Effective Customer Relationship Management Strategies to Scale Your Home Service Business

And that is so important to me. We actually put it into our scorecard for the KPIs for the way that the technicians get paid.
There's three KPIs that we track. One is revenue.
One is number of views and then closing ratio. And the technicians can elevate their bonus rate by getting more reviews.
And there's a certain threshold. We have a minimum that we ask at least eight five star reviews per month.
And that is like to earn eight five-star reviews because we teach lots of people how to do a wow service, provide five-star service. And we want them to earn the reviews.
That way, like when a customer reads and they're genuine, it doesn't seem like, you know, something got paid to give their review. You know, we want them to be real, actual, authentic reviews.
And then the reviews are good feedback, too, when you mess up. So they're really important.
Welcome to the Home Service Expert, where each week, Tommy chats with world-class entrepreneurs and experts in various fields, like marketing, sales, hiring, and leadership, to find out what's really behind their success in business. Now, your host, the Home service millionaire, Tommy Mello.

Before we get started, I wanted to share two important things with you.

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Now, let's get into the interview.

All right, guys, welcome back to the Home Service Expert.

Today's going to be really fun because we got Anthony Caffagna on here.

He's an expert in plumbing, home service innovation, business management. He's located in Rancho Kakamonga, and he started the business in 2009.
And Anthony is the founder and CEO of All City Plumbing. He started the company in the Great Recession and successfully led his team through tough economic times.
Today, All City Plumbing has approximately 90 employees, 80 vans, and generates over $20 million in annual revenue. The company has received the Angela Super Service Award for three years in a row.
He kills another review game, Yelp 5 out of 5, which is very difficult to do. In the last six months, he's expanded into Orange County.
Four months ago, he went into LA County. So he's done this primarily in one location.
Anthony, it's a pleasure to have you on today. Oh, thanks so much, Tommy.
I've been listening to you for the last four years. I really look forward every week to listening to your podcast.
And it truly is an honor to be on your show. You definitely helped inspire me and motivate me over the years.
So I just want to say thank you. No, thank you, man.
Listen, I put that out there. It's just as much for me to learn.
The people I get on the podcast, I'm always taking notes. In fact, before we got started, I just sent a voice note to all my managers about some of the review game we were talking about.
But the way I like to get started is why don't you introduce yourself, tell us what it was like in 2009, a little bit about the business, what you learned throughout the years, what were the biggest game changers and what the future looks like? Yeah. So what it was like in 2009 was, well, prior to that, I was working for a company that was really busy and we were just going call after call after call.
And then the great recession happened. At this time, I'm a 25-year-old kid.
I don't have a clue what a recession is. I didn't study that in high school or junior college.
So it was just happening. And it slowed the company down.
By that time, I had lots of friends and community and other companies were slowed down. So I had this great idea where it was like, hey, if I'm going to be broke, I might as well be broke working for myself.
I went and just got my license and got a van and just got it going. So that's pretty much what it was like.
It was a struggle for the first five years. I definitely struggled.
I stayed the same. It was like Groundhog Day.
And then I had that breaking point and things started changing for me. So tell me a little bit about 20 million.
A lot of people listen to this podcast and they're like, well, we don't want to talk about 200 million. We don't want to talk about a billion.
We need to understand the stuff that gets to 5 million and then 10 million. What were some of the mistakes and what were some of the aha moments? Yeah, so I definitely made so many mistakes.
I mean, it would take more than one podcast to talk about that. But one of the things I was saying is success is going from failure to failure with no loss of enthusiasm.
And I can say once I started going, I definitely went a good five years straight just going from one problem to the other and losing no enthusiasm, just going, going, going. And that was like for five years in a row.
It was like more vans, more trucks, more all this and that. But I definitely hit a breaking point and I ended up in the middle of two real major lawsuits.
And that definitely shocked and broke my little world. And I wasn't able to, you know, live that quote in real life.
I definitely took a couple steps back and I was like, damn, this hurts. I don't know if they answered your question all the way, but.
Well, yeah, there's lawsuits and that's in California. It's prevalent there.
There's a lot of mistakes that happen, but what doesn't kill you makes you stronger. Right.
So if you don't mind kind of putting more of an explanation, what were some of the things going on with the lawsuits? Yeah, they're still ongoing. I mean, if you were to lay down the top five lawsuits that you could possibly get into, two of the ones I'm in is still actively going on.
As far as the doubling, that's why I love listening to these shows and that's why I listen to them and they helped me so much. One of the things that helped us double one year was joining Nexstar.
There's just no way. That's one thing, a recommendation when you're smaller.
And we still are a baby company. But when you're taking the baby steps, joining a best practice organization, you just have to do it.
Because how else are you going to learn accounting? Before I joined Nexstar, a P&L was something I did once a year that the CPA did in cash accounting. And who cares about cash accounting when you're trying to run a business, right? You need accrual accounting.
And I just think that joining a best practice group, that's kind of like what's tried and true. And joining that will show you, hey, here's your financials.
You need, you know, your P&L by the 10th of every month. Here's your KPIs.
Here's how to build a price book. Here's your billable hourly rate, all that stuff.
I mean, just joining a best practice group and wrapping your head around that, boom, you're going to double. When you're real small, just hiring a competent digital marketing company and caring about reviews and pumping people up for reviews.
So just reviews and a digital marketing company, boom, you're going to double, right? And then when you're really small, I think it's tough when you're working at your garage to have like the highest hiring standards.

But as you get bigger and more momentum, you know, at least I did.

I raised my hiring standards and then I built a better team and just building a better team, having higher standards, you can double.

Hiring a company like Service MPP, we did that.

Joe Cacera, we started enforcing, giving three options that was a game changer our average ticket skyrocketed you know getting your average ticket way up there now you can afford more cool stuff and one of the takeaways i'd say is that when you're a smaller contractor which i still am but when you're starting off it doesn't take a whole lot to double right you know you put, you put these two or three things in the place and then grind it out, pay the price, like work every day. Because one thing I hear you say a lot, sweat equity, but like, I mean, come on, if you start a business with no money and no knowledge, like most of us do in the contracting world, it's called, you need to work that ass.
You need to work every day. You know, like you, you started behind the eight ball, grow up and get to work.
Well, another thing is delayed gratification, right? You don't go out the day the business starts making money. It tends to like, we deserve this.
We deserve that. We need to buy this.
We need to get this. And it's like, you have no patience with your business.
Why not reinvest? Why not make it look beautiful? You couldn't afford new trucks. Why not reward the company that got you everything? And reinvest in you've done it you got there getting joker star and next star reading books that you listen to the home service expert and now you're on here and you've got over 30,000 satisfied customers the problem is for most people there's no next star network and actually one of the things that i'm excited about is i've got an amazing show coming up in november called freedom and it's homeservicefreedom.com and it's going to be a game changer because the small guys the small industries which was garage doors they don't have a chance they don't have anything next door started in 1991 with frank blau yeah and they figured that out over 30 years ago so i I want to give back to the community.
And I think there's a way to have a win, win, win, win, win across the board and create a lot, a lot of millionaires. And I don't really talk about this a lot because it's still in process, but it's going to be the end all be all of getting your company to be extra profitable and accomplishing what you want, not only in your business, but what do you want out of your life? How do you want to be remembered? What kind of legacy do you want to live? What kind of parent do you want to be? What kind of child of your parents do you want to be to them? And I think it goes a lot deeper than just hitting KPIs.
There's a lot of things that we're going to talk about it and freedom that is just going to change things. What CRM are you using? Right now we're using service time.
Oh, that's another thing. I have a friend that is a smaller contractor just starting off.
He started about a year ago and he's had tremendous growth throughout the last year. But he showed me pictures of a CRM and I'm like, dude, what am I looking at? And I just forgot how big of a disadvantage it is to be.
I mean, you need a CRM, right? If you go from paper, if you go from paper to even the cheapest CRM, you'll get a big lift. So that was one of the things too.
I went from paper to a basic cheapy CRM and then I got a big lift there. But then once I went from the cheapy one to service tight end, I was like, oh my God, always call tracking numbers.
I love you. Let's go more here.
Let's go less over here. You know, like once you get that, it's's just wow you know well i make sure to keep my relationship close to aran vahe and admiles the cto and tom howard's over there and i always tell them i want to be the beta and alpha of everything and i am and we're helping them grow their business and we've always have and it's a win-win situation because they know i'll get the word out there they know i'll give them criticism if it doesn't work properly will make it work.
And it's a win-win situation because they know I'll get the word out there. They know I'll give them criticism.
If it doesn't work properly, we'll make it work. And it's just a massive machine now.
So we've actually had to really do a lot of work on the API. They came out with their V2 and it's still building before it used to work off of web hoax.
But I mean, I'm pushing them probably harder than anybody else to grow. I mean, there's not one week that's gone by in the last six months that I haven't been on the phone or text messaging eight of the people at service type.
Because literally, I think it's going to be very hard to catch up to a company like ours. And I think with you embracing the technology and asking for more, but it takes a lot of time.
Literally, you need dedicated people because once your KPIs are super dialed in and you could actually get them the next day and train on them, like you get mad at a dog when he shits, like right after you spank them and like you might punish him or something, but you can't do it at two months later. A lot of people aren't getting their stuff for like, they do their payroll.
They count up their paper invoices. It's a month later when they look at it.
And then they're trying to coach on a month ago and there's great crms it's not only service titan there's a lot of great crms out there but how do you keep up with it who would have thought of plumbing garage door hvac companies on these sophisticated tools oh yeah i mean once you have uh something like service titan you know there may be some similar to them trying to come up right now which i think competition is a great thing i know that syra is breaking through there i just saw a post on facebook that can get rich is a an investor and i'm like hell yeah because here's the thing service time right now is number one by a gazillion miles like they have like no competition you know and what's so great is like i'm like i don't know i i haven't fully looked into Sarah. I just, you know, when you scroll through Facebook and stuff and I hope that Sarah becomes like a real player, you know, that means service Titan is going to have to step their game up, which is going to be great for me because I love service Titan.
I'm on service Titan. So the better service Titan gets, the better I'm going to get, you know? Yeah.
You know, there's no doubt you got to have competition. Competition is amazing because with competition, it breeds innovation.
Yeah. And there's no doubt that's a fact.
And I like having options. That's why Nextdoor doesn't just say, it's not like they say you could only sell Goodman.
You know, they got partnerships, like two or three choices for everything. What systems do you have in place to ensure that there's customer satisfaction and you got a good reputation in the community? We went through a little bit of this stuff, but obviously reviews are important.
It's one of the KPIs you track on their scorecard. You incentivize them to ask for reviews.
What else do you guys do to really make sure you've got the great reputation out there? So, I mean, that's kind of like one of our core values is that we're a five-star company, you know, and that's one of the things that's really important to me. And I reflect on the team, you know, it's, you know, I obviously have a great team to have a good name.
You have to have a good team, but that is so important to me. We actually put it into our scorecard for the KPIs, for the way that the technicians get paid.
That's three KPIs that we, one is revenue, one is number of views, and then closing ratio. And the technicians can elevate their bonus rate by getting more reviews.
And there's a certain threshold. We have a minimum that we ask at least eight five-star reviews per month.
And that is like to earn eight five-star reviews because we teach lots of people how to do a wow service, provide five-star service, and we want them to earn the reviews. That way, when a customer reads them, they're genuine.
It doesn't seem like something got paid to give their review. We want them to be real, actual, authentic reviews.
And then the reviews are good feedback too when you mess up. So they're really important.
But one of the things that we do now, we kind of go over the top now. And got hundreds and hundreds of reviews every month prior to this but now we go a little over the top we have company season tickets to three professional sports teams and whoever gets the most reviews a prior week they'll earn tickets to a game like this week there was angel games the guys won club season tickets to angel games they won tickets to the anaheim ducks and then we also have tickets to the la rams you know that's one thing that motivates everybody is to win win tickets and they get you know great seats and then we celebrate them we're in a group chat the second a review comes through we're posting it and celebrating it and it just becomes part of the company culture.
Like it just, reviews matter, doing a great job. And it's just part of the company DNA.
That's absolutely phenomenal that you're able to, don't just give money. Money's great.
And a lot of people are like, reward, reward, reward. Give swag, let them represent your company when they're at home.
Take them out, let them bond with each other. Let them become great friends.
Sponsored on the company. And it's the gift that keeps giving.
Because then they stay. They're happier.
They show up. They feel like they're important.
They feel value. And then they can share.
Then you say, take a few pictures. I want to see what you got.
And then it's a recruiting tool. I mean, it's a great thought just to do that.
But it also is a great thought because you're getting great reviews. It becomes a recruiting tool.
It helps morale. It helps not offboarding a bunch of employees.
There's so many great things that come out of that, and I love that. Man, the plumbing industry is crazy.
I mean, HVAC, I'd say, really paved the way for me to be where I'm at today. But plumbing's right there.
Aaron Gaynor was at my house this weekend with Eco Plumbers. And he comes in every other week.
He stays over. We play golden team.
We whiteboard. We do fun stuff.
And I love the plumbing industry because there's a lot of money. I mean, Al Levy was part of Zoom Drains, one of my biggest, best mentors of all time.

And what's evolved over the years that you've seen in the plumbing industry?

So I definitely think that the plumbing industry is working hard to catch up with the HVAC industry as far as working hard to get their average ticket up.

And, you know, in my little world over here, there's all kinds of really huge HVAC companies that are now going into plumbing, which is great, you know, because when a successful HVAC company gets in the plumbing, that means that they're going to be priced right and they're going to pay right and they're just going to do everything right. They're going to pull permits and it's like, yay, you know, but more good competition just it just, it lifts all boats.
Right. So I'm just real thankful that there's a lot of HBlock companies that have been highly successful, you know, moving into plumbing.
I mean, obviously service Titan. So the software, obviously performance pay, the marketing has shifted, but this leads to my next question.
You wrote an article,

the highlights and strategies to attract Gen Z jobs in the plumbing industry.

Why don't you discuss that? Because a lot of people, especially the baby boomers, they're just like, they're used to paying more and you work harder. You'll work weekends, you'll work nights,

you'll do what I tell you to do. But their employees hate Mondays and the average plumber

is like 53 years old or something. And I will say baby boomers probably were smarter as far

is but their employees hate Mondays and the average plumber is like 53 years old or something. And I will say baby boomers probably were smarter as far as how to fix stuff.
I mean, they can basically fix anything. They can take apart something and put in like a washer and fix it.
But Gen Z and millennials, we're great people. I'm right at that edge.
And we want to know what's in it for us. Like, how do we grow in the company? What's our future look like? How do we move up the ladder? Is there a chance to get out of the truck? But when you wrote that, what were some of the highlights? Well, I got to admit that I didn't write all of that.
I have a PR company that helps me write things, you know, because that is written on a higher reading level that I'm able to write. What's the PR company you use? So I use Scorpion Digital Marketing and they'll find articles to help me get links to the website and they'll ghostwrite articles for me.
They'll give me options like, hey, what do you think about this? What do you think about that? And then I'll pick that. And then they have like a million questions and then I answer all these questions.
And then after I answer all the questions, they rewrite it for me in a way that makes me sound smarter. And then they publish it.
I'll just be honest. No, it's good.
Listen, one of the biggest things to talk about is recognizing your strengths and your weaknesses and double down on your strengths and hire people. And why not just 1099 and out to a specialist? You know, I think a lot of the mistakes I've made over the years are i need a person for that i need to hire another person for that and when you've got a company that just focuses on one thing and they're the best at it and they've got all the right tools and the software subscriptions so many times we want to in-house everything and i've seen huge pe companies with three people on their marketing team because they outsource a lot of it and they're massive massive.
And they get the best reporting. And they got specialists.
And that's what's the most amazing thing. So do you remember any of the things in the Gen Z article that you answered? Yeah.
I mean, one of the things that I would say is that I just think this is universal throughout the years is that people want to make money and they want to have fun, right? People want to be happy to be happy. So, you know, you want to make money, you want to have fun.
And I just kind of think that over the years of just employing lots of people, you need to be able to set something up to where people can make a great living within 50 hours a week. I've seen lots of team members, you know, go through divorces.
And just being a technician for a million years, I've seen lots of people kind of go through divorces. And I just feel like, you know, making a good living and then working a certain amount of hours so you can somewhat balance out your life is really important.
But, you know, on the flip side, for me, when you're a business owner, you just need to get it and work every single day. Like if you're, if you're breathing, you should be working.
You know, that's what I think. You know, I don't think people know that when they sign up for it.
And unfortunately, for most Americans that have a business, they work to pay the bills and they hardly ever get ahead. And I read a book and I recommend it to everybody.
It's called Acres of Diamonds. And it's a quick read.
And it says you're allowed to make money. And money is not the root of all evil it doesn't say that in the bible it says the love of money is the root of all evil right but there's nothing wrong with working your butt off and i'll guess what if anybody else talks shit about business owners that work their butts off go start a business and just figure out what's going to make the most amount of money in the least amount of time what's going to change the outcome the most like the dream 100 and 100 clients that'll pay you a million dollars a year there's 100 million earn their business work hard to make sure it's right and don't go after the let's make a deal people like we all start out and you do the cheap everything and then you just attract the cheapest customers that's one thing that helped us i think over the years maintain a good name i did do that for a while and i noticed a lot of my competitors are doing like the cheap drain thing but even if you do drain clean for 59 you're still going to grab customers i complain about 59 so i have 59 it's a lost leaders to get in there and do other things like if i'mumber, I'm going in and looking at every single drain.
I'm looking at every single toilet. I'm looking at every single faucet.
I'm looking at the hot water heater. I'm giving options.
I'm working. If it were me, I'd be working with your, I know this because of my house.
If I was working on larger houses of wealthy people, I would say, let me see your home warranty and your mortgage insurance, because I could actually set an alarm to turn the water off on here. If there's a leak, you said you travel a lot.
We could hook this up and it'll save you money on your bill. You'll get the money back by installing this.
The hot water heaters in Arizona last seven, eight, nine, 10 years. I'll get you a hot water water heater that's going to last longer that's going to make the temperature better it's going to be more efficient you're going to save the money in your water bill i'm going to work on making sure that like i would go in there and just give options like we talked about joker sarah says give six options two of the economical two mid-range and two top, and you'll fall on the fifth one most of the time.

And I believe in that.

And you've got to be looking at everything.

And relationships, HOA presidents,

whether it's home warranty companies or property managers,

building the relationships,

I think I could make money doing anything,

even on those cheap jobs.

It becomes a lead generator on the home warranties, Right. So there's always a way to do it.
And I mean, all the jobs are an opportunity, no matter what plumbing call you go for, you're getting your foot in the door for bigger opportunities. You know, I just, I've noticed that a lot of people do the loss leader for the dreams.
And, you know, I definitely understand that. And I implemented that for many years, but like you said, you just, all the jobs are, it doesn't matter.
Even if you're coming out for a drippy faucet, why is the faucet dripping? It's because of water quality, because of water pressure, you know, like 30% of the pressure regulars that we go to on the homes are blown out. Like you said, the age of water heaters in California, um, no one really a home with a water heater that has a drip pan that can protect the home from water damage.
So I teach our techs, like, what do you believe in? Like, what's the average life of a water heater? Like, what do you believe in? And if the water heater has exceeded that life, then that's an option that you want to build into. So yeah, like just any plumbing call can lead you into water pressure, water quality, quality, doing the shutoffs where if you spring a leak and it kills the water.

Also, some of the leak monitoring systems tell you what your incoming water pressure is.

There's endless.

Like any plumbing call can lead into so much because the plumbing systems is huge.

So, I mean, I definitely agree with everything you said.

When it comes to recruiting, is there any systems you have in place to help make sure you're getting the best the best? Yeah. So one of the things that has helped us a lot for recruiting has been Facebook and Instagram and, you know, taking our emails and making a lookalike audience and all that good stuff is important for us.
And then all the portals, you know, we pay to have advertisement on all the portals as far as Indeed and Glassdoor and Monster and all that stuff. But for us, Indeed and Facebook has been the best.
I kind of think that it's like two-sided, you know, it's like when someone's actually looking for a job, I feel like they go to Indeed a lot in our market. But when someone's like has a job, like the people that you'll see more,

you can pull them more through Facebook and Instagram.

Like Facebook and Instagram is going to entice people.

And it's your job to make the grass look a little greener so people look a little more, you know?

I love it.

You know, people go to Google and Yelp

when they're a customer.

People go to Indeed and Glassdoor

when they're looking at your company.

Do you help develop BNC players?

Is that something where when you're working with

Thank you. they're a customer people go to indeed and glass door when they're looking at your company do you help develop b and c players is that something where when you're working with somebody that has a strong will to survive like to make it for you that you'll work with them or what do you do to help bring a b player up to an a player level yeah so for me an a player is just someone that has a good worth ethic and a good attitude.
So I don't really think in terms of A, B, C, D, F, as far as grades are concerned. You know, it's like, hey, if you have a good attitude and a good worth ethic, you can do freaking anything.
So what do you want to do? How do you motivate them? Obviously, you do some cool stuff. But on a personal level, what are the one-on-ones look like? Do you have regular one-on-ones? Are you coaching them? Do they understand? Is it like you find something they could work on and really set a goal or how do you handle that? Yeah.
So, I mean, as far as the goal is concerned, we try to look at like how much money people want to make each month as far as the goal is concerned. And then we look at how, break it down, you know, like, okay, you want to make this much per month.
You're're going to get x amount per calls per day this is what your average ticket would have to look like and then like how can we help you get there and if it has to do with money then i think we do a good job as far as we have weekly meetings and then we have weekly sales meetings so there's two meetings a week as far as, you know, going there and learning the sales process, learning from others. We break people up a lot.
As far as sales are concerned, we break people up into table groups of five. The example you gave was really good.
The water heaters exceeded the life expectancy. You know, how do you present that? How do you sell that water heater if the pressure regulator is blown? so we'll have a table groups of five and they'll go around and then they'll each try to sell the regular hey this thing went bad or this water heaters exceed the average life and blah blah talk about that and they'll try to sell to each one and then as a table group they'll pick who did the best job presenting that option and selling that um service and then the table group leader will step up and then they'll teach that to everybody else.
And that's kind of like how everybody learns from each other. And that's one thing as far as just like making money is concerned.
If that was a goal, obviously people have, you know, team members that their goal is to get in really good shape. And one of the guys had just saw, I went a little while without seeing them, run into them.
And, you know, he just got into great shape and one of the guys had just um saw i went a little while without seeing them running them and you know he just got into great shape and everybody has different goals you know people want to buy a house some people want to make money some people want to get all buffed up pretty girl summer ready yeah no it's good stuff it's important to help people accomplish their personal goals outside of work that's what great coaches do is they look outside of just the game And I think it's important to help people accomplish their personal goals outside of work. That's what great coaches do is they look outside of just the game.
And I think it's important for leaders in the home service industry to be doing the same. Do you have any advice that you'd give to business owners who also provide plumbing services? Yeah, I mean, my number one advice would be, I mean, if you're not even starting a business yet, I would say join a best practice group or right when you, when you start one, if you can't afford to start and to join the best practice group, when you start, you probably shouldn't start.
So whatever you have to do, if you have to work six, seven days a week at your current company, grind it out, save money, live below your means, stack cash, whatever you have to do. But joining a best practice group is just essential.
Like you have to do it How else do you learn it? Yeah, you can go on Facebook and DM me. I'm not some guru, but if you were to go on Facebook and DM me, I would look at your profile, check it out and see, okay, let me help out this dude over here.
I wish someone would help me, but I'm not going to freaking teach you full-blown accounting and then here's how like how you set up your chart of accounts here's your kpis here's what your cost of goods sold you know i mean like maybe i'll go over that maybe not but it's gonna be like hey join a best practice group because you'll if you join a best practice group you'll get a coach and then dedicated to your success and then he'll show you hey you know like this is how you build a price book and it's how you make a profit and so you just need to pay for the service and you just need to do it yeah so you learn how to build a price book how to give options do service agreements oh no that's not something we've gotten into so crm setup what else have you learned from a coach well from the business coach that I got when I had, or I still am part of Next Start, that was the first game changer. Like I said, I didn't understand accounting.
I just thought, you know, you go to your CPA and then they do cash accounting and then you pay your taxes, right? And once you get a business coach and they start like reshaping your mind, you're like, okay okay you need to get a p&l by at least the 10th of every month the p&l shouldn't be a surprise like here's things that you should be looking at prior to that the p&l it should just be like something that like to verify things you already know and one of the good things about uh next are is that well when i joined they would just show you the financials of the top companies in there. But now, in order to see the financials of the top companies, you have to show them your financials, which I forgot what they call it, which is great.
But once I joined and they gave me the financial of the top company, I was like, oh, my God, this is what the gross margin is supposed to be. Like, this is what my material is supposed to be as a percentage of revenue.
I'm like, man, my stuff's all messed up. You need to start looking at these top companies.
Once you see other companies' P&Ls, once you see other companies' financials, and the Nexstar has so many members. So it's like, here's what the top companies are doing.
Now you have a target. Okay, cool.
If my material is way higher, once you see what's possible, like, oh, my coach is a real life human being. He showed me the financials of another real company.
They're actually doing this. Okay, cool.
We can do this. I love that.
I think it's absolutely phenomenal. I'm going to ask you a few questions to close out a little bit, but I know you had some questions for me.
You wanted to interview me a little bit. So let's just do this live on the podcast.
What information were you curious about? Yeah, so I wanted to say, so the question that would really help me a lot for selfish reasons, if you can go back to the old Tommy Mello when you're doing 20 million a year, if you were to like, I saw your Facebook thing with a Back to the Future, that was awesome, the little videos little videos if that car was real and you can go back to the future to tommy mellow at 20 million like what would you say what would you tell tommy mellow at 20 million first thing i'd say is make sure that you're only as strong as your weakest link make sure you've got the right cfo make sure your numbers are dead accurate and you understand how to read it. The second thing I would say is don't always hire people.
Try to get lean. Try to come up with systems and processes and find the right 1099 contractor.
If it's content writing, find the best content writer possible and just make sure they stay busy and help them get more work and have them take care of you. Another big thing I'd say is do the equity incentive program.
There's a strike price of whatever you're worth today. Get people vested into your company, but use that to attract not A players, but A++ players.
Because you know, if the company's at 20 million and you're at 20%, it's 4 million. Let's say there are multiples that's a 40 million dollar company so they come in at 40 million and you give them one percent and it gets to 100 million that one percent of 60 million is is 600 000 maybe you give two percent at best maybe you do 20 equity incentive program to get everybody it not only helps you retain people but it helps you get the right people.
The next thing I'd say is make sure you're talking to companies like I did, but at 20 million, I wasn't doing it enough. Go visit companies outside of just garage doors, especially HVAC.
Because I had a guy come in here a few years ago and said, you don't sell service agreements sending out commissionable texts. Because they try to sell more.
That's the only way they make money. You got to get hourly texts with a little spiff if they sell something, but your goal is to build a fence around the customer, make sure they're taken care of because eventually the system gets old and you replace it.
You're building future revenue. And I would start hanging out with PE companies and start looking at what they're doing because they're financial engineers.
They understand how to borrow money better than anybody. And they know how to leverage better than anything.
And I would just make sure that I'm around the right people, the right circle of people. And I make sure I have trusted advisors that I could call for anything and try to be the dumbest guy in the room all the time.
I would invested at 20 million, I would have doubled down. I scraped every penny I could to build the best state of the air training center and make sure I've got the best of the best trainers.
I would do more ride along forms and I would try it before I buy it, make sure I'm personality profiling every technician. I'm actually, instead of recruiting for customers, I'd be recruiting for A-plus players that they're smiling all the time.

They got the right attitude of abundance. They want to win.
They're younger. And if you give them 10 more years, they're probably going to be a billionaire somewhere.
You see this entrepreneurial spirit, the people that, and they're part of the business. They can earn equity in the business.
Like they realize there's what's in it for them. I would start looking at how do I motivate people to win their goals and their dreams and make it so that, and I would just whiteboard and say, if they win and they buy this house and they were actually able to save 80 grand in a year, what does that mean for me? And make it so they win and then reverse engineer what I'd have to charge and how I would have to pay so that I have a win-win.
Your whole paradigm shifts after a certain time. And then I would say probably slow down on the growth of other markets.
Try to take serious market share per market rather than just have a popsicle stand in every location. And that comes from senior management.
That comes from good one-on-ones. That comes through leadership training.
That comes from great storytelling. That comes from finding people that care.
And success leaves clues. There's attributes within some leaders that I could recognize now that I didn't back then, that I didn't know.
I would fill a role to fill a role because I was growing so fast and I didn't realize I needed to keep more of the money of the revenue. I would say't worry as much about revenue as i do about bottom line i'd probably tell myself try to hit 25 before you decide to grow because if you can't hit 25 there's no point of growing if you're at you know seven percent in eight markets you can do the same in a big market at 25 that's some of the basics i think making sure you've got call tracking numbers.

And I mean,

I would tell myself a whole lot of stuff.

I say,

get super lean,

buy new trucks.

Don't use used trucks because quite frankly,

used trucks break down.

There's no tax advantages.

It's not the image you want to portray to your clients.

When you pull up,

if you've got a cheap broken down truck,

they want a cheap job.

That's the customers you're going to attract. I would say do more things outside of work.
Have the people break bread with each other and become best friends and make it fun. Don't make it so it's dreadful.
Don't say, don't have this attitude of, if I don't do it, it won't get done right. Then you're not hiring the right people.
If you don't like anybody's ideas, you probably don't have the right people. If somebody's ideas don't inspire you and motivate you and you don't get excited, then you don't have the right leadership staff.
You didn't hire the right people probably because you're too cheap. You didn't do any equity.
You don't have anything what's in it for them. You don't really care enough.
And I started thinking, I want a business that's going to win even when I'm not here. And that's Built to Last by Jim Collins.

I would have read that book and I would have probably read more books,

which was hard to do back then because it was a lot of firefighting.

And there was a lot of people I kept on because I felt like I owed them,

even though they really didn't respect me the way I respected them.

And I enabled them to kind of act a certain way because they'd been here so long.

Thank you. even though they really didn't respect me the way I respected them.
And I enabled them to kind of act a certain way because they'd been here so long and I got comfortable and I was afraid to lose somebody. But every time I did and I pulled the trigger, we grew dramatically and I just realized my comfort zone was the problem that we didn't make leaps and bounds growth.
And I felt like I owed somebody to let them do things that were not helping the company grow. I didn't have the same growth attitude I have.
So those are some of the things that I could go on and on and on. But what questions do you have about that? Dude, that's good.
Thankfully, this is recorded. I'm gonna have to play that a few times times to fully digest everything that you said.
I really appreciate that. You know, so I guess another question that I would have is, I just finished reading Elevate.
Well, I read your first book, Amazing. And then, you know, I just finished reading your second one.
When did you start thinking like that? Like, it was a great read. I love it.
And I definitely, there's at least three things i wrote down i'm like dude we're taking massive action on this joint like three gems like right away and there was other good gems but like when did your brain start everybody needs to win when did this happen well the whole paradigm shift changed quite a bit with through covet when people started volunteering to give their pto and take pay dedctions, we didn't have to use all that stuff. We were fortunate enough to make it through that standing on our feet.
But I realized how expensive it was for turnover. And I realized hiring a C player instead of an A player.
And I started to look at just the variance between a top guy and a bottom guy and looking at the attitude and paying more attention to like who these people are, what do they do, what inspires them. And you start to realize that in your interviews and you start to realize success leaves clues.
And I've got a lot of data that I can look at now and really study it. And instead of going in trying to low cut my vendors, I say, look, how can I help you? What markets are you struggling in? My product makes it some of the best and they make

their highest margins on the best products. So I know there's a win-win and I ask them what their

three and five year goal. And I try to align myself to let them win too.
And then I realized

it's not only the CEO, it's there's managers and you got to get everybody's buy it, right? You got to go in there and there's a lot of people that don't like change. So you need to convince them.
And there's gatekeepers. And sometimes you can't get through to the right person.
So you got to go through the gatekeeper and earn their trust. And the mindset now is I'm pretty content.
I've hit some really astronomical things for my life that I never thought were possible. And now I believe that I could do so much more.
I'm still at an age where I'm just, I feel like I'm in the fetal stages, but it seems so much easier now. And I, I wasn't comfortable on stage.
Now it's very easy for me to get on stage. I've, there were certain things I knew I didn't want to hire somebody to speak for me.
That didn't make sense. So I would knew I would have to grow.
And that's really what I took the time to do. And I just made myself, I got comfortable being uncomfortable.
And as much as great things are going, I still got a lot of work to do. And the day that I say I've made it, I mean, the company's doing well, but I don't feel like I'm not even close to being done.
and there's something that money just is not going to

just do for me i'm not going to go to hawaii and just disappear forever i feel like as i continue

to sharpen and sharpen and sharpen the tools and my tool chest i'm capable of doing anything and

everything i put my mind to but i can't do it alone and i need an amazing team and if they feel

like they're part of it they win i know my my dreams will come true of their dreams come true

Thank you. to it alone and I need an amazing team.
And if they feel like they're part of it, they win. I know my dreams will come true if their dreams come true.
And that was designed. Yeah.
One of the things that, you know, I've followed you over the years and it's just been amazing what you've been able to accomplish and you've been like my North star that has helped motivate me. I would say many years ago, I just accepted the fact that I'm never going to retire.
Like I have some type of like DNA where I feel weird if I'm not working. And I was just curious because you've accomplished so much and you can easily retire.
I'm sure if you want to, where does that come from? I mean, what do you think about that? Do you think you're always going to be grinding and pushing the envelope and going forward? Well, I'll tell you this, it gets easier. The better people I get, it gets easier.
And I'm still having a lot of fun. I put together on the airplane yesterday, a plan, what my life is going to look like in five years.
I actually read this book. I read three books in the last two days and all of them were absolutely phenomenal.
And one of the books that I read was called Vivid Vision. And I read it years ago, but it's by Cameron Herold.
And he talks about one of the later chapters. It's not only a vivid vision for your business and a plan and a budget and a growth strategy, but he talks about for yourself.
So I got a document here and I called it, what does life look like in four years? What's my schedule? How much am I working? How much is my vacation? How much time am I focusing on? And last week I had Andy Elliott on here and he says, I took this out of Facebook and I posted this or I put it into my Google drive. As a man in my house every day, I have five main goals.
Number one, to grow every day as a godly man. Number two, to make my children proud of me.
I want to be their hero. Number three, to protect my family every second of the day.
Number four, to provide for them and give them a dream life. Number five, to make my wife proud of me.
I want her to admire her man. And that's some of the stuff.
Look, it's not only business. I want to move people's lives and I still get excited.
I'm not done yet. I haven't lost any passion.
So my biggest goal is, yes, I want to start doing things eventually. You know, I love Elon Musk.
He's helping people in third world countries. He's helping them connect to the internet and learn more and get out of poverty he's working on going to mars he's working on clean energy you know the solar stuff he's got satellites it's crazy everything the rockets that return to where they came from and just reloads them which he's launching more satellites in the sky than all the countries combined and i think there's a bigger purpose but i'm still having fun in the home service niche i don't think that's ever got it's a piece of me now but it doesn't define me so i partnered with pe and i rolled a lot i still don't have for the company i'm the ceo and i've got a job to do that i signed up for and i i'm still having fun doing it and by the way'm learning a ton every day.
And as I sharpen these tools and learn financial engineering and learn how to use other people's money and learn, you know, I still got to work on that document. I got to, I think I'm going to Idaho or we're going to be building a house out in Sandpoint and it's got great fishing, great golf, great winter sports, but more importantly, it's going to be fun to bring some of the people I work with,

some of my friends, some of my colleagues, some of my mentors,

and just spend time with them. I was with my family on Easter.

We were playing a lot of Euchre and having some fun.

And it's like, I can't do that all day.

I'm not into work-life balance because I have fun at work, but I like to fish.

I think what I'm going to do is just in four to five years, life's going to look a lot different, but I'm still going to be Tommy.

The problem is with me is I'm going to continue to grow.

And a lot of people around me are going to say you've changed.

And I'm going to say you just didn't change.

That's the problem.

You stayed still.

You didn't want to learn.

You didn't ask questions. You were the smartest guy in the room instead of the dumbest guy in the room that's not my fault i'm still the same old tommy just more knowledgeable because i was the dumbest guy in the room and probably 5.0 or 6.0 yeah exactly oh that was a long answer you know i'm so happy that i'm on here this is um for my little journey This is definitely one of the highlights of my journey to come on your show.
I've been listening to you, like I said, for many years. And honestly, I look up to you and this is one of my proudest moments.
So I just thank you for everything you've done, especially now joining the... You started the best practice group.
You're just going to help so many people. And that's, like I said, I said another one, my takeaway is join a best practice group.
Yeah, I'm part of Nexstar. There's lots of good ones.
I'm actually a member of the home service HMS group. And I went through all that.
It's amazing. And just, you know, don't go at it alone.
You're going to burn so many years trying to figure things out yourself. Like, why would you touch this thing and go and go are we hot are we hot are we hot like hot water burn baby you know just join the group and collapse time you know so just it's amazing that you've started that group and done all that well it's starting in november and you know what's so cool is as i talk to garage door companies across the country and if anybody knows any great garage companies, I think this is very compelling because I'm able to get them on service tight and give them my price book.
And I'm able to get their chart of accounts dialed in and give them the best ways to pay vendor discounts and get them on the same payroll systems. And then I show them if they do this and they roll into the new company, how much it like they become millionaires overnight and then they get multimillions more and then they can roll again and get multimillions more.
And it's like they don't know it exists. I'm like pretty happy just knowing like it's almost like this hidden thing that people don't talk about because it hasn't been around for a long time because quite frankly the home service industry was frowned upon blue collar it was just uh you know garage door guy a plumber and now it's like look i think we could create lots and lots and lots thousands of millionaires and i love the equity incentive program because this helps you win retain and find great talent and you know a lot of people are so selfish.
They would never do anything. And I get it because they felt like they put all the risk, but there's still a lot of work to be done.
You're putting a strike price. This is the bottom.
You're coming in at this price. And then you can reset that every three years, six months, however you design it with someone else comes on.
And it's not vested. It's vested over time and you can put certain thresholds on it.
you could do a double combo for an equity incentive brand you got to be here this amount of time we've got to hit this number and now they're driving towards something and they deserve to win too so as this new thing comes to light there's going to be lots and lots and lots and lots and lots and lots of millionaires and yes everybody gets to win i mean it's it's as simple as that. I mean, when I worked with Cowan, Eric Van Dam and Rob Park, these guys, they literally were teaching me for years on thresholds and why it makes sense and why 5 million of EBITDA and then 20 million of EBITDA, then 100 million of EBITDA.
And then beyond that and how it all works and why it works that way. And I asked a lot of questions, man.
And I asked questions for hours and hours, several times a month. And knowing this knowledge now, it's like I always say, it's not really fair.
I try to share as much as I can, but I don't really have to hide anything. I don't ever look over my shoulder.
I don't have any deep with anybody. I don't talk shit behind people's backs.
I tell it to their face if I, if I'm unhappy, of course we have management meetings and we discuss certain things with certain employees and there's a resolution, but as far as just being out there, I just, I won't be able to know I'm the real deal and I care. And yes, I talk about sales, but so does the preacher.

So does the rabbi.

So does the priest.

Yes, I talk about building relationships, but if you're married, so did you.

You figured that out. So some people are like those used car salesman tricks.

And I'm like, what?

Eye contact, asking great questions, giving options, not in your head because you believe

in it.

That's bad.

Calling it promotions instead of financing because financing makes it sound like I'm on food stamps when it's actually probably something that makes sense for me. 0% financing, who wouldn't do that? That's what the rich do.
And if it raises your average ticket, yes, you pay a dealer fee, but these are all things that I really do feel like I'm just getting started. I think because the business has evolved and I've had a different role kind of every year that I don't feel like I'm just stuck in this spot.
I enjoy what I do. And if I didn't, I wouldn't be here.
I'd like to ask a few questions, Anthony. Is there any books that changed your life? Any books that really stand out to you? Oh, yeah.
I'm a huge reader. I've read hundreds and hundreds of books over the years.
Well, one of the first books that changed my life was when I was stagnant for the first five years. The first book that I read was Mike Aguilero, The Secrets of Business Mastery.
That book really helped pull my head out of my butt and showed me what was possible because I basically was a tech that started a business with no money, knew nothing about business. And I burnt the first five years like Groundhog Day.
And I read that book and he did the same thing. That guy was an electrician.
And then basically, he stayed stagnant for the first 10 years. Then he engaged in personal development and boom, off to the races.
So that book just helped me a lot just because I think when you're stuck somewhere, it really helps to read and understand a story where the person's kind of just like you. I mean, obviously when you become more mature as a business owner, you know, like, Hey, I can learn from everybody business to business.
It's just the widget and the KPIs and this is what the finance, you know, like when you can learn from everybody, but I feel like when you're stuck, you want to try to go out there and look for someone that's similar to you. And he was one, and that was one of the books that really helped me a lot.
But now there's so many available podcasts. It's unbelievable.
Like the podcasts, I feel like help more now than books, even though I'm an avid reader, I read books every month. The most recent book I read was yours.
And then I read Alex Hamosi, Gym Launch, I think. Yeah, that book was crazy good.
Like you got to read that book and understand like his business mind. And you're like, no wonder this guy's a gazillionaire, you know, like it's just incredible just to read a book of a business operator.
You get to see how his mind thought about things and things to implement it. And it makes me want to go buy a gym and get that going.
It's not easy. Listen, he does a great job.
I like Alex Trimosi a lot. He made this comment the other day that he says he's 32 and he paid all of his money back to be a busboy for to get 10 years back.
And Ken Gooders would tell you the same thing. He'd take it all away, his private plane and everything to be back in his youth.
And the takeaway of that is enjoy it. Live it to your best.
Be in the now. Don't have regrets.
I think part of your brain needs to say enjoy today and part of it needs to say, make sure we're set up for the future, but you need to have that good balance. Is there any other books? The third one? You know, one book only because I've listened to all your episodes, people bring up a million times Napoleon Hill, think and grow rich.
And every time I hear that book, I'm like, Hey man, think and grow rich is to prime the pump, the ultimate book. Like you're supposed to read Think and Grow Rich just to kind of prime your mind, to get your mind ready for his best work of art, which is The Law of Success and 16 Lessons.

That's the book.

And then, you know, people bring up Think and Grow Rich a lot, but it's really, that's just a prime pump.

Think and Grow Rich is a work of art.

And then, you know.

And how does someone get a hold of you, Anthony? You can friend me on Facebook. You know, you can just hit me up.
I'm putting out on the ether that one of the things I've done good reading books, listening to podcasts and joining best practice groups and the main things, but I'm really in the market for a mentor to help give me some shortcuts. I'm just putting it out on ether.
If someone has a 50 plus million dollar business, I promise I'll be a good apprentice and I'll take massive action and I'll listen. I won't waste your time.
So it's Anthony and it's C-A-F-A-G-N-A. Like him on Facebook, find him on Facebook, friend him and message him.
And is there anything that we didn't cover that you think business owners should be thinking about right now? Yeah, definitely. So in my market, people are getting bought up left and right.
I can't go more than a few weeks or a month without some big player getting bought up or private equity. and I would say that for a long time in our industry, we're kind of competing against the unsophisticated dude that didn't know his numbers and didn't know KPIs, doesn't even know what KPIs is and all that.
I would say now's the time definitely to join a best practice group and to engage in personal development and take massive action because it's different now. We're competing against sophisticated businesses that have tons of money,

great data to take massive action on. And then they have a pool.
Some of the groups,

it's like they have some of the best companies in the nation inside. And they're creating a

mastermind. If you read any of the Napoleon Hill books, you know how powerful a mastermind is.
So they got money and they're creating masterminds. So if you're a smaller contractor, now's the time to definitely take your life serious and step your game up.
Well, I will say this, that all PE companies are created equal. A lot of PE companies have family offices.
They got family money. They got investors coming in.
And they see easy money. And I'll tell you this.
If you go with a PE company that doesn't understand and have a proven track record and just thinks they're going to do this game of arbitrage, they got another thing coming. And I've met dozens of companies that do PE.
And I say most of them don't know what they're doing. They think if they buy enough companies and use enough leverage, and it works in today's economy, but it's not going to work.
And I'm telling you, there's going to be something, and I don't know when, and I don't know exactly what, but this is not forever. This is not going to last.
This isn't like people think, man, I'm just going to get a little bit bigger. Man, you got everything you've got.
And I'm not, look, I'm not pushing people to get this done now. I think one of my best books I've read is the Private Equity Playbook by Adam Coffey and Kofi or whatever.
And I'll tell you what, he told me years ago on the podcast, you should do something sooner than later. And I waited for all the stars to align and I'll tell you what they did.
And I wouldn't have changed the thing I did. And looking back four months ago, I'm just so happy I made the decisions I did.
And you know, what's nice is I always had money, but now it's like different. I'm doing the right things.
I'm getting the haircut from my house. Now I'm getting more efficient.
Everything I'm doing is finding the right coaches and I'm not afraid to pay six figures a year to several coaches.

It's crazy because it starts being exponential.

And even the supplements I'm taking

and the tests I'm taking for my health,

before I would never do it

because it was like,

I didn't want to spend the money, I guess.

And I'm pretty frugal.

Now I'm like, look, you live one life,

live your best one.

And I've got the resources, so why not do it? so I'm like three and a half months into this thing figuring out all the things I need for efficiency the things I need for health the things I need I'm getting more personal assistant executive assistant the chef the hairdresser the special person that's helping with travel it's like it does get easier and it gets more efficient and it gets more fun, I think. And that's just my point of view.
I'm not pushing for anybody to sell or take chips off the table. I don't care what you do.
And it's not the right time for a lot of people, but I'm telling you, it's not going to last forever. I just promise you that things are going to change and there's going to be a lot of disruptors.
And if you're not paying attention, it's going to blow right past you. Yeah.
My takeaway would be to just use it as a motivating factor. Some people want to buy 10 million plus companies or 20 or whatever.
Just let that be a motivating factor that heavy hitters are entering the market. They're sophisticated, they're well fund it and make sure you you get yours.
Get after it. Get to work.
Let's go. Because yeah, the PE companies may own a small percentage of the whole market.
But the thing is, let's just fast forward a handful of years from now. I'm sure all the PE companies that are back, they care about reviews and building a brand.

So five years from now,

there's 10, 20 companies in this area

that have thousands and thousands of reviews.

And they had the financial means to actually build a brand,

meaning they had the money to spend X amount

every month, every year with no return, right?

Like when you're a smaller guy,

it's like you're paying for click, click, clicks, right?

Like click my stuff

call me give me money now click on my stuff call me give me money now they play the long game yeah

yeah like the p companies they don't have to do that like they're gonna build they do they got

lps believe it or not these companies have about 10 years to get the money back to the lps and

they got a hold for three years because of capital gains so three to seven is their target

and they've got to go back believe it or not they got to talk to their years because of capital gains. So three to seven is their target.
And they've got to go back. Believe it or not, they got to talk to their LPs and investors on a monthly basis.
And they need to tell them what's going on, what's happening, are they meeting budget? And they can't just say we're spending money to spend money with no goals. They got to say, this is what we're doing.
We're spending 25% on marketing. And here's the market share we're going for this year.
This is a play to take market share. And here's how we're doing it.
And they got to report on those. Yes, in a test of time, they're not in a hurry, but they've got a plan.
And don't let anybody fool you. They've got an amount of people to invest that are investors that they got to report to.
I mean, listen, I invested in a PE company, actually Cortec and And, you know, I get to know everything going on with every investment they make. I get to get monthly reporting.
I get to know what's going on. And they've got a lot of shit riding.
I mean, literally, who's going to invest in them again if they lose money or if they don't make money the year? And guess what? If you don't make money as a PE company, if you're not increasing the bottom line, that reduces your leverage. Because right now, let's say they leverage 8x to get your business.
Let's say you're $100 million. So they use the banks to leverage.
If you're a $100 million company, and you're at, let's just say, $10 million, they could actually borrow $80 million and then come up with $20 million. It's complicated math how it works.
But if you don't grow that 10 million dollars to 20 they have no more leverage they got to use the funds money which is dilutive and these are the things i'm learning about i'm telling you it's fascinating and i'm sucking it all in and going holy shit yeah this is like i thought i was pretty good and i wasn't even close this is a whole new school this is like a whole other ball game yeah but anthony listen i appreciate you very much i'm glad you came on i'm very very excited about your business and it sounds like you're a student for life and you're you're adopting the things that are working i appreciate you listening to the podcast even more for coming on and 20 million is amazing in a. And you've got lots of trucks on the road.
You're very humble. And it's been an honor.
Thank you so much, Alan, for everything you do. I appreciate you having me on.
Hey there, thanks for tuning into the podcast today. Before I let you go, I want to let everybody know that Elevate is out and ready to buy.
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