73. THE FORGE: Can Paul's Business Survive Losing Its Biggest Client?

"I should have done my due diligence, I should have made up contracts. It was all on a handshake..." Imagine stepping into the shoes of Paul, a Kentucky-based manufacturing company owner, who stands at such a pivotal juncture after losing his company's biggest client. On this episode of THE FORGE, we dissect Paul's current business strategy and offer him insights that could steer his company back to profitability.

Key Takeaways:

• Is Paul the right man to be running his own company? 
• How to funnel tasks so you can work ON your company instead of IN it
• Nuts and bolts of financial strategy to build profitability
• Knowing your own strengths and weaknesses

Paul's candid disclosure of the hurdles he's facing brings to light the universal struggles many entrepreneurs encounter in crafting a business that's not only profitable but also aligns with their personal strengths and vision.

Wrapping things up, we pivot to the future by unpacking sales tactics and big-picture growth strategies. Paul, armed with a truckload of fresh perspectives, is ready to tackle his business challenges head-on, and we're right there cheering him on. Join us on this monthly segment for a hearty dose of inspiration and practical advice, and remember, the view is always better at the top.

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Personality Resources: Working Genius, KOLBE test

Connect with Anthony Witt: witthouse.com or anthonywitt.com
Anthony Witt is a professional licensed counselor and a business owner with a deep understanding of how entrepreneurship impacts personal health and those around them. Having bought, sold, and started multiple businesses, he has gained valuable
experience at the intersection of personal health and business. His belief that "a healthy business owner creates a healthy business" underscores his approach to helping entrepreneurs thrive.

Connect with Bret Barnhart:
Barnhartexcavating.com
Bret’s Calendar Link
Bret’s Linkedin
Bret Barnhart, Jr. is the fourth generation in his family to start his own excavation company. He began Bret Barnhart Excavating (BBE) in 2002 with $1,500, a single backhoe and truck, and a trailer. Since then, BBE has grown to an entire fleet of heavy machinery and trucks, averages just under 20 employees, and grosses $4mil annually.

Connect with Big A and Wally:
View From The Top Website: https://www.viewfromthetop.com/
The Climb Newsletter: https://www.viewfromthetop.com/climb
Big A’s Linkedin: https://www.linkedin.com/in/aaronwalkerviewfromthetop/
Wally’s Linkedin: https://www.linkedin.com/in/kevinwallenbeck/

Transcript

Speaker 1: 0:00

Did you get mad? Did you? Did you slash any tires? Did you use some spray painting? Like what? What I mean? Did anything you just like? Ah, it's okay.

Speaker 2: 0:07

No, I mean I've done some personal yeah.

Speaker 4: 0:10

Mental slashing of tires Somebody's buried in the North In Zone. So I don't know, dude, they are.

Speaker 1: 0:17

Hey everybody, welcome back to another awesome episode of the Forge on the view from the top podcast. This is where we help growth-minded men who desire momentum in their business, their family and their finances get through the valleys and up the mountain to their very own view from the top. So, man, I'm so glad you're listening in today. As I mentioned, this is a special edition Forge episode. Again, we do these just once a month and this week we have a special guest. His name is Paul. He owns a manufacturing company up in Kentucky and he's joined us today for us to really dive into his business and he's struggling with being profitable in his business. He had a really made a decision that really cost him a big client in 2022. And he's working through that in 2023, losing some money, and he's working hard and making some really good decisions, and we get to speak into him today and challenge him on some things in this edition of the Forge. So let's get Big A in here. Big A welcome.

Speaker 4: 1:22

Well, hey guys, man, good to see you guys again today. I'm pretty fired up. I don't know about you here we are first quarter of the year. I don't know about you, but I've been gunning, blowing and going. Hopefully you guys have been doing the same. Brett, good to see you. Man, thank you for being on the Forge, and Anthony, you as well. You guys are no stranger to our audience. You continue to bring the heat and we're pretty excited about you doing that.

Speaker 4: 1:47

So, while it good to see you today as well, but before we get into our episode, I had a quick question for you guys, and it kind of leads into today's topic. But when you started your first business, how long had you planned on not being profitable? You're like, well, I've always planned on being profitable, but like, what amount of time was there? To be honest with you, when I was even writing the question down, when I thought back starting my first business, I was just scared to death to start the business. I don't even know that that dawned on me. I don't even know that it registered that I might not be profitable for a period of time. It wasn't in many businesses after that wasn't profitable for a period of time. But Brett, what about you when you first started your business?

Speaker 5: 2:32

I had to laugh thinking about this. So I had no idea about not being profitable. I was thinking about how profitable I was gonna be as an 18 year old. I had $1,500 when I started and at the end of that year I was gonna be the richest 18 year old with my own business. I had $1,500 at the end of the year no profit period. I turned around.

Speaker 4: 3:02

Why didn't you go the other way? So that was good.

Speaker 1: 3:06

Yeah, that's what's word for that. That was profitable. You didn't get anything, but you lose it. It was profitable.

Speaker 5: 3:09

But like I planned on having 50% of what I earned in the bank and I had nothing, and I don't know, to be honest with you, I always think back to that and I started with nothing, so I had nothing to lose. I wasn't married, no kids, so let's just go for it. And really didn't consider anything. It's like, well, if I just work, a girl working, so as long as you work and work, you'll make it. So just keep working.

Speaker 4: 3:35

You would do that a lot differently today, I bet.

Speaker 5: 3:38

Oh, 100%, 100% different.

Speaker 4: 3:40

You would plan way different, Anthony. What about you when you started your first business?

Speaker 3: 3:45

Yeah, so my, I have started all my businesses at a profit number, or having profit meaning I've not started anything capital intensive and so, like day one, I've had profit. Now, the difference is everything that I've, because it's all been based on my skill set right, it's the 1099 concept and building from there. The difference, where I've gotten hung up which wasn't your question, but where I get hung up is you can get stuck there because it doesn't require the planning, because you're just making money off of who you are. So, yeah, at the end of the year, sure, there was profit there every time. And so, to the breast point, like I was always planning on making money or always having a ton of profit.

Speaker 3: 4:34

But the difference I've always thinking through this question, the difference being is it doesn't require planning. If you're just building on the backs of your skill set, it doesn't, and so that means you go a lot slower because I didn't have X amount of money. Even the real estate I've purchased, like it was cash flow when I bought it. So at the end of the year there's been money in it. But where I forgot hung up is making the plans. Like what, making the structure that allows me to grow, because I have to grow.

Speaker 4: 5:05

I bet today you would do it much differently though right, yeah us absolutely yeah, as we go forward we really learn.

Speaker 4: 5:12

Brought a good friend of mine on. Today we're gonna be introducing him just to men. His name's Paul. But before we do, I wanted to tell those of you that are listening now a little bit more about the forge. It's a little different than we normally do.

Speaker 4: 5:25

Wally and I normally get on and we talk about certain topics and we started the forge to really emulate man in the middle and we do that in Iron Sharpen's Iron every single week. But in this particular episode we're gonna be masking the man in the middle and we're really gonna be distorting his voice just for confidentiality purposes, like we wanna get the real scoop. And so we're like, hey, if you'll come on, do this, show the audience how we do man in the middle and let us gather around. We're gonna distort your voice, we're gonna mask your face and then you give us the real goods and that way we can really protect your confidentiality. When you're involved in a mastermind, that aspect of it is expected. We wanna be confidential and that is honored every single week in Iron Sharpen's Iron. What stays there is talked about there and it doesn't go outside of the group. So it's really important that we really protect each other's personal stories.

Speaker 4: 6:22

Well, the reason for doing the forge is something that we want you to have a peek.

Speaker 4: 6:28

We want you to see what it looks like to be man in the middle, and I just want to encourage you that when you have competent, unbiased professionals giving you their perspective, it might just be that missing piece that could solve some major roadblock in your life. So I just want to say today that the thing that we're trying to accomplish for Paul none of this is scripted. Like we haven't preset the questions and the plan. Like we did get some information from Paul. He answers some questions to give us context, but we haven't sat down and planned out exactly what we're gonna ask him. We wanted it to be genuine, and so the problem that Paul is trying to solve for today is he's had years invested in his current business and he wants to know how long do I stay on this path, barely kind of scraping by, and what should I do to make the business more profitable? So, paul, welcome to the forge. Iron, sharpen's Iron, give us a little more context around what it is that you're trying to solve and let's dive in.

Speaker 2: 7:36

Hey, thanks a lot and I'm super, super excited to be on here. Thank you Big A, Wally, Anthony and Brett, and I'm super excited a little nervous about it, but excited to see what the results are gonna be. So in 2023 was a extremely hard year for us as a company and lost a lot of money over the deal, and now we're trying to put our company back on track, and so I thank you guys for reaching out and I'm excited about this time.

Speaker 4: 8:11

Yeah, tell us a little bit more about when you started, what was transpiring. Give us a little history. We've got some context, but for the listener, give us a little more context, Absolutely.

Speaker 2: 8:21

Yeah, so the company that I now own, my brother started it in 2009, just a small manufacturing company in the construction industry and we did great. I worked with him for kind of on and off. I was also full-time in the construction myself and would kind of give him some backup support when he needed when things got busy. So I was very familiar with the industry as well. And then in 2017, I came on with him full-time and then since that 2017 mark, we kind of talked back and forth what it would look like for him to sell and for me to take it over. So we went through that process and I bought it from him the beginning of 2020, not knowing COVID was gonna hit and that COVID year was actually our biggest year today.

Speaker 2: 9:18

So that was. It was a crazy ride, but it was a fun experience. And then 22, jump into 22,. We had an incredible year. And then 23,. Some things went down. We lost one major client, was our actual single biggest client that had produced about half of our annual revenue and we lost that client at the beginning of 23 and which just put a huge hurdle for us. And now we're here building back the beginning of 2024.

Speaker 1: 9:54

Paul, a cool question for you. You had in all the questions that you answered for us, which you did a great job, by the way. I know it took a lot of time and energy to do that. But as you did that, a couple of things stood out to me. So I'm sorry in some sense to go back and probably scrape some moons a little bit to get some context for all of us in greater context and then for sure we're gonna get to a point where we're starting to think about the future a little bit better.

Speaker 1: 10:23

But help us understand there was a big decision you made a couple of years ago to help out another upstart in your area. Walk us through that a little bit and how that fed into the decision. I'm also curious too about with your brother, why you chose, what was your reason, your purpose to buy the business and what were your brother's reason for selling. So those are two different questions, but if you could walk us through those and they could help bring us up to speed a little bit, absolutely I'll start with the last question, why I bought the business and why he sold.

Speaker 2: 11:02

My brother actually moved out of state. I was actually at the time I was actually managing the company for him after he moved. He was still running it after he moved. Then it got too much. He was always traveling back in. I was like, well, this is a great opportunity. I never saw myself in this industry. What I wanted to do was I wanted to fly and I wanted to be an operator on heavy equipment. That's what I wanted to do as a kid. This opportunity came up for me to take over the company. All along. My plan was to keep it super small, maybe two or three employees, and just do my thing.

Speaker 2: 11:47

As I got into and as I got into leadership, I started seeing the potential that I could have in other people's lives as far as being a part of their journey and helping them achieve some of success and dreams that they wanted to do. As we started growing, we started hiring people these employees. They would buy a house and buy a truck. I was like, wow, this is awesome. I love that I can serve in this way. Now I don't necessarily look at myself as in this industry necessarily. I'm very familiar with it because I've been in it all of my adult life. Now I look at my job as simply leading people and being a part of their journey and just helping them succeed. It's not necessarily that I get just a huge check out of and just passionate about the product that we do, although I am. The thing that gets me out of bed is that I get to work with my people and my team and help them in their success.

Speaker 2: 12:57

The first question was why did I help this other family In the community here? There was a family that wanted to do the same thing and they approached me. They were like hey, do you want to sell? I was like I'm not interested in selling. I'm enjoying what I do. It went by and they came back to me and they were like hey, would you consider it again? I'm like no. I was like I counteroffered. I was like hey, instead of you starting up something and being my competitor, why don't I help you? You can be a sub shop for us and we'll supply you with the work, the material, the design and estimating, the logistics about it. That worked great. They came on and hindsight is always 2020, right, I should have done a lot more due diligence and having contracts and expectations, but it was all over a handshake.

Speaker 2: 13:55

We started going and it was phenomenal. We had two good years of that. Then, the end of 2022, they decided to go out on their own, which is fine. That's totally up to them. With that, they were very close with our single biggest client. There was actually family involved with the two companies the company that I helped start and then the company that was our single biggest client. There was family involved when they decided to go on their own, they took that company, which is understandable if you look at it from that perspective. That was right out of the gate. In the beginning of 23, we lost half of our sales and half of our production capability. We had built up our team to maximize what we thought we were going to do about $4 million in 2023 and brought us down to less than half with those circumstances, you actually had a loss in 2023.

Speaker 1: 15:06

Is that correct?

Speaker 4: 15:07

Absolutely. What is some of the processes that you've put in place going into 2024? That's different than 2023? What are some things that you're doing different now?

Speaker 2: 15:20

One big thing is maximizing our team. I'm kind of a it's kind of just who I am. I'm kind of a I like everybody and I'm pretty easy on everybody, and I give everybody the benefit of the doubt. That's one thing I've learned is holding people to expectation and then simply letting people go. That don't fit our culture. And doing that quicker rather than later has been a big thing. We were talking before having to fire a salesperson. That simply just didn't fit our culture. Those things will drag you down so bad if you have them on a team.

Speaker 5: 15:57

So notes I took Paul rest and renew is horrible. Not happy with the business. Looking at profit margins over the years, do you truly want to maintain and take this business to the next level? Is this where your heart's desires are? I mean, if it was in order and you were making a profit, things were good. Would rest and renew be good and would you be happy with the business? Would you rate that differently?

Speaker 2: 16:25

Okay, you might need to ask that question again.

Speaker 5: 16:29

So if things were in order and you were turning in a profit, would you be happy with the business? Is this where your heart's at?

Speaker 2: 16:39

It is I have the most experience in this and I love what I do 100%.

Speaker 5: 16:46

Yeah, yeah, yeah, and you said earlier that waking up each day thinking about your people. So, on average, based off my numbers, 2% to 4% profit, and that's business doing well, or could it be better, like, help me understand what potential you have in the business, what market share? How do you get more market share? Like, what's your potential to build this business to, so that we know for me, knowing what the end result looks like.

Speaker 2: 17:18

Yeah, absolutely Great question. So yeah, 2% to 4% and that you know. So a lot of this is like I felt like I've had to build this business from scratch, because even though.

Speaker 2: 17:33

I bought a business, there were so many things that weren't in place. There wasn't processes, it was a 1099 company when I bought it and so switching that to a W2 and then all the expenses I'd go with that have accumulated over this year and so, like I said a lot of times, I feel like I have work to sing from the ground up. There is a lot like our material is high and we've. You know it might be a mistake on our part, but we've tried to keep our numbers low to try to get in with some of these customers. We have to give you a little idea of some of the potential.

Speaker 2: 18:15

So we were working in 22,. We worked with one major lumberyard company and then all the rest were just, you know, small, really small, like maybe a hundred to $300,000 clients and then some contractors, and so now we lost that big one, but now we have our foot in the door with about six more that the smallest one of those is about the size we lost. So there's huge potential there. A lot of these companies will work with two or three other different suppliers, so now it's a matter of coming in their building relationships where we get more of their market share and we are lower in depending on what region we're working in. We are lower than competition and so there is some room there. But and I could be wrong but what my thought process was was to keep it low as we go in and to be able to build a relationship and to be able to work from there.

Speaker 5: 19:20

Do you know your cost, like, have you broken down the exact cost of, I mean, let's just say your cost of goods sold?

Speaker 2: 19:27

Yeah, yeah, I have. Yeah, we have that labor, we have, we have our books pretty, pretty organized.

Speaker 5: 19:35

Yeah, yeah, yeah. So what are you projecting growth wise, by percent or by number, whatever you want to share for 24?

Speaker 2: 19:44

I mean we're, we're hoping, we're hoping to hit that 3 million mark again. This year, so you're going to recruit what was lost that we're hoping to, yeah, and with with the places that we have our foot in the door. With it's, it's available Like it's, it's the potentials there. It's a matter of if if we can capitalize on that or not.

Speaker 5: 20:06

Yeah, yeah. So what are you going to do? I mean, it sounds like to me you've fixed the financial side, right or wrong?

Speaker 2: 20:14

Well, we'll, we'll see. You know, our labor is super high and our materials high. You know, and that was one of some of the questions I have is like how do we work with that? One on the material side is I'm hoping to to join a buying group, but we have to be at a certain mark as far as volume before we can join, and so with this buying group we can get material costs at, you know, at a way, you know, a lot bigger of a discount. But we've got to work our way up to that point where we're buying enough.

Speaker 5: 20:48

So what? What does it got to take to get there being an outside investor Like?

Speaker 2: 20:53

what do? We so the last time I spoke with them, they had, you know, a certain amount of dollars over a three year period that we had to be buying before, before they would even look at it.

Speaker 5: 21:08

So what's your yearly cost?

Speaker 1: 21:11

What's the actual disparity on that? So disparity. So what's the like? This is what they said. This is what you have If you average it out.

Speaker 2: 21:19

Okay. So I think they said it's been a little bit, but I think it was like three to five million over a three year period. But, like you know, last year we had about $500,000 worth of material that we bought.

Speaker 5: 21:33

Wow, so you get a long ways to go.

Speaker 2: 21:36

Yeah, which you know. Our sales were less than half as well too, that's true.

Speaker 4: 21:42

So it is for a second, for clarity for me Are you saying that two to four percent is a good margin? No, that's what the margins are now. What is a good margin in your business?

Speaker 2: 21:56

A good margin would be, you know, 15%. You know I also dream about, you know, buying other companies, like, like what we're doing and we've. We've looked at some and some are producing up to 30%.

Speaker 5: 22:11

So help me understand. Say, say perfect year, we do a million bucks, you make 30%. So pull 300 grand. How is those dollars made up from whatever's left? Where do you spend those dollars? Does that make sense?

Speaker 2: 22:29

Where would I yeah?

Speaker 5: 22:31

like where does your cost come from and what percent of that, of what's left, of the 70% right? So we have 700 grand left. Where is that cost made up? It's what it costs you to make a million bucks. How much is your material?

Speaker 2: 22:49

So last year our material was about 48%.

Speaker 5: 22:53

So consistently, year over year, going back to 2019, that's where my number start. To 2023, you would say they're 48%.

Speaker 2: 23:04

No, we have done better, like 22. I don't know the exact number on that. I don't have it in front of me. What have been better than that? Okay, last year 23 was like 40, yeah 48%.

Speaker 5: 23:18

Okay, so then let's just call it 500,000. We got 200,000 in labor and that's your total cost.

Speaker 2: 23:24

So our labor last year was 45%.

Speaker 5: 23:27

Really, and how much of that's in sales versus labor actually building the product.

Speaker 2: 23:34

So in sales we had 40,000 in sales because we had a sales that come on that we fired two sales people last year, so sales was not crazy. And then we had our office staff. I can look right through here.

Speaker 5: 23:54

So you have full-time office staff there.

Speaker 2: 23:56

Yeah, you have a source no, we have full-time. Yeah, so our office staff is. That's design and estimating. That's myself considered as an office staff. We're at about 210, 220, and then a lot of the rest would be our production.

Speaker 5: 24:21

Wow. So when you say that these companies are making 30%, are they making that much margin up on their material? It depends on that, because labor is going to be labor across the board, right?

Speaker 2: 24:32

You're all going to unless they use technology. Well, technology is a big thing, which we did get a new saw the end of this year, which is huge for us, but it depends also where you're at.

Speaker 2: 24:47

So like if we go south of here we run into some pretty big competitors that are super cheap, and what I mean by that is their material is number two and number three where we use all number one. That's just kind of how we've been out of the gate. So we have a high quality product but it's super hard for us to compete. We're always 10 to 15% higher if we go south of here. North of here is a little different story. We have some competitors that we work with that were at the competitive price or sometimes 10% less.

Speaker 5: 25:22

So where I would like to go. And then, of course, I don't want to take all this time, but I want to go from the numbers. We should kind of establish some numbers. So help me understand what's fixed and what's variable, because it fixed cost very little change. Variable is where we make up margin. So it sounds like to me the only variable expense we have is materials, right.

Speaker 2: 25:46

Correct. Yeah, and even in that there's like we have some limited factors because of how small we are.

Speaker 5: 25:54

So how much would we say if we went and got $3 million in cash to go buy a load of lumber? Like how much percent on that material if it's 48% of your cost?

Speaker 2: 26:06

Okay, so I'll back up a little bit. And you asked a question about investors or whatnot. There is potential there, because what I would love to be able to accomplish is to be able to buy my material like two times a year, like every year. You have about two dips in the year where material will drop to like nothing. I mean they are basically pricing it so they can move it on. If I can go in on those dips and buy $200,000 to $500,000 worth of material on those times and have storage where I can store that material, you can make a huge percentage there.

Speaker 5: 26:52

What percent? What percent are we?

Speaker 2: 26:54

talking about. So I mean lumber fluctuates like crazy. So it'll run. It'll go down, like I'll get prices like that depending on the grade, but running from like 400 per 100,000 or per 1,000 up to like I just got a price today that was like pushing 600 per 1,000 board fee.

Speaker 5: 27:16

So if it costs us $500,000 to do a million dollars in revenue and we bought at the right time, how much would that pack Same amount of lumber cost you?

Speaker 2: 27:24

I could, I would have to type that out on the board footage.

Speaker 1: 27:30

I'm going to give you some real fast number crunching. Brad, You're pretty good at this.

Speaker 4: 27:35

Is it 5% or 50%? Yeah, let's just throw it out there Like 5% or 50% savings.

Speaker 2: 27:41

I would say you're looking at probably here. Let me just do it real quick. I mean 4 to 6,.

Speaker 3: 27:48

He's somewhere between 30 and 50% right.

Speaker 4: 27:51

Yeah, well, there's your margin.

Speaker 5: 27:54

So you give me, as an investor, 10% on that return, you still save 40%. There's your margin.

Speaker 2: 30:12

Yeah, so we have two things obviously. Number one for us is, you know, just the financial ability to do that. And then number two is the warehouse to be able to store that. And then I know that there has been some deals with other companies where they'll contract lumber and they'll be like, hey, we want to get X amount of board fee over the next six months and we will buy it at this price and we'll have, you know, two loads a month or three loads a month coming in, but we bought it at this price. So we don't have the warehouse because we simply don't have the room right now. So hold that, you know. Amount of material.

Speaker 4: 30:53

Would your suppliers hold it for you If you made the commitment?

Speaker 2: 30:58

That you know. I've looked into it, you know, a couple of years ago and there was that option to you know buy it and then let them sell or let them ship like X amount of loads per month or whatever. But I don't know where that stands right now.

Speaker 5: 31:13

So I think there's some. I mean, it looks good if the numbers are true and correct and what you're saying. So I think that the follow up to that for me would be how do we get you to a place where you can focus on these things, on a bigger level of business development, material purchasing, and get you out of the weeds and get you working on the business, not in the business? Where's that at?

Speaker 2: 31:41

Yeah, great question. So I've done, I've done okay, doing that. I've done, I've done okay, delegating responsibility about. The only thing I'm like really deep in the weeds in right now is onboarding our newest salesperson. I'm really committed to really invest in this person and, you know, implement who we are into her DNA, where she can be an extension of me, and so that's a process I'm really focused in on right now. Other than that, operations I have a guy that's over operations and, as far as production goes from, I have a design manager, I have a CEO that runs the operations and then we have dispatch and then I have a part-time secretary and then I have a CPA that does all my books and we really nail down in 23. So, as far as some of the foundation of the company, a lot of that's in place, and so now it's a matter of maximizing my new salesperson and I feel like I will have bandwidth to be able to do that when you're talking about.

Speaker 5: 32:54

Yeah, yeah, I think you, I think if you don't start hitting revenue monthly or quarterly, you may have to peel back some of that expense. You're pretty heavy top your top head, the last time we are.

Speaker 5: 33:07

It's not creating any revenue. And, to be honest with you, I know this, a lot of people wouldn't say this, but that CEO is probably the first one that can go, because you can manage a 1.2 million dollar business and sales and think outside the box to cut cost, to get yourself at least back in them in the black, if you will, so that you're not spending dollars just to keep this business afloat.

Speaker 4: 33:33

Yeah, oh. What is your unique sales proposition? What do you do differently or better than your competitors? And it seems that it's already been established you need to stay away from the South. You need to go North. Yeah, you've got the territory defined. What is it that you can do better in your competition?

Speaker 2: 33:52

Number one. It's who we are as a company and like service. We're very service oriented and honor. Our thing is just simply being there for the customer. And then quality we are high quality, and so sometimes that has been kind of one of those things that I struggled with. It's like Through Achilles' heel. Yeah, some people don't care about quality and so it's like do we let our quality go down or do we keep it and be able to sell on our quality and who we are as a company.

Speaker 4: 34:27

So, anthony, you've got some experience in that space regarding the way y'all did, because you had a construction business. What would you have done?

Speaker 3: 34:36

I haven't said anything because I want to change the subject completely.

Speaker 5: 34:40

Can I say something, anthony, before you change subject? Yeah, go ahead. Okay, here's, paul, I struggle with the same thing. Here's the thing that I think we have to offer and you have to think about. You're deciding for the customer the quality that they want, and you're missing that customer. Okay, what if you gave that customer two options of quality and let them choose the quality, not you? So then now you can be marginally less and they chose that quality, if they're okay with that quality, because quality is in the eye of the holder, right.

Speaker 5: 35:19

And I think about these developers and construction guys, and they get put in a situation of well, if I pick this specific material, I'm over budget and the project won't even go. But where can I cut? And structurally, is it okay to make this project go? For what's on the other end, right? And I would tell you to think through offering two different packages. It's like going to buy a vehicle you can buy the base model or you can buy the loaded out model, like, does Ford decide what I get and decide what I determine as quality? So then you don't miss out on those customers.

Speaker 1: 36:01

Is your process changed, though, based on the quality of product, or is it the same?

Speaker 5: 36:06

It's a quality of lumber right.

Speaker 2: 36:08

Yeah, and so then you literally have twice as much storage room that you need because you're handling basically two different materials and so. But we could work through that. I'm sure we could find a way to work with that.

Speaker 1: 36:26

Maybe a way to run a test just for a period of time with a few customers. Might be a little bit of a hassle, but you would know how well it worked out. I said both ways.

Speaker 2: 36:37

Yeah.

Speaker 1: 36:38

Before we move on to Anthony real quick, I wanna come back closer to the beginning of the conversation. Actually, brad asked you a question about what are some things you're doing, or big. I did what some things you're doing now, right in 2024. One of the things you mentioned was you are looking at building relationships with other I don't know what you actually call them, but customers essentially that you didn't have before you hired. I think they started what yesterday or today your third salesperson that you've had recently, monday. Yeah, brad, sounds like you're investing more effort into them specifically, which is great. Will they be working on those bigger relationships? Will you be working on those? Like, what's your thought process on what needs to happen there with those relationships?

Speaker 3: 37:28

So that's. I don't want you to answer that question. I know this isn't my podcast, but that's the direction I was gonna go actually, so I was sitting here listening.

Speaker 1: 37:37

Let's throw your question.

Speaker 3: 37:38

You kind of sort of Awesome. I really like listening to the tactical of this and then I was thinking about how do I wanna ask this question? And I thought of all kinds of therapeutic ways to not ask it and get you to come to the conclusion. So I'll just tell you where I came at this. When I heard your story, I didn't hear and it doesn't matter what you call it.

Speaker 3: 37:57

The word I wrote down was grief. There was no anything. So it was a well, you know that's, I would have done the same thing if they would have done you know that's a good like very melancholy, almost to a point, not depressive, but just kind of melancholy. Right, there wasn't anger, there wasn't depression, so there was no, it was like right in the middle. And so I literally wrote down the question I was gonna ask was have you grieved this at all? And what I mean by that has have you settled that? Change out that hey, they took 50% of my business.

Speaker 3: 38:32

And so then I'm just keep listening, being thinking, and really the question that comes I come down to is are you the person to run this business? And hear me out for a second. I didn't say own this business. I didn't say set culture. I said to run this business because you're talking about hey, we got these six or so good potential customers that are gonna actually sounds like, potentially you get two or three of them you're gonna blow up is what it sounds like.

Speaker 3: 39:00

And are you the person to be pushing those things? Because it seems as though that's not your personality. And so I look at your personality, I say your personality is great to care for people, but not necessarily great to be a bulldog, and I say that's fine, let's put you in the seat that allows you to maximize your personality. And find somebody to sit in the seat to maximize what you're missing and just straight out acknowledge I'm not that person and I don't know you well enough to put these definitive statements on you. But, like, if you're not that person, let's acknowledge it and find whether it's and I don't care what the title is, whatever is the person that's underneath you, or maybe it's the person running the business and you're sitting underneath them in several seats. Right, you're the culture guy down here or whatever, but there's a I don't care what the title is and a greater CEO. I don't care the person that is pushing that hard like that's closing, because there are sometimes there is hard conversations that you have, there's pushing that needs to happen and even aggression that needs to happen, not in a negative sense of the form, but like push that thing over the line.

Speaker 3: 40:08

I'm not sure if you're that guy inside this business, and the only reason I'm saying that is based on the way that I seen you react to the catastrophic type activity. So maybe I don't even have a question, kevin. Maybe I just wanted to make a bunch of statements without a question, but that was gonna be. My question is do we need to find somebody and I'm with Brett like we talk numbers, we can't just plug somebody in. We're already way too top heavy. I get that, but do we really need to find somebody that can be that pusher that I keep wanting to call it a bulldog, like for you, like that bulldog so that you can?

Speaker 1: 40:44

not be the bulldog. You got somebody in decent mode man?

Speaker 3: 40:47

Yeah, because that's not your personality. We can let you live into your strengths if we know what they are and what your weaknesses are, so we can find somebody that can live into your weaknesses.

Speaker 2: 40:59

Yeah, I've actually processed that a lot. To your first question as far as grieving the process, I don't know. My wife and I have talked about that. I'm like I couldn't tell you. I probably haven't like acknowledged it for what it is. And then the second item there, the second topic. I have literally talked about that with my team and have told them. I believe that I think I could find someone to run the company better than me and, just like you were saying, I'm the culture though yeah, I'm not giving you like a system in process for what that looks like.

Speaker 3: 41:41

What I'm saying is is you're the care person, okay, let's not use business words. You're the care person, okay, well, let's not even find somebody that's not the care person, right, abuse that. Get that person the beast mode I love that, kevin, right, like that beast mode person, that's gonna help. And as far as the grieving thing I'm not talking about like clinical grief here, necessarily, what I'm saying is have you just kind of been like I'm just gonna not think about it, because what eventually is gonna happen is we are gonna have mental issues, associated mental things, where we're gonna have to sit you down because you are gonna have call it a breakdown, call it a whatever, because you didn't at least think through it, process it a little bit. Maybe it's getting mad, maybe it's getting sad, I don't care and push through it. I just didn't feel like there was any emotion associated with that at all, did you?

Speaker 1: 42:29

get mad. Did you slash any tires? Did you use some spray paint? Like what? I mean, did anything? You're just like, ah, it's okay.

Speaker 2: 42:37

No, I mean I've done some personal, yeah, Mental slashing of tires Somebody's buried in the North End zone, so I don't know they are.

Speaker 4: 42:46

Paul. To Anthony's question have you ever done a personality test to see what your zone of genius?

Speaker 3: 42:53

is what your competency is. Have you done?

Speaker 4: 42:56

That's what I was asking Paul I mean, have you done that? I have not.

Speaker 2: 42:59

No, I've done different like strength finder tests and stuff, but not I think I have done.

Speaker 4: 43:04

Offline, offline. Wally will give you some of those. He's got a number of good ones. Anthony's got some he can give you.

Speaker 1: 43:10

Well, actually, I can't say it offline. We got a bunch of listeners, so I will put those in. We'll have those in the show notes as well.

Speaker 4: 43:16

Put them in the show notes. I forgot we were doing an interview.

Speaker 1: 43:17

Yeah, yeah working genius and Colby and some other ones.

Speaker 4: 43:20

Yeah, that'll be good. We really make that a big part of what we do here and it really aligns you with your strengths. When you think about nurturing some of these larger relationships let's just call it a half a dozen relationships Does that excite you? Do you feel your giftedness in being able to do that? Or is it like, well, that's not me and I don't have the skill or the experience, or I don't have the desire or the passion? What are your feelings around that? That's a great question.

Speaker 2: 43:52

I'm not the person to go in and like have a cold introduction to the company, like I hate walking in the door, they don't expect me, like that's not who I am. Who I am is. I love when there's some kind of expectation about who I am, like if it was a referral or somebody, and I absolutely love walking in and bringing myself, my presence into their space and being with them. I just got a client the other the end of last month, right at the end of last year where I did that. He expected me and I spent two and a half hours with him. I took him out to eat and that just built me up. I love doing that. We got them as a client through that. So that's who I am. That fires me up.

Speaker 1: 44:42

It's like the unassuming closer.

Speaker 2: 44:45

Yeah, exactly.

Speaker 4: 44:47

Yeah, but that's not run of the mill for your industry, though. You've got to have boots on the ground. You've got to be in front of these guys all the time. There's got to be a constant presence, right, but that exhausts you. You're not going to get many warm handoffs in your industry. You can close them once you've got them, exactly, but you've got to go out and be aggressive to get those, and I think that's where Anthony's going is. You've got to identify the players in your organization.

Speaker 3: 45:14

Yeah, I actually was with that. I was actually looking at the other end of it, which is you go, the guy that takes him out to eat. You're the guy that builds a relationship. You figure out what they need and if you can provide it for him. And then someone else comes out and lays down the hammer and does the close, negotiates the pricing, the delivery, the all the right, Like you've built the relation and maybe you're the guy in the middle, right, if we're talking tactically. Maybe there is a chaser, you're the guy in the middle and there's a closer and I mean I've got a client right now. That that's exactly how he's the guy in the middle, like that is his work Cause that's how his industry is, but maybe that's that just seems like that's your place, right there in the middle, but it doesn't seem like you're the guy on either's end to me. Yeah.

Speaker 5: 45:57

I have a saying in my business that I'm the hunter, I have butchers, so I drag the meat in. This is very redneck. I drag the meat in, but if it's up to me to butcher and process it, it'll be run. So then, once the butcher's done with it, then it gets processed and it has to go to the cooks. If the cooks don't cook it, then nobody eats on the bottom. We all play part, right. And to help me stay in that zone, that's where I need to be right. So you would be that guy. You're the hunter out dragging it in, right? So that's how you live in that zone. So who else? Who's gonna do everything else in your business and do it? Well, you know what I'm saying. So that's for me, that's how I try to look at things, and when I get out of that, then other things start falling apart around it. But that's where I need to be and actually I love that. Like if I could do that all day, every day, then that's all I do.

Speaker 4: 47:03

Paul, we may be a little late on this question, but the person you just hired, did you go through this exercise? Did you go through some of these personality tests to find out if they're capable and competent to do what you deserve for them to do?

Speaker 2: 47:18

Yeah, we vetted her pretty hard. I don't know if you remember Jared, he was in our last live event. He has really helped me and he works with a company that also has these different sales assessments, and so we took her through three different of these assessments and she came. That company said that she's in the top 10% of all the people they assess, so we feel like she's pretty competent in what she does, so you're on the right path, right.

Speaker 3: 47:49

So, in light of that, this is the question I also had, I don't know, probably 20 minutes ago, which is we had a problem. The problem seems to be being corrected. We're predicting a rebound financially in this. We have a salesperson. What's the problem?

Speaker 2: 48:09

The biggest problem is when I look at last year and then going into this year is our labor and our material percentages are so high. Some of that will change because we have our overhead is taken care of, like we have what we need to produce, a lot more so, and like we've kept even though we've had been a lot slower, we've kept these guys on payroll to keep them right and so we can produce a lot.

Speaker 3: 48:40

Just for clarity's sake, this helps me. I don't know if it helps the rest of them. Can you get to the three million? Can you get to the six million? What's the current overhead we can?

Speaker 2: 48:49

do three million for sure with our current overhead. And now that brings me to material which is high, which I feel like we have some room there. But then it goes back to what Brett was saying about buying and bulk and some of that stuff that we don't have figured out yet.

Speaker 5: 49:10

So I wanna take one step back to Anthony. What percentages sales come from? Low bid versus relationship?

Speaker 2: 49:19

That's a great question, so, and that's one thing that we're trying to process through. It seems like in the construction industry, it's like bottom number is gonna win most times, especially if you're the new kid on the block, and so it's like that's one thing I struggle with as a business owner, where some of my designers are like or estimators, they're like dude, like quick cut on the cost, Like we just we're gonna quote it out this way and so being able to quote it, and this is where we are, because this is the value that we bring. So, yeah, does that answer your question?

Speaker 5: 49:53

It does because we're sitting here talking about sales. But then if I was thinking of the construction industry, I'd say 80% of that three million is gonna come from low bid. So then my trigger is to have an estimator that's sitting in the office. So I don't go get a sales guy. Estimators aren't good at sales. They're good at a bunch of numbers and you literally send hundreds of bids out every day. You have people bidding jobs and you throw it on the wall and see what sticks, rather than going out and spending all this money to be in somebody's office and when, at the end of the day, the relationship matters. But when they make their final decision it's based off price. So that tells me where I need to be building right. And then I start looking nationwide and go to areas in market share where I know that I can compete and just go at it in that area.

Speaker 5: 50:48

I mean, honestly, your estimator is yourselves in a way. They're just not good at going out and building relationships. So then who's gonna do that if it's a relationship based situation? But I even read an article the other day that if in estimating you see that you have a 75% chance, you as the owner or the CEO has the chance to make that sale from 75 to 100%. So that's where your estimator steps in and says, hey, I need you to take it from here Because we're at 75%, and you go close that sale because they have a different respect for you. So I don't know, I just think that helps not to push sales because people aren't walking through your door. I think there's probably some sales areas, but you gotta focus on getting a lot of bids out there. I mean, I remember one time we were bidding 350 jobs a year to get 50 to 60 jobs.

Speaker 2: 51:45

How do you look at that when you? It depends on the complexity of the project. It's gonna cost us between maybe three to $800 to close that project.

Speaker 5: 51:57

Why does it cost so much?

Speaker 2: 51:58

Well, it's time. So we designed the whole project and it's through our software we design it. The designing is what takes the time. Estimating is simply what our software produces. So it's a matter and some of these buildings that we quote are extremely complicated, multi-level and it's a matter of designing. We take the plans, we get them on the plans and we build that thing, the structure, and so the estimating is basically we can punch our numbers in and, depending on the material and how we have, our presets will give us our quote.

Speaker 5: 52:44

Do you have to design it to get your quote?

Speaker 2: 52:48

Yes, pretty much we have ran some kind of just some quick running, but then what happens is, if we get that order, then then there's so much of redesign if we haven't done it well in the first time.

Speaker 5: 53:02

And that's how everybody in the market does it. They design it and sell the job as a package. Yeah, and then you get it. Just give it a think of a new business. Yeah, yeah, do the designs and sell it. Make it a variable for everybody else.

Speaker 2: 53:16

We actually work with a third party company that does they have implemented? Some AI in it and we can buy a seat where we have two designated designers for X amount of dollars and they will design X amount of square feet per month and so they use. We can upload it to their customer portal and they take it on, and if we buy that seat, they'll guarantee us a three to five day turnaround time on those designs.

Speaker 5: 53:51

I always say procrastinate on purpose the funnel of automate, eliminate, delegate Funnel, everything through that. Every task that happens in your business, take it through that funnel.

Speaker 2: 54:01

And if it stops at one of those automate eliminate and delegate.

Speaker 5: 54:05

And if you run it through that funnel, if you look at that funnel, can I automate this, can I eliminate this? Can I delegate this, even outsource, delegate If it makes it through the bottom of the funnel? That's what I need to do inside of my business. Outside of that, so like we could build 3D surface models in-house. I can get them built for 150 bucks. It would cost me more to deal with it. So I can. I can delegate that from pennies. So I delegate every surface model. Yep, that goes through this business. Right, if we have time we'll build it, but I can't tell you the last time we built one. Yeah, so then that can. Then you're you're taking that fixed expense that you have in your business. That's hurting this overhead number and you're making it a variable. And if you load up on work and you're busy for months and months, you don't have to pay that expense, right, or if you get slow, you're not carrying that expense. So really try to separate things from variable expense versus fixed expense.

Speaker 4: 55:05

Pause. We wrap up. As we wrap up today, just thinking through some of the decisions that are before you is you got to think. First Of all, you don't want to be the cheapest guy out there. It's a race to the bottom and you don't want to do that because you got to be profitable. You know there's a division, there's a dividing line somewhere to say, hey, these are the margins, it's the thing that we were talking about earlier. You've got to make that decision. Whether you make it up on expenses, whether you make it up on the buy, you know, or the sale, there's multiple ways here to get to your margin. You got to first identify what that is, wally.

Speaker 1: 55:37

Any final final comments for paul as we wrap up today yeah, I think, uh, I appreciate the fact that my observation, as you have a pretty level head and, uh, you know you're not letting emotion drive you one way the other, and so there's a lot to be said for that. So Encourage you to keep that up red.

Speaker 4: 55:56

Any final comments for paul as we finish up today.

Speaker 5: 55:59

Yeah, yeah, I would tell you, I would encourage you. We're actually working through this. Build you a. Build you a spreadsheet with your customer list and identify why they buy and why they make the decision to buy from you. After, with everything we've went through, I think that's going to help you decide what you need to be focusing your time on. Uh, and identify all those customers and and just learn your customer and learn how to make more sales, to get that revenue up to get to the point of Buying that lumber and packages like we talked about, and getting to that point. That would be huge for your business. I believe huge yeah.

Speaker 4: 56:38

Anthony, any final comments?

Speaker 3: 56:40

Yeah, I'm actually gonna I think piggyback on what bra was saying, because I was going to bring up something we hadn't really talked about, which was the client journey. It, if you can identify, if it's an 80, 20, like Brett said, to Forget about sales and go whether it's design or estimate or I don't care what you call the person. I mean I've I've had the privilege of watching brett's business grow and like some of those Changes are huge. If you can, but if it's the reverse or some type of the reverse, figure out what it is and then figure out how you can walk new people through that client journey, because that's going to get them. It's not what the industry expects, it's it. You're going to be a disruptor and it's not going to be a race to the bottom anymore. It's going to be a race to where you want it to be.

Speaker 4: 57:25

Yeah, man, I'm so excited today to be able to hear this input and I just want to say to the people that are listening right now If you're not in the middle on an ongoing basis really diving into your personal business, man, get some guys around you that you can meet with on an ongoing basis. I promise you it's going to give you a perspective like you've never had before. It's going to have the ability to hold you accountable. It's going to walk you through these journeys, as paul has said here today. I know his mind is blown for an hour With going through all this, but he's going to have a time that he can really set back and digest and make the decisions that he needs to make going forward.

Speaker 4: 58:03

So if you're not doing that in your business, I really encourage you today to really think through who are your unbiased, trusted advisors. That is hearing from you, like we've heard from paul today really Uncover the situations in his business that are making him not as profitable as he would like to be. Paul, thank you so much for being here today. I'm encouraged, I'm so thrilled that you're going to take some of this and go back and make your business better and bigger as we go forward, guys, I want you to do this, so you, too, can have that view from the top.

Speaker 1: 58:35

Thank you all for listening in again today to this episode of the forge. We do these special episodes just once a month, usually the last month, last month, the last week of every month these episodes come out. So please be sure to tune in every week, but especially that last week, if you guys are interested in learning more, hearing more of stories of like paul's and being able to be kind of be a fly on the wall and listen in. If you want to be more than a fly on the wall, you can go to view from the top comm slash group or you can join in on this conversation as well as take this conversation Even further for you and your business. So we will see you next week.