Latest / Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast / Why Everyone Is Buying Home Service Businesses (And You Should Too)

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Why Everyone Is Buying Home Service Businesses (And You Should Too) · Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast

• 0:00
  SPEAKER_00: Interest in the trades is only going to accelerate, frankly, just because we need it.
• 0:03
  SPEAKER_01: There's legitimate sub-industries that you buy into and then in two years, 6X multiple on a sub-1 million dollar EVD.
• 0:09
  SPEAKER_00: I've never heard anyone like buy a plumbing or HVAC company and be like, yeah, dude, it's easy.
• 0:13
  SPEAKER_01: There's a intersection of customer service and technicality.
• 0:17
  SPEAKER_00: What I have learned is being successful in this industry has almost nothing to do with intelligence.
• 0:24
  SPEAKER_00: And like everything to do with like how much pain are you willing to endure.
• 0:28
  SPEAKER_01: That cohesion of being able to have what you're not is what makes and breaks a lot of the early businesses.
• 0:33
  SPEAKER_00: It's hard to distinguish like, is this a job or a business?
• 0:36
  SPEAKER_00: Like, what's your take on that?
• 0:37
  SPEAKER_01: The biggest mistake I see people make is not.
• 0:52
  SPEAKER_00: I am your host, John Wilson.
• 0:53
  SPEAKER_00: And on this show, we talk about home service businesses, how to buy them, how to grow them, and pretty much anything else we want.
• 1:01
  SPEAKER_00: Pretty much anything else.
• 1:02
  SPEAKER_00: Pretty much anything else we want.
• 1:03
  SPEAKER_00: Pretty much anything else we want.
• 1:05
  SPEAKER_00: Today we are talking about why are home service businesses the hot chick at the bar right now?
• 1:11
  SPEAKER_00: Why are they the ultimate boring business?
• 1:14
  SPEAKER_00: And everybody now is like trying to find the unsexy business.
• 1:18
  SPEAKER_00: Uh, and apparently that's plumbing.
• 1:20
  SPEAKER_00: I think plumbing's super sexy, but you know, to to the outsider, it's not they're not there yet.
• 1:24
  SPEAKER_01: Yeah, it's been weird.
• 1:26
  SPEAKER_01: I and it's I feel like it's accelerating too.
• 1:29
  SPEAKER_01: Um, yeah, in the sense that I now get random messages from people like old friends, like, hey, I put my sister-in-law onto owned and operated to learn about home service businesses.
• 1:41
  SPEAKER_01: And I'm like, Yeah, uh sweet, awesome.
• 1:43
  SPEAKER_01: Or the guy that owns the the trampoline park down the way stops me at the gym, is like, hey, are you Jack?
• 1:49
  SPEAKER_01: I'm like, this is weird, man.
• 1:50
  SPEAKER_01: This is this isn't what I expected three years ago when we started this or started.
• 1:55
  SPEAKER_00: People are, yeah, people are into it.
• 1:57
  SPEAKER_00: Um, I I and I think like it is becoming more and more of a haven.
• 2:03
  SPEAKER_00: I was I'm on uh Reddit.
• 2:04
  SPEAKER_00: Reddit is apparently like my social media of choice now.
• 2:08
  SPEAKER_00: And so I'm on Reddit and there's like a small business subreddit.
• 2:12
  SPEAKER_00: And you know, like I don't even know.
• 2:14
  SPEAKER_00: Millions of people are on that sub.
• 2:16
  SPEAKER_00: But what is kind of funny is like most of the questions or like conversations going around that sub are home service related.
• 2:22
  SPEAKER_00: And it that has definitely been accelerating over the past like year or two, where it's just more people being like, I'm launching a painting company or power washing, or I mean, sometimes it's plumbing HVAC electrical, but often it's just like home service in general.
• 2:35
  SPEAKER_01: Yeah, and even further to further that, like I feel like a lot of the sub businesses, like this fractional CFOs are now fractional CFOs for HVAC companies or for home service companies.
• 2:46
  SPEAKER_01: It's a very interesting transition that um I mean I didn't explain.
• 2:50
  SPEAKER_00: Well, my friend, yeah, my friend Tyler's doing that from Profit and Grit.
• 2:53
  SPEAKER_00: Like, all he's doing is home service companies, and uh like that's their entire business.
• 2:59
  SPEAKER_00: And he's like, Yeah, I think he thinks he could build like a giant business just serving home service companies, which I agree.
• 3:06
  SPEAKER_00: I mean, there's probably tens of millions of like people inside that sphere or companies inside that sphere.
• 3:12
  SPEAKER_01: Do you think that the market or the the kind of industry is growing as a whole?
• 3:16
  SPEAKER_01: Are there more companies?
• 3:17
  SPEAKER_01: I mean, naturally there's gonna be more companies, but how much of that do you feel like is actually conversion from maybe people who weren't on social media and own home service companies to now, hey, I own bought a home service company and now I'm on social media.
• 3:32
  SPEAKER_01: So for example, your dad, like your dad wasn't on LinkedIn or Reddit, um, and you are.
• 3:37
  SPEAKER_01: So how much of it is that versus new businesses coming into play?
• 3:41
  SPEAKER_00: I think a bunch of it is um, I think there's a a few like factors that are big.
• 3:46
  SPEAKER_00: Like I think Alex Hermozzi and Cody Sanchez have brought a lot of attention to like the boring business.
• 3:52
  SPEAKER_00: Um, I think that in the early 2000s or 2020s, uh, there was a really big emphasis on SBA debt and like the silver tsunami, and there's just so many service businesses out there.
• 4:05
  SPEAKER_00: And I think this sort of entrepreneurship through acquisition started to become more of the thing.
• 4:10
  SPEAKER_00: Um, but I remember in it was probably 2019 or 2020, I was listening to a podcast and someone on that podcast, which was like a a sophisticated person, uh said something along the lines of like, you know, you've never heard of a plumbing company failing.
• 4:28
  SPEAKER_00: And and I was like, oh my god, are people gonna start buying plumbing companies?
• 4:35
  SPEAKER_00: Which, you know, then they did.
• 4:37
  SPEAKER_00: But uh, but it was kind of funny.
• 4:39
  SPEAKER_00: Um so and then now I think you just have all of this content out there, specifically like the tick TikTok, I think, most especially, where it's just helping push more and more young people into the trades.
• 4:53
  SPEAKER_00: Like I'm hearing um more than ever.
• 4:58
  SPEAKER_00: Just like random people text me and be like, hey, my son's thinking about becoming an electrician, what do you think?
• 5:02
  SPEAKER_00: My son's be thinking about becoming an HVAC tech, what do you think?
• 5:05
  SPEAKER_00: It's becoming like a movement where like more and more people than ever are like trying to figure out their life inside the trades.
• 5:12
  SPEAKER_00: So I feel like all those different things, like there's just more attention to it, it's less technological, it's a hard, it's a skill, it's a hands-on skill, and like people can make good money.
• 5:21
  SPEAKER_00: Like, it's a good thing.
• 5:24
  SPEAKER_00: Most home service companies don't stall because of demand, they stall because they run out of good people.
• 5:29
  SPEAKER_00: Finding solid help fast is hard, especially in this industry.
• 5:34
  SPEAKER_00: And that's where Quick Staffers comes in.
• 5:36
  SPEAKER_00: They help home service companies build reliable virtual teams that actually understand how the trades work.
• 5:42
  SPEAKER_00: Quick Staffers provides vetted, remote staffed who are already trained on Service Titan and use proven SOPs, the same as the ones that I use at Wilson.
• 5:51
  SPEAKER_00: These are VAs you can plug in from day one to handle customer service, lead follow-up, scheduling support, and a ton more.
• 5:58
  SPEAKER_00: They've been a huge help in scaling my team without the usual hiring headaches.
• 6:02
  SPEAKER_00: Check them out at the link below.
• 6:05
  SPEAKER_01: Yeah, and so I'm gonna ask this up front versus at the end because I think it's I'm I'm curious what your thought is.
• 6:12
  SPEAKER_01: How much of this is um going to stay and how much of this is trend of the week?
• 6:18
  SPEAKER_01: Because like we saw this trending with real estate back in the the 2000 or 2010 to 2020.
• 6:25
  SPEAKER_01: We saw um car washes get hit really hard with this, we saw pest control get hit really hard with this.
• 6:31
  SPEAKER_01: We saw um the what was the big one?
• 6:34
  SPEAKER_01: Uh self-storage was huge, what like 2018 to 2022?
• 6:38
  SPEAKER_01: Like, is this a trend or do you feel like this this uh continues?
• 6:42
  SPEAKER_00: I think that interest in the trades is only going to accelerate over the next 10 to 15 years, frankly, just because we need it.
• 6:49
  SPEAKER_00: Like, I think if you think about um, hey, everybody went into computer science in the early 2000s because that's where jobs were.
• 6:57
  SPEAKER_00: So they went there because like there was a promise that like you could make a living here.
• 7:01
  SPEAKER_00: And they went to coding boot camps and they did, you know, did all this sort of like alternative education, and then they made good money.
• 7:07
  SPEAKER_00: And I think that this is just the next iteration of that, where over the next decade we're gonna see a lot more emphasis on trade schools and hard skills.
• 7:14
  SPEAKER_00: And um hopefully we don't overcorrect because like we obviously do need tradespeople, but like we also do need accountants, like we doctors, nurses.
• 7:23
  SPEAKER_00: You know, we do need like other, you know, whereas I so I it whereas I feel like we definitely overcorrected way past the trades to the point of like now the country is like, hey, we actually need people to work on our infrastructure.
• 7:34
  SPEAKER_00: Um so I think as far as talent goes, the next 10 years, I feel like there's gonna be more and more influx, more and more resources.
• 7:41
  SPEAKER_00: I think as far as value goes, um, I think they're gonna stay valuable.
• 7:45
  SPEAKER_00: Uh, but I I don't think it's gonna um I mean car washes they stayed no one needs to get their car wash.
• 7:54
  SPEAKER_01: They still stayed valuable too, though, right?
• 7:56
  SPEAKER_01: They they still stayed valuable.
• 7:57
  SPEAKER_01: You're not buying a car wash at 3x anymore either.
• 8:00
  SPEAKER_01: Like they stayed valuable, they just lost their like the the online social like push that we were seeing.
• 8:06
  SPEAKER_01: The storage units still valuable, right?
• 8:09
  SPEAKER_01: Nobody's selling a storage unit at, you know, I I guess that's up based on cap rates and not multiples of revenue or or EBITDA, but still like they're still expensive.
• 8:18
  SPEAKER_01: So I think that they just hit a point where that's that's why real estate fizzled out too in circa 2020.
• 8:24
  SPEAKER_01: It's like, hey, oh, rates started to climb again.
• 8:26
  SPEAKER_01: Now we can't buy real estate at the rate we were.
• 8:30
  SPEAKER_01: So maybe it's a rate-in-place equation as well, where you can buy or start a home service company and still make a ton of money.
• 8:38
  SPEAKER_01: Um, there's still a lot of opportunity to grow the business versus hey, you don't have to buy a huge asset heavy business that you're you're paying 7% on or something.
• 8:47
  SPEAKER_01: Yeah.
• 8:48
  SPEAKER_01: Ironically, though, I after I say that, I realize like the SBA debt is prime plus two, which is probably way worse.
• 8:56
  SPEAKER_00: I mean, it's probably like nine or ten or eleven or something.
• 8:59
  SPEAKER_00: I don't even know.
• 9:00
  SPEAKER_00: Um but yeah, I think um I think values are gonna like stay like better than they were 10 years ago, or probably worse than they were, you know, today, tomorrow.
• 9:10
  SPEAKER_00: I I do also think I believe we're getting ready to see like the kind of a historic run-up of trades.
• 9:18
  SPEAKER_00: Um but mo I mean, most people I know there's just not many large legacy.
• 9:27
  SPEAKER_00: I mean, obviously everyone knows this.
• 9:28
  SPEAKER_00: There's not many large legacy operators there anymore.
• 9:30
  SPEAKER_00: They've all partnered with somebody.
• 9:32
  SPEAKER_00: Um so it it'll be it's interesting to watch like the new people take out the incumbents.
• 9:38
  SPEAKER_00: But yeah, I think people are leaving finance.
• 9:41
  SPEAKER_00: I think they're leaving, I mean, in inside the whole like SMB Twit community, half of the people were like ex you know, management consultants that went and bought a landscaping company or roofing company or plumbing or whatever.
• 9:53
  SPEAKER_00: I have 10 friends that were like they worked at McKinsey or something and now they own a plumbing company.
• 9:59
  SPEAKER_01: Yep.
• 9:59
  SPEAKER_00: Uh and I I do think that that part's only accelerating.
• 10:02
  SPEAKER_01: I agree.
• 10:03
  SPEAKER_01: I think that I mean there's a big part of it though, right?
• 10:06
  SPEAKER_01: It's the value engine that our generation was promised.
• 10:09
  SPEAKER_01: We found that wasn't necessarily the case.
• 10:12
  SPEAKER_01: Um, right.
• 10:13
  SPEAKER_01: You just mean like traditional college, traditional college, get a six-figure job, and then you're essentially set for life.
• 10:20
  SPEAKER_01: And wages didn't pace the same rate as um inflation.
• 10:26
  SPEAKER_01: And so we found out, hey, like that's not necessarily the case.
• 10:29
  SPEAKER_01: And so the intellectual middle class um realize that there might be a different route to generational wealth.
• 10:36
  SPEAKER_00: Or just, I mean, even on just like in working inside the business, like that is the six-figure income, is like you go electrical.
• 10:44
  SPEAKER_01: I I I mean, I fully agree.
• 10:46
  SPEAKER_01: I just I just think that that there's the right, like you kind of said earlier, there people are searching pathways, and the pathway used to be computer science.
• 10:54
  SPEAKER_01: Yeah, now the pathway is maybe it's business ownership, maybe it's just trades, maybe it's somewhere in those kind of sectionalities of um like the industry.
• 11:06
  SPEAKER_00: I want to hit why real quick.
• 11:07
  SPEAKER_00: Something that I think is pretty unique to home service, um, versus like some of the alternatives out there.
• 11:14
  SPEAKER_00: Uh the word fragmentation gets brought up a lot.
• 11:17
  SPEAKER_00: And what fragmentation means is uh there's just a lot of competitors.
• 11:21
  SPEAKER_00: And I think people struggle to conceptualize exactly how many competitors.
• 11:25
  SPEAKER_00: So it's fragmented, there's it's essential.
• 11:28
  SPEAKER_00: Like in, you know, we compared it to car wash, like no one needs to get their car washed.
• 11:32
  SPEAKER_00: Everyone does need heat or they need water, like it's a human need.
• 11:36
  SPEAKER_00: So it is it is um essential, and then you can't like offshore the mechanical work or or a robot ties it or automate it or whatever.
• 11:48
  SPEAKER_00: Like there's still a very manual component to it.
• 11:50
  SPEAKER_00: And there's no limit in all three of those things.
• 11:52
  SPEAKER_00: Yeah, there's like, yeah, basically.
• 11:54
  SPEAKER_00: So all three of those things make this like a hard to defeat model.
• 11:59
  SPEAKER_00: Now, I think what gets quoted a lot is how much competition there is inside big cities, which is totally true.
• 12:04
  SPEAKER_00: But something I think is just crazy, just because of all the like amount of companies that we look at and talk about buying and just we're in the industry, there, I mean, there are just millions and millions of these businesses.
• 12:18
  SPEAKER_00: And it's like, you know, if you get if I if I go 30 minutes outside into absolute nowhere Ohio, there's can there's little businesses doing one to three million dollars of revenue providing a service that for their like 10,000 person population town that's like driving income for the owner, driving income for the team.
• 12:40
  SPEAKER_00: And like that's fragmented to me.
• 12:42
  SPEAKER_00: I mean, it's like basically like a haircut.
• 12:44
  SPEAKER_00: So, like, yeah, there's a great clip or there's a whatever in your area, but like people are only gonna like Google can compete wherever, but like Jim Bob's plumbing is only competing within the 10 mile range that it operates.
• 12:56
  SPEAKER_01: There's geo geographical constraints on how far service areas can actually be.
• 13:00
  SPEAKER_01: And so there's lots of competitors in the big city where there's lots of people, but right, you still have to can you still have to have that service for anywhere that people are living, and in most of the you know, lower 48, that's almost countrywide, right?
• 13:13
  SPEAKER_01: I mean, if you think about the vast vast size of the city, I mean yeah, and the the wilder part is that some of those businesses they're doing massive numbers on just like a small subsect of the population.
• 13:26
  SPEAKER_01: Like this is a town of 30,000, and they're the only HVAC 10 million dollars.
• 13:31
  SPEAKER_01: Yeah, they're doing 10 million dollars, but they've also been there for 50 years.
• 13:34
  SPEAKER_01: They're they have a spot in downtown wherever, but I it's just incredible, and they're just an integrated part of that community.
• 13:41
  SPEAKER_00: I'm always I'm always just so blown away.
• 13:44
  SPEAKER_00: Um, I'm so blown away by it.
• 13:47
  SPEAKER_00: Uh because yeah, I'll drive through like a small town and I'll pass like five HVAC companies, and I'm just like, holy smokes.
• 13:54
  SPEAKER_00: And like, you know, each one of these is like providing an income for their family, and it it's interesting, but to me, like fragmentation is probably the biggest reason that this makes sense because you can only like if you think about home service in general, like yes, I can go launch an e-commerce store and compete against the whole world, or you can launch a carpet cleaning company and you're competing with people within a 20-minute drive of you.
• 14:19
  SPEAKER_00: And if there's no one within a 20-minute drive of you, then you're not competing against anybody.
• 14:23
  SPEAKER_00: And it's kind of like a wild, it's kind of wild.
• 14:26
  SPEAKER_00: And there's so many different ways to take it.
• 14:29
  SPEAKER_00: Like carpet cleaning is an example, even just like cleaning.
• 14:32
  SPEAKER_00: Yeah, like I there's like every business in the world is just crazy.
• 14:36
  SPEAKER_01: Cleaning, plumbing, pool cleaning, pool routes.
• 14:40
  SPEAKER_01: I mean, it it's just it's across the board.
• 14:42
  SPEAKER_01: There's so many services.
• 14:44
  SPEAKER_00: Yeah, it's it's so wild.
• 14:46
  SPEAKER_00: It's so wild.
• 14:47
  SPEAKER_00: Uh, I do think something that catches a lot of people by surprise is like, hey, it's a hard, it is hard.
• 14:55
  SPEAKER_00: So there's a lot of good, and you know, we've gone over all the good, but like it is not easy.
• 15:01
  SPEAKER_00: I've never heard anyone like buy a plumbing or HVAC company and be like, yeah, dude, it's easy.
• 15:06
  SPEAKER_00: Easiest thing ever.
• 15:07
  SPEAKER_01: Yeah.
• 15:07
  SPEAKER_00: It is smashing your head against the wall for like every day for a decade.
• 15:12
  SPEAKER_01: Night fight like it is knife fight every day.
• 15:14
  SPEAKER_00: It's a knife fight, it's a knife fight because it is a competitive space.
• 15:18
  SPEAKER_00: Staffing is challenging, as in like getting the staffing that you need.
• 15:22
  SPEAKER_00: It's a people business.
• 15:23
  SPEAKER_00: Like, it's not software where you can just code something, like it's working with people, a lot of people.
• 15:29
  SPEAKER_00: Um, seasonality gets weird.
• 15:31
  SPEAKER_00: Like power washing is such a good example.
• 15:33
  SPEAKER_00: Like power washing in Ohio or like pool cleaning in Ohio, you basically operate for like five months out of 12.
• 15:39
  SPEAKER_00: So like you got to make a lot of money in five months.
• 15:42
  SPEAKER_00: And then like managing growth amid all the reinvestment, and that gets tricky.
• 15:45
  SPEAKER_00: Like, is it time to buy a truck?
• 15:46
  SPEAKER_00: Is it how do I do these tools?
• 15:49
  SPEAKER_00: Um yeah.
• 15:51
  SPEAKER_00: So, like good good business on paper, there's a ton of great attributes, but like it is a hard business.
• 15:57
  SPEAKER_01: Yeah, I think that what's overestimated sometimes is there's the there's the or underestimated, is there's a intersection of customer service and technicality that needs to be had in any of these businesses, right?
• 16:11
  SPEAKER_01: There's a skilled trade, which requires skilled tradesmen, even I mean, I'm not talking bad about them, even pool cleaning.
• 16:17
  SPEAKER_01: Like there is a knowledge of chemistry that needs to be understood, carpet cleaning.
• 16:22
  SPEAKER_01: You have to understand how to use the colour.
• 16:24
  SPEAKER_01: And then, yeah, and then you have to be able to run a business.
• 16:28
  SPEAKER_01: And so, like that intersection of, oh, I'm a good businessman or woman, and oh, I can also do that trade well, or I can hire for that, um, is a very difficult thing that I think is underestimated.
• 16:40
  SPEAKER_00: Yeah, no, I I totally agree.
• 16:41
  SPEAKER_00: And I think this is what got a lot of people in trouble in um like the early sort of rounds of this is hey, I'm a smart human being, and uh so I'm gonna go buy this plumbing company and I'm gonna professionalize sales, marketing, recruiting, operations, whatever.
• 16:59
  SPEAKER_00: Like, totally, totally.
• 17:01
  SPEAKER_00: Like what I have learned is being successful in this industry has almost nothing to do with intelligence and like everything to do with like grit or like just how much pain are you willing to endure?
• 17:16
  SPEAKER_00: Yeah, for how long?
• 17:17
  SPEAKER_01: I said that about one of the the old timers I met a long time ago.
• 17:21
  SPEAKER_01: I was like, could you imagine doing the seasonality of HVAC as an HVAC only company for 40 years of like just how that dude is hardy as hell?
• 17:30
  SPEAKER_01: He has he probably eats nails for breakfast, nothing gets under his skin.
• 17:35
  SPEAKER_01: But like that, that's really what it is is 40 years of seasonality and still being in business is incredible.
• 17:41
  SPEAKER_01: Like it is that difficult that it'll just it builds some character.
• 17:46
  SPEAKER_01: Let's just say that.
• 17:47
  SPEAKER_00: Yeah, yeah.
• 17:48
  SPEAKER_00: Yeah, it does.
• 17:49
  SPEAKER_00: Yeah, but I but I also think I think that's kind of exciting because to me, there's um there's some industries that I would never do well in because like I'm not the sharpest tool in the shed.
• 18:00
  SPEAKER_00: But apparently one where all you have to be is really stubborn for like a decade straight and be willing to get punched in the face a lot.
• 18:07
  SPEAKER_00: Like I do okay in that one.
• 18:09
  SPEAKER_00: But like there's so many, like I'm you know, I'm not that, I'm not uh super bright.
• 18:12
  SPEAKER_00: So like I'm grateful to be in the industry I'm in.
• 18:15
  SPEAKER_01: I'm not gonna there, I have no comment on there because I was like, I think John's kind of smart.
• 18:20
  SPEAKER_01: So now that now now I feel like I'm not the smartest tool in the shed either.
• 18:24
  SPEAKER_01: Sharpest.
• 18:25
  SPEAKER_01: See, look at that.
• 18:26
  SPEAKER_01: That's right.
• 18:27
  SPEAKER_01: Embarrassing myself live.
• 18:28
  SPEAKER_00: What do you think about like uh one one of the dangers is as people are looking at this, they're but they're it's hard to distinguish like, is this a job or a business?
• 18:37
  SPEAKER_00: Like, what's your take on that?
• 18:39
  SPEAKER_00: As your business grows, the financial decisions get a lot more expensive.
• 18:43
  SPEAKER_00: Things like hiring techs, buying trucks, raising pricing, and marketing.
• 18:48
  SPEAKER_00: If you're making those decisions without really understanding your numbers, you're probably leaving a pile of money on the table.
• 18:53
  SPEAKER_00: And that's where profit and grit comes in.
• 18:55
  SPEAKER_00: Tyler has built, scaled, and sold a$25 million service business.
• 19:00
  SPEAKER_00: So his advice comes from real operating experience.
• 19:03
  SPEAKER_00: You'll work with him directly to improve your cash flow, understand your margins, and build better forecasts to make you more confident as you make decisions as you grow.
• 19:12
  SPEAKER_00: One client increased bottom line profit by 11% after fixing pricing, improving job mix, and stabilizing their cash flow.
• 19:19
  SPEAKER_00: If you're doing between three and five million a year and you want more clarity around your finances, book a free 20-minute strategy call at the link below.
• 19:27
  SPEAKER_01: Yeah, I think I think the biggest um risk that people take when they're buying a business, especially in the home service, is understanding that business prior.
• 19:38
  SPEAKER_01: So I know myself and I know as I've walked, you know, countless operators through their first acquisition, the biggest mistake I see people make is not understanding the industry they're buying into.
• 19:49
  SPEAKER_01: And it it's happened to me twice.
• 19:51
  SPEAKER_01: Uh, I've been lucky enough to kind of dodge some bullets, but others have not.
• 19:55
  SPEAKER_01: Uh, and that's specifically around like construction versus remodel versus residential.
• 20:01
  SPEAKER_01: And so when we talk about boring businesses, a lot of times what we're referring to is like residential service, but there's other businesses in that resie sectional that are kind of construction adjacent.
• 20:13
  SPEAKER_01: And I think what happens a lot of times is people here buy a home service business and then they go and they buy a home construction business, and then they have this looming debt service over their head, and they either have bad cash terms, or and that I mean that goes for commercial too, they have bad cash terms or uh the industry slows, right?
• 20:37
  SPEAKER_01: We saw it in 22, which is crazy.
• 20:39
  SPEAKER_01: That wasn't that long ago, yeah.
• 20:40
  SPEAKER_01: Where the home building market almost ground to a halt, and if you had 10,000, 20,000,$30,000 in debt from buying that business looming over you, you didn't install anything for six months.
• 20:51
  SPEAKER_01: And so you have to have six months worth of payments saved up, and it's just that that just doesn't happen.
• 20:57
  SPEAKER_01: So that's the biggest mistake I see.
• 21:00
  SPEAKER_01: And what worries me about the industry is making sure that when you're buying in, you know what the difference is.
• 21:05
  SPEAKER_01: Um and the differences in electrical, the differences in plumbing, they can be pretty razor thin.
• 21:11
  SPEAKER_01: Like you could hear, hey, no, we do a lot of residential um rough ends and install and not realize that well, they're doing, you know, what do they call it?
• 21:19
  SPEAKER_01: Um custom homes.
• 21:21
  SPEAKER_01: Same thing, it's construction.
• 21:23
  SPEAKER_01: Like that is a construction business um through and through.
• 21:26
  SPEAKER_01: So I mean, you had to shut down a million dollar plus vertical, I had to shut down a million dollar plus vertical, it bites us all.
• 21:32
  SPEAKER_00: Yeah, unfortunately, I've had a lot of friends go through just a tremendous um amount of pain, like learning that lesson, which sucks.
• 21:39
  SPEAKER_00: Um But yeah, I also think like what size are you buying and what does the owner do?
• 21:44
  SPEAKER_00: Uh, like I've bought a business that was a million dollars that the owner was like legitimately a passive owner.
• 21:50
  SPEAKER_00: And I've also bought a business that was four million dollars, and the owner was like the key driver of that business.
• 21:55
  SPEAKER_00: So size is not the thing that matters the most.
• 21:58
  SPEAKER_00: You have to like sort of look inside the business.
• 22:00
  SPEAKER_00: And um figure it out.
• 22:02
  SPEAKER_01: Yeah, if the structure's fine, yeah, management, how that's set up, do they have service managers, do they have install managers?
• 22:09
  SPEAKER_01: And then I think the the last bit that goes really well with that is understanding what your skill set is and fitting that into the puzzle nicely.
• 22:17
  SPEAKER_01: Like I'd rather take a business where the owner was doing a lot of the technical stuff, the operational stuff, and I because I'm an operational guy.
• 22:25
  SPEAKER_01: I'll take that over and it has a solid sales team.
• 22:29
  SPEAKER_01: But there's people who are amazing salesmen, they're great at local service marketing.
• 22:34
  SPEAKER_01: Um, like they should buy a business that may be smaller or bigger, but has a good technical team in place because that that cohesion of being able to have what you're not and understanding that about yourself is what makes and breaks a lot of the early businesses.
• 22:50
  SPEAKER_00: All right.
• 22:50
  SPEAKER_00: So we're five, 10 years into like into sort of a heavy amount of act uh consolidation inside the trades.
• 22:58
  SPEAKER_00: Do you think do you still think there's opportunity?
• 23:00
  SPEAKER_01: Yeah, it's that fragmentation again.
• 23:02
  SPEAKER_01: There's huge opportunities.
• 23:03
  SPEAKER_00: Yeah.
• 23:04
  SPEAKER_01: Yeah.
• 23:04
  SPEAKER_01: I mean, 30 minutes south of Nashville, right?
• 23:07
  SPEAKER_01: There's Spring Hill.
• 23:08
  SPEAKER_01: There's five HVAC companies in Spring Hill.
• 23:11
  SPEAKER_01: Spring Hill has put so many houses in in the last 10 years that they're not allowed to put any more houses in because their sewers are overloaded.
• 23:18
  SPEAKER_01: So, like, that's how much infrastructure has been put in, or not infrastructure, excuse me, housing has been put into that area.
• 23:27
  SPEAKER_01: And so there's there's massive amounts of relocation across countries.
• 23:31
  SPEAKER_01: Um, so like there's just I think that this is still a early industry and not just an HVAC plumbing electrical.
• 23:39
  SPEAKER_01: I'm talking again, all of them.
• 23:41
  SPEAKER_01: All of them.
• 23:42
  SPEAKER_00: Yeah.
• 23:42
  SPEAKER_00: No, I I I think I agree.
• 23:44
  SPEAKER_00: Some something I think is kind of funny is people get um they think that HVAC is like picked over, is the word that I hear uh get used a lot.
• 23:53
  SPEAKER_00: And like my best answer to that is in 2021, like Wilson did five 4.8 million dollars in 2020.
• 24:04
  SPEAKER_00: And today we will do like 53.
• 24:08
  SPEAKER_00: So like yes, during the first wave of consolidation, like we we didn't even like exist really as like a potential target.
• 24:16
  SPEAKER_00: Um and I can I can say that of like I have 20 friends that have the same story where in 2020 they were either like a million or some some of them weren't even in the industry yet.
• 24:26
  SPEAKER_00: You weren't in the industry yet.
• 24:28
  SPEAKER_00: And they entered in 21, 22, 23, and like that business now is like a 30 plus million dollar business.
• 24:35
  SPEAKER_00: So I I think that like there is still opportunity because there's still so many other companies that have not been brought in.
• 24:41
  SPEAKER_00: There's still verticals that have not been touched yet, but also in the first wave of consolidation, all of those legacy companies have basically been replaced by new participants.
• 24:52
  SPEAKER_01: I'd also argue that there's probably more opportunity now, in the sense that yeah, maybe HVAC H I don't actually disagree that HVAC quote unquote has been picked over.
• 25:02
  SPEAKER_01: I think if you're only looking at on-market deals, yes, that is going to be the case.
• 25:06
  SPEAKER_01: If you're on biz by sell only, um looking at deals, yeah, you the they're getting more expensive, right?
• 25:12
  SPEAKER_01: Because it's becoming a more valuable, more popularized industry.
• 25:16
  SPEAKER_01: There's more buyers.
• 25:17
  SPEAKER_01: But if you look at painting, for example, like painting is just starting to go through.
• 25:22
  SPEAKER_01: I've seen a few of the first big roll-ups starting to go in place.
• 25:25
  SPEAKER_01: Septic.
• 25:26
  SPEAKER_00: Which that feels like painting feels like a hell of a I don't know.
• 25:30
  SPEAKER_00: Like, I've got question marks in my head around rolling up painting, but not my point.
• 25:34
  SPEAKER_01: But my point is like septic's starting to see the first big roll-ups.
• 25:37
  SPEAKER_01: There's like three or four big consolidators that are starting to move into the market.
• 25:41
  SPEAKER_01: And so, point being is that if you were to jump into one of these non non-popular boring businesses like Septic, like there's a huge opportunity in Septic right now.
• 25:52
  SPEAKER_01: We've seen it.
• 25:53
  SPEAKER_01: Um I mean, even in the last year, what uh home not remedi remediation, what's that called?
• 26:00
  SPEAKER_01: You cut and dry.
• 26:02
  SPEAKER_00: Yeah, yeah, damage remediation.
• 26:04
  SPEAKER_00: That has been that has popped off.
• 26:06
  SPEAKER_00: Like people are buying these things for like five, six times for sub-million EBITDA businesses.
• 26:11
  SPEAKER_00: Like it's really gotten crazy.
• 26:13
  SPEAKER_00: And so imagine buying that doesn't make sense if you understand the industry.
• 26:16
  SPEAKER_00: It's like what?
• 26:17
  SPEAKER_01: But point being, like, if you're getting in, I don't want to say it's a lottery ticket, but like there's legitimate sub-industries that you buy into, and then in two years you go from hey, 2x multiple to a 6x multiple on a sub-1 million dollar EBITDA.
• 26:32
  SPEAKER_01: Um, I think roofing still has a lot of opportunity.
• 26:34
  SPEAKER_01: I think pest control now still has a lot of opportunity.
• 26:37
  SPEAKER_01: Um I think that there's a lot of industries that are not HVAC, HVAC plumbing, plumbing, yeah that um like are still huge.
• 26:45
  SPEAKER_01: Even even HVAC and plumbing are still huge, but you just have to buy it slightly differently.
• 26:49
  SPEAKER_00: Awesome.
• 26:50
  SPEAKER_00: I my take is home service is basically the ultimate boring business.
• 26:54
  SPEAKER_00: I think that like it has all the right ingredients um to basically be the perfect boring business.
• 27:03
  SPEAKER_00: It's because I think when I think when I think about the alternatives that I consider to be boring businesses, like they have attributes I don't like.
• 27:12
  SPEAKER_00: Like I've always thought haircut was interesting, but like the average ticket's like 15 bucks.
• 27:17
  SPEAKER_00: Whereas like plumbing the average tickets, you know, a thousand dollars or something.
• 27:21
  SPEAKER_00: Um it's essential versus non-essential.
• 27:24
  SPEAKER_00: And like, yeah, I I just think I I think home service is the ultimate.
• 27:28
  SPEAKER_01: I I do think that there's other opportunities, right?
• 27:30
  SPEAKER_01: Like uh when I think of when I think of non-home service specific boring businesses, my mind goes to, and maybe this is just me, uh, but like accounting.
• 27:39
  SPEAKER_01: Like I still think like a CPA roll up or uh like bookkeeping service roll-ups, like great opportunities there.
• 27:47
  SPEAKER_01: I mean, we've seen some of the numbers on those businesses, they're wonderful.
• 27:50
  SPEAKER_01: Yeah, those are crazy.
• 27:51
  SPEAKER_01: I think that there's there's another, there's something to be said about kind of these service providers in general, maybe B2B service providers, that there is some opportunity into, though traditionally, right?
• 28:03
  SPEAKER_01: They're not, and when we think of the dirty home or dirty, um boring business, like that's kind of where the we get stuck on the home service.
• 28:12
  SPEAKER_01: Um, like definitely septic and plumbing falls into that category.
• 28:17
  SPEAKER_01: So um, but not the only one.
• 28:20
  SPEAKER_01: Uh, I I'd venture out to say B2B service has some really dirty like I mean, think about like um I'm just my my mind's going, I'm doing this live, is like porta potties.
• 28:30
  SPEAKER_01: Porta potties dirty B2B not home service.
• 28:34
  SPEAKER_01: Uh roll off dumpsters, same thing, B2B service.
• 28:38
  SPEAKER_01: So I think that there's a big opportunity still in B2B service as well.
• 28:42
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• 28:48
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• 28:52
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• 28:59
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• 29:02
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• 29:40
  SPEAKER_00: Well, if you like what you heard, make sure you like and sub.
• 29:42
  SPEAKER_00: And tell us in the comments what your favorite boring business is.
• 29:45
  SPEAKER_00: Um I'd love to hear more.
• 29:47
  SPEAKER_00: I think it'd be fun to do like uh unpack.
• 29:49
  SPEAKER_00: Dumpsters is crazy.
• 29:51
  SPEAKER_00: Like I every time I see there's a dumpster company based around here, and every time I see one of their trucks, I'm like, I feel like we need to buy them.
• 29:58
  SPEAKER_00: And um I just think it's just sweet business.
• 30:01
  SPEAKER_01: I mean, I'm I've looked into the metrics on it.
• 30:04
  SPEAKER_00: It's like a$60,000 account on our own.
• 30:06
  SPEAKER_01: Yeah.
• 30:07
  SPEAKER_01: Which is like one truck and two dumpsters.
• 30:09
  SPEAKER_01: Like I know.
• 30:10
  SPEAKER_01: I know.
• 30:11
  SPEAKER_01: Anyway, awesome.
• 30:12
  SPEAKER_01: Thanks, guys.