Prepping for fourth acquisition this year, closing in a few weeks. We fully skipped the $30M’s, now mid 40s - solidly 8fig EBITDA. Under 1x debt. Still bootstrapped. You can just do things.

Twitter: Person managing $500 million business has 23 followers and no profile pic LinkedIn: Person who never does any work has 150,000 followers and 10,000 likes per post

Stories I want to hear more of: People who were successful that had good relationships with their kids, healthy marriages and never missed a game.

“I intentionally chose the market loser and was surprised they weren’t good”

This is a very long thread. @SamtLeslie asked to give the playbook for service companies so here it is. Follow it and you’ll get to 5M+ in a few years. This is pure operations playbook. No leadership, financial or HR discussion. Enjoy.

This listing is so stupid. A $1.83M rev HVAC company could easily be 3 full time employees, no office staff, no systems and could be built in like 12 months. I’ve seen it done - someone tried to sell me one last year they got to 1.9 in 16 months and offload it for $2M. Businesses this small shouldn’t be priced on earnings - they should be priced on “difficulty to replicate”. Which in this case, is low difficulty. Because that’s actually the equation. Buy or build. How difficult is it to build and what will that cost in time or dollars vs buying. “Creating value” isn’t creating cashflow, it’s creating an asset that is otherwise difficult to recreate. It’s creating moat with discernible differences. Brokers won’t like that but if your cashflow is easy to replicate - you’ve created a gig not an asset. This is a gig someone wants you to PG your house on. Heaaall no. I’d pay around $100k for this business depending on depth of customer list and vehicles that come with. It would honestly be easier to launch ground up due to having to retool the team anyways.

Most people can buy a $300,000 SDE business and change their life but they have no idea what those ops look like. Well grab a coffee, kick your feet up, and let me show you.

What’s the best cashflowing business you’ve ever seen?

Guys, let me save you a lot of trouble. Don’t open a coffee shop.

Over the past few months I’ve substantially reduced my alcohol intake. I’ve gone from 6-8 drinks a week down to 2. No difference in sleep, weight, appearance or feeling. Bummed out! All the anti-booze folks say I should be walking on water by now.

There are a thousand ways to structure a holding company. Our HoldCo has a portfolio of 5 home service businesses with 120+ team members. Here’s how we structure our holdco:

I have never been asked by a business partner, bank, acquisition target, or team member where I went to college. Tens of millions in revenue, Millions in deals, millions in lending. Nobody cares.

We serve around 42,000 homes a year. Very rarely, we accidentally schedule three neighbors at the same exact moment! Captured on film!

This truck costs about 250k and I have 5 of them. They each pump and haul around 12000 gallons of sewage a day. I think that’s hilarious.

I’ve bought 8 home-service businesses and manage 120+ employees. Here’s how you can get started doing the same:

Two years ago I had a chance to have two phone calls with a RE/Oil Billionaire. He gave me 30 total minutes and I have benefitted from the insights from those 30 minutes since 2019. Here is a summary of our calls: (his thoughts not mine)

Park them in front of buildings wrapped as a billboard Paintball/airsoft arenas Haunted house Take to state fairs/events and use as a booth

One of the most surprising things about Twitter is how many people just lie. Over the past year I’ve met 10 people who made big claims about their business only to find the business never existed. Totally wild - careful who you listen to.

Ive never spoken with RE Broker who thought it was bad time to buy.

Everyone's talking about buying small HVAC/plumbing businesses like it's just the newest greatest way to get rich. 1. No it's not 2. It's blood + sweat + tears hard 3. It can take 10+ years I've spoken with over 30 sellers in the last 2 months. Here's the *typical* story.

What’s the best cashflowing business you’ve ever seen?

Spoke with a septic biz operator in a big market. Has a single technician in an F-150 that manages 2,100 service agreements that generate $60,000/month in predictable revenue. Nearly all from repeat customers. They have not spent a dollar on advertising in 10 years.

Ok so funny story: When I was in high school a teacher told me if I didn’t get my grades up I would end up being a plumber. AND SHE WAS RIGHT. I AM A PLUMBER. I just also happen to be on the way to doing $26M this year in revenue with 150+ team members but, SHE WAS RIGHT.

A common misconception I see a lot is thinking the little guy is a victim of the big guy. Usually they’re a victim of their own decisions. Businesses that are super small are usually broken in some way - otherwise they wouldn’t be super small.

High paying customer → less complaints Low paying customer → more complaints

"I'll buy a business, hire an operator to run it for me, and collect passive income"

If I could do it again I’d roll up franchises. Hands down.

I own a midsize ($25M+) Plumbing, HVAC and Electrical business in the Midwest. Numbers you gave are totally possible but it’s the top 5% of higher. We have folks doing it. But, The average home service business is under $2m in sales and makes 140k. Average HVAC sales guy probably makes 80.

Moving forward on an HVAC company. About 95 days out from acquisition. 2.5M sales 200k SDE 16 employees Underperforming in revenue and gross profits. I will outline the turnaround plans and execution throughout the journey so stay tuned if that is of interest.

Stories about “how I went from X to 10M” are usually ridiculous. Examples: - We really focused on the mission - We just focused on culture - We marketed gud How about: - We went in every day and fought for our lives while doubting ourselves the entire way It’s not one thing.

You probably have an HVAC or plumbing company in your city or region doing 50M+ in sales. Biggest lawn mower in your area is probably doing < 5M. Licensed trades scale better.

1. One of the least discussed factors of success is your choice of spouse. I am reminded of this today because this is my 6th wedding anniversary. Here is a marriage thread.

As someone who actually executes on the “I’ll buy a business and hire a manager so I don’t have to run it”model - it is WAY harder in practice and I roll my eyes anytime I see someone write that.

I once went a year without buying new clothes. My socks had holes. My underwear had holes. Pants were falling apart. It was the same year I bought around $3M of real estate.

We saved $80,000/month by cutting off credit card access. little purchases here and there mean before you know it the spend is out of control. People were spending on: - extra supplies “just in case” - office orders with no oversight - truck stock piling up, warehouse stock collecting dust so we shut it down. no more company cards. every dollar now goes through a purchasing agent. Month one? $80K saved. That’s nearly $1M a year back in the business. If people have a card, they’ll spend it. and if they don't... they won't.

Guy who owns 1 share of an S&P 500 ETF: "Yeah, I'm a shareholder in a portfolio of 500 businesses"

Salary stopped mattering once we crossed $15 million a year. My drag on the business is about 8% of profits, and that’s fine with me. I’d rather reinvest. For years, I paid myself less than $60k because it was more important to grow than to take home cash.

I have never been asked by a business partner, bank, acquisition target or team member where I went to college. Tens of millions in revenue, Millions in deals, millions in lending. Nobody cares.

I’ve been buying businesses for 6 years. Here’s 10 things I’ve learned:

I am relentless. Tuesday is my 8th anniversary of ownership. This is a graph of monthly revenue over my career.

What I actually do: A brief history of the journey I own my family’s 3rd generation licensed Home Service business in Northeast Ohio. I bought it in 2016 when we were doing around $1m in sales. I had been at least partially running the business for a few years at this point, as a manager. I was kinda young, I joked with @thehvacjack the other day that my entire adult life I’ve had to worry about making payroll. There’s some truth to it. I ran it for about a year and I was having a tough time growing. There is just so little cash to reinvest at that size and I couldn’t figure out marketing. We were still on pen and paper with Time and Material pricing back then. 2017: 1.6m I saw a competitor buy another competitor out and was blown away. I didn’t think that was even possible. I immediately went to Google and sent out letters to 50 competitors that I had a feeling I could afford. 3 responded. 1, after a brief negotiation, told me they were about to go bankrupt (had been struggling since 09) and if I could buy them for debt they would sell. I only had about 30k stashed away and they wanted 110k. After talking we gave 15k down and a 6 year seller note for the rest. Changed my life. Bought it in Feb of 18. That note is going to be paid off in a few months. With this deal, the business doubled. We were now a little under $3m revenue and 24 people. This was also one of the hardest times of my life. We had a construction division that did its best to bleed us dry and I still had no idea what I was doing. I was 26 yo with 24 team members who relied on me and I felt pretty clueless. 2018: $2.7M Somehow we got it to work. We shut down construction in early 2019. Joined Certain Path, a business system, and hired my now President - Brandon. I now understood the power of acquisitions. In late 2019, I felt that our business was going to have an existential risk in the coming years. Our headquarter city, Akron, was shrinking little but little YOY which isn’t promising when you’re building a business there. We are around 30 minutes from Cleveland but we intentionally avoided it. “Too Much competition”. We started advertising up there but also looking for acquisition targets. 2019: $3.4M We found a small acquisition target and launched a Cleveland location. I made literally every mistake dropping a new location - including attempting to drop a new location. I kept thinking things had to be more complicated but really simpler is always better. Always. We launched that location and a water mit business. We managed to grow through Covid! 2020: $3.8M In 2021, we got serious about acquisitions again. We went aggressively on the hunt and spoke with hundreds of owners. We ended up buying three. A septic and drain business (July), an HVAC business (September) and an electrical business (December). 2021 was fun and exciting because we grew from 32 people to 105 in 5 months. lol 2021: $7.5M 2022 was crazy. Inflation began to hit materials hard and fast which harmed the electrical business a lot. They had a super long sales cycle and with inflexible contracts so we got hosed on COGS. The HVAC business ended up being a massive turnaround. The drain business was beautiful! 2022 was pure firefighting. Firing, hiring, fighting, losing. Trying to keep the wheels on and rebuild systems that were meant for a business 1/3rd our size. We got there but it was a journey. 2022: $14.5M 2023 has been a continuation. If 2022 was all about keeping the wheels on - 2023 has been all about figuring out “who we are”. We moved from 5 locations to 1. Shut down non productive business units (multiple 7 figure hit but made us healthier). Got more intentional on recruitment. Built out marketing programs. Focused on building again. It worked. The business is growing and fast. We have finally been able to focus on the “building” again, not just integration and fire fighting. It feels good. But damn what a ride.

Today I performed an extremely complicated market demand analysis: Opened up Nextdoor and scrolled. Tallied all the times someone needed something over the past 7 days. Electrician 7x Handyman 4x Plumber 3x Painter 2x Security 2x Garage Door 1x Interesting.

The acquisition is complete! I am now the proud owner of a Carpet Cleaning Company!

I love this business so much. Also stop alerting people to my type of business. Go tell them about how cool college is or something.

The Home Service Marketing Stack: If you’re about to start or buy a Home Service business then grab a coffee and pull up a chair - this will give you the primer on how to market your new business. A thread:

Quick lesson on SMB cashflow: 250k earnings doesn’t mean 20k a month. There are a lot of businesses where you lose 5-10k a month for 6 months and then go freaking nuts for the other 6. Plan accordingly. 80% of our profit happens in 120 days mid year.

The first time I “felt rich” was when my wife and I were 24, making 50k together and we learned to live off half of that. Make fun of minimalism/frugality but we couldn’t have built this without doing that. We didn’t come from money and had to provide our own seed capital.

You have 6 months to get to $100k in monthly revenue What kind of local service business do you start?

Yesterday we closed on the largest deal of my career (to date). I am now the proud owner of a 2nd generation Septic and Drain business here in Northeast Ohio. Yesterday we celebrated. Today we get to work. Here's their story.

A personal post: There’s no real agenda in posting this other than to encourage you spend time with your family. Today is the two month anniversary of my big brother dying. I’m not sure when it’s supposed to be back to a “new normal” but I can tell you it’s not at two months. This is not the first passing that I’ve endured - but it’s different losing a brother. He had a complicated life but was better than me in many ways and I looked up to him. Frustratingly, I didn’t say that enough and now I’m stuck telling that to a gravestone over morning coffee. In his last few years, he had finally found peace. Something that he hadn’t found for years. He had built a family and a home. He was loved and was giving love. It was a beautiful life. Grief hits me at the strangest moments now. I’ll just be sitting there and something reminds me of who I lost. I’ll open up a social media app and his profile gets served up to me. I see people or things that remind me of him. He always used to wear these dumb Bluetooth ear prices and now anytime I see one I see Chris. Memories, unasked and often unwanted, will pop up and just take your brain over. Hug your siblings, losing him at 37 was a surprise.

I am in the race of my career and nobody trains for second place. Over the past 18 months, every single meaningful competitor has been acquired. Every single one. Many, by the same PE shop. What used to be a number of strong competitors is now one very weak large competitor that has lost 50% of its revenue over that time period. We are still stunned how weak because these used to be the premium market brands that have been absolutely eviscerated by poor management and integration post close. Turns out the founder mattered a lot more than they thought. We are the runner up and we are in a race to take first. While they’re dropping the ball we are scoring points. Fast. The speed at which we iterate, adapt and learn is more important than ever because we have a beautiful moment in time that we can and will take meaningful market share. Everything matters. Call center Lead gen Branding Pricing Strat Hiring and retention In brand new ways. I would by lying if I said I wasn’t having fun over the past six months but it’s mainly because we are winning. For now. The score can change at any moment and we aren’t in first yet.

Lord grant me the confidence of someone who thinks they will quickly make $100 million rolling up SMBs in an industry they don't understand

Committed small amount of capital (sub 30k total) to a few startups this week. Need to start broadcasting everywhere that I’m an angel now. Basically VC. Lookout.

Story Time: In my early 20s I was working full time as a plumber. I took 3 semesters of business/accounting courses after work (5-10pm) at a community college. I was never a good student but worked hard to understand. It cost me $6000. I sacrificed a lot to pay that in cash.

One of the most exciting things about running a holdco is that instead of losing money in just one business you can lose money in several at the same time.

I’m not much of a “hack” guy. But if there is one hack I’m sure of. Buying businesses. I’ve done in 1 year through acquisition what would have taken 10 years through biz growth.

$1-3 million dollars is hell. A lot of owners would call me crazy for saying that. "What do you mean? I'd sell a kidney, my dog, and rugpull a shady crypto currency before I'd ever say having a multi-million dollar business is bad." But that's the operator in them speaking. The owners--the ones trying to grow, scale, build systems, take care of their people, do awesome stuff--those are the ones that look at that revenue range and feel stuck. Here's why. Welcome to Owner's Hell.

We have officially completed week 1 of integration for the new septic business! We started a private newsletter to show you exactly what our integration process is. If you want access, like this post and I'll make @RandLarsen1 DM you a link. (I'm having a lot of fun with this).

Building a small M&A team in your company can have massive results. 2 people can reshape an organization in six months. I struggle to think of a more low headcount high impact activity pre scale.

In my neck of the woods - it’s feeling like 2008 again. As you’d expect, all the smaller contractors are getting obliterated first. Many of them haven’t had work in over a week and their staff is reaching out in desperation to find new work places. More bankruptcies to come.

4x'd EBITDA this year.

Want to own a home services company? @AizikZimerman and I are looking to back the next generation of entrepreneurs to build asset-heavy home services businesses (think septic, drains) How does it work?

Building teams has been one of my biggest challenges in the past two years. Team building is how scale happens and our whole team has 125 people now. We have built this from 10 people 7 years ago. Here’s what we are working on now. Teams seem to maximize around 6-8 people. What happens below that is small teams. We are working on this breakup now. The confusing part is they share a common goal: revenue. We divide responsibility for that goal by dividing scope of vision. OPs Manager: focused on monthly revenue and annual gross margin with Gross Margin Field Managers: (middle) focused on daily and weekly revenue with gross margin Team leaders: focused per call and daily revenue Technician: focused per call revenue Here’s how this looks:

We just wrapped up weeks of extremely tense negotiations, many times I thought the deal was lost. My opponent was a true negotiations master. I have never faced anyone his equal. But finally, just a few minutes ago it happened. My toddler peed in the potty.

Every year for seven years I have given a talk to our company. We call it: State of the Wilson. The first one had 9 of us. I presented my big plans for the company. My dad and wife stood in the back. 6 people sat. This week I’ll present to 120 people. 🤯

Passive income is overrated. If it’s passive it means someone else is getting all the value and you’re stuck with low returns. Met too many people getting started and trying to achieve passive income. Should be aiming for scalable income.

I’m still upset about how terrible the last season of GOT was. Time has not healed that wound.

Mine is: For the insane amount of road construction that exists I’ve never met a single person who works on road construction.

As someone who actually executes on the “I’ll buy a business and hire a manager so I don’t have to run it” model: it is WAY harder in practice and I roll my eyes anytime I see someone write that.

A few months ago - @STLChrisH dropped a post on how his business has nearly no AR. 50k. His business is roughly 5x my size and my AR was $1.6M. It was an unofficial challenge that we took on. I haven’t had AR under $1M for four years. Today, my AR sits at 190k!

Yea bro don’t pull up in a Q8 Would be big mistake. I mean buy it - just don’t drive that thing to work. Grab a 35k Ranger too

At what interest rate do you start paying cash for assets?

If they have no chance of building TO $1.83M in revenue then they have no change of growing FROM $1.83M of revenue. Stand by my point

I don’t understand why we had to write minimum word/page essays in school. I would think the truest showing of understand is a succinct. The highest grade should go to the person who explained a complicated concept in less than a paragraph.

Be like @BrentBeshore - Do No Harm Be like @xavierhelgesen - Hold Forever Be like @sweatystartup - Embrace The Dirt Be like @moseskagan - @girdley - @tsludwig Care about the people who built what you buy

Buy an SMB they said. Hire an operator they said. Sit back and relax they said. You’ll be rich they said.

The trick is you gotta out crazy them. You think I won’t run without an accounting department? Think again my friend. You think I won’t run without a marketing team - hold my beer.

My business could only grow as fast as I was capable of leading it. Personal development and business growth have gone hand in hand for me. Here’s 20 lessons learned:

Talked to an owner yesterday who started his company at 23. Did all the work himself for a bit. Started making 250k+ around 30. Now preparing for a 7 figure exit at 35. That’s cool.

I always assumed that if I spent 165k on a vehicle it would be a lambo or something dumb. Nope, way better. Papa is buying a new septic truck.

So our team started using Lovable. Shits ridiculous. Tearing apart our SAAS budget.

So You Wanna Buy a Business: You’re sitting here drinking your coffee. You think to yourself - man - this John guy is pretty cool. He thinks businesses are cool. Maybe I should buy one. Quite the leap and I appreciate the compliment. 👇🏼

Sometimes I wake up in the middle of the night and can't stop thinking about a question that haunts me. How many plumbers and electrical technicians died on the first Death Star when it blew up? 84 floors, 2,609,960,630 sq. ft total, they probably had to hire workers for all trades to basically just be working at all times. And that's just setup. That kind of work involves contracts, shifts, man hours. What was their reporting systems like? Where did the Empire cheap out? WHAT WATER SOFTENERS DID THEY USE? Anyways, these are the things I think about at two a.m.

Not everyone can or should go buy a business. The risk is real, the work is insanely difficult and the rewards often don’t make either worth it. Don’t believe the hype - this is a daily knife fight.

Owning a portfolio of service businesses, expectation vs. reality

Most Home Service co’s have the same problems at the same point. Stuck at 1M? Spend money on ads, get unstuck. 2M? Hire field manager. 4M? Hire OPs manager. 5M? Recruitment Engine. 10M? Professionalize, standardize. It makes the buy then fix playbook real easy.

Buy the building your business rents, they said. It’ll save money and build wealth, they said. All good until the building that worked for 5 employees no longer works for 35 and you’re making business decisions based on RE and not the other way around.

11 months sober lol What started out as “eh - I’ll try that” turned into a stance apparently.

As you age it’s crazy how fast smoking meats sneaks up on you. My whole life I have been completely indifferent to it then BAM Now I smoke meats like four times a week!

Going viral is wild. #31 podcast overall #1 business podcast #1 entrepreneurship podcast This is insanity Check out Owned and Operated - apparently we are a thing

Long tweet. Some thoughts on CEO Focus in founder led SMBs: This is just my own lived experience and my thoughts are ever changing as my life and role develops. Mid December of ‘22 I was sitting there considering how to handle two business units. Both were struggling and heading downhill. Both had consumed hundreds of thousands of $. Both had been problems for a long time. I was working through napkin math/thoughts on keep vs kill. Both had: - declining demand - GM% dropping - rev dropping - bad sales processes - shitty AR in good times One had the potential for 70% GM and the other would max out at 25%. We killed the lower GM% division and invested into the higher GM% division and the revenue 6x’d over the next few months. We took the resources from the killed division and placed them into more productive teams. The 1.5M of revenue that we dropped there was replaced within 3 months. Another story: Mid March I got annoyed that we weren’t driving profit through our call center. Not sure why it bothered me so much but it did. We focused hard for a month and began driving revenue through our call center both through Membership sales and Promotional sales. It worked like crazy! We are now driving dozens of new memberships and a few dozen promotions sold a month purely through our call center. When I think back on the needle movers throughout the business over the past year they were primarily driven by me as the CEO, and then handed off. - new team launches - investments into existing teams - team shut downs - new sales channels - game changing sales hires And any time I tried to delegate a foundation shifting move, it didn’t work as well. A while ago this would have bothered me that the business couldn’t drive these things on their own but I think I understand a little better now. @markbrooks tweeted some time ago that you cant delegate growth to managers and I think about that daily now when thinking on what I should be working on. What’re the thing that ONLY I could be working on. Managers manage. They can drive growth of their team if you give them runway but they aren’t going to constructively break something or take big risks. They’re unlikely to double a division without executive support. It’s not their job, their job is to manage what you’ve built already. I missed this point for a long time and was focusing on all the wrong things while attempting to delegate growth to people not equipped to do what was needed. It’s all more obvious now. The things that get my attention/my presidents attention explode in growth. It makes sense, executive focus is a superpower in a small business. But giving attention is HARD when every day is a fight with a hundred problems. It’s a real challenge to give concentrated effort to any one specific thing for long enough to drive it forward. There are only 1-2 roles in a SMB that can move mountains and I happen to be in one of those. “Delegate and elevate” sounds super fun but you don’t want just anyone making multi million dollar decisions without REAL trust. The goal now is to find that third person who is capable and armed with the power to DRIVE change and growth - whatever that takes.

We had a remote employee hire someone else to do her job for about three weeks and she pocketed the difference. I’m not even mad, that’s hilarious! Definitely part of why we insist everyone above “base level” be in person.

Service agreement = recurring revenue for home service businesses Plumbers have ‘em. So does: HVAC Septic Roofing Pest control Power washing You don’t have to go to SaaS for recurring revenue

What businesses are the most recession resistant?

EBITDA don’t pay the bills.

Inflation or not, recession or not. Everybody poops. I love my business.

“I wonder what my grandfather would think of this?” This rolls through my head 20 times a day. He founded in 1958. Grew it to 5 EE before selling it to my dad. Died before it got big. Has no idea what he started. I wonder what he would think of us coming up on $30M.

@agazdecki blew my mind today. He’s built and SOLD 3 businesses, one in crypto, one in SAAS, and one job board. He's grown another startup from $0 to $2MM in rev. He's now grown @microacquire to $600,000+ in ARR. Andrew is a total baller, check out the episode on today's pod!

Subscribe to Owned and Operated Weekly Insights: tinyurl.com/OaOnewsletter I've seen a lot and I'm sharing it all. Get the full rundown on the wild rides (and faceplants) from my experiences in the home service industry. I'm breaking down marketing, recruitment, infrastructure, acquisitions, and more! Cya there.

Found an old pic: Me running my first company meeting discussing our move to Servicetitan, Flat Rate Pricing and going paperless. 2015 - I was 23 here!

Most Home Service co’s have the same problems at the same point. Stuck at 1M? Spend money on ads, get unstuck. 2M? Hire field manager. 4M? Hire OPs manager. 5M? Recruitment Engine. 10M? Professionalize, standardize. It makes the buy then fix playbook real easy.