, whatever it is.

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Speaker 2
And then you’re back at it in the morning because you’re so small, like you don’t have the the overhead. I mean, you don’t have the profit margin to sit there and say like, oh, well, let me just hire a staff, right? Like, you don’t have that capability. And so I will tell you, the first 90 days to a year and a lot of these, these trades is like, hey, it’s going to be you in the field and it’s going to be you on the books.

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Speaker 2
Until you get that profit margin profile that you want, they can afford that functional support, that you see the this helps our scale in this.

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Speaker 3
Yeah. Very similar to what we’ve I mean I’ve experienced and what we’ve heard other guest share as well. And I think that’s an important thing to, to touch on. It’s not easy. How long did that take before you did hire some some help.

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Speaker 2
So I was still pretty lean for the first 3 or 4 years. I mean, crew wise, like not lean because those are my revenue drivers. But it took 3 or 4 years to finally I’m like, hey, I really need an HR person because I, I just hate doing HR work. Like, I’d, we need it. And there there is, you know, you got to have it.

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Speaker 2
But it’s like, I absolutely didn’t like writing policies about HR. Could care less about it. It’s not that I care less about it. It’s just it was just not my thing. And so I was fortunate enough to talk my wife into taking that over for me.

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Speaker 1
So,

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Speaker 2
I kind of. I roped her into it, but, she’s got her master’s degree in HR, so I was like, hey, honey, this. I think this is get your name written all over this. Right? So, so she, she, volunteered and helped out and was tremendous in that, that piece of it, the one thing that I would tell you that as you’re building things out that I didn’t realize is, you know, a lot of operators, there are a lot of business owners are really good at their trade itself.

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Speaker 2
Right. And like, I like I didn’t like HR or most guys don’t like the HR or the finance or the accounting piece of this. And the one thing that I learned was from the accounting side, you know, we would all just file taxes like, hey, I just want to get the Texas file and I just don’t want to have to pay anything right.

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Speaker 2
What I didn’t realize is, like, as you continue to grow and you’re looking at bonding and surety and all this other kind of stuff is if you’re finance or your books doesn’t make sense or they don’t tell a story, it’s hard to going to continue to keep getting financing right. And so, I would say the one thing that I missed out that I wish I had had early on was like a fractional CFO come in and help out with the books as opposed to like, hey, here’s a CPA.

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Speaker 2
And yeah, they do your taxes and then you don’t see them again for another, you know, 12 months or whatever it is. And they’re they’re only there to file your taxes. They’re not really telling you anything about your business and how well you’re performing, from day to day or month to month. And, and that’s, the biggest piece of the pie because it took me a little over $200,000 to get our book straight.

00;14;18;15 – 00;14;39;23
Speaker 2
And one that is, is they charge you by the month to go back for the previous 36 months, 4 or $5000 to recreate all your books and to get all your financials in control. And that was one of the big pieces for me to to grow out was, I needed bonding, so I could bid on bigger jobs, because I was starting to hit a glass ceiling.

00;14;39;26 – 00;15;10;07
Speaker 2
Well, because you take on so much debt, it’s hard to get bonding because you’re so debt leveraged. Surety companies, like. Oh, well, you don’t look that healthy because you took on debt for all your air equipment. We would always push back and say, well, how do you grow? Like, the equipment is what drives my revenue. And so that’s a piece of, of this where you start to fill a glass ceiling a lot with our industry is like, hey, I can’t continue to grow because I’m so debt leverage and all the all the trucks or the equipment or the tooling or whatnot.

00;15;10;09 – 00;15;22;05
Speaker 2
And you can’t you just can’t go bid on the bigger projects. And so that fractional CFO really helps, clean up a lot of that for you as you start to build out.

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Speaker 4
I’m going through a similar thing right now. Yeah, well, you get it all cleaned up, man.

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Speaker 1
What a process it is.

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Speaker 2
Right? But I didn’t I mean, like, I just thought, hey, you know, CPA should handle every bit of this and have your books, right. But that’s not the case. I mean, yeah, yeah, they’ll get your books right to file taxes and it’ll pass the sniff test on on that. But as far as like, hey, how operationally, you know, profit margin profile, what does that look like for you guys.

00;15;51;23 – 00;16;10;22
Speaker 2
You know, is your Ebit of this or is it that or whatever? What are the KPIs? I was just sitting here looking at basic micro units of like, hey, if we get this much production, this is like a basic cash flow. But I will tell you that you’re slowly backing up if that’s the way you’re analyzing your books, saying like, well, I got money in the account this week.

00;16;10;22 – 00;16;14;08
Speaker 2
Like, that’s probably not how you want to manage. The business.

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Speaker 4
Yeah, I can make payroll.

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Speaker 2
Yeah. That’s it. Right.

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Speaker 1
And that’s.

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Speaker 2
The struggle. That’s the struggle as a as a startup in this line of work. Right? Like we’ve all been there. It’s like, oh man, it’s it’s going to be tough this week.

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Speaker 1
Yep.

00;16;27;18 – 00;16;47;20
Speaker 4
Yeah. I’m curious, you mentioned using a fractional CFO. You know, we’ve been talking a lot about scalability on the show recently, whether it’s Derek and I or with gas or with Bill over at the op shop. It sounds like you are a proponent of using outsource methods to help scale, at least in that instance. Yeah.

00;16;47;23 – 00;17;08;26
Speaker 2
The quicker you can automate that kind of stuff. To a fractional, whether it be fractional finance or accounting or CFO or fractional marketing, I don’t know if you need market. I mean, it depends on your trade, right? Yeah. Fractional, air, like any of that stuff that you can automate, take off your plate. A lot of us have that mindset where like, oh, that’s another expense.

00;17;08;28 – 00;17;32;05
Speaker 2
But that actually is the thing that’s probably holding you back from being able to grow because it’s taking energy away from your day to day to figure it out yourself, as opposed to, hey, if I just pay this guy $2,500 a month and it’s just ten hours, like, that’s all I’ve got to worry about. And and I can move on and probably be more beneficial to the company in these other areas, driving crews or cleaning up efficiencies in the field.

00;17;32;08 – 00;17;52;13
Speaker 4
Well, it’s, you know, we’ve been the last couple of episodes, Derek and I have been talking pretty heavy about org charts, right. And, we were talking with Bill Tansey, earlier we recorded an episode earlier in the week, and we were talking about coming up with that org chart and then playing Pin the Tail on the donkey with who’s, whose name goes in each spot on the org chart.

00;17;52;16 – 00;18;13;16
Speaker 4
And, you know, like, at my size, my name is in a lot of those boxes on that hard chart, man. Like too many boxes and looking at like, you know, I can’t afford to hire someone like a full time HR manager can’t afford that right now. But using that outsource solution sounds like an amazing way to handle that.

00;18;13;18 – 00;18;33;15
Speaker 2
For me, it was. I mean, looking back at it now because I was in that same boat, like, man, I can’t afford it. But I would argue that you can’t afford not to. Because if you look at that org chart and you look at it, every decision flow that rolls through, you are actually in essentially the, the paradox or the bottle trip bottleneck for your own company.

00;18;33;18 – 00;18;52;12
Speaker 2
Like you’re hitting that that glass ceiling that you’re bottleneck in your own growth because you’re not able to ability to hand these, these off to other people. Like, even if it’s a fractional, if it’s just ten hours a month, that’s just 10 to 10 hours is a full day’s worth of revenue for you that you can increase somewhere else?

00;18;52;14 – 00;18;52;26
Speaker 1
Yeah.

00;18;52;26 – 00;19;00;28
Speaker 4
Well, me being like in my situation, me being the chief sales guy, I can sell a lot of stuff in ten hours, right? You know, you’re smiling and.

00;19;00;28 – 00;19;03;03
Speaker 2
Dialing for ten hours. You’ve got this.

00;19;03;05 – 00;19;06;01
Speaker 4
Yeah, man, I get a lot of work done in that ten hours.

00;19;06;03 – 00;19;28;28
Speaker 2
Right. And so. But, I mean, it takes things off of you. You’re like, hey, I, I really don’t care about doing HR. We’ll use HR, right? And I don’t mean to throw off an HR, but it’s like you don’t want to be tied HR. You would much rather be doing sales, but you know, from a legality standpoint from a worker’s comp, case or any of those things, God forbid, like you want to be able to hand this off to someone else that you’re like, yeah, I know about it.

00;19;28;28 – 00;19;37;01
Speaker 2
I can speak to it, but I’m not down in the weeds in the details of that because it’s really pulling away from your business at that point.

00;19;37;03 – 00;19;39;05
Speaker 1
No, it’s a great point.

00;19;39;08 – 00;19;52;17
Speaker 3
And would you say that though that, which one of those if that was even your biggest challenge. But one of the questions that I had for you was what is the biggest challenge that you face while scaling on a attack?

00;19;52;20 – 00;20;16;01
Speaker 2
So it really it really came into the the balance sheet, the surety bonding. That was my ultimate glass ceiling that you can grow these businesses out very methodical and very slowly. But I did not want to be in the industry for 30 or 40 years. If you want to take that approach, you can. And you very well will get through the glass ceiling.

00;20;16;04 – 00;20;37;02
Speaker 2
My thing has never been to be like, oh, I want to do this for 40 years. Like it’s I want to build it out, grow it, sell it. You realize that you can grow so fast. And when you fill that glass ceiling of I can’t grow unless I take on more debt because I don’t have. I’m not liquid enough that I can just go acquire 2 or $3 million more debt.

00;20;37;05 – 00;20;56;00
Speaker 2
That because you’ve got to take on that debt, you run that. So it’s a 3 to 1 like that, or debt to revenue ratio that they’re looking at specifically on the balance sheet. And when anytime you come above that, you’re not going to get the bond. Well, if you don’t get the bond, you don’t get the revenue or the the bidding that you can go after.

00;20;56;02 – 00;21;30;18
Speaker 2
So it’s like the chicken and egg kind of conversation, right? And so for me, that was always the biggest challenge. If you decide to grow slow, you will eventually come over that. But you got to be consistent and compound the consistency every day of, hey, it’s it’s good margins, but it’s not. I can’t go after the big projects and I’m not going to see the the rapid growth of, hey, I don’t think none of us expect to grow like a Tesla and it’s 300% year over year kind of thing, but it’s like, hey, I’d like to go from, 25 employees to 50 and 50 to 100.

00;21;30;21 – 00;21;50;12
Speaker 2
As you start to compound that, like you’re going to run into the roadblocks of, you know, capital or liquidity type thing that you’ve got to overcome doing that fast. The only way to do that is like, you’re going to take on the financing or because you’re not. I hate to say it, but we’re not sexy enough for traditional banks.

00;21;50;12 – 00;21;56;10
Speaker 2
Like you’re not walking into Bank of America and say, hey, I’d like to get a $10 million loan. And like, what do you do? Well, I build houses like.

00;21;56;10 – 00;21;57;20
Speaker 1
A.

00;21;57;23 – 00;22;14;28
Speaker 2
We’ll finance the property, but we’re not we’re not going to give you a loan for that or for your growth, or whatever. Right. You can go the SBA route. But again, you just acquired more debt by taking on that line of credit. And so this is always this this fight on your balance sheet of how much debt you’re actually carrying.

00;22;14;28 – 00;22;25;15
Speaker 2
For us, that was my my breaking point. I’m like, you know, the only way to outdo this is sell the private equity and, you know, try to grow from their platform.

00;22;25;17 – 00;22;38;06
Speaker 4
You know, you make me think of a term that I learned a couple of years ago. I never heard of it. And apparently it’s used in banking and in insurance. But how they tell, you know, is they say we don’t have an appetite for that right now.

00;22;38;09 – 00;22;40;09
Speaker 1
Right? I you know, I was like the.

00;22;40;09 – 00;22;51;06
Speaker 4
First time I heard it, I was like, what? They’re like, they don’t have an appetite for that right now. Unlike an appetite for like we talking about like. Yeah. So you mean you’re just telling me no, you’re not going to do it like I.

00;22;51;08 – 00;22;56;14
Speaker 2
Tell you straight out, like you don’t like it or like it’s not going to happen. Like, all right, move on. But an appetite. Yeah.

00;22;56;16 – 00;22;57;20
Speaker 1
Yeah.

00;22;57;22 – 00;23;21;08
Speaker 2
So it’s funny I mean, and there’s other types of financing out there, but like like we’re not now that you couldn’t do an angel investor type stuff. But it’s angel investors are looking for massive upside right. For technology advances or what may have you like. No one wants to be an angel investor for you to go buy a skid steer and a dump truck like there’s nothing.

00;23;21;11 – 00;23;21;18
Speaker 1
There’s.

00;23;21;18 – 00;23;25;12
Speaker 2
Nothing attractive about that for pretty much any investor.

00;23;25;15 – 00;23;27;25
Speaker 1
Yeah.

00;23;27;28 – 00;23;56;09
Speaker 2
And we I mean, we all know those guys and I appreciate those guys. But man, it’s think about it. The the dump trucks today, the 150 $200,000 Sears depending on the size or the tractors, you know, another 50, 70 or 80,000 again, size wise and then the trailer and then you got to have the insurance above that. Like it’s like, man, you’re yeah, three or a quarter million and they’re easily or 305 hundred, half a million a debt.

00;23;56;09 – 00;24;01;03
Speaker 2
And you’re just hoping to keep the work flowing to, to make the payments on all that.

00;24;01;05 – 00;24;02;24
Speaker 1
Yeah.

00;24;02;26 – 00;24;10;27
Speaker 4
Yeah. Becomes a vicious cycle. Right. Like you get the equipment to get more revenue, but then you got to, you know, like now you’re imprisoned by all that overhead that you got.

00;24;11;00 – 00;24;30;09
Speaker 2
Yeah. And the other part of it too is like I said, you’ve got to be comfortable with that. And a lot of guys are like when they think of, oh crap, I’ve got 2 or $3 million of debt, they’re not sleeping at night. And I get it. But you got to be comfortable with that aspect that you’re you’re the personal guarantor on all that debt.

00;24;30;12 – 00;24;32;00
Speaker 1
Yeah.

00;24;32;02 – 00;24;33;23
Speaker 4
Yeah. If it goes sideways.

00;24;33;25 – 00;24;43;28
Speaker 2
Yeah. Well, we all know there’s slow months, right? And like, hey, maybe it’s not getting paid this month. I’ll definitely get you paid. It just ain’t happening on this timeline.

00;24;45;05 – 00;25;10;28
Speaker 3
So one thing when you originally had had reached out or you had on your notes here that you instituted a Friday leak check and I can imagine that, you know, while taking on debt is scary enough, you also have to worry about managing people and customers, requesting change orders and, you know, trying to get extras out of out of the company.

00;25;11;00 – 00;25;18;22
Speaker 3
So what is the Friday lead check that you implemented? And I would imagine that helped helped you sleep a little bit better at night.

00;25;18;25 – 00;25;40;15
Speaker 2
It does. So the one thing that we started was actually, I’ll just give you an example. If you take on a project, I will know every piece of revenue on that job. So in the utility space, there’s, there’s a prize for opening up a hole, placing something in the hole and then covering the whole up.

00;25;40;17 – 00;26;01;11
Speaker 2
At a minimum, there’s three, three line items. That’s got to be there. So what I made the guys do was ensure, like, hey, we’re going to look at everything on these projects. We’re going to know exactly what’s in billable on these projects so that again, let’s say a project is is $10,000. And then they come back to me and they’re like, hey, well, revenue this week is only 8500.

00;26;01;11 – 00;26;22;08
Speaker 2
I’m like, well, are you done with the job? Yes. Well we’re done with the job then what I want to do, I have a $1,500 delta right of difference of we said ten and here’s 8500. And what it was doing was actually pausing or causing the the GF for the foreman to look, say, oh crap, did I miss something or did something happen like it made them stop and pause?

00;26;22;08 – 00;26;45;07
Speaker 2
Like, oh yeah, I did forget, to bill for this extra transformer that we said or like, no, we’re not splice in that transformer because it got moved or we’re not doing that section or whatever. But it was the ability to say here, like, hey, we’re looking at before and then after the fact, and it’s not a, a glossary look over it is at the end because you did all the hard work up front.

00;26;45;10 – 00;27;02;18
Speaker 2
But on that Friday, as you go through it, we already with the hard work on Monday, to look at, to see what that revenue should have been and anything that’s off and you know, if it’s within a point or two, so be it. But if it were off big time, like, hey, what what’s caused this, this big gap in this delta right here?

00;27;02;20 – 00;27;31;07
Speaker 2
And, and really putting the ownership at the Gia for the foreman level that, that owns this part of, like, hey, this is your bonus right here. Like, if you’re missing that, that you’re probably not seeing the bonus later on down the road because you’re not capturing all your billable. You’re just leaving money out there. And the thing is, there no one’s going back to check you to say, oh, you forgot this, or oh, you forgot to build me an extra $1500 or $2500 if you miss it, you just kind of miss it.

00;27;31;07 – 00;27;34;17
Speaker 2
And it’s kind of forgotten about.

00;27;34;20 – 00;27;39;26
Speaker 3
So that’s an in-person meeting that you would sit down with your your team and have every week.

00;27;39;28 – 00;28;04;01
Speaker 2
Yeah. Every Monday morning. Yeah. Every Monday morning, to go through to their workload. And then we itemize every bit of their workload. And it sounds like a, it does two things right. It does a couple things actually, or more than that. So what it does is it forces them to look at their project and layout their crews appropriately, that they can be profitable at the crew level as well as the project level.

00;28;04;03 – 00;28;23;16
Speaker 2
But it also has them in touch with what’s going on on all their job sites so they know exactly what they’re looking at, where everything sits on those job sites. The ability to my thing for them is, if you’re a GM, you should be able and it sounds horrible to say it like this. You should be able to leave from the truck or pull up from the truck.

00;28;23;16 – 00;28;45;11
Speaker 2
Look out from the truck, know exactly what’s going on. Based on everything that you laid out that Monday morning, and not had to get out of the truck and say, hey, what’s about this, this, this not to necessarily micromanage the guys, but you’ve already went through it. You’ve already laid it out on paper Monday morning. So the Wednesday you come out there, you know where you should be theoretically on that project.

00;28;45;14 – 00;29;08;15
Speaker 2
So by Friday and you’re like, hey, Wednesday, you were here. You were tracking right along. You know what happened here? Did we miss billing or did we just not get it accomplished because, you know, crew was out. You know, they they all got sick or whatever, or it was a rainy day, something that that caused you to miss that there’s there’s got to be a plausible answer that her question there that’s got to be asked.

00;29;08;17 – 00;29;15;27
Speaker 4
I’m curious, what was it that caused you to put this into practice?

00;29;15;29 – 00;29;32;28
Speaker 2
Because when I would go through the projects, I would look at it and I was like, hey, you know, I would start asking something like, did we bill for that? And I’m started asking myself like, oh, crap, I did it one year. And I probably had missed $75,000 available when I went back through all the projects.

00;29;32;28 – 00;29;49;29
Speaker 2
And I was like, yeah, so on, you know, on $1 million, that’s it’s almost ten, 10% of your revenue. That’s 7.5 for sure. Right? So, I mean, you’re leaving 10% of revenue on the table just because you didn’t have something to have a checks and balances to catch your revenue.

00;29;50;01 – 00;29;51;03
Speaker 4
It’s a lot of money.

00;29;51;06 – 00;29;53;28
Speaker 1
There’s a lot of money. Yeah, a lot of money.

00;29;53;28 – 00;30;04;02
Speaker 2
You’re not you’re not losing it on, you know, days one through five. It’s through the course. I mean it’s that slow leak that you, you miss out through 365 days of the year.

00;30;04;04 – 00;30;25;11
Speaker 4
Yeah, I was actually just, on another podcast I was listening to recently. They were talking about one of the biggest silent killers of businesses, small businesses is is just that unbilled revenue that you paid for the work to get done. But for whatever reason, you never build it out. And, every business is guilty of it, and it can add up to a lot of money.

00;30;25;11 – 00;30;29;25
Speaker 4
And for small businesses especially, you know, if you’re only doing a million a year, that’s a lot of money.

00;30;29;28 – 00;31;00;03
Speaker 2
That’s like I mean, that was probably your whole insurance premium like bundle, like you’re in the marine policy and your worker’s comp and general liability and all this other stuff like that has real consequences, for, for any company. And so you got to be able to identify that. And I think a lot of guys, they’re not there yet, to really analyze that or think through that, but you got to have those checks and balances of, hey, where it’s those blind spots is really eating you alive and you don’t even know it.

00;31;00;08 – 00;31;02;27
Speaker 2
And that’s what the killer and a lot of this.

00;31;02;29 – 00;31;05;02
Speaker 1
Yeah.

00;31;05;04 – 00;31;14;11
Speaker 4
And I know we got to start moving, our way towards the Patreon side of things, but I do have a question about something you said earlier, too. And then D can pull us back on track, but.

00;31;15;20 – 00;31;27;29
Speaker 4
You it sounds like when you originally got into this business, you got into it beginning with the end in mind that some day I’m going to sell this thing and go do something else.

00;31;28;02 – 00;31;48;03
Speaker 2
Exactly. Right. So I will tell you, there’s nothing proprietary about what any of us do, right? Like, you could start my business tomorrow. I can start your business tomorrow. Yeah. There’s not a lot of barriers to entry. Maybe there’s some good ol boy networks here and there and that kind of thing. Outside of that, there’s nothing to keep me from doing what you do and vice versa.

00;31;48;05 – 00;32;12;03
Speaker 2
So knowing that this is not the next Facebook or Tesla or whatever, you can’t be married to your ideal and that is your baby. Like, know that there’s the next, you know, podcast coming up or the next time it’s like, oh, it doesn’t matter what it is. Right? Like this stuff is all replicable. So you got to be with a notion like, what is the end goal in mind to to be able to exit from this?

00;32;12;05 – 00;32;34;01
Speaker 2
And so for me, yes, it was an organic growth to figure it out. If I had to do it all over again today, I would probably cut that timeline in half easily. And because there’s not a lot of room where when you get to year 4 or 5, when you’re when you’re talking strictly EBITA, you’re probably not going to gain that much more in EBITDA.

00;32;34;04 – 00;32;59;17
Speaker 2
So your valuation is not really going up from year 6 to 10, right. And so what I mean by that is if you’re even a is at $1 million, and let’s say you’re a for simple math, five x EBITDA. So that means your company will sell for $5 million, based on $1 million EBITDA. Okay. If you take, to do as I say, $1 million, that’s $10 million in top line revenue.

00;32;59;20 – 00;33;17;23
Speaker 2
So for you to do another $20 million, what’s it going to take? You got to double everything. Chances are from 6 to 10, unless you can visibly see and know that you’re going to double that revenue and you’ve got a clear path to that, you’re probably not going to do it. Based on the current workload and trajectory.

00;33;17;26 – 00;33;42;07
Speaker 2
And so you’re going to spend another 6 to 10 years and only create 100,000, 200,000 worth of, of EBITDA. If that. Right. And so you stayed another five years to gain another 500,000 or $1 million wasn’t really worth it. You could have probably gained that in your new venture, whatever that is. On the growth of the next one.

00;33;42;09 – 00;33;46;10
Speaker 4
That’s fascinating. I’ve got another question, but I’m gonna hold it till I advance.

00;33;46;16 – 00;33;49;06
Speaker 1
Till the picture on Saturday. Yeah, yeah, yeah, I think.

00;33;49;06 – 00;34;16;08
Speaker 3
That, we’ll have to move it over, but, this is, very insightful. And, thank you again, Sean. I do want to thank our sponsors. Before we do move over to, the Patreon side of things. People ease. Martin electric, MLB construction, Pinocchio construction, Michaels group, Catamount consulting, northeast construction trades workforce coalition. They go cleaning systems and five towers media and welcoming our new sponsor, Curtis Lumber.

00;34;16;10 – 00;34;25;08
Speaker 3
Yeah. You know, the blue collar startup family here. And, we’re excited to have them on board as well. So we’ll see everybody over on the Patreon site.

00;34;25;11 – 00;34;37;13
Speaker 4
Oh, now, before we go, one more thing. We got a new Patreon members. Just want to do a shout out to Nate over at, And LH Property Management just joined yesterday into the Patreon side of things. So welcome Nate.

00;34;37;13 – 00;34;38;05
Speaker 1
Thanks for joining.

00;34;38;08 – 00;34;40;04
Speaker 3
Us. Great guy, great company.

00;34;40;06 – 00;34;46;25
Speaker 4
Nice nice. Well you have to tell him that we we shouted him out although he listened to the show. So I’m sure you’ll hear it. But thanks Nate.

00;34;46;27 – 00;34;47;12
Speaker 1
Very close.

00;34;47;18 – 00;34;49;21
Speaker 4
We’ll see everybody on the Patreon side.

00;34;49;21 – 00;35;17;27
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;35;17;27 – 00;35;30;03
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;35;30;03 – 00;35;45;13
Unknown
Oh, hey. Oh, hey.

00;37;17;08 – 00;37;32;18
Unknown
Oh, hey. Oh, hey.

00;37;32;18 – 00;37;55;26
Speaker 4
you know, I was thinking about while you’re talking and about with, you know, kind of the last question I asked you with, you began with the end in mind that you were going to sell this business someday. And I and I love how you answered that question with essentially saying, like, there was a moment in time where I realized that the amount of effort I was going to put in to grow it any further wasn’t going to be worth the squeeze, so to speak.

00;37;55;26 – 00;38;13;08
Speaker 4
And so that was a good time to sell. I’m I’m curious just, you know, based on other conversations that we’ve had over the last few weeks, what did you do to get your business ready to be like, okay, here, I have a business for someone to buy, buy this thing. And it and they had an appetite for it.

00;38;13;10 – 00;38;15;07
Speaker 4
Like what? What were the.

00;38;15;10 – 00;38;33;07
Speaker 2
How did that. Yeah. So this is one of the biggest I think the things that a lot of us business owner because we get we don’t have a lot of shoulders to cry on as the business owner. Right. And no one’s there to kind of pick us up when we’re down. Like, man, this month looks horrible. Like, I don’t even know what I’m doing here.

00;38;33;07 – 00;38;58;03
Speaker 2
Like, we all have these self-doubts, negative thoughts that creep in to your point in question. Like, would anybody even want to buy this business? Right. And the answer is the answer is always yes. But the the trick about this is and this is why I was kind of alluding to the fractional CFO. You’re going to want to get eventually, you’re going to go past a fractional CFO and you’re going to need a full time CFO.

00;38;58;05 – 00;39;16;24
Speaker 2
Right. And so at that point in time, this individual has got to help shape your book so that your numbers tell a story. Like your numbers have to articulate a story of of growth. But we’ve hit a glass ceiling and we just need extra funding to grow this out, or a scalable based on the clients or the repeat business.

00;39;16;24 – 00;39;37;11
Speaker 2
And you look at our previous eight quarters and we’ve got a trend of up and to the right every single quarter. Right. And so the answer is always yes. And how you get to that is a broker. A broker will, you know, they’re going to put a flier together on your company. And they’re going to shop it around to all these different PE shops from Boston to California.

00;39;37;11 – 00;40;01;10
Speaker 2
And you’re going to go through the, the, the circus and interview with all these. And some people are just kicking tires and some people are just generally interested in your company. And, and in my case in particular, the company that acquired us was already private equity. But they were trying to break into the southeast, and they were a union company up there, but realized that they couldn’t compete with nonunion prices in the South.

00;40;01;13 – 00;40;26;08
Speaker 2
So it was either start a business down here or acquire a business, relatively small and grow them out from a nonunion standpoint. And so here’s where we were at. We were in that market niche of underground. They, they do really good overhead work. And so it was just a perfect fit. I would have never thought about that until I got of the broker and was doing the song and dance with all the different PE firms.

00;40;26;14 – 00;40;50;17
Speaker 2
As you walk through this. So there’s always a buyer out there for your stuff. It’s just do the numbers tell a story or articulate a good story that someone would want? And are you with the right? The broker that I dealt with didn’t charge me a thing. He charged the buyer as we completed the sale. But he didn’t charge me a thing to promote the business and put fliers out there to other PE shops.

00;40;50;20 – 00;40;53;24
Speaker 4
Interesting. So broker big part of that.

00;40;53;26 – 00;41;17;16
Speaker 2
Big part of that. I’ve got a great one. If you guys need it. I’ll give it to you later if you guys want his name and number. But, he was phenomenal. And then on the flip side of that, as you get to and this is later in the ballgame, having the, counsel, the general counsel, to to see this through as you exit is a big piece of this as well.

00;41;17;18 – 00;41;34;17
Speaker 2
And before you get to that, always the here’s one thing that I would always recommend to is always ensure that your business can function without you. So, Derek, Michael, if you were to step away from from your position right now, would your company fall?

00;41;34;20 – 00;41;35;25
Speaker 4
Absolutely.

00;41;35;28 – 00;41;36;21
Speaker 1
Right.

00;41;36;24 – 00;41;55;18
Speaker 2
So how do you like you have to ask yourself how do I keep that? How do I put people in place so that you can go take that 3 or 4 day vacation? I’m not saying take the full week, but you can step away and know that day to day billing got out, bills got paid and the wheels just did not fall off.

00;41;55;20 – 00;41;57;17
Speaker 4
We’ve been talking a lot about that lately.

00;41;57;23 – 00;41;59;15
Speaker 3
And I just had that conversation.

00;41;59;15 – 00;42;00;22
Speaker 1
Yeah, yeah.

00;42;00;24 – 00;42;12;15
Speaker 4
A lot about that lately. And specifically a lot with, you know, being able to put in systems and processes and then finding the right people to execute on those, that gives you the room to be able to do that. Right?

00;42;12;17 – 00;42;33;25
Speaker 2
Yeah. And here’s here’s a unique part about this that I realized, and this is the part I’ve been writing a lot of LinkedIn content on right now is as an industry or as just blue collar trades in general. We do an absolute horrible job of bringing the foremen or the front line leader out of the field into the general foreman position.

00;42;33;28 – 00;42;55;25
Speaker 2
Like there’s not much you’re going to teach a foreman about the business. Like they know the trade, probably inside and out. But they have no idea what levers to pull and why they’re pulling those levers because they’re starting all over again. So we’ve got to do a better job of growing those leaders out and understand, like, you know, Michael, you would have to like, I don’t know who the next guy is for you.

00;42;55;25 – 00;43;14;21
Speaker 2
Another like, came in like, as you’re thinking through this thing in your lane at your work, this week, you’ve got to you got to teach him how to think like you. And it’s not that he’s there. You’re starting him over to replace you, but you are in the sense or start a business, but you are there to like, hey, I want to grow you out in this industry because I want you to be part of this.

00;43;14;21 – 00;43;36;24
Speaker 2
The, you know, fruits of our labor to to grow this out, and, and grow a salary or is hourly rate out or whatever, or the ability to offer insurance or referral link or profit sharing. Because the more you can invest back into these guys, the quicker you’re going to see a growth with internal like growth from your guys in your org chart starts to really shape up.

00;43;36;24 – 00;43;42;14
Speaker 2
Pretty nice thing you can divvy up all those hats that you’re wearing and shift it to other guys.

00;43;42;17 – 00;44;07;05
Speaker 4
Yeah, it’s it’s interesting you say that too because we I want to say it was with Bill Tansey. We were talking about whether it’s that employed person going to self-employment, business owner and that transition to leadership, or whether it’s one of your team members getting promoted from an operational capacity into a leadership capacity. That transition is a hard one for a lot of people.

00;44;07;08 – 00;44;27;25
Speaker 2
It is. And if they’ve never been taught, you know what that looks like as you come into that bottom rung of middle level management, right? Like you’re starting all over again. Because again, operationally, there’s not much more you’re going to teach those guys. They know all the tricks of the trade. But what does that look like to lay out five crews or you know, and you got this crew over here say, well, why did he get a new truck?

00;44;27;25 – 00;44;53;15
Speaker 2
And I didn’t like we all know that he got a new shovel and idea and or whatever, right. Like we’re we know those conversations, but, I wrote about one that’s called the Promotion Trap. And what I said in it was what what I would propose and recommend that people do is like, you promote the guy 90 days in advance of whatever the promotion date is, but you promoted him for one day a week for 90 days.

00;44;53;17 – 00;45;15;27
Speaker 2
So on Tuesday they’re going to agg the roll out. They’re going to have all the tough conversations, but they’re going to go through all of that leadership that they got to have or, you know, to make them ready for that. Whatever that next level is. So when the the date does get there, they’re just not overwhelmed because they’ve been playing in that role for the last 90 days or one day a week for the last 90 days.

00;45;16;00 – 00;45;24;29
Speaker 2
And so they’re just they’re starting to they’re just not thrown in the deep end like, oh crap. And then you get the burnout and then you lose the guy altogether.

00;45;25;01 – 00;45;35;17
Speaker 3
How transparent were you should are with, with the growth of the business and reviewing scorecards or KPIs with your team.

00;45;35;19 – 00;45;53;26
Speaker 2
100%, I laid it out every day. I don’t think it’s hard not to, because there’s always that inherent like, oh man, he’s over there and I don’t have this. But like, you know, you see guys that go by the Harley or the bass boats or the new trucks and, and, and all the guys see is the lifestyle. Right.

00;45;53;28 – 00;46;10;05
Speaker 2
My thing was like, no, here’s the investment back in the company, you know, this is what it looks like. This is where you guys are operating. This is we get where you guys fell in, like, I’ll show them the numbers. Like, you know, in the construction trades, we handle a lot of money, and we see a lot of money.

00;46;10;05 – 00;46;28;11
Speaker 2
And these guys all think that we get to pocket this. So, like, for instance, if you take a guy, make an $20 an hour. Well, the guy said, well, you’re only painting 20. It like the reality is no, I’m painting probably close to 27. When you back in all the taxes that I got to match or has insurance and all this other stuff is like, there’s so much hidden cost of this, guys.

00;46;28;14 – 00;46;44;19
Speaker 2
But I was very transparent to show them like, hey, this is what it is like. And I don’t show them that to like, hey, don’t is not one of those things where I beat them over the head with it every day. And don’t do that because then they start to carry that same stress. And that’s not the idea.

00;46;44;21 – 00;47;06;01
Speaker 2
The point is like, hey, here’s where it is, and this is the reason why we’re making that decision. It’s easier to make like, hey, you know, for instance, we would use something, we’re like, hey, I’m already on this part of the job. Why don’t I just go ahead and finish? Well, the reason why I don’t want you to go ahead and finish is because your revenue is down or the profits down, or your production is way down.

00;47;06;01 – 00;47;29;23
Speaker 2
And there’s more meat and potatoes on this part of the project. So I need you to shift over here. Oh, well, that makes sense because we’re not as productive or we’re not as Fisher. So highlighting a lot of that stuff to say, like, hey, and not that we won’t close out that piece of we will, but we’re going to do it when we’re, you know, maybe we’re a little ahead of schedule or we got a little time to burn or spare or whatever.

00;47;34;20 – 00;47;36;17
Speaker 4
I’m just unpacking that in my head right now.

00;47;36;20 – 00;47;59;01
Speaker 3
Yeah. It’s very interesting. I do I feel like you know and we’re the same way you know with our team and I try to give them some insight as to what you were referencing because it helps I think in the long run them understand that the decisions you make are in their best interest, in the best interest of the team, rather than any one individual.

00;47;59;03 – 00;48;17;15
Speaker 2
Yeah, I’m I’m probably to a fault. I am probably too open a lot of times, but I just want them to understand, like, hey, the reason why we’re doing X, Y or Z because there’s nothing worse. Like I know it. As a junior enlisted guy, I knew it as a as a warrant officer. I knew it as a as a ground hand.

00;48;17;16 – 00;48;39;09
Speaker 2
Right. There’s nothing worse. Like, man, why are we doing this? This is stupid. Because no one will communicate the overall game plan. And there’s absolutely nothing worse than that to like. I’m just doing it because I’m told to do it. I couldn’t tell you. While we’re doing this. Like it is the most absurd thing. But if I can get everybody on board, it’s like, hey, I need you to move down to this other job site for you guys to be more profitable.

00;48;39;12 – 00;48;57;23
Speaker 2
Oh, yeah, well, that makes sense. You know, like, we’d like to finish up here, but I’m like, no, I hear you. But that over there is going to make you more profitable and your scorecard is going to look a lot better because you complete that. And when you put that carrot in front of them, they’re like, oh, okay, well, if I’m going to look better by doing that, then that’s what I’m going to go do it.

00;48;57;25 – 00;49;25;05
Speaker 4
You know, it’s interesting because in the main episode and then just now you kind of talked about, you know, we’ll see your resume a little bit, right. Your background, career status. I didn’t hear business school in there anywhere. And you seem to have a pretty good business acumen. I’m really curious to hear about how you learned about business or where you learned about business, how you gained all this knowledge and skills that you have.

00;49;25;07 – 00;49;44;17
Speaker 2
So I will tell you, first and foremost, the the best investment is in yourself, right? Like, it doesn’t matter about the trucks, cars, fleets, equipment. It’s seeing yourself that’s the greatest return. So when I got out of the military, the one thing the military teaches you is leadership. Obviously. And they teach you how to budget. Right.

00;49;44;17 – 00;50;01;25
Speaker 2
So there’s, there’s a lot of budgets out there that you, you got to contend with, but they don’t teach you panels and balance sheets. So I actually went back to school at night, to get my MBA, while I was, running down in tech. And so I did that for two years, to kind of round out my, my business school there.

00;50;01;27 – 00;50;06;26
Speaker 4
So you’re obviously a big fan of work life balance.

00;50;06;28 – 00;50;08;13
Speaker 1
Yeah.

00;50;08;16 – 00;50;10;03
Speaker 2
Well, the work part. Yeah.

00;50;10;05 – 00;50;12;08
Speaker 1
Yeah.

00;50;12;11 – 00;50;22;29
Speaker 4
But, you know, to put it in perspective. So you, you know, you said earlier in the show, right, like you’re, you’re, you’re in the rig all day and then you’re on the books at night and then you’re also going to school.

00;50;23;02 – 00;50;26;19
Speaker 1
Right.

00;50;26;21 – 00;50;28;07
Speaker 4
That’s a lot of work, man.

00;50;28;09 – 00;50;48;25
Speaker 2
I remember taking classes, setting in your exact same position and watching guys, out in the field at the same time. They kind of burned through it. And and the key thing with school, right, is like, hey, you you don’t have to be the number one guy in class, right? But if you can retain at least 30 to 40%, that’s coming out right.

00;50;48;26 – 00;51;10;00
Speaker 2
Like, I, I couldn’t tell you the first thing about panels and balance sheets. Prior to school. And I’m still not like a finance guru, but I have a deeper understanding of it now and can appreciate it. And I can talk to an MBA level, and feel comfortable, but I’m just as easy. Like, I would much rather be on an excavator opening up a hole.

00;51;10;03 – 00;51;29;11
Speaker 2
I just enjoy that. But if you don’t have to go to business school to learn all this, this stuff’s on YouTube and masterclass, but it doesn’t require you to sit down and take notes and challenge yourself to get better at it and understand every line details. I mean, look at Michael Dell. I mean, how many of the billions he’s worth?

00;51;29;11 – 00;51;37;22
Speaker 2
And I don’t even think he, you know, Zuckerberg and all these guys like they’re looking at financials every day and none of them have, a degree either.

00;51;37;24 – 00;51;47;07
Speaker 4
Right. Well, you you mentioned it a few times. Will you just define that for our audience and why it’s so important?

00;51;47;09 – 00;52;11;07
Speaker 2
Yeah. So even as earnings before interest tax depreciation of assets. Right. And so this is the key metric for private equity. And what they look at. So we know about gross margin. We know about our gross profit margin. We know about net margin. Net margin is you know gross is and I’ll put it in layman’s terms, is basically anything your crews are producing.

00;52;11;10 – 00;52;38;12
Speaker 2
Revenue was less than what they cost you in the field. So their cost, maybe their truck cost. And again, depends on how you have your book set up, but essentially anything that’s associated with that project at that level, your net profit would come down to like, oh, well, I had worker’s comp, I have, all my liability insurance I had to pay for, tooling or equipment or something broke down and I got to fix it.

00;52;38;12 – 00;53;11;06
Speaker 2
Right. So all that’s going to hit your net EBITDA takes a lot of that and backs out, the depreciation or the taxes out of the net. So it looks a little better than that per se. Private equity by and large, only deals in EBITDA valuations. So if private equity is on your radar and that’s what you’re looking at to exit, it would behoove you to ensure that your EBITDA and all of your books are very tight and clean and tell a story, a great EBITDA story of your growth and what it looks like.

00;53;12;27 – 00;53;14;09
Speaker 4
Awesome. Thank you.

00;53;14;12 – 00;53;34;10
Speaker 2
Yeah. It’s, not everybody uses that metric. Some people use this as, like a free cash flow. And I don’t mean to go in the weeds on a lot of this stuff, but cash flow is also another great metric. If you’re talking just overall profit margin or gross profit margin, that’s good for a crew level.

00;53;34;12 – 00;53;55;11
Speaker 2
Because it’s not the crew’s fault that maybe your two top heavy. Right. Let’s say you go out after this conversation and you hire every fractional IT or individual in the world, right? You, you know, like, man, I just don’t understand why we’re so negative. Because the crews are so profitable. Well, is because your opex was pretty top heavy.

00;53;55;13 – 00;54;15;12
Speaker 2
Above that. Right? Or your knee is off. Right. And so there’s things that you you still want to be very lean at the top, which we don’t have a problem doing that in our line of work. But you’ve got to maintain that, as you go through this process, being very lean at the top or as long as possible at top.

00;54;15;14 – 00;54;16;20
Speaker 4
Lean, lean.

00;54;16;22 – 00;54;17;26
Speaker 1
Yeah.

00;54;17;28 – 00;54;24;26
Speaker 3
Well, I think we are, running a little bit tight on time, but should I? We could probably keep talking here for another couple.

00;54;24;28 – 00;54;26;22
Speaker 1
Absolutely.

00;54;26;24 – 00;54;36;01
Speaker 3
We’d love to have you back. And if anybody wants to, to connect with you or or find about, find out more about you or Diane at Tech. Where can they find you?

00;54;36;04 – 00;54;56;17
Speaker 2
Yeah. So I’m on, LinkedIn. Probably the best place right now. As I was telling you guys earlier tonight, pushing anything, just writing a lot of content about really taking care of the the the frontline frontline guys in the middle level management guys and help them with their career paths. So, you can find me on there.

00;54;56;20 – 00;55;05;11
Speaker 2
H e na would, on LinkedIn and, we had a lot of content on there, and starting to post a little bit on X as well.

00;55;05;13 – 00;55;08;01
Speaker 3
So, I know I’ll be following it.

00;55;08;03 – 00;55;09;00
Speaker 1
Yeah.

00;55;09;03 – 00;55;11;04
Speaker 3
Back on. We’ll have to get you back on here before.

00;55;11;07 – 00;55;11;21
Speaker 1
Yeah.

00;55;11;24 – 00;55;14;00
Speaker 2
Absolutely. I’ll be here, guys.

00;55;14;02 – 00;55;15;15
Speaker 4
Thanks. And I really appreciate the time.

00;55;15;15 – 00;55;18;13
Speaker 2
And yeah, if you guys need anything, just, feel free to reach out.

00;55;18;15 – 00;55;21;00
Speaker 3
Thank you. Likewise. Yeah.

00;55;21;03 – 00;55;22;02
Speaker 2
Thanks, guys.

00;55;22;04 – 00;55;23;22
Speaker 4
All right. Thanks, guys. Enjoy the day.

00;55;23;22 – 00;55;51;26
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;55;51;26 – 00;56;04;04
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;56;04;04 – 00;56;19;14
Unknown
Oh, hey. Oh, hey.