Donovan Quesenberry (00:00):
How I got a million bucks is that I realized, Donovan, there’s very little you’re good at. The one thing you’re good at is coming up with a quick solution. But besides that, I suck at everything else.

Adam Sylvester (00:11):
Welcome to Masters of Home Service, a podcast by Jobber. Each week we talk to successful home service entrepreneurs and experts in their field to learn how they built their company so we can make your business more profitable and more efficient. We’re in Las Vegas at Blue Wire Studios. Today we are talking about scaling to a million dollar business.

Adam Sylvester (00:32):
Donovan, you are the owner of DIV cleaning service, correct?. You also have a Christmas light business, you sell, you install all that kind of stuff, is that right? Absolutely. Welcome to the show. Thank you. Alright, Dan, you own Dan Guest Plumbing. You also have a podcast, the Guest Life.

Donovan Quesenberry (00:46):
Yep.

Adam Sylvester (00:47):
And you do HVAC in plumbing? Yep. Is that right? Yep. Awesome. Welcome to the show.

Donovan Quesenberry (00:51):
Thanks man.

Adam Sylvester (00:51):
Guest Plumbing.

Dan Guest (00:52):
Guest Plumbing and HVAC,

Adam Sylvester (00:53):
Not Dan. Guest

Dan Guest (00:54):
Plumbing, not Dan. Guest Plumbing. Got it. We talked about that before. Yeah. Yeah. Cool.

Adam Sylvester (00:57):
A million dollars a year is 88,000 a month. It’s about 22,000 a week and it’s $4,500 a day. And my wife, when I broke that down to her, she kind of congratulated me a little bit because she was like, wow, that’s a lot of clients that you serve. That’s a lot of transactions that you do. That’s a lot of money. That’s a lot of money. And so how did you guys get there? What did you guys do to get 2 million a year?

Dan Guest (01:19):
For a long time it was just head down. I remember not knowing about business when I started business, it was just how do I stay busy? And I never liked being slow. And so then just all of a sudden you started learning about business and understanding numbers and understanding sales and profit. And then it happened. And then the interesting part is you get over a million dollars and you understand, wow, I didn’t make any money. I did over a million dollars in sales and I made no money. This is a problem. And I think the next steps from there are understanding business and having a great accountant.

Adam Sylvester (01:53):
Yeah, I definitely get back to that profitability aspect. Donna, what do you think?

Donovan Quesenberry (01:57):
Well, I mean I grew up in an entrepreneurial family. So for me in high school right around the time you got interest in, ladies, find out you got to have a little bit of money. My father has more degrees than a thermometer and he put himself through college by having a winter clean company. So again, it was just kind of second nature for me. I was like, I’ll go hustle up some work. The good side of that is I have a high tolerance for risk. The downside is, man, it took me 10, 15 years to get to that million bucks. I knew everything. You couldn’t tell me anything I was doing was wrong. And I learned every lesson by screwing it up. One day I had a realization, I was like, you’re really doing this wrong. I was like, what else am I doing wrong?

(02:29):
And that moment that I started becoming receptive to actually surround myself with people a little bit more successful is when I went from six figure business to having six figures in the bank account. The profitability aspect of it. Exactly. And man, it took a long time. I think everybody starts out with a goal of like, ah, let’s reach a million bucks. And then you hit a million bucks and you’re like, that wasn’t what I thought it would be. That’s like, and then maybe you start another business, you start a podcast and it’s like you focus on the things that got you to it. Instead of focusing on the million dollars, you focus on the things that got you there. And that’s what I did with a Christmas site company. And then it’s like, oh wow, we did a million bucks this month and it wasn’t even, that was never a goal. So it took a while and it takes some hard work. But yeah, focus, I would say focus on the things that’ll get you there, not necessarily the million dollars.

Adam Sylvester (03:13):
How did you change each step along the way you a hundred thousand when you first start, 250,000, 500,000, a million. How did you have to change at each of those levels? Generally speaking, what did you have to

Dan Guest (03:24):
Do on

Adam Sylvester (03:25):
Yourselves to get to there?

Dan Guest (03:27):
I break this down backwards a little bit. So there’s two levels of mentor for myself, and that first level is don’t get too big and people suck. They’re going to take advantage of you. Clients won’t pay, you’re never going to have any personal time.

Adam Sylvester (03:38):
More negative.

Dan Guest (03:39):
Yeah, work-life balance kind of thing. And the second level of mentor, which is a huge shift, but it was so powerful when I got there and I found it. It was people. People are everything. Our team is great, our leadership is awesome. I’m not the smartest person in the room. You have to talk to this person in our business to get that answer because they’re the expert, they’re smarter than me. And as soon as I shifted that, the business just exploded, which was what my purpose is. And our business is creating opportunities for others so they don’t need to leave our business. And by doing that and empowering them, it’s exploded. And then you start getting refining and actually have the time to work on how to make the profit when you’re over a million bucks because you’re not worried about doing all the work, you’re not worried about going all the job sites. You’re empowering your team to do it because just like you said, that $4,500 a day, you can’t do that by yourself. So what does that mean? Well, it’s a simple answer. You have to empower people.

Donovan Quesenberry (04:41):
I mean, I think for me, getting over a hundred grand, you got to get off the truck. You can just work and make a hundred grand to get over two 50. You probably got to start building up your office admin side of things, getting over half a million. You got to start developing a team. It’s not just like husband and wife combination. You might could probably get up to maybe half a million or something like that with just wife in the office or husband in the office and the other person. You kind of divide those roles, but over half a million, I think you got to start actually building a business that’s not just going to happen. I’ve had people just make a hundred grand or 200 grand without really growing the business side of the business over a million bucks. That’s a tough barrier.

(05:20):
You got to get past what I would say is that middle of the road size business, and even though I’ve done over a million revenue, I feel like I’m still kind of stuck there because there’s some things that I’m still lacking. I think to really sell past a million, you need to have maybe good core company culture. So you got to have some core values, some good company culture. I got a lot of room for improving on that one. I think maybe you need to have some sales team or sales staff, and then you got to have people who are integrators. If you’re not integrators, you’re not going to get over a million bucks by doing what you already did. You’re going to have to say, okay, I am not good at showing up on time. So you got to hire people who are showing up on time. You’re not just going to sail past a million bucks or your business is going to go up and down, up and down, up and down. If it’s relying on you too much. You’re saying you got to empower people.

Dan Guest (06:15):
Yeah, totally.

Adam Sylvester (06:17):
That’s a great segue. So what people really, I should say roles.

Donovan Quesenberry (06:21):
What

Adam Sylvester (06:21):
People roles do you need in a million dollar company?

Dan Guest (06:25):
Well, you kind of work it backwards. So what is your role before that million dollars? Understanding that you can kind of pull yourself, what are you good at and what can you do better? My title is visionary of the Business. So a visionary of the business is somebody that goes out high level relationships, understanding where the vision is going, understanding if you want to be a 2 million business or a $20 million business is going to change the direction and the path.

(06:54):
So being able to unpack that and say, well, what am I really trying to do here? And I think talking about a lifestyle business, which is, yeah, the wife’s not working or she’s doing the books and you kind of keeping things in tight, that’s okay, but getting over that million dollars you have to understand for the positions is the next person that you’re going to put into what you were doing is never going to be as good as what you are. So you understand now there’s a capacity issue, so we call it the breakthrough stage. So if you’re talking about annual revenue and then profit, if you’re focused on all the jobs, if you’re dealing with the relationships with all the clients and then you have to train somebody to do it, there’s always going to be a hit to your bottom line. I haven’t seen somebody do it any other way. So understanding that there’s going to be that hit and making sure the runway, but trusting the process in, you know what, this is going to free up my time. It’s going to allow me to do more. And really giving yourself not a month, but giving yourself six months to a year.

(07:54):
We had managers come through and we always now give ’em six months to a year to get their feet wet. They’ve never had a process like this. Maybe they had their own business and they wanted to get into management, or maybe they had to get off the tools and get into management. All those things, they’re new to it. They’re not going to come in with all the answers and they’re definitely not going to do as great a job as you. So being aware of that and understanding that’s the process to get over that hurdle. Now we do it monthly with new positions.

Adam Sylvester (08:21):
There’s a lot of listeners who are in the 250 to 50 $500,000 range, and I viewed like you’re shifting a car, first gear really. And then second gear and third gear. A lot of entrepreneurs are stuck in third gear and they’re trying to go faster. They just can’t changed to get ’em out of third gear. And so what kind of habits do entrepreneurs have who are leading companies in that range?

Donovan Quesenberry (08:47):
Was stuck in third gear for 10 years. I mean, again, I think in order to hit a million and then quickly get past that, I would say that a middle-sized business where a million dollars a year, you got to hire managers. Exactly what you’re saying. You got to have middle management, but middle management just sucks up your cashflow.

(09:07):
And so I think that a lot of small service businesses, you can be extremely profitable at the 200, at the 500,000, absolutely at a million bucks. Now you’re hiring middle management, you’re trying to increase your leads, you’re trying to, and all these things are just dollar bills and it can really suck the profit out of a business. I would say for a lot of people, if you’re trying to hit that million bucks, almost shoot for three sail right past that number and it’ll be so much easier. Now don’t overcommit, I’m not saying that, but focus on the things that will get you to three and quickly get past that middle-sized business. What are some things that you have to change? For me, I had to realize that a lot of things that I thought I was good at, I thought I was good at my numbers.

Adam Sylvester (09:51):
I wasn’t.

Donovan Quesenberry (09:53):
You got to hire a good CPA, you got to hire a good bookkeeper. I thought I was good at managing people. I wasn’t. I mean, how I got to a million bucks is I realized, Donovan, there’s very little you’re good at. The one thing you’re good at is coming up with a quick solution.

Dan Guest (10:08):
But

Donovan Quesenberry (10:08):
Besides that, pretty much I suck at everything else.

Adam Sylvester (10:11):
So

Donovan Quesenberry (10:12):
I realize that about myself. I realize I fall short on the monotonous over and over repetitive task. I’ll do it for when I have to. While if my business is like, okay, this is putting you on life support, okay, I’ll focus on that and I’ll get it done. But I get that much leeway and then I relax by relaxed too soon. So for me, I realized that the end of that process of me focusing on something has to be teach and delegate it to somebody else that has a strength in those areas that I’m weak in. So a million bucks is about a team. You have to let go. You have to let go of things. I used to think there was a time where I used to think that I was the only one bright enough on this earth to invoice our clients. My technicians can’t invoice clients. That’s crazy talk. And what do they do today? They invoice clients. And I never touched that. That was a limiting belief that I had that, oh man, I’ll be invoicing clients until the day I die. Well, that’s a bad business.

Dan Guest (11:03):
I love that statement. Limiting beliefs. It’s so interesting. It stops that process of why can’t they, why not? Right? So we do the same thing. Why not me? Why not now? And really just jump into that process of, well, what’s the worst that can happen? Or again, trusting the process. Instead, you don’t have to trust all your staff, but you have to have a process for them to trust that they’ll get that done and add that into the

Donovan Quesenberry (11:32):
Are you a perfectionist?

Dan Guest (11:33):
I stopped being a perfect, you

Donovan Quesenberry (11:35):
Stopped being okay because I was going to say perfectionist, right? And so I think that that’s small business owners. When you feel like you can’t let go or something like that, you walk in and the mug is like this and you walk in, the first thing you do is go boop. And then you tell your team, the mug must be like this. And behind the cameras all scatter, were all yelling at us earlier.

Dan Guest (11:56):
The mugs have to stay like

Donovan Quesenberry (11:57):
That, right? And I’m joking, but I think that that’s a common trait of a lot of business owners. We’ve poured our blood, sweat and tears into the business to get it to 250,000, half a million, and we’ve done everything in our power to do that. And then you start bringing on a team and you’re like, they don’t care as much as we do. If it has to be done, I’ll do it myself. That’s a common thing, and correct me if I’m wrong, but I have to look at it now, is if they can do 80% of what I can do, that’s amazing. Like 80% of the invoicing properly. You know what I mean? I get that we could have squeezed 20% more out of giving ’em a quote or something like that. But 80% of the time, if the trucks are perfectly clean, that’s good enough. 20% of the time, if they’re a little dirty, it’s not the end of the world. And so that 80% rule is shooting for an employees or team members to get it. Most of the time, 80% is the target instead of 95, a hundred percent that I hold myself to that standard.

Dan Guest (12:57):
We do an exercise called the 80 20 rule, especially for management and leadership. So I take it the first 10, they take it 80 and then I finish off the last 10. And so a lot of the times people don’t want to make mistakes, so they don’t want to go the whole a hundred percent because there might be a small edit that

Donovan Quesenberry (13:15):
You want to make. And

Dan Guest (13:16):
So then out the door, there’s a different,

Adam Sylvester (13:18):
give us an example of that. Can you give us an example of that?

Dan Guest (13:20):
Yeah. So okay, you got to put a quote together for the climb. Okay, so here’s how I’m going to take it. The first 10, we got this quote, it’s downtown, okay, make sure you have the travel time, make sure you got the lifts on this truck, this and that. I want you to go through all the material lists. I want to set the standard. So I want to say, make sure you call three different suppliers. Get the pricing out there, put the quote together, package it up, ready to go. Okay, so that’s just me. I spent five minutes, they’re going to go out there, they’re going to spend two hours putting this estimate together. They’re going to call around, they’re going to do all this groundwork, and then they’re going to come back to me for the final 10. And that final 10 is just the fine tweaks. Okay, this is what I found. I just want clarification. This is what I do. Okay, perfect. Now I’ve seen the last 10%. I’ve put my seal of approval on it. They’re happy because they’re either in the right path with the right direction or they’re not. And then we can tweak it. So next time, and again, this isn’t micromanaging, this is supporting the outcome that you’re looking for. And then every time they feel empowered, because doing most of the work, again, talking about perfectionism, if they’re almost great, they’re great, right?

Donovan Quesenberry (14:24):
But celebrate that almost

Dan Guest (14:26):
Greater. You’re not drilling into ’em, oh, why didn’t you do this? Why didn’t you do that? You’re saying, oh, great job. So yes and right? Yes, that’s great. And then you just add to it.

Donovan Quesenberry (14:38):
Yeah,

Adam Sylvester (14:38):
That’s a good example.

Dan Guest (14:39):
You don’t want to be doing, but so it’s like the yes end’s a really powerful statement. So that’s kind of our 80 20 rule. And also the team knows that,

Adam Sylvester (14:48):
Well, that’s your rule for delegation. It sounds like 80 20 rule is all about delegation.

Donovan Quesenberry (14:51):
And I would also say that most tasks, most of it can be done with somebody. The bulk of the work, like you were saying, can be done by somebody who’s not an expert at that, right? They can take on a bulk of the work away from the person who is an expert. So a perfect example of that is when we’re doing Christmas site quotes, we may get a hundred, 200 leads in a day. I mean, it’s crazy. It’s so seasonal and it’s the toughest thing to staff and train for that seasonal spike. But what we can do for our quoting is anybody can be trained to answer the phone and get the client’s information and set up that process and say, okay, awesome. It sounds good. Sounds like we’re on the same page. We’re going to get you a quote within 24 hours. And then what we can do there is I can have an army of people finding a photo,

Donovan Quesenberry (15:38):
Doing the design, because we’re doing the same design on every house in Jobber. We can look at that photo, that design photo, and we do a text only line item that’s just the photo for design. And then underneath that, based upon that photo, we give line items that correlate to how they marked up that design. Now, the difficult part of sending the quote is looking at that house and is that 150 feet of lights or is that 170 feet of lights? Well, that requires a much higher level of expertise than just putting a circle. If there’s a triangle, put a big circle right there that is going to be a wreath. The front roof lines put a red line on that. Anybody can do that, but not everybody can look at that house and accurately measure it. So to your point, I can have an army of people getting the client’s information, making the design photo, adding the line item, save that line item as a draft and Jobber, and then I can have my expert go through and spend 30 seconds a quote,

Adam Sylvester (16:29):
Signing off.

Donovan Quesenberry (16:30):
Well, signing off, but more so adding the pricing. And then once that person gets caught up, that is that entry level quota. That person, once they get caught up on their stuff, we say, Hey, alright, you’re getting real good at doing the design photo. You’re getting good at putting the line items on properly. Now I want you to take a stab at coming up with an estimate and still save it as a draft, but then we’re going to talk about it before we click send. We’re going to talk about it together. And before you know it, you give somebody like you’re saying, six months for a manager. Well, now I can give somebody, they can be efficient almost day two or day three. They can be an efficient, they can be a net positive to the team, but I can give them a month to become an expert at quoting. So some of those bulk tasks can be done by somebody who doesn’t quite have to be an expert. If you say 80% is good enough,

Adam Sylvester (17:14):
Guys, what value does Jobber bring to your organization?

Dan Guest (17:18):
For us, it’s getting some time back. I remember turning on Jobber payments a couple years ago and just saving so much time, almost saved a full position, trying to call around getting money. That was huge. And just keep relearning Jobber, right? Take those training courses, call your representative. That’s been huge for us.

Donovan Quesenberry (17:36):
What I’ll say is I have shiny object syndrome, so I’m like, squirrel. Ooh, what’s going on? Most business owners are a lot smarter than I am. So the biggest thing that Jobber has done is it’s made me accountable to the process. And then as I’m growing a team, it’s allowed everybody to follow that same exact process. If that client is an input in Jobber, it doesn’t exist. So having a team and growing the team, we can all do it the same every single time. And it’s a smooth transition. When we go from office admin to sales staff to technicians, I would say that’s probably the biggest thing. And I know for a fact there’s no way that I could put all those systems in place myself,

Adam Sylvester (18:11):
Jobber, change my business. I know it’ll change yours. You should give it a try. Go to Jobber.com/podcast deal to get an exclusive discount for new members. Try it out. It’ll make your whole business more profitable and more efficient. I want to move into a slightly different direction in terms of profit. I mean revenues for vanity profits for Sandy, who cares if it’s a million dollars if you’re not making any money? A lot of entrepreneurs getting that model where they are doing a million and they’re not really making any money. They’re making a lot more money before at 500,000 if we get there. Any final thoughts on this like getting to million and any final thoughts on this before we move to profit?

Donovan Quesenberry (18:44):
I got one. I got one that I think it’s a trap that a lot of people fall into. They think that they’re more profitable at a lower level, and that’s because they’re wearing 15 hats and what they’re doing is they’re paying themselves, their business still is at 10% profit at a million dollars or whatever, or 5% profit. But what it is is they’re paying themselves a salary for the work of three or four or five people. So your business is just as profitable at a hundred grand or 500 grand or a million. The difference is that you’re working multiple jobs and then at a million dollars, as we’re building that team, you’re forced to pay other people that salary and you’re not earning that income yourself. So you’re not more profitable. It’s a trick. What it is is you’re wearing a lot of hats. You’re working a lot of jobs, and at a million boxer as you’re growing, you’ve got to pay that out. That’s a good point. Yeah. You’re not profitable. You’re Donovan Quesenberry and you do not understand your numbers. What’s going on?

Adam Sylvester (19:34):
Okay, let’s go. That’s a great segue. So how do we maintain profitability at a million dollars?

Dan Guest (19:40):
I would say know where you’re going. You’re talking about the accounting year, right? You got 365 days. So whatever your physical year end is, is your physical year end. If you’re doing a million dollars for that 365 days and the next day you land another million dollar job and you scale and the following year you end up doing 3 million, what’s the difference? So understanding, they talk about Simon Sinek, the Infinite Game. So business is not finite. There are finite things within business, but the infinite game talks about that long stretch of business strategy. So if you’re always focused on profits today and you’re not reinvesting into your business, that will be your limiting factor. So for us, understanding, especially navigating the banks, if you’ve got lines of credits or you need financing free business if you’re getting into commercial work. So you need those longer lead times for different types of jobs, but being able to understand, well, we want to be a 5 million business or we want to be a 10 million business, and having the right structure and strategy to unpack that, which means some people are like, oh, I can’t hire this person.

(20:44):
Or, oh, what’s the next position going to be my business? Well just go look at a bigger business. They’ve got an internal bookkeeper, they’ve got a payroll specialist, they’ve got a customer service coordinator, they’ve got somebody to answer the phones, they have managers. So nothing you’re doing hasn’t been done before. So if you can kind of look at other businesses and say, okay, what’s the next best position? Because again, when you’re dealing with growth, say you hire an estimator, we hired an estimator a year ago now, and it was the best thing we ever did for our business. It got us over that hurdle of four and a half million, but at the beginning it was an expense, and guess what? The profit line went down, but we know where we’re going. We’re going to a business that’s going to need estimating. We’re probably going to need multiple estimators. So I think that’s really key in terms of understanding. Don’t be scared to reinvest in your business. And if you can keep your personal expenses down in those early stages of your business or whenever you want to make that decision to jump, there could be a huge benefit later. And it comes down with financial freedom, but also time.

Donovan Quesenberry (21:54):
I got to a million bucks and my office warehouse was a storage unit. We did a million bucks out of a storage unit. And so living at home with mom, if you’re playing video games all day is not a good thing living at home with mom. If you’re building a million dollar company, great thing.

(22:11):
And then you’re talking about look at companies who are successful also, don’t be afraid to look outside your industry. Look at successful people. One of my mentors is actually a farmer by the name of Joel Soloan, and he has two quotes that I love that I’ve applied to my business. The first one is, sales should be organic, almost a serendipitous outgrowth of quality and service. And the second one is that business should be able to scale up profitably and scale down profitably. And what I mean by that is you should be profitable at a hundred grand and you should be profitable at a million bucks. If you got to get to 1.5 or $2 million, then you got to range in there that you’re not profitable. So you got to know your KPIs, you got to know your numbers. If you’re going to play big numbers and do big jobs and big quotes, well, that also is potential for big losses and big if you’re going to take on big debt, okay, well, if the economy goes sour, then you could be in a real bind.

(23:02):
You could be hurting if you cannot scale up profitably and also scale back down. And for me, it’s like one sales guy can support two crews. I need another office lady for every two crews. And so you switch from, alright, I’m going to add crews, and then you quickly get that crew to capacity. I don’t want to say, oh, I’m going to grow in a year, so let me buy five new trucks and let me hire 10 new guys and I don’t know who’s going to answer the phone or I don’t know who’s going to sell those jobs or I don’t know where the leads are going to come from. When you’re adding on staff, you should have a really good onboarding training program so that you quickly get them to capacity. And so you should be hiring. If you’re in a growing mode, you should be hiring technician side of your business.

(23:44):
And then you go to the office admin side of your business and then you go to the sales side of the business and it’s a revolving door and you kind of focus on different things and that’s growth. And at some point you’re almost always going to be behind in one area of your business it feels like, but you’re also profitable if you’re like, oh, we’re on Easy Street. I can say there’s probably a little bit of waste in your numbers somewhere. You’re probably a little bit overstaffed or paying people a little bit too much, or your crews are a little unproductive.

Adam Sylvester (24:12):
Let’s talk about cashflow. So what kind of capital funding do you recommend for companies that want to go to a million dollars or more? What kind of cashflow management do you need to have in place that doesn’t dry up on you. Any tips on that?

Donovan Quesenberry (24:25):
Don’t take on unnecessary debt. I mean, start the process, but I should have started getting credit for my business sooner. Didn’t. I’ve only done that for the last maybe three years or something like that, but I went over 10 years with just cash, right? So yeah, we grew to a couple million bucks with no debt, with no, when I bought a vehicle, Adam, again, when we met, I was driving, I had a thousand dollars truck. I literally paid a thousand bucks for this truck and it was earning two, three grand a day. And so I think that if you’re going to grow your company, I don’t think that you need to take on an unreasonable amount of debt. Now with that, start the process. Go ahead and get an LLC, go ahead and get your credit. Start building that. But when you get a credit card, don’t use it like a credit card, use it like a debit card, pay it off twice a month.

(25:14):
Don’t go out and buy a hundred thousand dollars truck if you don’t have the money in the bank. If you’re like, I can’t afford to buy this tool, but I need it to complete a job, maybe you shouldn’t take on that job. I think again, everything that you do should be profitable. And in the back of your mind, you should always say, if this goes sideways, is it going to be detrimental to the company as a whole? Because keep in mind, if your company goes under, then everybody that works for you is going under. You got how many people in your organization that literally you’re putting food on their table. And I think that most business owners, at least me, sometimes I stay up at night and I’m like, if I make a bad decision, this is going to affect a lot of people. And I think that debt is one of those things that you can very quickly get out of hand. If you know how to leverage it, awesome. But I think that you should be able to grow without it and use it like a bank account, like a debit card where you can get by without it, but you’re building it.

Dan Guest (26:10):
I would say if we take it back to when you’re starting your business, make sure you can get personal lending before in Canada, the banks don’t really recognize you as a business for the first two years. So if you’re not
Adam Sylvester (26:20):
Interesting,

Dan Guest (26:21):
Yeah, so if you’re not successful, you don’t have a track record, they want to see that. So find, I would say get a good accountant to understand your cashflow because you’re not going to know what it means or how to understand it if you don’t have someone explaining yours behind you. But then also understanding that your banking partners. Some of the best advice, as I said, it’s like when you go to your mortgage broker and they don’t have a mortgage, so when you go to your banker, but they don’t have a business, right? Yes, maybe they’ve seen some businesses, but as you start in the small business world, understand the other side of the desk, that person is in an entry level business banking position. They’re in small business banking. A lot of the times that is just a stepping stone into commercial banking. A lot of the times that’s just a stepping stone in a private wealth management.

(27:06):
So understanding that you’re not dealing with the expert all the time, but you’re dealing with somebody that has guidelines. And so if you can reverse engineer your needs from the bank’s guidelines, it’s the best advice I ever got. And once I kind of understood that, and it’s not manipulating, it’s playing by the rules and playing by their rules. So going to the bank and saying, listen, we’ve got this new job coming up. There’s 60 day terms on the payment, it’s legally binding. I just need to take on the job and have the cashflow to do it. It’s a profitable opportunity. And then you can come in with the right amount of paperwork and say, okay, listen, that’s how we’re going to take this job on. Or like you said, with that tool, we’re going to be able to take this job on and this job’s going to pay for that tool. And then now we’ve got that tool for the rest of our business’s lifecycle. You don’t want to do it. And I think we’re agreeing on that. You don’t want to do it to the point of it’s not really risk, it’s just like you’re just shooting from the hip all the time.

Donovan Quesenberry (28:03):
Structured debt, the difference between structured debt and just racking up a credit, you maxing out your credit card. Right? Exactly. And you also need to understand there’s different types of credit. Exactly. To your point, you got to understand what do banks want to lend to you? Well, they want to return on their money, so that’s what they’re looking for. It is similar in the states. They want two, three years worth of history. And so that’s why I’m saying start out small, right? Start out with a $500 credit card if that’s all you can qualify for, something like that. But start building that out and then do other things. I mean, there’s lines of credit, there’s invoice factoring, which is what you were kind of referring to, I believe, where you say, Hey, we got a big job. It’s under contract. We just want to upfront on our money. And if that job is going to be a 20% profit and the debt only costs you a 3%, 5% all day every day. Yeah, let’s go for that. But you got to be a little financial literate so you don’t get in over your head.

Dan Guest (28:55):
Yeah, I think the best, we’re talking about scale and over that million dollar threshold. The best thing you can do is have an in-house bookkeeper by far. I highly recommend it. A lot of the times they will do part-time work, but in-house is the critical thing there. In-House bookkeeping, you want to know your numbers as quickly as you can. Outsource bookkeeping, it is going to be every month.

(29:21):
So maybe get ’em at the 15th of every month. That’s not effective. That’s reactive decision making when you can say, Hey, how was this week doing? Okay, there we go. Let’s make a decision based on that. Well, how are we looking this month? Listen, there’s some extra cashflow. Let’s buy that tool. That tool’s really going to pay us off and it’s going to set us up for next month. Absolutely. Okay. You know what? The trucks need some oil changes, that thousand truck needs, new tires. But also if things are tight, you know what, man, let’s work Saturday or Sunday, right? Let’s get it going.

Donovan Quesenberry (29:52):
And being able to scale it back or scale it up. You’re saying the in-house bookkeeper, a guy had a hundred thousand dollars cannot afford to pay. You know what I mean? You can’t afford to pay a full-time in-house bookkeeper at four or 5 million. It’s a necessity. So I think hanging around people, it goes back to your advice at the beginning of the episode. Hang around people who are at where you want to be, get advice from them. And then have that plan at X amount, at 1,000,005, we’re going hire an in-house bookkeeper, and this is going to be a typical salary for our area, and this is how many hours and X, Y, Z. So you have that plan in place, so when your business reaches that threshold, you can quickly pull the trigger. And again, it’s about that opportunity cost, not missed opportunity cost and capitalizing and reducing those missed opportunities.

Dan Guest (30:35):
Yeah.

Adam Sylvester (30:36):
I’m going to boil this conversation down to three more actionable steps. Number one is work on the business, not in the business. Number two is build one production crew at a time and then rinse and repeat. Number three, build your business on fundamentals. Knowing your numbers, using a platform like Jobber to really know your numbers. How do your listeners learn more about you guys?

Dan Guest (30:58):
Yeah, you can follow us on at Guest Plumbing. We’re on Instagram, YouTube. If you want to check on the podcast, it’s at the Guest Life Podcast.

Donovan Quesenberry (31:05):
One good way to reach me is directly through Facebook. You’re welcome to look me up, Donovan Quesenberry, shoot me a direct message. And if you’re interested in growing a seasonal business and you’re interested maybe in the Christmas light industry, we do run a free group on Facebook, which is Christmas site contractors, so it’s geared towards helping the brand newest people grow and become successful in the industry.

Adam Sylvester (31:24):
Small business is the backbone of the economy. You guys are that backbone. Thank you for what you guys do. Thank you for the clients that you serve. Thank you for the families that you guys impact, and it really makes a difference. Thank you. Thanks so much, and thank you for listening to the podcast today. I hope you learn something will make your business more profitable and more efficient. Maybe get you to the million dollar mark. I’m your host, Adam Sylvester. You can find [email protected]. Remember, your team and your clients deserve your very, very best. So go give it to ’em.