Transcript:
Well, happy Friday, everybody, and welcome to another episode of the Service Legend Podcast. I have a real treat for you guys today. I was just telling Jason that I just was looking up to him as an industry leader. This is a selfish one. Super excited about this. Welcome to the podcast. Jason Paris.
Happy to be here, man. Thanks for the invite.
Yeah, absolutely. So for the probably two people on planet Earth that don’t know who Jason Parris is or what he’s done, I’ll give a quick bio. And so currently Jason is the chair of the PCA. He’s from Minnesota. His current job title at Parris painting is Synergy and Meme, so he’s basically an active board member of the business and does some apartment focusing. And he also has a holdings company that is currently acquiring painting companies and transforming them into a completely different level in business. Revenue is just under 10 million for pairs, painting 6 million for Haven. And we’re going to jump into that a little bit because Jason didn’t meet the goals, but he’s still massive success but didn’t reach the goals. So we’re going to dive into that and how you can kind of reduce the law of the lid, if you will, of not achieving your goals and kind of what that kind of goes through in our minds for as an entrepreneur. And really, Paris painting is just a a unique business with quick growth to scale in the residential space. So we’re going to dive into a lot of these things. But again, thank you so much for being here. And as you guys are joining live, I see a couple of you guys live.
If you could in the comment, just post hashtag live. Let us know who’s live. Let us know who’s actually listening right this second. We’d love to see that hashtag live in the comments. If you’re on replay, if you could type in hashtag replay, I’d love to see who is catching this in general. So if you’re watching this live or replay, would love to see that. Also in the comments, if you could share maybe your business and where you’re kind of tuning in from what city or what county or things like that. So we’d love to see some of that action. So I want to dive right into a big splash of a question, if you will. Jason, there’s so much going on, right? You’ve got the R word being thrown around. You’ve got different things along along that aspect, the political landscape, what’s going on there. Then you have just, you know, the business or the industry is not professional as we’d all want it to be. There are so many moving parts. If you could give us as the chair of the PCA, as someone that I think we all look up to, just a State of the Union at some level of the industry and kind of where we’re at right now.
Sure, yeah, I can do that high level. So thanks for that awesome intro, by the way. Super flattering. Just to be clear, when you said like Apartment Focus, I focus on we are buying land building, developing the land building apartments and then holding those as assets. So it’s not like I’m focused on selling or developing like a painting channel for the company. There’s nothing I’m not. I’m an active board member in Paris painting what you said apartment focused. Just might be confusing for some of the listeners.
No, that’s great. I’m glad that you clarified. Thanks a lot.
So, state of the state, I would just say it’s a very profitable industry to be in. It’s a very profitable environment. So, you know, recession has been thrown around. There’s some realities and there’s some unknowns, things that are real. Is that consumer I mean, the main nugget is that consumer confidence has dropped and we’re talking us. This is being recorded late 2022. So consumer confidence has really dropped. That just makes it harder for people to part with their dollars. If you’re going to boil it down, simply other supporting metrics around that, inflation is up and interest rates are up. And so both of those affect basically people that are our clients. I’m talking residential repaint homeowners just have they have less cash available after their mortgage payments and after their cost of goods, their basket of goods are purchased. And then so there are fewer dollars and it’s harder for them to part with those dollars. So that’s like a softening in the market. That’s the first headwind. And I think we’ve seen in the last ten plus years, which is a drastic change from a tailwind. But specifically this supercharged tailwind that we’ve had in the last two years called COVID Boost, Biden books, all that stuff that gave people excessive excess of cash as well as kind of spiked their demand, probably pulled forward some work.
So if we look forward to 2023, I think some of those things will continue. So you could argue that there were paint jobs that were scheduled to be completed in 2023. 24. They got pulled forward, right, Similar to 2008 2009. There, their paint jobs that got pushed back. So jobs that were traditionally we’re going to be completed in 2000 8009 got pushed back, which then created an even greater spike or boom once the economy started to turn around a little bit. I’d say in our industry doesn’t matter. The supply and demand gap is just so large that’s still very profitable environment to run a business in. So I’ll speak specifically to a professional home service offering. There are just way more there’s just way more demand than there is supply for professional service in a whole industry. I know that you dabble in in the floor coatings or heavy in the floor coatings. I’ll speak specifically to residential repaint. I think that would be the state of the state.
Yeah, for sure. Man. Well, that’s awesome. And I think a lot of people get very fearful and I like to tag on to Mark Cuban. Always talks about look for industries you can disrupt. And I think when we look at private equity as well, you know I’ve got my mentor Tommy and dabbling into that a lot right now. And so he gave me this book. It’s called Private Equity. I don’t know if I can.
Find private equity playbook.
Or yeah, I’ve got that right here that I’ve been that I’ve checked out and I’ve read that these guys love spending money. Now, obviously, it gets reduced a lot, but they know what to do when there’s an opportunity in the marketplace and you see people winning and losing during these times. If you could also just speak to like as we go into as we go into a situation like this, how do we prepare as a residential, small painting company, whether it’s the marketing, the hiring, the sales, the systems? My opinion is that the companies that are professionally are. I put, if you will, like their professional companies. They know how to market themselves, acquire customers, they know their numbers. And even if it’s not as big a revenue numbers, they’re not going out of business. But I’d love to hear your input on that as well.
Yeah, I think, you know, running a professional business and we can we can get down and really kind of qualify that, if not quantify that burning a professional business is always giving you a leg up on the competition, right? So you’d say like, here’s, here’s like entry level, minimal service, here’s like I’m kind of surviving and I’m trying some things and then like maybe call it professional service. So you got like this delta of like three units you call it. Yeah, it’s well into more of a headwind environment, I would just say at that that’s, that’s striation straight radiation, the stratosphere, it just increases that delta will increase. Right. So while running a professional business that’s giving you a leg up traditionally that gives you much more of a leg up. You even say it doesn’t it keeps you from going under and going out. So it’s always been a positive, right? It’s just it’s just that much more amplified in a softened market. That’s that’s my take on it.
Yeah, that’s that’s perfect. So, guys, if you guys are listening and maybe you don’t have your systems documented, you don’t have a hiring process documented, you don’t have the culture that that, that you want currently, you don’t have your marketing kind of systems down. You don’t know what it costs to acquire a customer. You don’t have salespeople that are trained up. I would get prepared on those things like ASAP and maybe spend the rest of this month and we don’t have much left. But in early Q1 on developing these things, that way, when it gets harder, you’re more pre positioned to succeed. Also, your cash reserves make sure that you’re not you’re not spending money on dumb things. So excuse my French, but don’t spend money on dumb things right now. And so I think that’s that’s what’s going to help you guys get prepared here. So love that. I think that’s a big question for everyone that I that I talked to in service legend. We do coaching calls every Tuesday and Thursday now that I’m running. And so these are the things that we’re kind of hearing as well. So that’s why I wanted to ask him on that, if that’s helpful for you guys. If you guys could put it like a one in the comments, if that is helpful to understand the State of the Union and also understand how to get prepared for whatever is to come, because the last thing that we want to do is go out of business.
Okay, cool. So let’s start from the beginning a little bit if you can. I’m always intrigued of how like someone like you with just the place that you’re in, in life, like, how would you get there, Right? Like for me, the personal and the professional, I’ve really learned to kind of mix in, like, the better leader. I am in the House, the better leader. I am going to be in the business like I’m not going to just become an amazing leader in the business and then I’m just a crappy father. Like, I feel like that’s just it’s very a unicorn ish. And so I feel like we have to be personally developed. But so I like to understand how how everyone kind of developed, if you will. So you started as a student and a student painting franchise program in college. Could you speak to like leading up to that? Like why did you get into the painting trade versus figuring out the financial side or the economic side, get a degree and go do something in wealth management or something like that?
For sure. We’ll kind of go Origin story. You had made a comment about like, don’t spend money on dumb things like in general if you cover your basic needs, but it’s spending money on what’s it call, what’s the phrase? It’s like productive assets versus forget the word, it’s escaping me. But basically you’re putting your dollars to productive uses. That’s something that you want to be mindful of and and obviously encourage that in all times. And this would be no exception. Also, like what what you said about people being that you are who you are. And that’s a very real thing. I just say when you get to higher level hires and higher level level positions, a lot of times you’re hiring a person, not necessarily their competencies. There’s a baseline of competency. You want to be able to perform the role, but as you get higher up the the impact and the importance of a role, really hiring the person a lot of times origin story. So there’s two origin stories out there in the world. One is either painted for my dad uncle or did something in college that was mine. And I’ll touch on the next origin story here in a moment. Probably when we get into just general professionalization challenges of the industry. So I painted in college is an organization called College for Painters, which I don’t think they they don’t definitely don’t operate in the US anymore. I think they have a window cleaning division that operates in Canada. They were just world class entrepreneurial development program, and so I had a phenomenal experience with them. I was an econ major at the University of Minnesota, so graduated with a bachelor’s of science and economics, said, Thank goodness, you know, I never want to paint again. I’m very glad that I graduated. This is fantastic. I went to Fortune 500 Land. And so you can imagine clean shaven Jason, with a tie.
I can’t imagine.
That. Actually, I kind of dressed like this at Expo after someone yelled at me for being on the board and not dressing up. And so wearing a tie, waking up early in the morning just ironing my my slacks, kind of a kind of a Jason and I did that for about 13 months. So when I was hired, I told them, I give them a year this was in. Well, it’s actually right after the recession. Oh, I know why. When I hired him, there was a big thing of like, can you commit? Are you going to commit? I’m like, Yeah, I’ll give you a year. Like, I’m pretty tough. I’ll stick it out. It was after the recession. So you wonder, like, why are they so concerned about commitment in kind of an employer’s market, but because they had a lot of turnover. So 87% I still remember the statistic today, 87% of the people in my role turned over in that office during that year. Wow. It was it was a was an awesome year in a lot of ways, too. They treated me really well. I treated them really well. But I had that kind of awkward passion bug of that entrepreneurial taste in college. So in that student paying program that basically gave you your own pal to. Edge. Can I run the shots with the support of You’d call it a franchisor, but it wasn’t really a franchise. It was more of a coaching and support system. So it’s kind of a hybrid model.
They just made money off of like the, like the revenue that you sold or something like that. Yeah.
So it made money a lot of different ways. I want to dig into them too much, but they have a royal you call the royalty fee a quality assurance fee margin on the on the services and products. Lots of different ways they made money.
I love the fact that they helped you out with the pal like you actually understood. I know when.
I have my real education, I mean 100. I mean, I had they have a pretty good, good program here at the U of M, but that was my real education 100%. It taught me the reality of business and and also the practical. There’s you talked about going into coaching, consulting or something like that, Like that’s the ivory tower, right where you get to tell people what to do. And and a lot of times the the track record isn’t there, but it’s fun to say there’s a big difference between believing, you know, the answer to a practitioner, someone that has has done it.
Yeah, 100%. Well, that program is really cool. I think. I think it’d be awesome to see the country have a lot more. I mean.
Yeah. So they. They fold it up. You could probably say for a handful of reasons, and maybe I’ll have to watch my tongue because who knows, someone might get mad at me or I probably have the wrong hypothesis. But my hypothesis is that college ball players was owned by an entity called First Service International. I believe maybe there was an holdings in between those two. First search is one of the largest real estate management companies in the world. I think it’s FC FC. They also own a lot of franchises like Servpro, Painters, Paul Davis, Restoration, California closets, myriad of things, and College Pro was the first. I think it’s first service. First service Brands was born out of college, bro. Surf Pro was actually born out of college. Pro as well. College Pro was never a big pal driver, but was a phenomenal talent talent funnel for for future franchisors because you can just imagine these people are I mean it was a pretty pivotal time in your life. You’re in your early twenties and you’re running a little business unit and those people become pretty hot commodities once they kind of graduate that program. But anyways, they ended up not doing that anymore. You get big enough, you can buy talent and there’s quite a bit of liability, especially as the internet comes of age with kids out there on ladders and and on job sites. So yeah, it doesn’t operate anymore. And it’s a big loss. And I mean, honestly, I know like you went through one of those college programs, a different one or maybe you didn’t think of somebody else. A lot of people.
That I didn’t, but I went through a lot of I mean, I’ve had so many coaches and mentors and courses and. Sure, sure, sure. Things like that.
Like, like the Yeah, the part of like actually running a business in college that if you go to like most of the major markets and you kind of peel back the onion, a lot of the big players come from that background. A lot of coaching entities come from that background as well. It’s kind of like this big talent funnel that existed for a period of time and now it’s gone. And I think we’ll see the impacts of that in the decades to come.
Yeah, yeah. I just love the concept. There was a book I have a I have an 11 year old and a five year old and I bought my 11 year old. There’s like this teen entrepreneur workbook thing off of Amazon. It was like 80 bucks, you know, It was so cool. And I think if we could get to the youth sooner on this concept of entrepreneurship and also serving our teams and building teams with like understanding the financial side of the business as well, how impactful do you think this program was to what you’re doing now?
I mean, foundation, I mean, I don’t know, 70%, I don’t know what to say. It’s a it’s a it’s a lot. So it’s also a good program. I think a lot of people go through that in their early years and they find out they’re not an entrepreneur. And that’s something that’s pretty nice to find out in your early twenties instead of your mid thirties or or early forties. Right? We see a lot of these corporate refugees coming out in their late thirties or early forties looking to dabble into entrepreneurship and and doesn’t always go go that well. Yeah. I mean pivotal I mean most of the team here came from that background as well that’s in the in the office and yeah I mean I’d say like high.
That’s awesome. So love that. And I would say there’s there’s a place in every business for the entrepreneur, and then there’s entrepreneurs. Like we hired a sales manager and he’s he said it. He goes, Look, man, Ryan, I love being an entrepreneur. I love operating within the business, making everything come to reality, implementing execution. And but there’s but there’s other like there’s other category of people where you have the entrepreneur bug like you talked about. So having all these resources is pretty cool. So let’s move on to just give us some basics about Paris painting just in general. Like, you know, like maybe the differentiation between subs and employees or. W Yeah, how long the business has been in business, A number of crews, kind of the services you guys offer and kind of things like that. Sure.
So kind of lay the land. So I started Parish Services LLC in 2012 and it was like staining decks and like doing random trim paintings. So it was very side business. Hire a couple side hustle a little side hustle. A couple of friends from college hired them on and and I would train them up and then try and manage the jobs the best I could while they all they painted 20 going into was the end of 2013. I quit my job, went into painting full time for the 2014 year.
What were you doing on that job right there? Jason And you were.
So right out of college. I worked at a company called Automatic Data Processing largest payroll processor. I think I was like a I don’t know what they would call me something something that millennials like. It was like district manager or something stupid, which.
Was the director of something.
I’d be to be Pavement Pounder is what I was. And so I did that for a little over a year. And then I was like, gosh, you know, this is for a variety of reasons, was not going to be the greatest fit going forward. Had the conversation with my wife and took an interim part. So I was working with a roofing company for about maybe call it like a year and a half, which with a roofing company started pair of services on the side, did that hustle for a little bit and then went full time into Paris painting. We are, I mean, bread and butter house painters, so we paint a lot of houses. We can paint a lot of frickin houses in some cities. We’re also in Minnesota, so that’s the northern half of the US. And so it’s quite a seasonal business, which means you pack a lot of that revenue into a pretty tight window. So we’re kind of April through October timeline, but you’d say April and October are the two wild cards. So you put those two months together and you get one. So plan on like half of April, half of October, give or take flex on either side of that buffer zone. That’s what we do. So it’s a pretty logistics heavy business, a lot of moving parts. We started out all employees and then we started adding in a few subcontractors and it was about 5050 split and then mostly subcontractors, then all subcontractors and start sprinkling back in employees and then we’re adding even more employees. So so you.
Need to figure out everything perfectly. In the beginning you didn’t like it wasn’t just perfect, right?
No, for sure. I’d also say, like you, you have different models that will fit different parts of your business growth and the different stages that you’re in. So when you first start out, I can’t say which one was better or worse, but starting out with a group of employees that I could lead through like charisma and gumption and go get them, and that worked out pretty well. And then we had more of a split. I wasn’t ready to fully transitioned to subcontractors, and so I had my little employee team that could do the small jobs or the jobs of subs we don’t want to do, or if there’s a bad relationship and we need to clean something up, the employees could swoop in and take care of it. And then we got to a point where it was such a logistics game, it was just a full sub contractor deal. And then we’ve been trying to grow the top line of our interior painting because we’ve got this big corporate infrastructure that really hits peak bandwidth for five months of the five months of the year. And so as we drive our interior, we’re just there’s a tremendous pool of labor to pull from the subcontractor market as long as you fit them on the right competencies and skill sets that they that they have. And interior painting, it feels like there’s a smaller, smaller pool of competencies and skill sets that match for interior painting in our market for for our brand.
And so we’ve built up our in-house team a little bit more as well. Yeah, you certainly a lot of times the success of I don’t even say success, the speed at which you can scale is based on how quickly can you iterate and how quickly can you adapt, How, how fast are those revolution cycles? I remember I don’t know if you’ve ever had a paint rep come into your office. We work a lot with Sherwin-Williams. That’s the same thing every single time, which is great. But one of the things they ask is like, What do you think is the biggest challenge in your company right now? And it’s hard to ask me like hypothetical questions because I just I get stuck on them and I think too deeply about them sometimes. And so they had asked me that and I just sat. And I was like, first of all, I was like, Shut up. Like, we’re growing fast. Like, what do you mean, like we are growing, like, really fast. What are you talking about? But then I was like, it’s basically how quick is the feedback adapt cycle in our in our infrastructure, right? How quickly can you get the feedback? How quickly can you change? That oftentimes dictates the speed of growth, assuming you don’t know what you’re doing, which we did not.
Yeah, I was on a panel a couple of weeks ago in a agency mastermind, and they asked me kind of a similar question. And I noticed too, like the the the time in which I get a conviction to do something or like if if someone from the leadership team gets a conviction to make a decision like that, they know that needs to be done, whatever it could be. Like the quicker the conviction to the decision, like the quicker that is. Like we’re I know we should do X like I know we should fire that person or I know we need to build this new system, whatever it is. The quicker that I have that thought to it’s actually implemented in the business has been like profound for like for me, you know, because that’s been the biggest challenge as an entrepreneur is like, I have this idea, but like, when is it like when does it actually happen? Right?
You have like a six month goal and then someone says, Well, why not six days?
Yeah, right. Yeah, that’s been pretty instrumental to being innovative, staying on top of things, especially in the home service space. I mean, consumers are changing. You got got like the current, like the landscape of the market, if you will, and the consumers, you have the hiring challenges and whether there’s equipment. So we’ve got to really be on top of things quick and we’ve got to be convicted. We have to be aware, make decisions. And it feels like from what I’ve kind of researched on you and what your what you’re saying, like you’ve been able to really maximize that. So that’s awesome. And and also you mentioned that you built like a corporate leadership team or staff. Could you speak to that a little bit to like as you scale like how do you do that? And like, like why is that important?
Yeah. So how you do it is build the foundation so you have different roles in your company. And we operate currently off of the traction model. And so you have your five key roles and with five key seats, it starts with building a foundation, right? So you got to get you got to get off the ground, whether it’s in the company or in the different roles. It’s the Orange book. Orange book was some maybe.
Just sit right.
Here. That’s it. Yeah.
Okay, guys, don’t you have not read this book and you are a home service entrepreneur. Like, literally, I will buy it for you. Like it is like, so instrumental.
So I love put it right up with like E-Myth and Rich Dad. Poor Dad for me. Top three high impact books. But you know, build the foundation. You got to get off the ground. You got to get, get going. Something’s got to get just just get in the. And that’s the entrepreneurial spirit. It’s like high tolerance for pain. Chewing glass, looking down a black hole, and you don’t know if it’s going to work out. And that’s what it means to be an entrepreneur, right? So you’ve got to build the foundation from there. You now have the luxury of perfecting the system, right? Perfect. The process, right? So you can’t perfect the process until there’s something there. You got to get off the ground. You got to get going, build a foundation. Now you can perfect the process, which is very important before it’s actually necessary, before you can develop a successor. Right? Once you develop the successor, you can move on to the next one. What’s the next role or the next business or whatever it may be. So those would be the four steps. There’s some head trash or just philosophical parts of it of you. If as a founder, you’re typically going to be the funnel to the businesses performance as growth, right? The company is going to rise and fall with you and your ability. If you can get yourself out of that funnel, all that kind of democratize the wait and the burden of the business, it’s going to be higher performing, certainly more longevity, more have more longevity.
Yeah, I love that. We work with a lot of companies that are 800,000 a year and they’re getting there like 1.5, 2 million, 3 million. So it’s usually in that 800 to $3 million range. Tons of guys that are doing kind of like six figures, but that’s like the biggest like, okay, like as we’re scaling, it’s like, okay, like this middle management, there’s culture.
And those are great. That’s kind of like, you have a great job, that’s a great lifestyle business and there’s nothing wrong with that. It’s God Bless America. You can make more than a cardiac surgeon running a home service business in that one, two, $3 million range. So that’s that’s fantastic. It’s phenomenal. But it’s not it’s not it’s not like a business at that point. You have an awesome job. You’ve built an awesome job. This isn’t a business that sustains or survives if you decide to stop showing up some day.
And so Tommy always taught me. He goes, Look, dude, look, if you are doing anything in the business there and you leave for vacation and it’s like turns to fire. Like, do you own a job? You don’t own a business, which is not like you’re saying it’s not bad, but it just depends on what you want out of the business in your life, I guess.
And, and it’s start with the end in mind. What do you want? And and if you’re going to have an awesome job, that is awesome. There’s nothing wrong with that. That’s fantastic. If you’re looking to build a business that can produce stable and passive income for the rest of your life, that requires a different architecture or a different thought process. And you should always be making decisions to get you closer to your end goal. This is like a general life principle. So Stephen Covey’s seven Habits High Effective People start with the end in mind. Things get created twice. Once when you create it in your mind and your vision, and then the second time when you actually do it. And this is something that will guide your decisions because as you’re growing and scaling, you’re going to have all these little decisions that you have to make. And sometimes we say, like, what? What’s the most pain avoidance decision? That’s how a lot of people make decisions. What’s going to help me avoid the pain? Now, you might have a profit motive. What’s going to help my pal this year? You might have an ethics motive of like, what’s the right thing to do where I can If this was broadcasted across the world, I’d be fine standing up to it. But I also think what is the end in mind? And so are these little decisions. Little steps are moving you closer to your vision and you’re in state or farther away. And in general, you want to move toward your goals, not away from them.
Yeah, that’s freaking gold, man. I wish I had one of those buttons. Like at the Bradley.
Put that on a t shirt, try and move towards your goals, not away from them. The wisdom of.
Love that I wanted to kind of get into the professionalism thing as well. I think it’s such a massive need really in all of home service, but there are other industries that have really maybe like progressed further down that path for whatever reason. I’m not sure if that’s HVAC. I mean, obviously there’s a lot of unprofessional companies in every trade, but could we speak to that a little bit? Like like what is professionalism in a business? I know you’re breaking that down earlier, but why is it so important that the painting industry goes through this renaissance of just maximizing professionalism?
Yeah, so you’ve seen it in other industries. I’ll touch on that first. Like I was actually talking to a colleague of mine in the office and he said, like the financial services industry, ten, 15 years ago was the Wild West. And over the last ten, 15 years it’s really consolidated and professionalized. And the standard of of expectation from the consumer is a lot higher. You’d say the same thing. I think if you’re going to see like leading edges in the trades, it’s parts where private equity has come to play. And so you have the electric companies, the plumbing company, these the HVAC companies, you could even say like maybe roofing would be the next like watershed of of where high quality business talent and cash is coming into to get a return. And those two things come into an area. It changes pretty fast because otherwise you’re just counting on organic growth, which has been a tough one to count on in most industries. Painting no exception. But what is a professional company? I’d say it comes down to like excellence in three categories. And so one, are you treating your labor well? Is your labor being treated well or poorly or excellent? And you could say, like with a softening of the market next year in general, it’s been like, okay, to treat your labor not that well, but it might become more important and more and more necessary to have a high quality individual on that Labor side because of the second need, which is are you treating your clients well or are you treating them okay, poor or excellent and consumer confidence? You can you can no one has a crystal ball.
What’s going to happen in the future? I’ll say that right now. And so I have I have a BS degree. So not not a master’s, not a doctorate, but I know just enough about economics to say, like, if anyone knows for sure what’s going to happen in the next six months, one year there’s a literal casino called Wall Street where you can find you can buy a futures option. And I go to conferences all the time. People. I mean, for the last five years, people have been saying like there will be a recession next year because we’ve had good times and now there’s going to be bad times. And there are like general macro trends and and cycles and leading indicators and all those things. But say no one is confident enough that they’ve put they’ve gotten a lock on their house and are putting putting cash on that casino bet. So in general there’s no one really knows but. Is offering the market. Consumer confidence is down, so there’s less cash available for clients. It is harder for them to part with that cash. That’s the current reality. In that case, getting by is poor.
It’s going to be maybe not good enough. Getting by with excellence in how you treat your clients will do do well. The third part of a professional business is how do you treat the business? Is it something that survives off of the martyrdom of a single individual working 80 hours a week where there’s no profits in the company, but there is a wage to one person who’s overworked and overstressed, and no one would ever take that job. For the companies that competencies that are required. The hours worked, the stress paired with the compensation into it. Are you a company that has appropriate roles and appropriate profit at the end of the day? Right. Those are the companies will survive a strong headwind in the coming years. I think Warren Buffett has a saying of everyone just has I’ll paraphrase a little bit, like everyone has a lot of fun at the beach swimming around, but when the tide comes out, you find out who has their swim trunks on and a lot of people are just out there. They’re not really covering themselves and it’s not really a severe scenario with their employees or their labor, the clients or the health of the business overall. And it’s pretty fun to swim when there’s a big tailwind in the economy. Right. But when the tide goes out, the fun typically stops.
Yeah, that’s an amazing point. So I love that you mentioned like the employees, because Tommy always talks about that his employees are internal customers. And so we spend a lot of time usually developing like with Cardinal. It’s like, like if you’re out there developing, we have this seven steps to a 100% satisfied customer. It’s outline how we do that, but it’s like, well, is there a seven steps and I’m guilty of this. Like we don’t have a seven steps to have a 100% satisfied employee. And we’ve got tons of different things in place, whether it’s training or whatever. But I really love that that piece of it, that these employees are just as important, whether they’re contractors or W-2, they’re just as important as our customers and the business, of course. Number three, could you speak to that just for a moment? I think that’s really important is like how do you how do you take care of the employees and treat them right?
Well, that’s been so over the last ten years. That’s been what has limited most companies. And I’m just an outside observer and I see things. I’m like, it’s just been odd being in this industry of how little focus has been on the labor and the operations. Every time you go to an expo event or conference, there’s a lot of companies telling people how to sell and market sell. Who needs help selling and marketing in, call it 2012 through 2021, right? If that is your issue as a company, God help you in solving problems you’re going to run into because that has been like candy from a baby. And if you struggled with that, it’s going to get real hard in the upcoming years. What what typically is limiting a company from my just observation and experience is the operations side. And so the amount of hype dollars focus hours that goes towards stewarding that side of the business as opposed to the leading edge. So back end operations as opposed to the front edge of marketing and sales has been like, Oh, this is why companies aren’t scaling. That makes sense. Makes sense to me. The second part is I just want to talk about labor. We talked about the two origin stories, so I told you the first one my dad painted, my uncle painted, I painted in college and I got back into it because I knew it’s what I knew.
The second thing, the second origin story is, So I was working for a guy and I wasn’t that great. How many times you heard that I was working? I would say that’s a lot of most painting companies start because I was working for a guy and it wasn’t that great, right? It’s not that great. Most companies are unprofessional. They’re very, very they treat their labor poorly, their clients poorly. The business isn’t healthy, so they start their own company, but they’re really shouldn’t be starting their own company. So it’s like this vicious cycle of like, okay, now you have someone who thinks there’s grass greener on the other side, but they’re not really running a company. And then you have people coming in to the industry and there’s all these there’s all these questions like, there’s not enough good painters out there. It’s like, Well, who would want to work for you? Who would want to work in that company? I wouldn’t. I don’t want my kids working for you. That’d be terrible. The reality is it’s a very I have like a general business philosophy of blue ocean theory. Right? And so something I’ve said over and over is your only competition is your ability to execute your business model.
Right? Yeah. Blue ocean growth mindset, whatever you want to call it. There is an infinite supply of labor for pairs painting in the Twin Cities market. We will not be capped by our our market cap of labor. That’s not what’s going to limit our growth for sure. I’ll just tell you somehow, some way, Shawn Williams sells more gallons of paint every single year. Someone’s applying, applying, applying that paint. And I would just say you look around the market and the industry, it’s like a great point. If you have a professional company like this, just like there are so many painters that do not have a professional experience, they don’t have a company that gives them clear expectations. Clear guidelines, has good culture, a clear path to advancement in their career. And it’s like if you have that, it’s kind of like acquiring clients over the last ten years. It’s like taking candy from a baby, right? So you have all these unprofessional painting contractors and you’re like, okay, this is like an issue in the marketplace. But they’re also producing a lot of very grateful labor when they get the experience of what it’s like to work in a professional business. So those are like a little bit of your question, a little bit of a rant on like the labor problem.
The labor there’s not there’s not a labor issue. The issue is that no one wants to work for crappy companies and 99% of painting companies are terrible to work for, right? And so there is a vicious cycle of that and I don’t want to downplay it. I’m sure people will email me hate messages about Biden’s stats of the economy and all these things. And and sure, you could say there’s an issue, there’s more people on this planet. There’s more people in America. People are doing the work. They just don’t want to work for you. It is the loudest complaint because it’s the first issue that small businesses owners run into. Average painting company is 1.5 people. They no longer can convince their friends and families can work for them. I was like, Oh, Frick, I can’t find anybody work for me. And I just feel like in this industry, like if it’s kind of like if you can’t find someone to come work in your business, like look inside, don’t look out, don’t complain, You’re not an entrepreneur, you’re complainer, Entrepreneurs are problem solvers. Go solve that problem because you can’t solve that problem. God help you because there’s a lot more problems coming up your way.
So we’ve got a question here. Is Jason Pearson else?
Implementor No, I think I’m passionate about it, so I’ve tried to like we’re like soft implementing it into the BCA, at least on the board level really. So just, just like some semblance of structure. And so the BCA is going to be something I’m passionate about. So no, I’m not a professional.
I got to focus day this Sunday for the marketing company.
I’ve talked to consultants and and we’ve done like the test things and everything. But no, I haven’t worked with an implementer. I’m not an implementer, but it’s something I’m passionate about. I would not say it’s the best. I can’t I can’t definitively say it’s the best system out there. It’s just one that works. And having a system is way better than no system.
Yeah, 100%.
That their ability to execute my business plan. I bet that’s glad because.
I’m not sure who that one is, but this person’s got a veto. I actually had.
Brad Ellison I’m sure.
The Cardinal veto actually, I got ours right here as well. So I’ve got a veto that we were working on here. Yeah, I love this man. I love this concept and this topic of of employees.
That’s pretty obviously. Yeah. So sales versus employees, you know, neither one is an easy button, I’ll tell you that. I would I would say for me, it’s playing to your strengths and your abilities. So I am not. So I’ll give you a little more origin story stuff. So when I went to the university, Minnesota, I started out as a biology major when I was a biology major. So I thought is maybe funny to people now, but I thought I wanted to become a nurse. A nurse, as you would call it, a male nurse. I want to be a nurse. And I started going through the classes and everything, and I got into the practical application of it and I quickly realized I don’t like touching people or helping people. And so then I switched over to economics, which requires neither of those. I do like helping people. It’s one of my core core values or life areas, but I don’t like touching people. Why was I telling you that? It’s a great question playing to your strengths. So I am not like I’m going to hold your hand, teach you the craft of painting, Build an apprenticeship program with like little, little, little spring chickens and and that kind of stuff. I could do it for a little bit of time, but it wouldn’t be sustainable and it wouldn’t align with my passions. I’m a master logistician. I’m very, very good at video games, real time. Art’s pretty good at those, pretty good. That kind of economical way of thinking of if this is logistics game, how do we operate that business model effectively when you’re super organized like that. So contractors are great. There’s an infinite supply of subcontractors in the Twin Cities. They’re going to appreciate our organization ability with subcontractors. There’s like three main things good culture, pay on time, be organized. You do those three things, you’re going to win in the labor market, and.
They don’t want any admin responsibility. Like they’re like, look, like like I want work on my calendars, right? Like, I don’t want to have to deal with all of the, the, the admin or the crap, if you will. They might call it, right?
I don’t think so. Not the, not the ones that we work with. And when you go to employees versus subs, I think one question I get often is like, what about the quality? And I’m like, well, I think just to shoot you straight, I think the best painters in the state are subcontractors. There are people who have the pride of wine to run their own company. I think it’s up to 65% of the industry’s labor is Hispanic, and that’s a hockey stick graph. For those of you who are familiar with hockey sticks and graphs, it’s it’s it’s where most of the pool is playing in. And I just I don’t want to put this broad blanket out, but from my experience, that culture, it’s a badge of honor to run your own business right.
Like, like an actual painter versus like, like owning a painting business.
I own my own painting company, right? That is a badge of honor. And it’s the American dream, right? Small business entrepreneurship. But the path is that’s like not always the easiest or like the the most fruitful path to success, Right? So obviously coming in as if you’re if you’re someone that’s using subs, you’re basically a middleman. You are a middleman. And if you want to play the middleman game right, Target doesn’t make all their own shirts, right? They’re a middleman in that sense. But they do provide value, right? The factory in China does not have storefront or marketing or sales reps in the US. They, in a sense, outsource that to target. So if you want to be a middleman, you have to provide value. If you’re not going to provide value, you’re going to get cut out. Then the labels are interacting directly with the client or the base origin, interact with the end client. So subcontracting is a good game to play. You have to acknowledge your middleman. I mean, every every element of business is essentially a middleman. I don’t make my own paint. I don’t make my own paint brushes. There’s a lot of things I don’t do, but you have to provide value in that equation, otherwise you get cut out. And I laid out some of the some of the ways you provide value. I’ll lay out for subcontractors. It’s actually very, very hard to properly estimate an exterior residential paint bed. There’s a lot of. Most of the industry is not doing it well. I’ll just say that there’s.
Probably underbidding.
And it’s hard to probably quantify all the various variables involved. It’s not like roofing. Roofing is a very easy trade to do. Your squares and your pitch and your ridge valley, linear feet and the vents and whatnot, or extrusions. Residential pain. There’s a lot more variables involved and it’s hard to get right. That’s I think that’s pretty definitive. There’s also a skill in the competency of selling a job. So you have the emotional intelligence to pull out needs not not feature dump, feature vomit, and then the ability to be organized enough to present a bid on the spot. And then after the sale, you have the ability to close. Not most, not Also contractors have that. You don’t have the ability to be organized enough in business to schedule things, communicate well, the emotional intelligence to deal with conflict or issues, or the cash flow or financial abilities to cash flow business, not make decisions based on how much money is in your bank account. What are the future projections of cash? Those are four competencies that are acquired. If you want to be successful in business in this business, But they’re not required to be successful or really high skilled at painting. So if you can find individuals that have been roped into running an LLC, because I worked for a guy and it was terrible, or there’s this badge of honor called being either a first generation or second generation immigrant and doing the American dream of entrepreneurship with my own little small company. And they’re really good at painting, but they don’t have either one or all four of those competencies. That’s how you provide value as a company.
Yeah. You don’t want to find yourself in contract or prison, as Jason Phillips would would say, because that is absolute prison. Man. This is amazing. I mean, I’m not sure about you guys that are here live, but if you’re getting massive value, if you could just type in like hashtag Paris, hashtag Paris in the comments, if you are enjoying this, if you want Jason to keep going, hashtag Paris in the comments there. Also to a lot of what you’re talking about can be learned and developed for the owner and for the team of the owner in the PCR. Right. Like going to the event in February. We can speak to that a little bit. That’s going to be absolutely amazing. I’ve seen the floor plan. Unfortunately, I wanted to speak and share like I had amazing presentation, but I just I just didn’t put it in. I forgot. And so but it’s.
A competitive and it’s super competitive speaking. I’ll just tell you, I got my speaking session cut. That’s how competitive it is. So yeah, man, there’s a.
Lot of decision to cut in. Jason Is that, is that Nick or what?
No, it’s not Nick. No, it’s not Nick. There’s a whole separate committee, but it is. I mean, it’s a competitive thing to speak it. It’s like the big tent event. Yeah. For those who haven’t gone, you know, describe it as getting off the island, really rubbing shoulders with people who are who I would say this has been like a shift in the last four or five years. I know you’re not an old timer like me, but the association is much more entrepreneurial, younger and diverse and has been in years past. And I think I have a great relationship with most of the old timers. I’m sure I have my haters too, but most of them, like we’ll all acknowledge like, Hey, there was a little period of the PCA, call it 15, 20 years ago where I was like, Let’s write off a trip, talk about oil primer, get drunk and commiserate about how hard it is to run a business. Now it’s much more professionalism, much more business savvy focus. It’s kind of like younger, a lot more diverse, very good women representation in our industry overall. I mean, painting has been like doing a pretty good job at the trades representation there. Yeah, Yeah, it’s an awesome place to be. I’m obviously an advocate for it. I appreciate you putting the plug out. I volunteer a lot with BC. It’s something I’m passionate about and I’d recommend.
Yeah. So guys, if you’re listening here live or on the replay and you want to make your business more professional and you don’t know where to start, there’s there’s obviously coaching programs you can reach out to mentors that might help you for free on Facebook Messenger, but if you want to take it seriously, the PCA is an amazing place to get started and you can go to PCA painted dot org. That’s PCA painting dot org and you can learn more about it. Again, there’s a there’s an expo. It’s an annual expo. We went for the first time service legend last year and it was it was it was so cool just to kind of experience everything, meet everybody in person. That’s going to be February 22nd through the 24th in New Mexico. So we’d love to see you guys there. And again, if if you’re hearing this stuff about leadership and training and systems, this is a great place to go learn that stuff. You kind of bring some awareness to that stuff.
I think you put it really well. It’s like a great stepping stone, right? It’s not like you’re not going to get the value you get with a full fledged coaching company. That’s going to be a lot more expensive, a lot different. The BCA is all just it is a it’s a nonprofit that’s driven by the membership. Right. And so typically you’d have things inflated, call it 30, 40, 50% if you want to put a profit margin on there. So it is a nonprofit. It also is underwritten by all the major paint manufacturers, right? So they write big checks so we can operate not only as a nonprofit, but reduce the cost even further because they want to see the industry professionalize. That’s only good for them.
Yeah, 100% service will be there. Sherman Williams I mean, everyone’s going to be there that that’s in the industry. A lot of great, great vendors are going to be there. Oc Cool. So I love that, that conversation. If we could circle back a little bit to what you’re doing now with Olaf.
You got it all that coaching on pronounced. Yeah.
So all of this. Go ahead. Well, you know as as you’re like you’re so well spoken in terms of what this industry needs and like over the next 5 to 10 years, I think you’re going to be probably one of the spearheading people that are going to help us lead, kind of lead us into that existence or that atmosphere that that we’re talking about. And I think Olive is obviously going to play a major role in that because obviously you’re going to you’re going to buy these companies and I imagine you’re not going to leave them behind of systems or leadership. So if you could speak to that, if anybody is looking to get their painting business exited or like what they like, what what they should look for and kind of like what impact that you’re making in the in the industry with that holding company.
Yeah, I think we’ll I don’t know if we’ll be like, it’s a big world, I’ll just say that. So I’m pretty realistic about the impact we’ll have. But I think if we’re going to have kind of that tipping point impact, it’s going to be by being an example for others to follow suit. And so the model that we do is we make an equity purchase into a painting company and then we partner with them to help grow and stabilize that into a true asset. And so you said, like, leave them behind. That’d be a pretty bad strategy of leaving behind after we write a big check, it’s us putting our money where our mouth is. So this is something I do believe in. I think it’s it’s not it’s not like private equity where we’re like, hammering like, Hey, Jimmy, where’s my where’s my 8% return on my cash? That’s the private equity game. Did you read that book all the way?
No, not yet.
So that’s like it’s just like opening up the like, here’s the world of private equity. Yeah, Negative. We have I have some friends in franchising who there are some franchisors that do it really well. Do it really well in general, I think is a very tough business model. It’s just architected in a very win lose way. Most of the top talent that we been able to recruit into all of have come after just having their souls destroyed in franchising and they see what our doing and they’re like, Gosh, I would actually like to be incentivized to help people, not incentivized to. Play a game? I don’t know. We have some sponsors who are franchisors and they are fantastic. They are fantastic. I’m just saying there are some bad ones.
Yeah. I would agree with that.
The model is not bad.
Well, and it goes back to the people running it. It’s not like when you think if you see a franchise organization that you don’t like, well, it’s not like every single person or every single aspect is is bad. You have to have some some.
Like it’s a tough it’s a tough architecture because of the incentives. It’s more incentivized for win lose, and there’s no lose lose in that scenario. Hypothetically, I could get deep into that rabbit trail and think, I’ll wait till I’m not the chair anymore. But yeah, what all it does is we yoke up office. The first letter of the Hebrew alphabet means strength of the ox. It means a lot of different things. One of things it means is strength of the ox. We use ourselves as ox that are then yoking up with these business partners to plow the field. So we’re not in our ivory tower like Ryan Davis. We’re not in our ivory tower saying, Here’s what you should do, here’s what you need to do, here’s my playbooks, or some here’s some custom software playbooks. I like my I like my fee now, Thank you. I’ve told you what to do. I really hope you do it. Or franchising would be like, I really hope you make profit. I really hope you do. Either way, I take my royalty. This is great. We partner in as an equity partner and then become active in the business. Right? To the extent that the founder wants us to be active or not.
So that’s kind of our big our big differentiator, a big plug, big focus on how this is how I think we are able to invest and be successful, right? So like people are not investing in painting companies. I would not recommend it. They’re not great investments. I’ll just tell you that right now, because they’re all busy. They’re all hinging on that job. Right? But if you feel like you have a domain expertise you’ve done, you’ve scaled to stability recently and you have the team that’s created all the bandwidth, it makes sense to make those investments because you can step in and help help run that company with that founder. So that’s in general what we’re doing. I’m putting my money where my mouth is. I do think that this is what’s going to help professionalize the industry. We always talk about being the Wild West and in the Wild West who’s out there? A lot of cowboys. There’s a lot of cowboys in the Wild West. Why? Because they need thick skin that to be good at a lot of different things. And they have to be just determined to stick it out. Right. That’s the Wild West, right? Your little homestead. You do that. What, the Wild West eventually.
It gets settled. Eventually, the Wild West gets settled, right? And you start to get a little bit more of a process in how you build things. And and the territory becomes a little bit more tamed and a little bit more knowledgeable. And you get these little towns and now the little accountants come in, a little dentist, and they can never homestead a farm. Right? But you do get economic prosperity when you get these specialized individuals that come in and now can operate in this new environment. And I just say I think that’s like the macro trend that we’ll see in this industry is top level business talent has not flocked into painting businesses for very good reason. Right? It requires incredibly thick skin. There are oftentimes dichotomous requirements to being a highly specialized individual in a focus of business, and there’s also societal pressure against it as well, which has been has been driving that supply down. So that’s where we’ve been. I think that’s where we’re going. That’s what ALF is doing. I think we’re going to be a part of it. We came in with a goal this year of taking on three partners. We’re currently sitting at six with two and two agents.
Six for the year.
Six for the year. Yep. So all Holdings has six painting companies that has anywhere from 40 to 49% equity. So we come in as a minority partner. That’s up to that founder if they want us to eventually become the majority owner, at which point we would become the operating partner and allow them to be completely passive, or we’ll come in as a minority, build the business with them, and if they want to stay on and be stable, if they want to stay on, or if they feel like they can hire the stability on their own, we’re completely fine with that. 207 If you include pairs painting those kind of like the first, but that’s a cheat code, so we don’t really include it in the in the list.
How many are you guys looking to acquire in 2023.
It depends on the growth. So the nice thing about it is it’s all like add on and gravy. So it’s it’s primarily driven by how we how we steward our talents well and the passion of building assets with other people. So none of this is like, let’s be transparent, like our businesses do really, really well. We’ve made investments in real estates that have paid off very, very well as well. None of us are trying to figure out how to pay our mortgages, Right? This is not like, oh, I need I need to get this many more partners this year. Otherwise how the kids are going to get shoes or whatever.
And there’s no there’s no private equity. That’s like saying, hey, this is what I need. You know, it’s our money.
It’s our money, so it’s our cash. So in that sense, like we do have like a pro forma built out for budget next year, the goal is to get ten more partners next year, which would put us to 16. And so the idea is you get six in the first year we kind of were just getting off the ground and and had some courageous people raise their hands at the start. Now we’re a lot more grounded and what we’re doing, it’s a lot more visible, I would just say professional at the beginning of it. So let’s say like, well, we did six double, that would be 12, don’t do 12, do ten. But we’ll see. It’s kind of like. It’s kind of like whatever, whatever happens, happens, whatever’s good is good. It’s also a unique deal because it’s like, I appreciate the podcast opportunity because a lot of us just gain the awareness out there because I’m not we’re not trying to sell anybody on it. It’s not like it’s odd because we’re the ones that are actually writing the check, so it should be people coming to us and pitching. Here’s why I think I’d be a great partner for all holdings.
I really love for you to come in and and lean in with these services and fly some people out. And I have a real challenge hiring salespeople. I know how to do it. I know I should do it. I just I’m just not going to do it. Can your VP of Sales fly out and coach these people and we’ll get it figured out? It’s like, Yeah, we’ll do a due diligence and report. We’re not going to partner with you unless we know that we can come in and provide value because that would be a bad investment. And we are here kind of like, you know, I have this saying, Ryan, you can put on a shirt. You should always be moving towards your goals, not away from your goals. Once you write that down so you don’t forget it, right? Yeah. You want to make good investments, not bad investments. You don’t want to be doing things or moving away from your goals. Move towards your goals. So we never invest in a company unless we’re very, very confident we can provide value. Otherwise, that’s. That’s lost cash.
You’re not just looking to cash. Cash out. Like you said, you’re not private equity where they’re like, look, if you don’t acquire this amount of companies, this amount of time, then, hey, we’re pulling your funding or like it’s your own cash, which is really backed with your guys values. And that’s what’s that’s what’s just for me is the is the, the major difference is that the money that you guys are investing or infusing, like when you’re partnering into these businesses, your values are going into that. It’s not just cash and.
Kind of like I mean a lot of it it is ethics driven, it’s values driven, but a lot of is just like rational to it’s like, why would I pull my cash out of a painting company? These things trade at like three X multiples of EBITDA and I pay a tax man. There’s like, why would I put that cash to get a better return, Right? There’s a reason why we’re so passionate about building stable passive assets in the trades. They’re great investments, right? And I’m not super passionate about just filling my bank account every single day. That is fun. But the game gets I’ll just be honest, that game got pretty old quite a while ago. It’s more about how do I help partner with other business owners that I know the spirit of entrepreneurism and how we help build them a stable, passive asset, an industry that’s kind of like a purple unicorn, right? A lot of people have. All people have stable, stable profit for a long time. It’s not passive. It’s very stable. Not passive. Or hey, this is pretty passive, but not stable, right? I work for like three months, six months, one years, two years, but still hinging on, like, a few key individuals. You haven’t really built everything into a system. Identified the key people. No one. No one’s operating off of their unique, unique talents and gifts. It’s more like following following things that are pretty replicable. So it’s stable or it’s passive, but it’s not stable in the long term to get both. That’s really like the Gold Star. Here’s our gold star. Your business is now stable and passive. Congratulations. Welcome to capitalism.
Congratulations. You’ve played yourself. No, I’m just kidding. So? So I’m curious. So. So if I’m a painter out there, like, how do I get a hold of Aleph or Aleph just to make sure that you guys know I’m interested? Like, how do I reach out and engage or apply or, or, or those things? Secondly, what should I know, if I’m interested, that I should be prepared for before I even think about applying? Like, what should I have kind of developed and what are you guys really looking for?
Yeah, so you can find me on most social media channels. Jason Paris or Jason at Aleph Hyphen MGMT or go to all holdings with an S dot com. Any one of those will work, but I’m usually a pretty easy person to find her or get a hold of. But I’d say the number one thing is do you want a partner? Right? And that’s a big ego basher. For most people. It’s usually, I mean, you’re different, but you’re not. Mr. Cardinal. But most people are not very creative in the trades. They do their last name and then what they do Paris painting, Johnson plumbing, et cetera, etc.. So it becomes elephant painting, but it becomes your identity. It becomes their identity. It’s like I am the painting business. The painting business is me, which is never healthy, because in the painting business does well. You think you’re a rock star. Being business does bad, you think you’re worthless. That’s not just that’s just not a healthy thing. You should have your identity root and something else rather than the performance of your of your annual business. But getting over that ego trip of like, do you actually want a partner? Right? I would say most people don’t. Most people do not actually want a partner, especially in the trades, especially now I don’t think will last that long forever. Most businesses in the economy in this world, people aren’t building stable, passive income generating assets like just one person on their back. Right. That’s not how business typically works. There are some purple unicorns, but typically it’s through whatever you’d call a stock option. Bring on key partners. This is really saying, hey, there’s a there’s an operating partner with domain expertise that’s looking to put their money where their mouth is.
Most painting companies don’t need cash. They’re not cash. They’re not capital intensive businesses. But it’s nice to have a partner that has some skin in the game. Right? Right. It was like, yeah, I’ve I’ve got to perform here, right? We’ve got to get some upside. It’s always a risk for us. I’d say 90% of the deals we look at hinges on that individual, right. I’ve looked at some great businesses, but it’s like, Yeah, I just don’t think it’s going to work with this person or I don’t want that person in my life because there has to be a value alignment and you want to when you partner with someone, it gets pretty, you get yoked up, right? You’re in there looking, put it on the oxen and and go in there. But yeah, that’s 90% of it is the individual. From there it’s do we really believe that we can provide value. So I’ll say in the first year, the smallest business we did, they just done like 700 grand last year. I think the business, the biggest one, they just done like 2.5 million the previous year. So kind of looking in that range, call it like 800 grand to 3 million. There’s probably no cap on the top end where we like to plug in, but ultimately it’s going to be for income, make an investment. We’re going to look in there and say, is this something I know we can plug in and provide value on? We’re not just we’re not just there to give you advice, but there to get in the trenches, put the yoke on, plow the fields together as an active partner.
I love that man. And so in service legend, we have something called the Service Legend Academy. And in there we’ve got all of our trainings on lead conversion sales, and we’re going to be developing it further. But we also have something called like the vendor village. It’s kind of like a place in there and we have different vendors that we trust from manufacturers for Coatings, we have prolific brand designs. I’d love to maybe talk to you about maybe getting all up in there as like if there’s if there’s painters that are interested in exiting, they.
Can just say, we just focus on residential painting right now. So if you’re a concrete flooring person, I just don’t have the confidence that we could make an investment in your business and drive the results. I’d be taking a bet as an investor, probably not betting on most trades companies. They’re just not great bets to make because of the turkey truck test. Right? Person gets it by turkey truck. Oh, no more cash, ope. No one can take that job in. I can’t hire for it. It’s running off of chaos. This. This sucks. I just lost my money. But if you’re a residential repaint company, we have enough domain expertise in there. We have the bandwidth. As a team. We’ve hired a lot of top, top talent. We know what we can plug in as needed to steward that cash.
Well, I’ll get with our admin team on if we connect on that. You guys, if you are interested in, in, in that, please reach out because it could transform your business. But also to if you’re thinking as you’re listening, whether you’re live on the replay, if you’re thinking, Oh, shoot, like my business is nowhere near ready to be exited. I don’t have the systems, I don’t have the team. Again, take the rest of this month, early Q1, and start really working on those things as you build out your plan. So that way you can. Have an opportunity to get a check one day or to kind of fulfill whatever you want to do with your business.
And I would just say, for most people, exiting is great. It sounds super fun. I would highly advise you to keep equity in your company if possible, even if it’s minority equity as a as just a shareholder, because taking that cash out of the business, you’re just not going to get a multiple where it makes sense to where you can put that cash and invest in something else. Now the caveat to that would be like if you have a life event where you need that money, it’s like, oh, shoot, I need I need a half million bucks because Johnny is in prison. I don’t know. I got to bail them out, know, then sell your company. It’s like, Oh, I want to sell my company. I’m going get this big payout and then I’m going to play capitalism the rest of my life. It’s like, Well, you’re going to regret that pretty fast, right? Yeah. The investment of equity you have in your paying company is the best. Probably the best. Unless. Unless you’re like local sports team, Nflx team wants to sell. That’s a pretty good return. Typically, historically, they pay with Fugazi Fugazi money over there. Yeah, I would. I would full exits are I know I’m not a big fan of them if you can avoid it.
I’m actually going through a full exit right now with well I’ve got three buyers for Kardinal. But my main thing.
Is you always make good decisions, Ryan So yeah.
Yeah. You know, I try to make the best possible. I usually make nine bad ones and one good one, but which I’m sure most entrepreneurs do.
Other caveat would be most businesses don’t fail because the underlying economics, you know, they fail because the owner gets disenfranchised and burnt out and or burnt out. Right. And so if you’re like, oh, I can’t I don’t want to sustain this forever, or I can’t sustain this forever. And it’s not something that can be passive in, you know, find someone who wants to pick up that mantle. That’s another option.
Yeah, that’s kind.
Of what that might be what you’re going.
Through. Yeah. Because I want to focus on service legend. We have you have our own event next month, the sales legend Synergy event. I’m running with Chuck Toki. We want to create the Service Legend Summit and have guys like you come speak and Tommy and Nick and create like, a really awesome, like, kind of like PC style expo for our industries. Yeah, I want to grow new products and I just feel like my capacity control and like what fulfills me. And also I know after praying, you know, what does the Lord really have for me? And I get way more fulfillment and enjoyment serving our painting companies, our home service companies. We’re doing the coaching calls now. It’s just I just really love it. So, yeah, it’s hard to balance both at this point. But I got a couple more questions and then and then I’ll let you go here again. For those of you who live, if you guys could just do a hashtag parish, if, if you’re excited about this or you’re getting value from this, because I’m, I’m loving this. But what is the best advice you’ve ever received?
Yeah. All right, so the best advice I ever received. Hmm. Also. Move towards your goals, not away from them. No. The best advice I’ve ever received. So I’ll go. I’m like, I’m going back to the archives. I could give you like a candy answer or something that’s like sweet and pops quick in like in 30 seconds or I give you an actual answer. Give me, like 10 seconds here.
It’s you know, it’s a great question, you know, and I like to ask it vaguely because some people answer like more on the personal side or on the business side.
So it’s probably a. So like to kind of pick one of those two. I think the number one would be your reputation is your biggest asset that you hold.
And that’s so true. Have you ever ruined it at some level and had to kind of regain it back?
I’ve made poor decisions in my past 100%. I have a pretty strong prefrontal cortex these days, so most of my poor decisions get governed by that. From my younger days, my prefrontal cortex was not fully developed, and I’ve made some some poor decisions. There’s no question about that.
Yeah. Same here, same here. And then what is the worst advice you’ve ever received? Hmm.
The worst advice for me, it’s probably like a subconscious thing of like, consumerism makes you happy. All right. So consumerism is like one of the underlying elements of capitalism. It’s kind of what helps make it churn if that goes away. Capitalism stops pretty quick. But it’s almost like this unspoken default desire that the zeitgeist or society or the ether kind of promotes out to you, and that this consumerism is what consuming is what makes you happy.
Consuming, like it could be material things or just those types of things.
Yeah. Yeah, material things could be maybe like take it’s going to be like pride, ego giving, like fear. You can consume a lot of those things and it feels good. Like in the short term maybe. But it’s not what gives you joy.
Yeah. That’s solid, ma’am. Okay, final question here is what is the greatest insight that you can share with our audience that has helped you find success in your painting, in your painting business? And I know I know you’ve shared a lot, but what is the greatest insight for our listeners that you can share?
Yeah. Um. You know, I’d say the industry is very unprofessional. It’s going through a lot of change. There’s this concept called first principles reasoning. All right. Some ways stop. People in the chat are going wild, getting crazy hashtags, I’m sure. Bad. Don’t be afraid to question things. That’d be probably the number one thing. Like if you’re like, Why aren’t people doing it this way? It’s probably because they’re stupid or lazy, right? So just assume that everybody is stupid and lazy and question things and and the world, the industry three years from now will not be like it is today. And don’t feel like you have to operate through the default. Be willing to challenge things. Try different things. You know, there is no normal. There’s no new normal. There never was a normal just look at the rate might be changing in different different spheres. But you know it’s kind of like it’s kind of like a video game. You know, you get patch updates and you’re like, Oh, Frick, I really was really sweet. You know, I’m going to switch over to Blitzkrieg and and when all the mana gets too low and I use this item and you just have to adapt different patch nodes, different characters get nerved and buffed, different items get nerf and buffed, the the map itself can change. You got to adapt to all those things and and just assume people are stupid and lazy and use first principles reasoning break it all down, break it all down and then try and build it back up.
It’s absolute gold, man. Well, thank you so much, man, for your time. Again, if you are not registered for the PCA Expo in February, you’ve got to do that right now. Go to PCA painting, dawg. We’d love to see you there. We have a lot of amazing things planned. So outside of that, again, thank you so much for your time. We’ll see you guys next week. See you guys later.
