#161: From 38% to 55%: How David Mayster Mastered His HVAC Margins // Next Level Pros Podcast

Today we got something that's going to hit home for a lot of business owners out there.

I sat down with David Maester.

He runs a successful HVAC company out here in Seattle, and we got real about the numbers.

We dig into the difference between thinking you're running a 55% gross margin business and realizing that you're actually at 38% and how to get those numbers locked in so that you can actually scale.

Plus, we dive into his personal journey from Ukraine to overcoming addiction, turning to his faith, and building a thriving business.

So if you're looking at getting your pricing right and find a bit of inspiration, you're in the right place.

What's up, everyone?

Super excited to have David Maester here today with us.

David is an entrepreneur in the HVAC space.

He owns a shop, Maester Heating and Air.

Is that the right?

Cool.

Maester Heating and Air over in Seattle, Washington, right?

Is that where you guys are based?

We're south of Seattle.

We're in Lakewood, Washington.

Okay, Lakewood.

You know, us eastern Washingtonians, like we think it's all Seattle.

I know.

That's what people ask me.

Hey, where are you at?

I'm out of Seattle, south of Seattle.

South of Seattle, dude.

So he's of the west side, a little bit strange over there, not quite like us Eastsiders,

but

definitely has a cool story, has been building in the HVAC space for a while.

Family moved here when you were younger from Ukraine.

It's cool.

We actually have several different people that have like a Ukrainian background in our community.

And just cool to see like the hustle, the grit, like the first generation wealth building.

And just a lot of fun.

So

give us a little more color to the story and then let's dive in.

We're going to be treating this like a live consult, diving into the numbers and figuring out like what's working, what's not working.

And hopefully, we got a good game plan from this.

Yeah, I love it.

Well, first of all, thank you for having me on here.

This is a privilege.

This is my first podcast.

Ever?

Ever.

Oh, my goodness.

Let's give him a round of applause, ladies and gentlemen.

What an honor.

So, uh, so it's really an honor to be here.

Um, I do want to say that my journey has been very unique just because we moved countries.

Yeah.

And we came to America in 2001.

I was eight years old.

Nice.

There's nine kids in our family.

Wow.

Where are you at in the pecking order?

I'm number seven.

So the perfect number.

Yeah.

Yes.

That is the perfect number.

So at the bottom end of the pecking order.

Correct.

Correct.

Seven sisters, one brother.

Wow.

Yes.

Cool.

And your brother's your business partner.

Correct.

Yeah.

It's interesting if you guys ever have the chance to meet David.

So like you came here when you were eight and your brother was 13.

Yeah.

He was

and he's got a pretty thick accent and you basically can't even tell you're from somewhere else.

he has a funny story because he was kind of like a bad kid in school so he didn't do any kind of I was a bad kid too but

um and then he went to truck driving for 11 years so you know he was just in the truck with his wife and you don't really talk to a lot of people but he ended up like the way that he improved his English was just because he started watching movies in English changed his phone to English language and with subtitles and now we have like a lot of refugees coming in from ukraine right now yeah and he's like this is what worked for me you got to do the same thing you want to learn english yeah that's cool why did your family come originally so we just kind of are everybody started moving from our family okay down here so first uh my uncle and aunt came in like 93 or something 92 and then it was just one by one and then why seattle We don't know.

I mean, I don't know.

You know, one thing I've never quite understood is like when people move from maybe like a poorer situation, which happens, you know, a lot, whether it's from like certain like Southeastern Asian countries or, you know, Latin countries, and they come and they move to a big city.

And it's like, dude, that's the most expensive place.

And like, I've never understood why, you know, it's like, you know, you got like these people that literally came from nothing and they're living in New York paying $5,000 for an 800 square foot apartment.

It's like, it's crazy.

I think, I mean,

people that come from other countries that don't have nothing, they know how to work.

And if you know how to work, America will reward you for that.

Yeah, for sure.

I think that coming here,

just, you know, there was a big Slavic movement in the early 90s.

And a lot of people came here.

There's a big Slavic church down in Tacoma.

Cool.

That's kind of what, yeah, kind of very family-oriented, right?

I know you guys are very like faith-based.

You got a family yourself.

Absolutely.

Wife, a couple kids.

So I have a beautiful wife, Natalia, and I have a son, Solomon.

He's six years old, and a four-year-old daughter, Abigail.

So cool.

Family is, yeah, so much.

I mean, really the purpose of why we do this whole thing, right?

Yeah.

I mean,

God bless them.

Yeah.

Yeah, for sure.

It's a sacrifice, but in the end, you know, it's rewarding because when you stick through it,

you know, you'll be able to reap the fruit.

Hey guys, it's Chris.

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Now, let's let's dive back in the show.

Let's talk about Maester

heating and air.

And so you guys just specialize in HVAC, right?

Yeah, right, yes.

Cool.

Plans to expand into like plumbing and electric, anything like that?

Possibly plumbing, but definitely electric.

Yeah, definitely on the electric side.

Currently, are you carrying like any 0102 electricians, which are for those that are outside of Washington State, that means like a commercial or residential journeyman electrician?

Yeah, no.

So we subcontract all our electrical work and uh but the goal is to bring that in-house love it love it love it and how long have you been running uh maester uh heating and air we started in 2019 march i actually started the company two days before my son was born so we had two babies at once and the company name was simply efficient heating and air conditioning llc you were what 26 at the time yeah okay 26 so young hungry passionate you know could do everything in the world and uh why'd you want to start your own business um

i didn't really want to start my own business to be honest i whenever i had my life transformation back in 2013

um i really wanted to be like a pastor or an evangelist and i mean i am an evangelist to be honest but I wanted to be like a missionary guy or something involved with my faith

because I used to be a drug addict and a drug dealer.

Oh, wow.

Tell us more about that.

Yeah, I'd love to.

That's my favorite story.

So, you know, coming from Ukraine, we were super poor.

We lived in a village, like village city type area.

And coming to

America,

my favorite thing that was like, hey, my mom can't spank me anymore, you know, because I was a bad kid.

I was like the black sheep.

And I surrounded myself with the wrong people.

And, you know, parents are always wrong.

And my friends are always right.

And then in high school, like for, you know, middle school, you started dabbling in some unique stuff.

And then in high school I went into heavy

drinking and cocaine and

high school high school yeah yeah I didn't realize cocaine was like available

I mean anything was available plus I went to Foss High School so Foss's boss you know

so

and I was there at the skate park I mean if you know FOSS High School you know the skate park that's where all the potheads and everybody was at and coke addicts were hanging out i guess that was on the low but yeah you know whatever uh but basically, it took me down a path where

I thought I was free, but a cigarette controlled my everything, my life.

If I was hungry and I had 10 bucks, I'd go buy a pack of cigarettes.

When'd you start smoking cigarettes?

Oh, that's Daniel.

First cigarette was actually in Ukraine with Daniel.

When you were eight?

Wow.

Wow.

And you liked it at that age.

I don't know what I was doing.

But I mean, and then later on, after like middle school, you kind of, oh, this is cool.

You know, someone bought me and my buddy a couple packs and we smoked it until we threw up.

You know?

Sounds fun.

But anyways, so high school went into the crazy and

about,

you know, so on our culture, actually, there's things that you don't really do because we're...

conservative Slavic culture Christian.

So you don't like move out and move in with a girl.

And that's what I did.

You know, I moved out living with the girl just with your current wife?

No.

No.

So

it was a shame to the family kind of thing, you know?

Yeah.

But God had his plans and he had his hand on me from that time because my mom prayed for me for years.

And my mom was like a prayer warrior.

So she would pray until the wall sweat, you know, so she would just go in and she did not let the devil have his way, even though my friends were dying and getting girls pregnant and all that kind of stuff you know kind of ruining ruining their lives but there was a time where i became real with myself and it was about six months before my life really transformed and i just said you know what if the world tells me that this is what life is about i have it i had money you know i had a really I would say a good-looking girlfriend, you know.

How were you making money?

Dealing drugs?

No, no, I actually started to work,

but I actually always worked, but

I started to work in hardwood flooring, and then I got into HVAC in May 2013.

So you were 20 years old.

20 years old, yeah.

Got it.

And but that's when more money came in because I actually got into a trade where you're making good money, you're making overtime.

So guess what?

You could spend more money.

And what did I like to do?

I like to work and I like to party.

And that was it.

And, but then, you know, I tasted that party life, the freedom, kind of having whatever you want.

Yeah.

And I was just, you know, this is, this is like a lie.

Like, this sucks.

And I became,

you know, the Bible says there's a heart that's

a cold heart is better than a warm heart.

You know, and I became cold.

And I said, I'm not a Christian.

I don't read the Bible.

I don't go to church.

I don't even pray, but I believe in Jesus.

And

I became real.

And that's when I hit like the low point.

And then I broke my finger.

And I didn't know what to do.

Except I was home and bored.

Started using at home.

And that's when I got into ecstasy, Molly, cocaine, all that stuff.

And there was a time on December 16th, 2013.

I was high on five drugs.

Just gotten this huge, I mean, me and this girl broke up like four times a day.

You know, it was that bad.

Yeah.

I remember I did something I never thought I would.

I have seven sisters, and you know, I just kind of like

pushed her

into a wall that I would never do that.

And I realized that something's inside of me that controls me, and that's not me.

And that scared me because the Bible has a clear answer in the Bible.

It says, if you do sin, you're a slave to sin.

And I said, wait, wait, wait, hold on, hold on.

I'm not a slave to the devil.

But yes, I was because all my fruit were all all about lust pride you know um just

me me I became my own God in this sense and I was desperate and I became like that night I became suicidal I said I'm not gonna live like this anymore

and I had one little string of hope left that there is a God that still might help me and that night came to my room I actually had a I told you I had a broken finger I came to my room I fell before my bed And I said, God,

I wish I could come to you

clean,

white, pure, but I'm coming to you as I am.

I have nowhere else to go.

I said, and if you don't help me, I'm not going to do this anymore.

And God knew that I was real about that.

And he encountered me in that room.

It was December 16, 2013.

About 7, 20 something, 23 in the morning.

I cried my heart out to God for for two hours.

I confessed anything and everything I could.

Anything came to mind.

I was just, God, I'm so sorry.

I don't want to be this person anymore.

Please help me here.

And I ran out of words.

So what I said was, amen.

That's what you say at the end, end of the prayer.

And

I didn't know

that there's such a

presence or a love or a wholeness out there.

And I was seeking that in every, every, every single thing.

And what happened was when I said amen, I just started to get up because I was done praying.

And I literally felt chains ripping off of me.

So if you imagine like the darkest ball and just cracks and then like this light coming out of it that was me being born again because the Bible says if you're born of the spirit you know that's when you're born again

and from that day i never used drugs i never had to go to rehab i'm talking about i was picking like like cocaine would fall off i would pick it off the carpet type thing like i was that bad and nobody knew and i was using in daniel's apartment and he had no idea that i was going through this so when i tell you that god had mercy on me god had mercy on me and i like bible stuff started happening to me like there was a guy that always invited me to church I care about Jesus like I don't want to go to church I want a party like I'm gonna go for him my friends you know we're gonna go fast you know whatever we get drunk or we're gonna just do dumb stuff when I encountered Jesus that's the first person I thought about

and I was looking for his number on my phone and I kind of flipped phones in high school to make some money.

It's kind of what you you do.

You just flip stuff.

And I never saved his number because it wasn't important to me.

So when I was looking at the phone, trying to find his number, I couldn't find it.

I said, I'll see him at church because I want to go to church.

So on Monday, I give my life to Jesus.

By the way, my finger got healed, that broken finger.

They take my cast off that day, a month and a half early.

Wow.

The doctor checks my cast.

He said, your finger's fine.

You don't need this anymore.

Wow.

So my finger gets healed after I become completely sober, which I shouldn't have been because I was high on five drugs.

On the next day,

you know, us Slavics, we love the sauna.

Like, that's our thing.

So after my cast was gone, I was able to go to the sauna now.

Which, by the way, a great tradition.

Yes.

And then I love that.

Big fan of a nice Slavic spa with an ice bath and the sauna.

Yes, it's great.

So on Tuesday, I go to the YMCA where my dad works and I come home and this guy, Tim, that I was looking for or wanted to meet was at my house.

Wow.

And

he told me, hey, David, I know it's going to be hard to believe, but I have a message for you.

And he said, I want you to know that God sent me to you.

And I want you to know that God heard your prayer.

Wow.

Because

scripture is absolutely 100% accurate.

Because what was going on in my life that Tuesday, only God knew.

And I was dealing with doubt.

Like, was i just tripping was that did i even encounter god was this just this crazy high you know the bible says that there's a seed that falls on certain soil or on rock or shallow and enemy wants to come and pluck it out and that was happening with me that tuesday because i was doubting this whole situation But when Tim this guy shows up and he's like, you're alive by the prayers of your mom.

So cool.

And all that doubt just shattered.

And I said, no, I'm telling everybody about Jesus.

So for me like not ashamed I don't care who I'm in front of I encountered Jesus I love it and ever since then like my life changed but I wanted to be in ministry didn't really care about business or money at all actually because I was I became so how can I say freestyle with money right that God had to hey, you're going to be a steward of this.

You can't just be giving it away.

And, you know, people start to use that and all that.

But that's later on.

Well, dude, thanks for sharing with us uh that that's uh that's a remarkable experience i mean coming out out of that you know i've never had you know had to face that kind of pits of despair in my own life but uh very powerful you know uh oh yeah so that's awesome thanks for thanks for sharing that yeah that's a good thing so you so you go from there and you you wanted to be a minister but eventually you stuck in the traits Yeah, so basically I found passion and just doing good and whatever the gift that God gave you.

So when I saw that, hey, this is actually a place where we can serve

people

and because HVAC is a very unique trade.

You know, you're there underneath houses, you're in the attic, there's stuff disconnected, done incorrectly, which could damage people's health and life and all that stuff.

And I just loved doing the right thing.

Yeah.

Like to me, that was just like, I know that I know that I did my best.

And that to me satisfied me.

But what really

took me away from the path of ministry to business was I was looking at all these evangelists and Crusade, you know, Brian Hart, Bonkey, Daniel, Kalinda, and all these big boys.

And I loved how they were bringing like thousands and thousands of people to the kingdom of God.

But I think

I know personally, that was more for me than for God.

You know what I'm saying?

So that was my idol, Not really like, oh, I'm going to be a great evangelist, all this stuff.

So then I went to a different church and I went to a church called the Church for All Nations.

We still go there.

I went there.

I started going there in 2016.

I met my wife in 2017.

Pastor Bill Wolfson, shout out to Pastor Bill Wolfson, amazing pastor.

We have an incredible pastor, Dan, right now.

But Pastor Bill Wolfson was the pastor and he showed me, him and Dave Ramsey, showed me that money has power and power needs to be respected.

Absolutely.

You can do a lot of amazing things with money.

Yeah,

I'm a big fan of,

you know, money being the great magnifier of who we are, right?

When our heart is dark and not in the right place, money can do some terrible things, right?

It can destroy lives.

And, and when our heart is in the right place, money is the great magnifier that can, you know, spread his word, can give back to communities, serve, impact a lot of different lives.

So,

you know, that's, that's one of the things I'm most passionate about with Next Level Pros is getting people to a very highly profitable position and teaching them how to be great people and use that money in the right way.

And so,

you know, I think obviously, you know, your experience has been the same with learning from your pastor and whatnot.

And so that's awesome.

So then you fast forward, you start this company in 2019.

You initially,

did you have a business partner at the very beginning?

Yes.

So me and my brother-in-law partnered together.

He's the one that actually trained me in HVAC.

I was his apprentice.

He was my lead.

So 2019 was awesome.

You know, 2020, COVID hit.

Like, if you had breath, you had work.

Yeah.

So I think that was a big plus for our company and why we were able to hang through it because I didn't know about, I didn't know how to do installs.

Right.

I didn't know there was like you didn't know what to charge, what to pay.

Yeah, yeah.

For sure.

This price, I'll do it for this.

Great.

Yeah.

You know, it's interesting in the trades.

I think this is a very common practice is that, you know, a tradesman becomes a business owner, sometimes out of necessity, sometimes out of luck, sometimes just like wanted to, but really doesn't necessarily know what they're doing, right?

Right.

They get in, they learn through a lot of mistakes, you know, it bumps and bruises along the way.

What was like, in those first few years, what was like the biggest mistake that you could pinpoint?

Partnership.

Partnership.

So it's tough to be partnered with your brother-in-law.

Yeah.

What was the difficult part about that?

Mindset.

Yeah.

And motives.

Yeah.

And what do you mean?

Like, give me more depth there, like mindset and motives.

What does that mean?

So.

I've always believed in

buying your time and

gaining freedom especially if you're going to be on the line it's your business it's your responsibility you take all the hits yeah

um if i wanted you know we can make great money being installers or sales guys or or whatever actually salesmen i mean they make stupid money right but they don't have to carry the burden they make a mistake okay we'll take it off my whatever right next job but

I was always focused on buying my freedom.

And that was not the same kind of mindset from my business partner at that time so how do you mean like he was more committed like hey we need to be in the field doing the work you can't hire hired out so yes so basically basically he who works hardest should get paid the most or deserves just as much no he's saying hey i just

we have work we have you know we have money like we're good you know i just want x amount a month and i'm cool i'm like that's not cool yeah i want free.

I want to be able to be anywhere, anytime.

You want to be able to grow.

Yeah.

So that's the difference.

And the reason why I'm being a little bit sensitive because I get it.

You know, we're still in the process of the.

What do you think he would have said about you?

Like, and like, what was the because it's easy to say the friction was one-sided, but what do you think he would say about you?

You know, that's such a good question.

No one asked me that before.

I really like that.

I think that

just because I've been with him for many, many years.

What I mean by that, I was like in Ukraine when he was dating my sister.

I was the little kid that had to take with me to make sure they're not kissing and stuff.

Yeah.

Snitch.

Snitch.

Watch out for the snitch.

That's right.

So he would probably say,

you know, he has thoughts about me as well, which he didn't like.

But I'm sure we do love each other and respect them and want the best for one another.

But what would you have said he probably

oh man that's a really good question like at that point when we were yeah exactly as you're starting to feel the friction of like hey this isn't going to work like well he said he probably would have said i should have listened to my friend his friend told him like once you guys start seeing money you'll see that um

you know david's gonna change get rid of you that's what his friend said but that's not the case i mean

but eventually you you did buy him out and you treated him very fairly in that buyout.

I mean, I talked to Ken Goodrich.

I don't know if you know who Ken Goodrich is.

I know who Ken is.

So he sold his company for what, half a billion.

And he said, yeah, you paid him very well.

Right.

All right.

Especially the fact if

I remember right, you guys weren't making a whole lot of net profit at the time.

No, we did so much work.

I mean, we won the sales award for Bosch

in 2022, but we did like 2 million.

2 million because you were selling all your units at $5,000 or something.

No, not $5,000.

I'm joking, but.

Come on.

Yeah.

Four.

I'm getting it.

You said four.

That would have been a, we would have made money at five.

It's funny.

Yeah, I think one of the hardest things, I don't know if you agree or not, but like just when you have experience as a technician, just even knowing where to price yourself, would you agree?

Absolutely.

Yeah.

Because you don't take an account, like,

what really goes into run a business.

Right.

You know, and the thing is about when you're starting out, you don't really focus on marketing and you just kind of go on Angie's list or something.

Yeah, marketing.

Yeah.

When you, when you start out, marketing is not considered an expense, right?

Because you're not doing it.

Right.

Only word of mouth and referral.

Right.

So I don't have zero marketing, so that means I can charge less.

Or, you know, it's you and your business partner, maybe one other staff or two other staff.

And so you price price based on how big you are today, not how big you want to be.

Correct.

Right.

Not for scale.

And so these are like a lot of the classic mistakes.

Would you agree that you made those same those same mistakes?

Absolutely.

And we did so many of those

just because you're exactly right.

When we looked at a job, we were like, oh, well.

Here's a job that we can make X amount.

At least we're making money.

Correct.

And then you go at the end of the, you know, at the end of the

month, you're looking, you're like, no, we didn't you didn't make any money yeah is it fair to say too like there's times where you

you are pricing things just by gut feel oh all day long that's how it was like i feel like we could make some you know one of the things that i think would be uh you know uh really beneficial for school is to teach how to understand numbers better yeah versus just math like i don't remember anything about any other

letters and stuff right But

this is not that hard to understand, you know, okay, what does it cost, especially if you have a good CRM.

Right.

And that too, we didn't have, we didn't have a, we didn't have like a very simple, basic CRM that costs like 40 bucks a month.

But now you're on service Titan, right?

Now we're on Service Titan.

It's great.

Yeah, but it's from the gut pricing all day long.

Yeah.

That's how a lot of business owners start is they're just like, there's no system.

There's no process.

There's there's no thing to follow to know how much you should charge for what thing.

Yeah, no structure.

And so let's talk about today.

So I'm assuming there's still some mistakes being made today.

Absolutely.

All right.

So, but you know, I'd love to maybe dive in and like see, okay, where we can help right now and just diagnose like some of the potential issues and what improvements we could potentially make.

They're going to help you.

even be better at the numbers because ultimately at the end of the day business is ran on numbers and people right right if you got right people and the numbers make sense now you got a profitable business right

and and so and much of it's rooted in the structure and not pricing correctly not paying correctly you know not strategically planning right there's a lot of different things so um a few of the things that i always love to to dive in is is understanding like uh

Well, one, how are you currently pricing a project?

So if you roll out to a home and you just have like a standard offer, like what's your standard offer if you want to do a whole home replacement?

So if we're doing, I'll give you an example.

Recently,

I actually just closed the job this morning.

Okay.

So felt great.

Energies on.

Here we go.

Let's go.

And the way that I came into the house, identified what the needs are.

I looked at, I presented options on what system would work for them, you know, asked about air quality, all that stuff.

Vent location, it's a full new duct system.

Yep.

It's a small house.

It's not like that much, but it still has a good amount of detail.

So the way that we look at pricing is we look at our cost all the way down to labor, all that, and then we divide it by.

0.45 so we get a 55% gross margin.

So right now we're working on

being at 55% gross

but

there's other things that I'm not taking in account like we're not utilizing

financing so I need to add that into my project so everything's cash right now pretty much okay wow pretty much yes but we are no we are offering financing but zero percent through our programs we're not really yeah there's there's a difference in having financing available and offering financing so that's why one of the things that I really appreciated with the phone call with Alex was like

his business was basically built on financing.

100%.

And he showed me like, dude, even though you think that you want to be with this kind of income level,

I don't know, because these guys have cash and they kind of play with you.

Someone that has a need

and you can serve them and help them.

but they're not making X amount of money, but they still qualify, you can actually help them to buy better in their life with a better system.

Yeah.

Absolutely.

I mean, financing, I think, is the key to volume, right?

And,

and frankly, it opens up your ideal client profile, right?

What we refer to as an ICP, right?

Like if, if you're going in and you're expecting somebody to pay, what's like, what's your average ticket?

We're at

right around $14,000.

Okay, so if your average ticket's $14,000 and you're going into a home, expecting them to put, you charge half up front in a cash deal.

Yes.

$7,000 down and then figure out how to pay another $7,000.

It's something the, the,

the stats are like ridiculous.

Like 80% of the population doesn't have more than $5,000 sitting in their bank account.

Right.

And so if right out of the gate, you're only being able to market to 20% of the population and you know, out of that 20%, how many of them are willing to put their whole bank account into an HVAC system, right?

And of course, like when you're dealing with a customer, there's a lot of psychology that's going into this, right?

The psychology of the consumer of like, one,

they have a reputation to uphold.

Everybody's got a reputation, right?

Everybody wants to feel important, look good, feel good to other people, even if they don't know you, right?

And so one thing they don't want to express to you is, I don't have the money for that, right?

Like nobody wants to say, I'm poor.

Yeah.

Right.

Yeah.

Regardless if it's true or not.

Nobody wants to admit that.

Right.

Right.

And so when

as an HVAC professional or anybody in the home services, like if your product is more than a thousand dollars, if your product is more than a thousand dollars and you are not leading with financing, you are making people say I'm poor.

And

also

sometimes calling them poor.

And this is, and this is what I mean.

Like if I'm sitting there across the the the table from you and i show you hey a 14 000 system and instead of saying hey uh yeah all of our people we qualify for zero down financing it's just 98 bucks a month right if i don't present that it's 98 a month or 150 a month or 200 a month and i only present fourteen thousand dollars yeah and you in turn tell me um i need to think on this or whatnot and then i'm like oh by the way we have financing.

Even if they want that financing,

by them taking it, they're admitting, yo, I'm poor.

Yeah, I don't have this $14,000.

I don't have the $14,000 and I need this.

And so you basically want to eliminate that friction

of the customer admitting that they're poor.

So that's...

One of the biggest things that changed, and I began to move towards this way was

understanding like people don't have that money.

Right.

And

no matter how you say, if you had a Dave Ramsey past or, you know, we personally, I took it really serious, canceled credit cards.

It does affect you, no matter how you do it.

That's why I was like, man, forget financing.

I don't want to have people screw over their life and all that stuff.

But the truth is

people

need to have incredible HVAC systems.

They're going to better their life.

This is the way I justify it.

I mean, they're going to go buy Jordan's or HVAC, whatever.

But the truth is, if you can save on their energy, they come home.

Even if they had a terrible day, something happened at work.

They come home to a comfortable AC home.

Right.

or they will have a way better experience.

Or they can come home having an amazing day and their house is extremely hot.

They'll get mad at the kids, mad at the wife.

You know, it's just

the reality is no matter how you look at it, whether it's a tool like what you're talking about, like it's

elevating their life, right?

From a tool standpoint, allowing them to be better fathers, mothers, sisters, brothers, better providers at work, whatnot, like that's a tool.

And the straight asset aspect, if a home doesn't have a working HVAC system, it's worth less the cost of the HVAC system.

Right.

And this is an asset, right?

Like an HVAC system is an asset to a home.

There's also a psychology piece too of like that we've learned in solar is you you present the HVAC system at you know 15 grand 14 grand even if they can buy cash you you mentioned that Alex was talking about like dude you actually don't want these customers at this upper bracket because if they can pay cash they immediately have to think this is an investment whereas if you just present the 98 bucks a month that's not an investment for them and you get to mitigate that that uh objection later because they don't have to perceive this as an investment i got to go talk to my accountant i got to go talk to this that and the other it's just this is what happens it's just 98 bucks a month i can do that it's like having a cell phone bill.

Yeah.

Right.

Having an HVAC system is a cell phone bill.

It's a tool.

It's a utility cost.

Correct.

Right.

Versus a debt that's being taken on.

Yeah.

And actually yesterday we got off the call with Goodleap.

And finally, we got our integration done because of our name change.

That's right.

Yeah.

And so we're going to be able to present.

proposals with the prior monthly costs.

Love it.

And that to me is like one of the tools that, because when you go into a certain house or, you know, even you say, hey, it's only $99.

Yep.

What do you mean, $99?

This system costs, yeah, $99.

You know, and it's, it's nice and saying, oh, it's $14,000.

Yeah.

It's a completely different psychology.

So on top of that, so you're right now you're, you're pricing your stuff at 55% gross margin.

What about negotiation?

Customer says, hey, I can't afford this.

Or can you do it cheaper?

So-and-so is doing it down the street.

What are you saying?

So

let me tell you this, okay?

I got to give you guys a full picture.

I went back into sales about a month ago.

Yep.

And I haven't done actual like face-to-face customer sales in a very long time.

I've done construction sale, custom homes, all that stuff.

So for me, I've just been facing stuff like this.

And I'm like,

what is going on?

Because I'm so used to saying discount.

Sure, I'll do, I'll beat that price, you know?

And unless I did run into somebody I'm not gonna say his name but somebody told me hey just win the job which whatever the guy ended up going lower and uh but what I say now is I go back to my CRM service time and I say hey let me see if I can make something work

and I look at it and sometimes it does make sense if I can pull some triggers other times I just say no

it doesn't make sense to me what what about so i know you've had a sales force do you currently have a sales force right now is it just you So I just brought it on the way up here.

I just got a guy that left one of an awesome company.

I mean, they're struggling in our market, but he's going to come on and he's starting on the 2020.

Awesome.

But previously you had sales guys.

So what did you allow sales guys to do?

So I paid them on gross.

uh profit numbers not total jobs so if if he was gonna go so i had one sales guy and he was if he would go below 50 he'd get five percent

can i can i give you uh some feedback here absolutely okay one

one of the best things you can do is eliminate negotiation like

when you give room to negotiate it does two things

one it tells the customer like when you're willing to negotiate it tells the customer hey i was trying to screw you to begin with Okay, I mean

like wait, why didn't you present me the lower price to begin with?

You're willing to drop it now.

Why didn't you do it before?

Right.

That's, that's psychology number one.

Number two

is it also

prohibits the salesperson from having perfect confidence in the price.

And so because they know that in their back, they can negotiate and that previously they negotiated and they got a deal, then what does it do?

It creates a cyclical era of constantly.

So one, in my companies, we do not negotiate.

We cannot drop price.

Price cannot be dropped.

The only exception to that is a promotion that is done by the company and decided upon by the company.

All right.

And that's not done in the moment either.

Right.

Like, it's like, okay.

If this is our price and we're running a promotion for the rest of the month, then the promotion is for the, and so it's just, it's the price is what it is, right?

But at the

every time whatever is presented to the customer, I am not like, we are not going to drop from that.

Okay.

So it solves those two psychology.

And in turn,

what it encourages with the salespeople is actually to be better salespeople.

Right.

Because

when a customer says, hey, can you lower the price?

And even if you respond like the way you were just saying, like, hey,

let me check on it.

What that that is whatever you're doing here is not

a good sales practice, right?

It's not using sales skills to convince them to buy at that price.

It's you're trying to negotiate on price.

And

the same psychology that navigates price is what navigates pay with employees as well, right?

And so

just understanding that you can get great employees by not paying the most in the market and you can get great customers without being the cheapest in the market, right?

And so it's the same type of thing, but like then it allows us to up our skills, say things like,

when the person's like, hey, are you able to go cheaper?

Right.

Like if the customer is like, hey, can you drop the price at all?

I have a couple of different responses I love.

One would be, Mr.

Customer, yeah,

I can drop the price, but I'm going to have to cut corners.

Which corners would you like me to cut?

And immediately,

how do you respond to that as a customer?

You don't want the corners cut.

You want the whole package.

Wait, wait, I don't want to corner.

And basically,

you come to this realization of like, look,

our price is what it is.

And we put in, we're going to bring the best equipment, the best value.

And then one of my other favorite ones is

like, ask me, hey, why are you $5,000 more than the other company?

Why are you $5,000 more?

Hey, that's a great question.

David, why is it important to you that we're profitable?

Well, I know why because I own a business, but I want you to honor your warranty.

Yeah, so as a customer, why is it important to you that me as Meister or Maester

Heating and Air, why is it important that Maester Heating and Air is profitable to you?

Because you give me warranties and guarantees, and I want you to be in business if something goes wrong.

Exactly right.

And because of that, we refuse to drop price.

If you want to go with ABC down the street, you're more than welcome.

But I'm assuming this isn't just a short-term investment for you.

No.

Right.

And so, like, here's the reality is that a customer has never been asked those questions.

Go ahead, sorry.

I was just saying, think about it.

Like, have you as a customer ever been asked by someone trying to sell you something, why is it important that we're profitable?

I'll tell you, like, one of one, another big thing why trade guys don't think about this kind of stuff is because

the business coaching part of the trade,

you don't get that being in the field.

You don't understand

how to negotiate.

You don't understand if saying you kind of like, you know, someone says, hey, I got an air conditioner or mine just broke.

You just go there and help them out when you're working for somebody else.

But when you actually start looking into the business and understanding how numbers are supposed to be ran and how you're supposed to look at them, you're thinking like, no way.

I didn't know I just spent 20,000 on gas.

I had no idea.

I didn't know that my um you know building payment is six and a half thousand oh it's only six and a half thousand what is that and then at the end of the year you're like oh my goodness so if you're looking at percentage wise it does make sense right so not having that kind of background because you're in the field and you're just kind of oh this is a lot of money because i make this much and now i can make this much i'm like you know way more twice as much or whatever and that's the kind of mindset i had i like period

and here's the beauty that

you don't have to be a business owner to receive this kind of training, right?

Like, like one of the most important things you can do as a business owner is to train your people on this level of psychology and help them understand, right?

Like, like when we talk about business priorities, there's, there's three priorities in a business.

And the way that they're prioritized is very important.

So most, most companies prioritize the customer first,

the employee second, and the company third, right?

When the exact inverse needs to be true, the company needs to be first,

then the employee, then the customer.

And that is the only way that you can serve the customer.

And the reason is if I am profitable, if I am priced correctly, profitable in business long term, I can afford to take care of my employee, pay them right, motivate them right, build the culture that's going to last, keep great talent around, provide opportunity for them to learn and grow.

And in turn, if I do that, they will take care of my customer, right?

And that is the best, that is the best way to serve your customer is actually putting them last.

And it seems counterintuitive, but it's the reality.

It makes total sense.

And like, and educating our team members on this and educating our customers on this, right?

Like if you can, if you can teach your salespeople, like, look, the company needs to make a lot of money.

Because if the company makes a lot of money, we can provide you a lot of opportunity.

You can learn, grow, you can develop, you can be in management opportunities.

We can expand locations, you can be a general manager, you can do all these things, but only if the company's profitable.

And

if that, then we can take care of the customer, right?

So now they can sit down with the conversation with the customer and have a conversation of,

hey, Mr.

Customer, why is it important to you that we're profitable?

And

the customer is all of a sudden going to start selling you

on why they should go with you versus ABC

heating and air down the road.

The confidence your employees have in the business gives them like the value to

sell better to the customer.

Because a lot of the times pricing is not the actual objection.

It's just a value proposition that needs to be readjusted because

if it, regardless of the situation, if their HVAC was completely out, they would probably be willing to pay any price to get it fixed if the value was correctly set up.

So like another great objectionable way is like I noticed, Mr.

Customer, you've got an Apple watch like on your wrist.

Why didn't you just get like a Casio or like a Samsung watch?

Why didn't you get that on your wrist instead just to tell time?

Yeah.

No, I mean, there's so much for me.

You know, I can go on walks and it tracks my steps.

Yeah.

And you have an iPad too.

And I assume you probably have an iPhone.

I do have an iPhone.

Why don't you just get like a flip phone?

You know, I just, I like Apple.

I see the value and I'm willing to pay them.

I'm willing to way overpay.

I feel like that is

so important what you're saying, because if you're, it's also a process, right?

So if you're coming in and another thing I want to kind of backtrack, it's so hard to change a

mindset of a team or a culture of a team if you yourself are programmed that way.

And that was one of the reasons why I had to separate myself from people in my business.

And I'll tell you, I'll tell you one other quick story.

I believe it was at the end of 2024.

I said a prayer like, God,

please,

I want to, you know, people say it's your team, it's your team.

I say, God, please help me to build an amazing team.

And if there's people that need to be here, bring them on.

If there's people that need to be gone, take them out.

Well, this year hit me that really good.

I'll tell you that like i have like a whole new team which is nice because now like we might have never done something before and i'm like this is how we do things here yeah and they're like okay yeah and like today on the way here i hired a new service technician and he was an installer i told him dude you're gonna sell it's you have you have the path to the customer's heart because the sales guy comes in all nice and everything you're just a tech you're here to help them on the way here this guy closed an 11 000 job too many splits like we're awesome like you know i said dude that's amazing and because changing a mindset of a company is so hard and that's why changing people and just not i mean not in a bad way but because they're you know sometimes not a good fit or they just have their own dreams and goals so for us we're doing it now and being on the right crm knowing your numbers better and um just making sure you're making money.

Yeah, if I could add one more thing to that, too, is like you think we start hiring these sales reps and technicians, and we give them these powers to negotiate, thinking like that's what they want.

But I promise they don't want that because now they have to think about numbers.

When before they could just think about if you take that power away from them, they all they have to do is think about value, sell, objection handling.

But now, because you give them this power to negotiate, they got to start calculating how much am I going to make on the back end of this?

Do I want to give them half and then have to save some wiggle room in case I need to go down again and then continue to objection handle?

Like, they don't actually want that power.

You want your employees to have the easiest path to success, and it's by doing less.

Like, just standardize it across the board.

We never did discounts unless it was a company forward-facing discount.

So, I've got

some numbers here in front of me.

Yes, so we got year-to-date financials.

Yeah, and I want to, so

you know, one of the old adages that I love is that numbers don't lie.

People do.

And so I think, and, and the, the beauty of when we accept the lies that we've told ourselves and accept the truth for what it is, that's the only way that we can make change, right?

You agree?

Absolutely.

Like you shared your story earlier of you coming to God and basically putting it on the table.

And basically what that represents is everything in life is done based on truth.

When you own the truth, expose the truth, then you can change.

Yes.

Right.

And the same thing goes for running a business.

Yeah.

It's the exposure of the sins of the business that allows us to make change.

And

sins of the business.

The sins of the business, because, man, I'll tell you what, there's some sinful things here.

Help me, Lord.

But, but, yeah, so what we got here,

just to be like specific with the the numbers, we got 2.11, so 2.1 million this year.

So $2,117,882 year to date.

That's through a July 31st close.

So first of all, what's your biggest year to date up until this in revenue?

So we did 3.6 last year.

Okay, cool.

So right now you're on pace to

outgrow that a little bit.

So

I don't know if we're going to do

seasonality.

Well, not only that, we are focusing more on structure and versus just top line.

Yep.

Which, yes,

profits are sanity for sure.

And so let's talk about that.

So right now, you're 2-1, top line.

This next line is one of the most important things that most business owners fail to understand is their gross profit.

So like right now, you had shared with me, hey, we build all of our stuff at 55% gross margin.

Right.

Your numbers here would say otherwise.

That's right.

Yeah.

And so

right now, right now, we're at $799,000 of gross profit.

So if you take that divided by that

million, we're at a 37.7% gross margin.

Yeah.

So basically, if you if you want to open the other link I gave you, it has the percentages on the right side too.

Okay.

So it's cool.

Super easy.

Love it.

Let me pull that guy up.

100%.

And then there's no justification.

I know that.

So to me, all that says is: one, you're either one, not pricing correctly up front, or two, there's too much negotiation going on, right?

Too many special deals, side deals, everything like that.

And so the hard part with so a standardized offer is one of the best things that I could get for you.

And a standardized offer is basically like we sell

mainly one solution at one price right like and and i know it's very common in the hvac world to give choice like good better best you know good better best you know we have options we'll customize it to you right right the the problem with customization or the problem with optionality optionality creates uh a confute confusion right and a confused buyer doesn't buy and that's so true i'm i just listened to a guy named named Sean Mitchell.

He, I think he did eight, over 8 million with a company down in Seattle area.

Yep.

And he actually says that I do not give too much options because then they got to think about it.

They got to think about it.

It creates confusion.

Right.

Like whenever there's more, because here's the reality, most customers.

So there's a range of customers.

And if you've, you, if you haven't dive into my course where I talk about this and it literally talks about like the different levels of questions or knowledge that a customer needs to buy and the lowest common denominator is like Billy Bob right so Billy Bob when when he calls up maester heating and air he just knows he needs a new unit right and he needs it now right

and so when we go and we Give Billy Bob too much information, Billy Bob doesn't want to admit to you that he has no idea what you're talking about.

Right.

And so in his mind, he's like, well, I didn't think that there were other options.

I didn't think about multiple warranties.

I didn't think about this, that, and the other.

And so instead of admitting to you that he's confused, he's like, David, can I just have some time to think about it?

Can I give you a call back tomorrow?

When reality, if Billy Bob would just be like,

you know, hey, Billy Bob, this is what you need.

He's like, you know, I just need some money to say I didn't realize there were so many options.

That's how they sound in Lakewood.

Right.

And

so like the less options, the less options, the better.

And the more standard, the better.

And when you are standardized, you have predictability.

All right.

So if we are consistently always at a 55% gross margin, now I can make decisions as a business owner.

But if I think I'm at a 55% gross margin, in reality, I'm at a 37.78.

Since

it's really hard to run a business.

It is.

And I'm feeling that pressure.

And that's why for me, you know,

I'm reaching out to

you guys, actually you know my goal is to grow and learn and understand

how can i better myself as a business and a lot of the things that

we just don't know because no one does this right and the thing is we can go and blab and everybody lies on their numbers too right but so that's it when you look at this stuff um it gives you the truth now

It put me in a unique position because I took, I looked at this.

This was recently.

We did a call with our CPA CPA

and

he said your materials and supplies are quite you know it's 33%

yep you know h vacc is expensive but

that's a lot of money yep you know

and another thing is like our direct labor it's not bad we're at 20 that's you know you got to pay to have good talent today not absolutely kids want or not kids guys want to be on um not in the crawl space or in the attic at 130 degrees so if you want good integrity work to be done you're going to reward that but it has to be built into the price now another thing where we're struggling a lot in is marketing yeah because we're not going to the right customer just like we said hey we're like we're actually selling to a higher end person you'd say in the society because that's where we grew as a company and it was easier to go there and say oh these guys got cash they'll pay boom boom boom whatever so can i give you the straight truth here yes cool So the reason you're struggling with marketing is because you're not spending enough.

And the reason you're not spending enough is because you're not priced right.

And so

really every single business starts with the offer.

Okay.

If your offer to the marketplace isn't structured the right way, it doesn't matter how good you're at marketing.

It doesn't matter how good you are at sales.

It doesn't matter how good your installation process is.

If you're pricing an offer is not structured correctly, you're scaling a piece of crap.

Right.

And so like, if I'm looking at this, I have to see a consistent, so for me, I'm building my heating air company at a 60% gross margin.

Okay.

Not 55, 60.

And I'm not 60, I think it's 60, but it's going to show up as 60 here, which means I've got to go through and see how my labor is actually being priced in, how my equipment really is, what happens when we have to eat certain things.

Like, because

do you guys ever have to eat something with a customer that you didn't properly quote it?

Yeah.

What are examples of that?

Oh, sometimes,

you know, let's say like we're doing something in the attic, drywall.

Yep.

You've got to repair some drywall.

That happens.

How often does that happen?

Not often.

I would say, you know, out of 100 jobs, maybe two.

Okay.

Three.

And how much does that cost?

Oh, it depends.

Right.

Yeah, it depends.

So say, like, let's say that an average or a drywall repair, we're at around like maybe 600 bucks to repair the drywall paint.

Right.

So, so this is like, and, and here's the reality is like, right now you're pulling that number out of your butt as far as how often it happens, right?

Like, you think you know.

So, what, I mean,

pretty much yes.

I mean, you have a gut feel about it, right?

Right.

Because what I do is I don't actually really look at, they'll say, hey,

we had a damage on the drywall.

It's like, we'll just call Victor.

Right.

And then, you know, we get a correct.

So

my point in this is like,

you've seen it happen.

You know, it happens, but you don't know exactly how often and how much.

Right.

And so this is an example of knowing your numbers and how you have to make sure that you can price it in correctly.

Because some of you got to pay for that.

Right.

And so, for me, the way I like to price in certain things, so, like, for example, if I know something happens one in four homes, and I know that one and that thing is going to cost me $400,

what do I do?

You put in all of them, I'm going to put a hundred bucks into every single

average, and so because so I protect my margin, right?

And so that when I do have to eat $400, no problem,

it good the law of averages keeps me at that same and right.

And so, if I'm properly creating that

offer,

my gross margin is going to only vary one to 2% maximum, right?

Based off of little mistakes or whatnot.

But like right now, you're thinking it's your pricing at 55 and you're actually coming in at 37.

That's a huge variance.

Imagine an additional 18% to the bottom line.

Oh, right.

The coolest part about baking that price into like one of every four homes is, you know, if you got to go fix the drywall, one out of every four homes is when that happens or a mistake happens by one of your technicians, the customer's like, oh, well, what the heck is supposed to happen?

We'll take care of it, Mr.

Customer.

Don't even worry about it.

That was our mistake.

It's already done.

Don't worry about it.

And it's just the value stack of the company becomes so much higher of perception of value just because you're like, oh, we need to change out your electrical panel.

We'll do that for free.

Don't even worry about that, Mr.

Customer.

So yeah, that's the example is like, even when it wasn't our mistake and it was actually the customer's home mistake, where you should be able to go back and bill them for it like like they need a new electrical panel upgrade or whatnot if you're baking that in you now can offer like you're basically giving them something incredible without having to come to the because think about how many other companies that are in your industry send them a change order and be like all right it's okay we'll upgrade your electrical panel it's going to cost you 2500 bucks so don't worry about it and then now you've created an opportunity for them to cancel and so now the less opportunities you give them to back out because you had to change something you've already baked into your price, the more you can just bulldoze your way through the rest of the process and it's nothing to you as the company or to the customer.

And it's completely seamless because there's two ways you're going to increase your gross profit margin.

Lower your cogs or increase your price.

And it's a lot easier to increase your price than go through line item by line item of like, so, oh, I should change my this or that.

So what, one, like 100%, I agree with you.

And that's why we're in, when we're focusing on like,

you said it, we're not marketing enough.

We're not.

And the thing is, what I'm figuring out is, okay, how are we supposed to do marketing?

Because I've never done this before.

We did some

flyers recently.

We did

all this unique stuff.

But still,

where do the most customers come from?

It's going to be Google.

Yeah.

Like, that's your best customer here today.

I'm on my

fifth digital marketing company.

Who are you guys using right now?

So, this guy that we just got, he started in July.

And I went to us, I went, I dropped all these cool big names that were just in the background.

I went to a small company.

Who'd you use previously?

Oh, come on.

All right.

Dang it.

Who'd you?

So we used Camp Digital.

Who else?

Rival Digital.

Okay.

Who else?

Before that, oh, so sad.

Highboo.

Okay.

It's like the yellow pages, I guess.

Man.

So

a couple things.

A couple things here.

Like, let's just look straight at your numbers.

Yes.

If you were actually hitting a 55% gross margin, that would have an 18% more to drop down.

Right.

And then if we, so right now you're spending 5.77%

on your marketing.

That's not enough.

You need to at least be 10%.

So marketing is one of those interesting things.

If you're spending too little,

it's a stab.

If you're spending too much, it's a stab.

Right.

Like, meaning like you, you're spending too little, you're costing yourself revenue.

You're spending too much, you're just doing it wrong.

Right.

Right.

And so

this number has to be 10%, 12% max.

And so what that's doing, because this is directly correlated to the amount of revenue that you get, right?

Like if you like typically, if you're at 5%, if you double your spend, you should get double the customers, right?

Now you have to have the operational capacity.

You have to, not only that, you have to have the

proper business model because even though it says 5%, we actually spend more than 5% because a lot of this revenue comes from new construction, which is the repeated builder that we work with or a remodeling company.

So if we take down, so we're about 60%

retro, like replacement service okay and then 40 new construction right so and we only do marketing for retro service got it we do zero marketing for new construction okay so i mean so the the reality is you are probably like 10 11 for your new for your uh new business yeah your new retro business yeah yep totally totally understand but like even then

how are you pricing your builder stuff So we, the way that we do it, we try to do it.

So that's a, that's going to be hard one for me to answer because there's so many details, but our average project is around thirty thousand dollars and that's that's a higher ticket for a new construction uh or a remodel uh

but

i have it's it's a very unique path but i have everything built out by systems and what it is like we go by the heat duct so for example do you know your gross margin on that thirty thousand

no Okay.

Very vital.

Very vital.

And so this is the only thing thing I would say that potentially.

So on new construction, I still like to be very high margin.

And at most,

I only want to reduce it by the cost of marketing.

You know, what I can do is I can see if I can work this out.

And that's fine if you don't have those answers.

We don't, we don't need to solve that on this, but this is, this is my philosophy on new construction is if you're going to reduce it because you have that repeatable business, only reduce it by the cost of marketing.

Right.

So basically your difference between a new construction and a retro should be about 10%.

And now I understand that may cost you business in certain aspects, but the problem is,

like most business owners, they make the decision like, well,

if I make a dollar, it's a dollar I wouldn't have had.

Well, but it's also a dollar that you couldn't focus on a different channel with.

Right.

Right.

Right.

Which is more highly profitable.

And at your current spend, you know we'll take the the 5.77 with a grain of salt with with your new construction but to me that highlights if you're not spending on marketing well marketing is a casino okay

as you walk into a casino the casino will always have the edge on you right if you sit down at a blackjack table you get one hand dealt with you

And if the dealer is showing a strong hand and you've got a weak hand, you've got to hit.

But the problem is sometimes you'll still hit and you might still win but sometimes you'll bust and you might lose but the problem is you only had one hand and if you're not spending enough on marketing you're not able to figure out what with data how many more hands you could do to find the winner because you're going all in and hoping thing you're you're trying to get a lottery ticket with 5.77

and unfortunately most of the time as marketing most of your ideas will fail and most of your ideas won't work.

So you have to spend enough to test so you can find find the ones that work and scale that to the moon.

And at 5.77%, you're not testing enough.

And of course, to your point, you got to have the right, you got to have the right group and you got to have somebody that's running your marketing.

You have to have the right systems,

which starts with generating the lead and then having the proper CSR that is going to convert that lead to a book.

Right.

Right.

And from that appointment to a close, right?

Like that system has to be constantly fine-tuned, trained up, and

delivering for the marketing to be worth it.

right that's that's very true and that's and and with marketing like another big area where business owners just don't ever get learned never taught about it you know and what we're doing trying like social media stuff

we just like i thought it was going to be such a cool video we got you know i thought that was going to get like a bunch of views and stuff i threw i dropped the unit off my roof Like it was supposed to be pretty cool, you know?

No, and I was giving away a free heat pump in the month of July.

Can you believe that?

And nothing happened.

Zero entries.

And by the end of the month, I said, take it down because if one person enters, I'm screwed.

It's a good thing nobody got in.

So, and it's like, it's like, okay, what?

So this is a classic marketing mistake is that we think we are better than the data at like determining what's going to work, right?

We see something viral.

We're like, hey, let's recreate this.

It's got to work.

You go all in, you do this high production, you freaking bust a system you do whatever else and then it doesn't work and then on the opposite you got a few of your employees doing a christmas tick tock dance right and it's generating your highest leads and converting and this is reality for us just so you know um like like one of our highest performing ads ever was five of our female employees just doing a Christmas dance with Christmas music that continued to run through through the summer.

Yeah.

And like

that continued to run through the summer, and it was our best performing ad, right?

Like, like, at the end of the day, Levi's going to say, we're scientists, right?

Like, we're, we're not these great artists or whatnot.

Like, marketing is a science, and you've got to test, and

you can't go all in on one hand, right?

You've got to be diversified and you've got to take whatever's performing and add more money to that rather than going this big giveaway that you broke a system on that you thought was going to break the internet.

You know, I also want to add too, like

we think as small business owners all the time, the more discount slash free thing slash giveaways I can do, it will probably like, who doesn't want a free heat pump?

But I'm going to tell you this right now, as an uneducated HVAC customer, I don't even know why I want a free heat pump.

You know what I'm saying?

Like if I'm not properly educated on the pain of why I should have a new free heat pump I don't even know why the value of a free heat pump is because you're like in your brain dude are you kidding me how did nobody enter a giveaway for a free heat pump but if i'm sitting as a customer and i don't know even know what a heat pump does right why would i enter it so that also goes to not even just specifically you but anybody watching is like structuring your offer and your scripting and your creative of don't just keep stuffing and doing more discounts and giveaways identify a true pain and educate your customers those will be the best customers to sell, the ones that you teach those things to.

The sad reality about whatever your product is,

nobody knows as much as you do.

Nobody cares as much about your product as you do.

And frankly, nobody probably even knows what your product is, right?

Like that is the sad reality.

The truth and the happy reality is people just want something that works and gets them a result to solve the pain that they're in.

That's it.

And so like

at the end of the day, we sometimes we get hung up on like oh this is the best xyz product with the best warranty and the best everything

when

nobody

cares

right and nobody knows that that's a cool thing in fact i was sitting with the fencing company the other day and they were trying to tell me about this cool product and they want to carry this product and they dropped the name and i'm like what's that and like you don't know what that product is i was like no

what why would why would i know that brand of fence and they're like everybody knows what that i'm like news flash i'm your customer nobody knows

like and and so just like getting in the head of the customer and understanding like who we're selling to so when i rebranded i started to attract better talent yeah and a lot like these other companies they're not selling these they are selling some of the top of the line stuff but that's so true the the brand or whatever company your system or whatever that you're using your material doesn't matter it's truly about who you are and that's why we shifted the focus and doing more like social media stuff about who we are love

and you know

that right there uh actually put me uh looking at these numbers actually put me in the room with some amazing people And they understand like, hey, I'm looking for a incredible product that's going to take care of my customer.

Yeah.

I'm not, even though maybe the name is not there, but I need it to deliver.

Yeah.

And if you guys got my back, a reliable product.

Yeah.

Yeah.

For sure.

That's a customer wants something that works and solves their problem.

They don't care about the brand.

They don't care about like all the fancy whatever.

Yeah.

Right.

The stuff that we get hung up on.

The only reason they think they care about the brand is because they can trust that brand that it will deliver the results or hope that it delivers the results.

And so like,

this this is what I've learned recently in the past.

Well, basically, I've had the business for two years.

That's why I started focusing on the CRM, on

the brand name, systems and processes, answering the phone call, looking through, you know, making sure the leads are being booked.

It's what you what we went through today, it all has to make sense because even if you say like your sales process might be really cool, but then you're dropping the ball on like discounting or whatever structure.

Yeah.

Like Like sales guys are promise maker, the installers are promise keepers.

Yeah, so if you're if your install guys suck, absolutely deliver it.

The whole wheel has to be around right.

And then that's from like getting the lead, booking the lead, getting the sale, and fulfilling it.

And then getting referrals.

And then get referrals.

And that's where we're at.

We're figuring all that out because it was just a discount game.

And one thing that frustrates me the most is, you know,

my ad spend on Google LSA is not small.

Right.

But my Google is broken.

I'm not getting calls.

Yeah.

And to me, I'm like, what is going on?

And that's why I hired a smaller company that I can reach out to say, hey, we got Google just gave me this, whatever, just figure this out, dude.

And overall, it's a process.

So

couple items of homework that I would give you.

Okay.

One, let's create a standardized offer that's going to consistently get you that 55 to 60 gross margin because right now you're not right the 37 that alone if we just shifted that additional 18

all of a sudden your business right now you're operating just over 10 net right so on the 2.1 you've made 200 and you know some 219 000 which is great and and it's respectable right but imagine that number with that's more than double right oh yeah like that this this number could easily be a 25 net.

You could easily be over $500,000 today if we can standardize that offer up front.

So the standardization of that offer, we can get that to, let's just call it a 55%

and then dial in the marketing to a full 10%.

I don't care what, like...

where you're at.

Like if you can average 55% across commercial, residential, everything and get the total spend up to 10%.

And of course it's got to work, right?

Like the phone's got to ring.

The appointment's got to be set.

It's got to be booked, right?

You got to have an 80% booking rate and everything like that.

Like fix those two things.

Your business will look drastically different this time next year.

And again, you're in a good position.

A lot of people are in much worse positions.

Like you're profitable.

You've got a lot of really good things going on.

You've got a great name.

You've got some good people.

You've just recently hired another salesperson.

And then now with these new people structuring it in a way,

and this is one last piece I would give to you.

Do not pay the sales rep on gross, gross profit.

Pay them on a percentage of revenue, total revenue, because

they won't have control over the gross profit.

Okay.

Now they just get paid.

So that's interesting that you say that because a lot of times people say, you know, if you're looking at the gross profit, that's the accurate way to pay.

So the reason why people say that is because they negotiate with price and they want the sales rep to be tied to their negotiation.

Okay.

And they give them the opportunity.

Like, hey, look, if you drop gross profit, you're going to drop too.

Look, you can't drop because you're selling it.

Like, if you, and you have a unique opportunity right now, you're starting with new salespeople.

Yeah.

Build it the right way.

Yeah.

And I promise you, this is the right way.

And

it's going to give you so much more power.

power it's gonna you're gonna train your people so much better they're gonna sell the right way and ultimately they'll make more money yeah i think that i know that that's that's a huge thing marketing has been such an opportunity for us it's just we need to figure that part out and i'm willing to invest but when when i'm not seeing the fruit it's you know it's a little hard because you're like man why am i spending right you know three grand on yelp a month and we looked at the revenue and it's like, it just doesn't make any sense, you know, or whatever the case, no matter what.

So, but I like your, even though I'm not into like gambling or casinos,

but you're saying, hey, you know, it is a chance.

You got to kind of, you know, shoot and see what works and dropping a unit off the roof.

I think a better analogy is like the stock market.

You can either try to go all in on one stock, hoping it works, or you invest in a mutual fund.

And a mutual fund, you know, eliminates a lot of your risk and basically assures you're going to be successful.

So I wanted to ask you a question.

I heard, I was listening to your story on the way up here.

And man, you have a crazy story.

I was shocked.

Like I, you know, I heard you on a podcast with Tommy Mello.

Yeah.

And you recommended a book that I actually listened to twice.

James Clear.

Tom McAbbott.

Tom McCabots.

Shout out.

Jamie.

Jimmy Jim.

So that book just completely changed.

That's why I drink water.

I don't have Celsius in my van anymore because, you know, you make, you adjust your life.

But

you were at a point where you thought you were making money.

You made all these investments and you got all these, you know, or you got all this money from family and whatever.

When did numbers really just like click for you?

And how did you get to the point of like, man, this is where business is.

It's not all motion or, you know, excitement.

That's a great question.

So I think, one,

I have been fairly naturally gifted with numbers from the beginning.

So I've been eighth grade.

Shout out to eighth grade state champion, Washington State Champion, Math Team.

But

even then, even though numbers made sense, like to your point, I did make a lot of emotional decisions that were more emotionally driven.

And frankly, when did it all shift was once I started getting getting in the right room with the right mentors and I saw the importance of having the KPIs and the numbers and everything in your face constantly and not just numbers, but like knowing the meaning behind the numbers and the story that they're telling.

Right.

And so like, again, when I look at your, when I hear what you're saying and I see your numbers, I know exactly what the truth is, right?

What the real story is.

And so like that's,

it's a process of education.

And, and I, you know, I've spent a lot on my education, 1.3 million in personal development,

being in the right room, being with the right mentors and whatnot.

And so, and then, of course, just bumps and bruises too, man.

Yeah, I think that's where you, I think the

spending the money, you have to spend the money because, you know, but that's how you actually get to the people that, hey, let me show you what I went through.

Here are my numbers.

And like, you get those connections and they call you or you call them.

Now they call you, say, hey.

And another thing that stood out to me me was you talked about your bankruptcy and you said please please please reach out for help i think that right there is another

big opportunity for the trades yeah because we feel stupid when we don't ask questions and and i failed or when we feel stupid when we do ask questions

so we don't we feel stupid and that's why we don't ask questions

but that the a wise person the bible says it's so amazing scripture is so powerful and true but

a fool is wise in his own eyes right right and then a fool cannot get instructed amen you know so that to me was those like things like

stood out to me i was like man this is where my life really changed and it was i when i began to ask for help and that's why i came to the decision of moving away from my situation with my partner and working on the brand and getting on the cram and eventually coming to this place and working with you guys Yeah.

Well, David, dude, we appreciate you trusting us, being a part of the next level community, sitting down with us, going over your numbers.

Dude, you have an incredible opportunity here.

Like you build a great brand.

I mean, this is something that if you can dial in these numbers, the scalability of it, right?

Like, I mean, you've seen as the people that have gone before you, like in the HVAC space, this is something that could be scaled to 50 million, 100 million, 200 million dollars a year.

But the only way we get there is we have to have, we have to fix the foundational stuff that allows it to scale.

And so you have some incredible opportunities.

Look forward to working with you on it.

Thank you.

Appreciate you being here today.

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