Luck in Business

As a lifelong Chicago White Sox fan, I paced my living room floor on April 14th of this year, watching the 9th inning of the Cleveland Indians vs. the White Sox. The Sox were winning 8 – 0, so what’s the big deal? Why was I so nervous? It’s just the 9th inning of a regular-season game with an eight-run lead. Well, Carlos Rodón was pitching for the White Sox with a perfect game going into the 9th inning. With another three up and three down inning, Rodón would go into the record books as one of the few pitchers in baseball history who pitched a perfect game.

What made this even more exciting and special was that Rodón suffered from shoulder and elbow injuries, and in May of 2019, he underwent Tommy John surgery. He’s pitched just 42 innings the past two years and wasn’t even guaranteed a spot in the White Sox rotation this season.

I can’t do justice to the play-by-play, so if any baseball fans want to watch the exciting last inning, here’s the link: https://www.youtube.com/watch?v=wxDQocUOvk8

Meanwhile, the first out was an exciting play at first where the batter was out by a fraction of an inch, only confirmed by slow-motion replay. The second Cleveland batter went to a 0 – 2 count, then Rodón hit him with a pitch! There goes the perfect game! Rodón then got the next two batters out and finished the game with a no-hitter.

Was this luck? Obviously not. Luck is winning the lottery. Pitching a perfect game or a no-hitter in the MLB takes years of practice, dedication, and challenges to meet along the way to realize that dream.

I would suggest that the same goes for us in the contracting business. Successful contractors don’t get there by luck. It’s their hard work, dedication, and passion. And after over 30 years of partnering with, training, and consulting with contractors, I have observed several common denominators that most successful contractors have.

 

  • They have a dream and realize it. These contractors have a vision of where they want to be, the type of company culture they want to build and realize it by taking action to make it happen.
  • They have challenges and meet them head-on. Just because you dream, it doesn’t mean that you will not run into challenges along the way. They don’t ignore these challenges and hope they go away. They meet challenges and focus on solutions so they can continue the journey of realizing their goals.
  • They act when opportunities are presented and benefit from them. When an opportunity presents itself to improve or expand the business, they turn that opportunity into a business reality. There isn’t any coulda, shoulda, woulda going on here.
  • They stand by their promises. When they enter into agreements or partnerships with staff, suppliers, or any business relationship, they always fulfill these promises. If circumstances arise that challenge the stipulations of the promise, successful contractors always discuss it openly with the parties involved to arrive at a mutually beneficial solution.
  • They look at business as an adventure. It’s not just a job, rather an adventure that they dare to take. They know they will have struggles, yet they accept this, and it doesn’t deter them from their mission.
  • They are strategic. Successful contractors have a plan and execute it every day. They avoid knee-jerk reactions by having a business plan and make decisions based on set goals and a mission statement. Risk-taking comes into play here, but with full awareness of the likely consequences.
  • They are honest and ethical. Fair and honest decisions are made based on their plan. They treat their employees and customers like family by running their business with a code of ethics that all employees are aware of and are expected to follow.
  • They WOW their customers. They create a company culture where everybody is involved in servicing the customer to exceed all expectations. From the CSRs to the service call and from curb to collect, a first-class customer experience is delivered by all team members.
  • They don’t go it alone. Successful contractors surround themselves with people who are better at specific tasks and duties than they may be. They get the right people on the bus, in the right positions, motivate them, and hold them accountable.
  • They have Faith. And speaking of not going it alone, they have faith in themselves, their team, and God. They prayerfully seek guidance, give thanks, and utilize their God-given talents and tools for the service of others.

 

I’m sure you can add to this list based on your personal experience or from your observations of other successful people that you know. But I would venture to say that “Luck in Business” isn’t on your list either.

Meanwhile, back to baseball. In the movie A League of Their Own, manager Jimmy Dugan, played by Tom Hanks, has that famous (or infamous) line, “There’s no crying in baseball!” Well, while there may be some trials, tribulations, and tears along the way, “There’s no luck in business!” Luck is an abstract concept that can become a physical reality with hard work, determination, passion, and a plan. You must make luck happen; it’s not a given.

Good Luck!

 

Steve Mores is the Vice President of Training and Sales at Dynamic Air Quality Solutions.

Service Roundtable is dedicated to growing your bottom line and helping your business maximize its full potential. These groups of contractors work together to assist you with marketing, sales, business, and so much more. Twice a month, seminars around the United States and Canada are held to network and further assist your business. Visit Service Roundtable.com to see if there are Success Days in your area.

Count Your Blessings

We all have heard the expression: “You should count your blessings.” This phrase is used in several different contexts. Someone may express this sentiment when something good happens to you: “That’s great news; you should count your blessings.” When something upsetting happens to you: “I’m sorry to hear that, but it could be worse, you should count your blessings.” Or even when something bad happens to someone else: “It’s so sad what happened to them, we should count our blessings.” There are even certain times of the year when we are asked to stop and think about all the things that make us happy or bring us joy.

Every fourth Thursday in November, we celebrate Thanksgiving, which is when many of us count our blessings. Yet do we need to wait for a holiday to give thanks and count our blessings? Is this just a saying, or should we really take it literally? I would suggest that when we count our blessings, we note all the wonderful things in our lives. Write a list, a gratitude list, if you will that helps us to appreciate how good life is and read it daily. Start your day out with gratitude!

It’s better not to take our blessings for granted or wait for a holiday to celebrate them. When we take something for granted, we tend not to appreciate it. So, let’s take a step back and consider what a blessing really is.

In our secular world, a blessing is considered something that brings us happiness or helps us somehow. To religious people, a blessing is approval and help from a higher source, that being God. A blessing can also be a sign of approval when someone permits you to do something. “You have my blessing to do so…” Counting all these blessings is important. It shows that you are grateful and are expressing a feeling of appreciation or thanks. When we count our blessings, we can say it like this: “I am thankful for my family. I am thankful for my friends. I am thankful for my health.”

Other forms of “blessings” are expressed as “the little things in life” or the “small blessings,” “a mixed blessing,” or a “blessing in disguise.”

Let’s say you get angry because your car won’t start, and you start thinking of all the negative ramifications it may cause. But then you stop for a moment and think, “Well, at least I have a car. I should consider myself lucky and give thanks for small blessings.”

Another small blessing is a fun thing known as “Pay it forward.” Paying it forward is expressed when the beneficiary of a good deed is repaying the kindness to others instead of the original benefactor. Paying someone’s toll or buying a cup of coffee for the person behind you is a common example. Small acts of kindness, like paying forward, can really make someone’s day and can be added to their gratitude list for the day!

Not all blessings are that simple and easy to recognize. Some are more complex than others, like “mixed blessings.” A mixed blessing is something that is both good and bad. For example, being a rock star can be a mixed blessing. On the one hand, they are treated as a celebrity with special perks, benefits, and financial rewards. On the other hand, they may lose their privacy, be more susceptible to addictive behavior, and feel pressured to produce that next hit song to keep their status. In the case of mixed blessings, focusing on the good and avoiding the bad can be a blessing in and of itself.

Another type of blessing is what we call “A blessing in disguise.” It is a little more complicated than a mixed blessing can be. This is where the blessing is hidden or “disguised” in a bad event or situation that we may have experienced. It refers to something that at first appears to be bad or unlucky but is actually good.

For example, someone losing their job turned out to be a blessing in disguise when it forced her to start a business that became very successful and that she loves and is passionate about.

As you can see, there are many types of blessings that we can be grateful for every day. Yet sometimes, it’s hard to focus on these blessings when we are bombarded every day with predominately negative news. I’m not saying that we shouldn’t be concerned with local, national, and worldly events. We can’t just bury our heads in the sand, but it gives us all the more reason to count our blessings!

So, this does take some effort and deliberate concentration on the good in our lives and the world around us. Whether the blessings are small, mixed, or disguised – they all count! And while this may all seem elementary, I thought we could all use a reminder to count our blessings. I know I do!

 

Steve Mores is the Vice President of Training and Sales at Dynamic Air Quality Solutions.

Service Roundtable is dedicated to growing your bottom line and helping your business maximize its full potential. These groups of contractors work together to assist you with marketing, sales, business, and so much more. Twice a month, seminars around the United States and Canada are held to network and further assist your business. Visit Service Roundtable.com to see if there are Success Days in your area.

Three Powerful Price Conditioning Techniques

I know that you have experienced this:

You’re at the end of your presentation, you present your price, and the client is shocked. Deeply shocked!

They’re so shocked, in fact, that their reactions can be anywhere from sad, to confused, to downright furious! They can even be shell-shocked to the point that they don’t even know what to say.

When this happens, they’re not going to buy. You are going to get a load of excuses. You’ve heard these before, right?

Let me think about it.

We’ll call you back when we’re ready to make a decision.

I have to get three bids before I can do anything.

The real reason why you got slammed with objections is because your client wasn’t prepared for the price. The good news is, we can fix that!

I’m going to teach you three techniques that you can use to make sure that your client is prepared for the price.

 

Technique #1: Explain the Investment Factors

When you’re presenting a large ticket item, it’s important to start price conditioning very early in the call. This technique is used prior to your heat load calculation or your system design work.

There are several good ways to use investment factors, but to keep it simple for this example, I want to limit it to two.

It works by explaining that there are two major factors that are going to affect the price of a system:

  1. Options that can be controlled by the client, and
  2. Options that aren’t in anyone’s control.

In this technique, you’re going to pick out some items that will increase or decrease the total cost of a system. Then you’re going to tie this into their system options. You could explain how increasing efficiency increases the price. You could also explain how bigger systems are naturally going to increase the price.

Once you have given the homeowner a series of features and benefits that affect price, you’re then going to relate that to a sliding investment scale. To make this really work well, you could even use a visual representation of this sliding investment scale.

This is a great technique that is very effective at communicating the investment range and choices that a homeowner will have. If you would like to hear some examples in greater detail, make sure you listen to the audio version of today’s blog.

 

Technique #2: Use the Shock and Awe Statement

The Shock and Awe statement is a tried-and-true classic for any salesperson. It is used to coax out the budget that a homeowner has in mind when they are not willing to freely give it.

Here’s how it works:

  • You asked the client to tell you what budget they had in mind for this project.
  • They give you some type of reason why they’re not going to tell you.
  • You then ask them if they’re willing to invest a very large sum to get the project done. Be specific, say something like “$20,000.”
  • You keep your mouth closed and wait for them to talk. They will usually tell you no, they will not spend that much money.
  • You then ask them what they’re willing to invest.
  • Surprisingly, 90% of the time they’re going to tell you now

This technique works because of human nature. The homeowner will not be expecting the surprise of you being so bold to ask for a large amount. So, it loosens their lips just enough to tell you what budget they actually had in mind.

Once you know this information, then you also know how much value you need to build.

 

Technique #3: Reference Other Jobs

This is my personal favorite technique. The reason why I love it so much is because it ties in technique number one and two with real examples.

In this technique, you’re simply going to share with the homeowner some real examples of other people that have made very large investments with your company and why they did that. You’ll also share some lower to middle examples of investments made with your company.

The whole point of this technique is to say the following;

When it comes to new systems for your home, Bob and Betty, we have a very large range of options. The great news is you’re going to be able to pick one that’s going to work for you.

This technique is received very well by the homeowners, and it works fantastically! I absolutely love it.

Here’s my closing thought for today: price conditioning is a normal part of the sales process. It helps you and the client make good decisions. It’s also a skill that is quite uncomfortable for many people. My best recommendation to you is to start practicing it today and master it for your own success!

 

Todd Liles is the CEO of Service Excellence.

Service Roundtable is dedicated to growing your bottom line and helping your business maximize its full potential. These groups of contractors work together to assist you with marketing, sales, business, and so much more. Twice a month, seminars around the United States and Canada are held to network and further assist your business. Visit Service Roundtable.com to see if there are Success Days in your area.

Employee Social Media Policy to Stay Above the Fray

Online, more and more, you see comments and posts that you may not agree with.

Unfortunately, some of these remarks are made by your employees. You can’t control what your employees say on Facebook or any other social site, but you can help them post wisely. Because what they post can have an impact on your business.

As a company owner, what are the best ways to protect your company’s reputation from the personal beliefs of your employees?

I reached out to Ian Scho-tan-us of Big Picture Consulting. Anyone who has been on any of the myriads of contractor support groups on Facebook knows Ian as ‘The HR Guy’. He has 12+ years of experience in the industry and is considered an expert in the fields of HR, Safety, and Payroll Compliance. What I also like about Ian is he understands what the contractor is going through; he knows the difficulty in retaining good, quality employees, so his insights and suggestions are reflective of those challenges. Ian emphasized that you do not want to limit your employees’ personal freedoms, but you NEED them to realize how their actions can affect your business. He stressed that company culture should be a factor in all aspects of your business, and your company culture should guide your employees in their actions.

Company culture can be defined as the shared values, goals, attitudes, and practices that characterize a business. It is the way people feel about what they do, the principles they believe in, where they see the company going, and what they are doing to get it there.

Company culture is the key for businesses to operate with purpose. They drive the shared culture of you and your employees. However, each employee also has their own values. These may be based on their upbringing, education, and their social environment. Differences between corporate and personal values are not new, but the popularity of social media can make them more obvious.

Outlining basic guidelines that create a level of respect for the company, your customers, and other employees is beneficial. These include:

  • Do not speak negatively about the business, its staff, or customers.
  • Company and customer confidentiality is essential.
  • Do not post harassing, hateful, or illegal content.

 

It is essential to help employees understand the possible risks associated with the use of social media. The questions below are beneficial to employees if they are questioning what to share on social media.

  • Does this relate to my work?
  • Does this conflict with my company’s values and culture?
  • Is it obvious that I am speaking for myself and not on behalf of my company?
  • Would I be comfortable sharing this with my boss or colleagues in person?
  • Could this have negative effects for myself or my company?

 

It should also be clear that employees are not evaluated for personal activities or opinions if they do not break the law, are not offensive to others or the company, and do not negatively refer to the company or working conditions.

Yes, your employees are active on Social Media. No, you cannot forbid them from discussing work. However, if you leverage the opportunity correctly, you may find that giving them reason to post the POSITIVE aspects of your company culture will help promote your business, assist in recruiting efforts, increase both employee and customer loyalty, and overall provide real-time validation to your Company Culture efforts!

 

Lynn Wise is the Founder and CEO of Contractor in Charge.

Service Roundtable is dedicated to growing your bottom line and helping your business maximize its full potential. These groups of contractors work together to assist you with marketing, sales, business, and so much more. Twice a month, seminars around the United States and Canada are held to network and further assist your business. Visit Service Roundtable.com to see if there are Success Days in your area.

The Market is Red Hot

Some Quick Points Regarding Today’s M&A Frenzy

 

To say that the first quarter of 2021 M&A activity within the residential service contracting trades is hot is an understatement. In fact, there has never been as much buying and selling going on within our industry! Not even the Consolidation Period of the late 1990’s compares to what is occurring today. HVAC and plumbing service contracting businesses are the thing with private equity investors and have been for a while now. As this trend continues, more and more investors are finding their way into our world.

What has changed in 2021 are the number of buyers jumping in on the action has as well as the flexibility of both the size of the businesses acquired and expansion into secondary markets. Whereas your business better produced $1M in EBITDA to attract a buyer in the past, I am seeing buyers consider businesses that produce less than $1M in EBITDA today. In the past, the less than $1M EBITDA was a no man’s land for finding qualified buyers, not so much today.

No one can predict when the heated interest in our industry will slack up; all we know is that at some point, the activity will morph back into a less frenzied pace. If you are a service contractor and you want to sell your business, now is the right time. Although there has never been a better time to negotiate with a buyer, a business owner should keep the following points in mind:

Although buyers are stretching for premium businesses, the highest offers are going to businesses with consistent double-digit earnings within markets that can facilitate growth. One exception might be smaller acquisition targets in markets that the buyer has already made a commitment (add-ons or tuck-ins).

Buyers may want you to roll a part of the proceeds back in the transaction which would make you a minority owner going forward. Retaining a minority ownership and continuing to grow your business under the support of private equity partners or new owner can be an excellent opportunity for you to enjoy what is referred to as the “second bite of the apple”. The second bite comes when the private equity partners grow and then sell their collection of businesses at a higher multiple than what you would be able to achieve for business alone. In many cases, retaining a minority interest of say 20% can result in a payday equal to or higher than when you sold the original 80%.

Understand the meaning of the word arbitrage. If a buyer has already put together a significant operating group, it is likely that they are able to sell that group for a multiple much higher than what your business, as it stands alone, can demand. What this means is that a buyer can stretch significantly as long as the arbitrage makes sense. The best way to explain this is by example. Assume a buyer pays you 8x for your business, and that buyer is able to then add your business into their group. Now assume their group collectively demands a 15x multiple – the arbitrage here is 7x earnings. The day the buyer purchases your business at 8x, they automatically can sell it for 15x. The magic of arbitrage is what is driving the impressive earnings multiples today.

Despite recent off-the-chart sales prices and other tales of great deals, a business owner must still understand the basic concepts of valuation, what builds value, and how earnings ultimately drive values and purchase prices. Make note there is a big difference between valuation and price, especially today. Understand valuation, but think price when it comes to selling. Consider a formal valuation, but be sure that the professional completing your valuation understands what is occurring in our industry at the moment.

Don’t be fooled into thinking everyone who contacts you via letter or telephone is a buyer or actually represents a buyer. With the interest in our industry, you are being bombarded by every investment banker and business broker who has ever turned down a thermostat. Many clients report they are contacted weekly by buyers, when in fact, the contacts are mostly from people looking to list and sell their business. This does not mean real buyers are not directly contacting business owners because they certainly are.

Don’t waste time on buyers who are not serious or incapable of completing a transaction. There are a lot of qualified buyers out there today. Potential buyers include private equity, strategic buyers, and individuals (to name a few). There are also a lot of time wasters. The quickest verification is to ascertain the capital a would-be buyer has to actually complete a transaction. Does a potential buyer have the capital, and if not, are they working with a lender such as Live Oak Bank (who specializes in lending within the service contracting industry)? Without the capital or without a plan to secure capital, whether conventional or SBA, the would-be buyer is just wasting your time. Another quick verification is whether or not the would-be buyer has a history of completing transactions.

Although you may have been contacted by a buyer and have received an offer, have you negotiated the best offer (counteroffer)? Are you prepared to navigate through due diligence, and have you fully negotiated the entire transaction? Although you may not require a business broker to find a buyer, you will still need a team to ensure that the transaction closes and closes for more money than the original offer. Consider a consultant who understands the M&A process, a good M&A attorney, and of course, your tax CPA. On the surface, nabbing a multi-million-dollar offer may seem simple, but in all actuality, the work has just begun. A good M&A consultant will have gone through the procedure many times before, understands both value and purchase price, and is able to guide you throughout the entire project. Many projects that I have taken part in over the last 24 months begin after the seller has been contacted by a buyer.

Do not discount the chances to sell your business just because it is relatively small or services a smaller market. I have assisted clients in transactions of all sizes over the last year, and I am finding more and more buyers for businesses with less than $4M in revenue. This is especially the case in hot markets where strategic buyers are frantically looking to “add-on” to already purchased businesses. I have even assisted a small HVAC contractor in a rural market recently that, up until now, I would have falsely concluded there was little chance of the business trading at what the buyer proposed. Again, we are in uncharted waters and the nets buyers are casting get wider and wider by the day.

In summary, the service contracting trades are hot today. The trend ends are unclear, but we can be certain that over time the frenzy will lighten up. However, prior to that, the opportunity to sell your business exists today regardless of size and to an extent, your geographic market. If you have been approached by a buyer or if you are considering taking advantage of the market, feel free to reach out to me and I will be able to provide further insight.

 

Brandon Jacobs is a CPA and operates Contractors Financial Opportunity, LLC. For more information, contact Brandon at Brandon@contractorscfo.com.

Service Roundtable is dedicated to growing your bottom line and helping your business maximize its full potential. These groups of contractors work together to assist you with marketing, sales, business, and so much more. Twice a month, seminars around the United States and Canada are held to network and further assist your business. Visit Service Roundtable.com to see if there are Success Days in your area.