From Insolvency To Salability, With John Conway

Nexstar business coach John Conway joins Jack to discuss how he took his family business from insolvency to salability by learning to grow the right parts and charging the right rates.

Transcript

Speaker 1: 0:09

Jack Chester and welcome to another edition, another episode, Leadership Lounge. I am in lovely Saint Paul, Minnesota and we are just about to start a leadership mastery class. And one of the great things about these classes is our business coaches roll into town. And I'm looking across the table at John Conway. How are you doing John? Oh, I'm doing great. Glad to be here. Welcome. You love comments, Soda, don't you? I love coming to Minnesota. Absolutely. Especially when the winter's over and you'd a been here last week. It wouldn't have been right. I'm so glad to have you here John. And you've got a great story and you're a full time business coach for next door and you've been there since what, 2012 2019 now. 2014 yep. A long time. Yep. Right. And you are a longtime member before that. Absolutely. So I want to, you've got a great story to tell and I don't think I'm going to get to it all, but I do want to share, have you share kind of your journey in some of your lessons learned. Fair enough. Absolutely. So you had a business called Conway services. How'd you get in that one? In Memphis, Tennessee. Tell me about that.

Speaker 2: 1:03

You know, I uh, went to work with my father back in the early nineties and a contractor. Yeah. He was a contractor doing mainly new construction work. Okay. And I went to work with him in the, in the early nineties. And um, you know, mainly installing duct work in new homes is kinda where I got my start and, and uh, doing a little bit of doing a little bit of everything of growing the business for sure. Okay. So hardworking guy, no doubt your father. No doubt. Absolutely. Yep. And you were so lucky to get put into a family business, right? Absolutely. Yeah. I thought I was so lucky to get put into a family business, but, um, you know, I kind of ended up, uh, I wasn't, you know, coming out of out of high school, I wasn't in the family business and I was in the automotive parts business. And then I had, um, you know, had an opportunity to come into the family business and was kind of at a time when that opportunity tell me how well, you know, um, I had been doing a lot of traveling and my sons were my, I only had one son at the time and he was one year old and I was doing a lot of traveling and I wanted to get out of that, traveling with him at that age in automotive parts business. And then, um, so I came home one Christmas and said, Hey, I'm not doing this traveling thing anymore. And I went to work with my dad and I told him, this was in December of 19, or, um, basically December of 1993, January of 94 I said, hey, I'm on, uh, you know, I'd like to come to work with you until I find something better and better comes along. Yeah. Until something better comes along. And you know, I guess what is that 25, 30 years later, nothing better came along. You know, a lot of us came along a lot better. Came along in the, in the Conway services and then on into the next star world for sure. So you are in the business right in the field at first small company I imagined at the time, yeah. When I went to work with my father, we had one truck and two employees. His previous year's revenue was 250,000. This was in 93? Yeah. 93. Okay. Yep.

Speaker 1: 2:53

Give me, just give me quickly, kind of your career trajectory there because by the time I met you, I don't think your father was involved. Right, right.

Speaker 2: 3:00

So tell me just quickly walk through that trajectory for him. Yeah. So I bought my father out of the business in 1998. Okay. And um, in, in 98 when um, bought him out of the business and at the time the business had grown about, so in that five years I'd been there, or four years I'd been there, the business had grown to about 2.1 million. Um, the problem was 2 million of it was new construction and$100,000 of it was service and replacement. Okay. So your new construction guy chasing money, right? Absolutely. Chasing, chasing payroll every Friday. But you bought it. You wanted it. Yep. Why'd you want it? And didn't know any better. Okay. That's the truth to it. Yeah, absolutely. No kidding. So Dad transitioned the business to you, right? And, uh, what'd you do with it after you, cause you knew it all then, right? Yeah. And I know, uh, you know, when I, when I, when I, um, bought the business from him, you know, I had always heard that the money didn't be made in this industry. It was to be made in the service and replacement industry. And so I immediately set goals that were, that were driven toward our service and replacement business, letting the new construction continue to do what it would do, you know. Okay. And, um, so I had, um, at the time I was flat rate and I was just flat rate and at the wrong price. And, um, so when I bought the business, I had, uh, you know, had a goal to at the time to grow it to 300,000 and service and replacement and keep the, to keep the 2 million in new construction. And, and I did that. I grew it to three 60. In that first year, I guess I'd be 1999, uh, three 60 in service and replacement and still about 2 million. And a, the problem was I was, I was growing and at the wrong price. I didn't, didn't know anything about flat rate pricing, was basically getting my advice from the flat rate company about how much I should charge and had, of course, this was prior to next door. And so I didn't have any nexstar experience. And, um, so essentially what that turned into was I was buying, you know, basically I had gotten my pricing from, you know, calling the GATT, the flat rate company and just saying, hey, how much you think I should charge? And he said, well, how much do you charge now? So I charge 59 an hour. And he said, well, you can charge 85 an hour and a hundred and on the weekend. I said, great, send me the book, you know, found money. Yeah, found money. I thought that was, I thought that was good. I only did that. I did that for one year. Get to the end of 99. I had grown to this three 60 but I was losing money. And I called the guy up and I said, hey, I'm just so, you know, I already had a way to lose money, new construction. I didn't need another way to lose money. And uh, so again, we just continued to raise the price. He said, Hey, well you charging now said 85 and a hundred on the weekend. He said, well, you can charge a hundred a hundred dollars an hour and 125 on the weekend. I said, great, send me the book, you know. So I do that. Basically, I'm Jack from 1999 up until 2004 and in 2004 I found myself 942,000 in the hole to carrier. Um, I will commonly tell people I tried to get them to sell me 60 more thousand, so I could say out of a million, but for some reason they thought nine 42 was enough. That's, that's, that's gotta be crushing. Oh yeah. And um, cause I was half your sales mode cause you'd grown the business at this point. Yeah, we had grown the business. Um, but we were really just, um, I think when I joined next door, I remember in 2004 I joined in May of 2004 and I'm pretty sure how to not joined in May of 2004 I would have went out of business in 2004. And um, but I joined in 2004. I believe the business at that time was a little over 4 million. And um, but we were, had, had kinda been doing the deal with the flat rate company charging the wrong price and we'd Kinda got ourself up to, you know, one, you know, we kind of got herself up to about one 85 an hour flat rate. And back then when we, when you went to next our bootcamp, you did the profit price or at bootcamp. Yeah, and the thing that I realized at bootcamp was that my break even was two 85 an hour. So every time I was billing an hour, I was losing, you know, every time I was billing an hour, I was losing$100 an hour. So I'm from bootcamp now, I end up calling the Gat, the flat rate company and fussing at him. And, uh, the books beat me home, but I went from one 85 an hour flat rate to three 25 flat rate overnight. Um, while I was like, I say the boost picked up the phone and pick up the phone and one of the breaks at bootcamp and called the guy at the flat rate company. And, uh, and I just simply, I just simply said, you know, man, how in the world could you let me be charging these prices? And he said, where are you at? And I said, where do you know, where's your business at? And I said, it's in Memphis, Tennessee. And he said, Oh, you had an the big metro areas, most of those guys charge three 50 an hour. I was like, uh, yeah, that'd be really nice to know.$942,000 ago. Um, so never, never less folksy kind of graveyard charm here. Cause it's, it's, it's brutal isn't it? Oh yeah. And it's just, you know, I just remember some of the sayings back in the days, you don't know what you don't know. And, and um, we'd definitely, I was definitely in that situation. Uh, when I joined Nexstar I remember in 2004 I remember specifically having a conversation with myself from buying the, from coming into the business with my father in 1994, uh, until joining Nexstar in 2004. I remember having a conversation with myself that just Kinda said, you know what, you've been doing this 10 years and you don't have it figured out. And, and so there was no way not to join Nexstar when the decision was made to join nexstar and not join next door. The only decision was whether or not Lisa would hold the checks long enough for them to clear so I could join. That was the only decision that needed to be made. You had an open mind. I had an open mind and sometimes, um, uh, you know, Jim Hamilton once referred to me is the best implementer he'd ever coached. And um, and it certainly had a lot to do with gyms coaching, but it had a lot to do with my fear as well. So I was in 1942 that nine 42 had a lot to do with it for sure. Yeah, I bet it did. Yeah, it did. So tell me, so you joined Nexstar in 2004. You, you changed your, so the, the, the great thing here is, I mean, you are, obviously your back was up against it, right? Right. Absolutely. Like you didn't have a lot of slack left in the rope. Yup. You know, you were staring down the barrel of default. Right. You know, you can, it's funny with the clarity they'll to you, oh yeah. In those moments sometimes, right. These fears that used to have and maybe I'll lose my customers. Well good. Yeah. Yeah. They can participate in my bankruptcy. Right? Absolutely. So you really were in this moment of, of, you know, what are you going to lose? Yeah. Yeah. And I think, you know, one of the things that I, I remember, you know, from, from, um, joining Nexstar is just thinking back to the, um, sometimes people say, how did carrier let you get into them that far? You know, and why didn't they, you know, why didn't they call you a note? Well, I tell people, you know, if you owe somebody a couple of hundred grand, you got a debt, you owe somebody a million, you got a partner. And so they were, and I think a lot of it had to do with them being able to tell also that I wasn't messing with lawyers. I wasn't thinking about bankruptcy. I had had a couple of people say, you know what, you'd have been better off to just file bankruptcy. But quite frankly, that just wasn't in my DNA. If carrier was willing, I was willing. And, um, and so I knew once I joined Nexstar I knew that I was starting to figure it out. And, um, Jim became my coach, have about a year after I was a member. And in 2000 and of 2004, we actually stopped the bleeding. We didn't lose. We broke even in 2004, 2005 and we made a made 2%. So now I'm an average contractor, you know? And that felt good. Yeah. 2%. Yeah. And so then, um, uh, in 2005 when Jim became my coach and I'm, so it was, that was kind of funny cause I remember, I remember, uh, you know, all the rage was about, you know, the great coach that Jim Hamilton was and that sending my financials and I said, I'm about to make a coach out of you. He looked at my financials, he looked down and looked at my financials and said, yeah, I think you are. You know, and uh, so nevertheless, it was, uh, um, you know, that really started the trajectory there. And you know, when I joined, when I got Jim as a coach and then in 2006 I started on site visits with Jim the third week of January every year. Yeah. Those, those were very impactful for sure. Well, you know, um, Jim is a great coach. Sure. He is a great, great coach. He's been here a long time and you know, our most tenured coach and Lou Holtz said though, I've coached good players and I've coached bad players and I'm a better coach when a coach, good players, there's a lot to be said for that, for sure. For that one John. So, so Jim's a great coach though and he had a great player in you. They're so, so the, the business was, was insolvent, broke even and you started to grow it from, from 2007 it sounds like. And then then you sold the business. So let's just talk about the, the growth pattern from 2007 to whenever you sold it. And I can't remember what year that was sold in 10 yes. Sold in 10. So really kind of how that went in 2000 and, uh, I, one of the things that Jim taught me as he really taught me to make money in new construction, he really taught me how to do that because quite frankly, um, he wouldn't have recommended and there was no way I could get out of new construction at that time of the debt. I needed the cash flow, but I didn't need, I didn't need to be turning money. I need to be making money. And so, you know, Jim taught me through 2000 in a row, you know, really what I would say Jim, but also the nexstar processes taught me through 2007, you know, 2008, you know, really to really to start making money in, in, uh, in the new construction. And we, matter of fact, we made 12% net profit in 2007 in new construction. And then everybody knows what kind of happened in 2008. Yeah. So in 2008, the demand for housing starts was going down and the cost of materials were going up. So copper was going up, you know, sheet metal was going up, everything, all the equipment was going up, all the pricing was going up, but demand was going down, which is basically a recession when your expenses are going up and your demand is going down. So when I ended up doing at that time, as I got to the end of 2008 and I see all my competitors at that time thought it'd be a good time to drop their price. Their prices are rob prices going up. They're dropping their certain, dropping their prices, my competitors when their prices was going up. And I said, you know what? Got The tee shirt. Not doing that. Already been there, done that. And I'm, so at the end of 2008, uh, I went to my brother in law Dale, who's been in the Conway business over 20 years now and he was our new construction install manager. And I basically told Dale, I said, hey, Dale, we're, we're getting out of new construction now at this time in six in, um, 2008, new construction was 68% of the Conway business. So Dale reminded me that it was 68% of the business. And, uh, he sent me for a drug screen and, um, I went to, um, I went, uh, and I wanted to add plumbing at the time. And, um, so through, through really developing nexstar processes through my p bod group at Nexstar, through working with Jim, um, I knew that I could add plumbing to the business as new construction went away. And so we did, you know, in January of 2009 and really the first quarter of 2009, I went and got my plumbing license. Um, I will commonly tell people, the state of Tennessee says, I'm a master plumber and I'm, I can assure you if I come into your home, Jack, and you have a plumbing problem, when I leave, you will still have a plumbing problem. Right? But, um, if you let me take a test twice, I can pass it. Got It. And um, so we started plumbing in, in really about June of Oh nine is when we added plumbing to the Conway business. The biggest thing that happened in oh nine was in February of Oh nine, we retired to carry your debt debt free, didn't know anybody a dime. And um, so that was a, a monumental task force. Yup. And I remember, um, I remember this time frame in 2008, um, as we were close, as we started getting out of new construction, 2008, we did 6.2 million 2009, we did zero new construction. And even though it was 68% of the business the previous year in 2009, we did 5.2 million dropped million off the top, but we made 180,000 more on the bottom. Okay. So we're doing less work and making more money and made it through that risk, made it through that recession. And it really only paused us for what we did in 2010 in 2010 we did 10.6 million. Okay. Grew 107% and what some people call it a recession. And um, that's when, that's when I sold the business in 2010. That's amazing growth. Did the, did it feel shaky at that time because you know, looking back on it, is that, was that, you know, I've been reading a lot and thinking a lot is, was, was that too much growth? Was it the right amount, right amount of view at that time? You know, um, I think there were a lot of things going on. There were a lot of things going into that at the time, you know, and, and, um, and what I mean by that is some of the things that were going into it was, um, because of this new construction dropoff in the whole industry with a recession, there was availability of manpower. Okay. And so I had, and quite frankly, I have even my own employees available that had been doing duck work for me and set in air conditioners and, and so, you know, once Nexstar told us, hey, these, these guys can, you know, if these guys can get uniformed up and start learning the next our service system, then you can quite, you know, quite frankly, you've got unlimited amount of, of labor here. And what really started happening in 2009, 2010 is people stopped buying new houses, so they were fixing up their existing houses. And, um, so I, I don't know if the growth was the right amount of growth or, or, or not. I mean, it'd be hard to say I didn't, um, he did it. I did it and I did it. And we had, you know, we had the nose to the grind and we got after it, you know, and, and, um, so we, we certainly did it. And, and I'm so, you know, that was, um, that was really where, you know, I look at, look down the road and of course, you know, uh, um, a lot of what I do, Jack and my life has my faith tied to it, you know, and I know that, that, that, you know, it wasn't, uh, you know, heard somebody say one time, there's, you know, um, has it ever occurred to you that never, nothing ever occurred to God? And, um, so it didn't occur to God that that business was going to sell on June 30th of 2010 I didn't know it, but he knew it. And so, um, I think it was just positioned well for that. Right, right time, right buyer, good opportunity. Yep. Yeah. And you stayed there for a couple of years? I stayed four and a half years after I sold the business and I'm doubled the business again in four and a half years. When I left at the end of 2014, um, the business doing 20.1 million. So it had grown, um, our kind of that trajectory, Jack was in 2011. Um, we did 14.2 million, grew another 53%, and to the end of 2011 we didn't really like the profitability. We were making eight or nine points. It just wasn't where it needed to be. And so 2012, um, that we intentionally tried to slow the growth. Um, and we slew, you know, we slowed the growth down to um, in 2012 did 15 million, nine 84, so almost 16 million from 14 too, but profits jumped to 13 points on the bottom. And then, um, and that's what really what our intention was. And, and then 2013 was, you know, what I'd probably say was the best year I had it was, it was, um, 18.5 million with 18 points on the bottom. And I'm so really nice year in 2013 and then 2014 the last year I was in the business we had, we had to add a little infrastructure in the business, did 20.1 million, put about 14 points on the bottom. Wow. Nice. And so that's kind of been the trajectory of the business. Well, well done man. Yeah. What did I great, what a great, uh, you know, common story though. Fuck, you know, son works for father, right? Son takes over the business struggles a little bit. Yeah. You know, but then a lot of companies just capitulate or just continue to struggle and live in that dysfunction for a long time. But you, you know, looked outside of yourself, you know, kind of swallow your pride a little bit. Absolutely. I know you're a prideful guy. I mean, I know you're faithful man, but you gotta you gotta have strong ego, like most good business operators do. Well, I just knew I wasn't doing, they were some things I wasn't doing right. You know? And so, you know, I just, you know, quite frankly, when I got the letter that we sent out back then in 2004 promotions for promotions, for money, masters events, when I got that letter, I just couldn't believe what I was reading. I couldn't believe there was actually an organization. Oh, really? That, that took knuckleheads like me and taught them how to run a business. I didn't think that I, you know, I couldn't believe that I thought, you know, I thought I was getting pumped when I opened the letter up. You had no way. There's no way that this place even exist, you know? And so we're an easy sale. Yeah. There's no doubt I was an easy sale. Yup. That was, it was, uh, it was definitely neat. And then, you know, and then so for me, you know, I tell people, Jack, you know, I don't look at it as an opportunity to work for Nexstar. I look at it as an honor to work here. Well, let's talk about that because even when you were running your business at Conway Owning Your Business at Conway, you would even talk to me some day, I could be an XR business coach. You would even say, I mean early on you had, you had planted that idea in people's head by self and others. I'm sure. Right. Right. Now I don't even know if I was the CEO again, by the time you telling me this. So, cause I came back in 11 and you would sold, so maybe you did. Maybe it did, but we kept in contact. Sure. That, you know, you'd always say, yeah, I like to do this someday. Right? So some day came, why, why did some day come? Why did you want to do it? You know, um, when we've had that, we had that conversation before Jack about, you know, first of all, you know, I'll always knew that, you know, I wasn't in, I wasn't the only guy that fell off the turnip truck. You know, there was there, I knew there was other nexstar members out there and other, quite frankly, contractors and service companies that the owners and or managers probably were struggling with some of the same things that I was struggling with. And so, you know, um, you know, kind of the process. The thing about the next are processes and the reason that we were able to grow the business is when you're following processes, you know, you've got a good process when it's repeatable. Okay. So next, our process is really work when they're, when the business is, you know, if you've got a process that works, it'll work with three technicians, the same process. I'll work with 10 technicians, will work at 30 technicians. Okay. If that, if that's happening, which it did in my business, now you know, you've got a process, you know, cause the process is repeatable and so, you know, it's scalable, right? It's scalable. Yeah. And so I had kind of learned, you know, that I felt like that, you know, there were other members out there that could use that information and that we could, you know, that we could really help grow the business and, and, um, help, help grow their businesses. I enjoy giving back. And so that was to me, you know, I've always felt like I had, um, that I owe a debt to Nexstar and for me that was kind of the way to give it back, you know, give back and, but I remember you telling me one day, you know, hey, hey John, you know, you'll know when the time's right. You know, after I had sold the business, I was kind of working in, for lack of a better term, corporate America, um, you know, as one of 70 locations nationwide. And, and, um, so you'd kind of mentioned to me, John, you'll, you'll know when the time's right. Nobody will have to tell you. You know, and, uh, so it's end of 2014. That's kind of when, that's kind of when I knew the timing was right, it's probably time for me to go do something else. And then I always knew what that something else was, you know, always knew it was to come to next door and give back to the organization. We were waiting for your call. God sure. You know, we had the cheered dusted off ready for you as for sure. Well, I appreciate that. And it was a, and it's been, it has really truly been an honor to be here and it's been fun to be here. And then, um, what I was thinking back then was, um, w you know what I was thinking back then was that I knew there were some other members out there that could use the help that could use, um, the things that Nexstar and Jim Hamilton had taught me and yeah. And I'm so 87 members strong now. There are certainly some members out. Part of that are that are using utilizing it. And it's been just so gratifying to see, you know, members who are struggling or losing money or not making much money and then look at their financials a year or two later and, and it's, it's just been gratifying to see that. Oh that's so good. I want to talk, I want, I'm going to come to it back to your business coach because I stepped over something I think might be illustrative here. So you are a great member next door. You know, you ran your own business at a very high level, you've sold your business, you work for a large national company. What'd you learn there? What, what, what did you take away from that, that you maybe wouldn't it guide if you'd have state at Conway for another four and a half years and then come to sold your business to come right to next door? Tell me about that. You know, I learned several things. You know, some of the things that I learned, I would say, and I would say these would be positive and negative of the different things that I learned. But, you know, one of the things I learned as a think bigger, you know, and, and, um, and you know, kind of learned that I could, that, that could think bigger and that we could do really some, some big things. Um, you know, other things I learned is, you know, Kinda the, you know, things that I felt like I learned at Nexstar the importance of people and knowing and, and, um, you know, and, and really quite frankly, caring for your people and, you know, be being very people oriented. That's not always the, you know, that's not always the culture, you know, of, of a large corporate company. You know, sometimes it can be more about the value of maintaining that you're saying. Yep. Yeah, I saw the value of maintaining it, you know, things on the things that I'd say that I learned on, you know, from, from being on the corporate side is, you know, um, there's, there's a lot out there that, um, you know, I would say I probably learned to drive the business more. Um, you know, I learned to, I learned probably learn goal setting really well, learn budgeting really well, learn, you know, learned, you know, how to achieve those goals and how to drive the business and you know, um, so those were some of the things that, you know, that say I probably learned on the, on the corporate side a little bit more. Um, so, okay, let me ask it.

Speaker 1: 24:37

So still, thank you for that. Cause I, you know, I, I worked in a large company, in fact, I worked in the same company, but it worked at a different period of time than you did. And I found it, you know, so valuable just yet, just from my growth and understanding, you know, bigger business, the time I worked forward, it was ars, it was a public company, right. Was owned by ServiceMaster then and had probably a different dynamic than the private business you work for. So I never worked for that entity, but I sure learned a lot, you know, and I learned through my mistakes. Right? Yeah.

Speaker 2: 25:03

Yeah. Some of the, some of the things that, like I say, I learned both positive and negative. I'd probably say I learned more positive than negative, you know, and it was very valuable to, you know, um, some of the guys that I worked for, you know, you know, really kind of taught me to, to look at the business and sometimes, you know, look at the business a different way. Sometimes my Conway employees used to call it Conway math, you know, where, where, you know, we really just look and say, you know, hey, if we're missing one call, you know, we're missing five calls a day. You know, if you, if you basically look at that, you're missing, you know, 1,250 service calls in a year, you know, 10% of them would be a tech lead. You know, now you missed a 125 leads, you know, 65% of them would be, you know, would turn into a sale. So now a sudden we missed about 80 sales. Um, and an$8,000 average ticket, it doesn't take much to miss$640,000, and then you still got to run 10% of the service calls. And so that, what my employees used to call Conway math was me just taking every little piece of the business and really breaking it down to how much does it really mean to miss five calls in a day. If you do the math in your own company, you probably find it's about a million dollars a year to miss five calls a day. And that's probably something I learned in the corporate world to really look at the business a little bit more that way. Okay. A little bit more about the opportunities that you had within the fort walls and maximizing that and driving the business, right. Yeah, absolutely. Very cool. And I know you carry that forward in your coaching too, that I do. Yep. I do. That's something that's worked well for us. Well, let's talk about your experience as a business

Speaker 1: 26:33

coach. And I, and I, I guess what I'd like you to speak of is, is without naming names good or bad, I want you to think back to some of your hose column, aren't your next star success stories. These are the companies that you've been coaching here that really have really kind of repeated your success. Right. And there's a bunch of them, right? And I just like you to think by, you know, what are some of the things that, that if you had to say, what are some of the commonalities in those businesses? If there was, if you'd just say there was a thread that went through them that was consistent. If there is, and I'm, I'm, I'm, we did not ask this question ahead of time and you're kind of putting you on the spot here, but, but what would, what would it be,

Speaker 2: 27:14

you know, um, Jack, a couple things that kind of stand out in some of these stories are, or, you know, kind of fun and gratifying, you know, and I re recall, you know, a member in, you know, out, down in Texas and, you know, um, and you know, they asked me that. They asked for me to coach them and they came on board and I started coaching them. And the first problem was their price. You know, even they'd been, even though they'd been Nexstar, even though they'd been, you know, uh, even though they had been through profit pricer, you know, they had all these reasons why you can't charge this price in their market. And, um, so, you know, I kind of coached him for a year, a year and a half. They're floundering. They're not making much money. The two is two owners. They're great guys, but they're kind of at each other's throat, you know. And finally, um, you know, they happen to be up at, uh, they happen to be up here in Saint Paul for a BPW and I just asked them to go to dinner one night because this is plenty of workshop there yet they were up here for business planning workshop and, and uh, either I asked them or they asked me, actually as I'm thinking about, I think they asked me to go to dinner. And in my mind I went, I'm not sure they want this dinner, but we'll do it. And, um, so we went to dinner and, um, uh, the dinner was great. The conversation was not so great. Um, I pushed on him pretty hard about, you know, when you guys going to start listening to me, you know, you're not, you know, I'm trying to tell you what to do. You're not doing what you want, you know, you're not doing what I'm telling you to do. And so to make a long story short, they came back out of that dinner and they would probably tell you that, that, that, that dinner moved them the most. And, um, they came back out of that dinner, they started getting their price right and then you've just seen the business grow substantially from getting their price right. Since then, you know, these stories, you know, this is probably been two and a half, maybe three years ago. Well since then they are, you know, they've raised their price two or three times. They're not afraid to raise their prices anymore now. Now they've learned there is no such thing as going rate. So the rates that are charged in certain markets need to be based on what it costs to run your company, not what you know. But so, so I'd say one of the commonalities in, in that particular situation was these guys were just scared of the price. And once we got him out of being scared of the price and they started really paying attention to, you know, it doesn't matter what heating Majeed them charges or any other company charges, it just matters. What does it cost to run your company? Right. And once they got to that point, then you seen the needle immediately start moving. Gross margin started going up. Employees could start making more money, they could offer more benefits, you know, and, and, um, so that's, that's really one. Um, you know, I think of another, it's a, it's, it's owning the price. It's really, it's, it's, it's getting out of your own head Yup. In the service replacement business and getting real on what it really costs to run your business fairly. Absolutely. And, you know, from my me telling you the story, you come into the whole story. Yeah. I gotta Stop You for a Sec. You know, if Frank Blau was saying this in 1989 when I met him, you know, I mean, and it's funny that it's still a relevant message. It still hasn't resonated fully. And if anyone's listening here that, that has low profitability in your business and you're a surface replacement contractor, your first stop, what I'm hearing is, is the profit price are and getting real. Absolutely. Is that right? Yep. Okay. A private pricer will not lie to you. It's the, you know, and there there's probably a, I contribute probably three, you know, three pretty important documents to, to um, my success in the Conway business to getting rid of the nine 42 in five years and, and the profit price or would definitely be one of them. You know, we don't use it as much now as we used to, but you know, we, you know, we have a kind of a next nexstar implementation guide and the very first thing, what own it was do the profit pricer. Right. And so that's Kinda where I take new members when I get new members these days. And, and, um, so quite frankly, you've got to get your price right. And so these guys were committed to getting their price right. You know, and once they got there, once they got their price right, you know, it made a substantial difference in the business. Huh. Okay. So that's, that's one of the threads you see of these common explosive high profit companies is that they've, they've reconciled through any misgivings, any, a fear of charging the right price and being the right price, which is one of the great laws of double digit profitability, right? Because the right price be the right price. Yep. Well, you see, well the other thing that I see, especially traveling all around the nation doing onsite visits and then also on the phone is a c, you know, I say a lot of members that just don't know what the goal lists. They're not goal oriented. The company's not goal oriented. You know, even though I talk about goals on the phone, I go to, I go to a known site visit there and I'll just walk up to the service manager and say, Hey, what's your goal today? And when I asked that question, they, they just look at me like a calf staring at a new gate. And they're like, yeah, that's an old thing that's an old saying. You know, they just have no idea what they have no idea what the goal is. And, and, and I can just tell you, if you don't know the goal, they're not going to hit the goal. But a lot of quite frankly, a lot of employees, um, service technicians, plumbers, electricians, service managers, if we will communicate the goal to them, a lot of them will just go get the goal because they know what it is now. Um, if, if there your pay plan happens to incentivize that, that even helps even more. And you know, when the two are tied together. But I would just say, so the second thing I see is companies aren't goal oriented. They don't know what the goal is. And so what, what if you can imagine this, you're not the right price. You come to work every day and you don't know what the goal is. So what's really happening in there, Jack, is the business is running you. Yeah. You're not running the business. The business is running you. Yeah. So there's a transformation that's been taking place with, with these members that, uh, I've seen exponential growth with in a transformation is they no longer are being ran by the business. They are now running their business and by running their business, they know what their price is. They have confidence in their price. They know what today's goal is. Everybody in the team is focused on the goal. You know, it, it Kinda, it Kinda reminds me, Jack, I kinda use um, your, your uh, intent article that you wrote for the business planning workshop book, but I kind of use a line in there that you talk about people who aren't focused on the goal and aren't helping the owner achieve the goal or removed from the business. Okay. I say that you did say that she's mean. Yeah, your main, right. It's easy to say that we write it around and say, yeah, that's right. But never, nevertheless, um, I would just say so the second thing is these businesses are really getting goal-oriented and when they know what their goals are and whether you know, their goals can be established through their budget, they can be established through business planning workshop. They can be established from the profit pricer. Once they start really knowing what the goal is and going after the goal and everybody on the team, you can walk up to a service technician and say, Hey, what's your goal today? And he says, 3.2 billable hours are about 1800 bucks. Okay, now, now we're fixing to get somewhere. Yeah. In the past, without that, what I saw John and I haven't asked that question well, but when I did ask that, and that's a question I learned from Jim Hamilton as a business coach or as a business coach, right? Is I hear like, well, my job is to give customers great service. Right? Or if a service manager, they'd say, uh, my job is support the guys in the field. Which what does that mean? Right? Know what you can say is my, my, my goal is 3.2 billable hours or$1,800 a day in the way I do that by giving great service to customers. Now. Now it all ties together is a hack sinlessly without the number. You get these nebulous broad statements that are subject to complete interpretation. You could say, well, you're not, you're not doing your job. Yes I am. No, I'm not. Yes I am. No, I'm not. So the number takes it all. Yep. Absolutely quantifies it. Right. That's power in that. The way, the way you tied that together, it really sounded beautiful. Well Jack, one of the things I'd mentioned, you know, when you talk about happy customers and serving our customers well and making happy customers, you know, recently toys r us had a whole lot of happy customers. Like there are a lot of happy customers at toys r us. Like I'd never been to a toys r us where the customers weren't happy. I mean, they're like all happy. They're giggly, they're giggly, happy. Well, what just happened to toys r us? They went out of business. Yeah. So happy customers and serving your customers well and, and being safe, which is very important and getting off by four 30 all of those are part of your job. They're going to happen. Whether you produce a profit or not, but your goal has to be tied to, you know, what is the company hire you for and what's your goal and knowing what your goal is and making sure that everybody in the business knows what the goal is. And then also, you know, we take it another step in communicating goal throughout the day. So, so that commute, I call it communication rhythm and just communicating throughout the know live, we have it next to our communicating rhythm. Yeah, exactly. Communicate and rhythm and just make sure that we know how to hit hit company goal.

Speaker 1: 35:49

Yeah. Fantastic. So there's a couple things you've learned and I guess that the people that struggle would be the reverse of that, that people that don't have goals. Is there anything, and I hate to, you know, live in the negative John, but if you could speak to an owner who's listening to this, Yup. Somebody that has a control over a department or a business that is struggling, what advice would you tell them? Just what would you say?

Speaker 2: 36:17

Yeah. So a couple of things I think about on that one. When I think about sometimes jack, the toughest managers and the toughest business owners to coach are the ones that they are the problem. And sometimes they are the problem because they have this mental block that says, Hey, we can't charge this price or we can't do this or that won't work in my market. You know? And, and, um, and I see at work in markets all over the nation, you know, and you know, I see, I see at work in markets in rural west Tennessee where there's 5,000 people in a town, you know, or I see or I see at work in, you know, and in big markets like Indianapolis or, or Dallas, you know, and so, so if I was, if, you know, if I were talking to an owner that's really struggling, you know, I'd say, Hey, first evolve, you know, stop doing what you're doing cause what you're doing is not working, right. Quit defending this, quit defending this. What you know is kind of like the realization that I came to and I said, you know what? I've been doing this 10 years, I don't have it figured out. You know, and start really paying it, you know, start really paying attention. Cause, cause let me say this, every company has a Gold Jack and it doesn't care if you know the goal or not. The goal still exist, right? The mailman man shows up and he drops off his stack of envelopes every day. That's your goal. That's your goal. Yup. And he doesn't, he, like I say, he doesn't, it doesn't matter if you know what the goal is or not. It's the goal is still happening. And I'm so a lot of times what happened in, you know, if you're a business owner listening to this or you're a manager listening to this and you feel like you're a firefighter and you feel like all you, all you're doing is reacting. You're not proacting, your business is running you and you need to stop it from burning you and you need to start running it. And so how do you, how do I start running the business? Well, you know, one, you know, make sure you got tight connections with your business coach. Secondly, make sure that you're, that you're getting your price right and then really start living in those eight laws. So start living in, you know, company goal and making sure everybody in the business knows the goal and why the goal exists. And try to have your incentive plans tied to company goal, you know, and, and um, and then focused on hitting that goal every day. If you were to come to me in the Conway business and ask, Hey, what's, you know, you know, what's our, you know, especially in the later days of last few years, if you said, hey, what's, what's our goal this month? Well, I have no idea what our goal is this month. I can just tell you what it is today. You know? Now, if I'm once a week, I'm in a key manager meeting, I'm looking at the goal for the month and I'm looking at my pacing, I'm looking at my pace report, how are we pacing? But in reality, I'm really just focused on today. Yeah. You know, I want to know what happened yesterday and what happened today and what do you know? You know, what, what happened yesterday and what's going to happen today and what are we doing about it. And really just kind of getting into the living in that win win the day. And you know, sometimes I'm on the calls with members Jack and I'll say, you know, Jack, when, when you and I had that conversation about when the day, and I'm sure you had conversations with many more coaches and other trainers about the win the day law, you know, we could have made it when the week yeah. Or we could have called it when the month. Right. Or maybe we could have even, I mean the, the, the book was, you know, the sheet was wide open. We could have made it whatever we wanted. We could have caught it when the year. Yeah. But that wasn't what it was. It was when the day and so we know that you can win the week and the win when the month and when the year, as long as you can win the day. And Yeah. So

Speaker 1: 39:29

you'll find that you have a very, very convicting way of making the complex simple. Yeah. Which is really good.

Speaker 2: 39:36

Well thank you for that. I only, I only do simple, I tell technicians and members when I'm talking to them, if there's anything I'm here, you know, anything you're hearing from me over the next hour that's complicated. Either I said it wrong and you heard it wrong cause I don't do complicated. I only do, I only do simple and, uh,

Speaker 1: 39:52

that's so good. What I love though is, is uh, the focus you just provided there is that even as a, as a, in a big shop,$20 million shop, you didn't even know your monthly budget. You weren't sitting there looking at that number. You know, you're sitting in, okay, today I need to do$50,000, I need to do$51,287 today and that's my goal and I'm going to worry about tomorrow, tomorrow by worry about today. Today. Yep. Right?

Speaker 2: 40:17

Then it's gonna take a certain number of calls and it's going to take a certain number of conversions and then certain average ticket and it's going to come from any level that's going to come from three, three or four different departments. And we're all, we're going to all meet tomorrow morning and we're going to bring, you know, we're going to bring a piece of Pie to the Party and see if we can put together that 50,000 bucks. And that's really, you know, and, and you know, um, you know, I did, you know, you asked earlier, I kind of learned from the corporate side too to watch for trends. And so we kind of developed this three days as a trend. Yeah. And so, you know, I tried to warn members about letting managers come to the huddle day after day after day and not be at goal. I mean, you know, and I even had that last week in a very successful shop and you know, very successful shop in Cincinnati. I was at, I was at and, and in the morning huddle we had a manager that came to the huddle two or three days in a row and not at goal. And I just kind of said, hey, I mean, I mean days in a row you're going to come to the huddle and not be at goal. You know? And sometimes those are a little tough conversations you got to have during the huddle, but you know, it kind of makes a difference. Um, because you know, these goals are not, they're not just made up, you know, it costs a certain amount of money to run these companies and the bigger it gets, the more it costs. And so, um, you just want to make sure that we stay dialed in to what company goes.

Speaker 1: 41:29

Yeah. Yeah. That's great. That's great. What have you learned? What else, what of

Speaker 2: 41:34

as far as your approach about influencing people on the phone or face to face as a business coach? What have you learned? What has been, you know, if you go back to John Conway in 2014 Vaughn, John Conway, 2019 tell me, well, you know, one of the things I've learned is there are certain certain things I have to adapt, you know, because every business is not like my business and people, you know, do things different and some people do things better and you know, and, and the other thing that I keep in mind, Jack, is, you know, I Kinda tell members sometimes I don't, I don't like to fix things that aren't broke. So just cause you're not doing it my way or you might not be doing it next to ours away. If it's not broke, we probably not going to try to fix it, you know? And so it doesn't just happen. That's usually because there's something else broke that you could focus on, right? Yeah, exactly. There's plenty of other things else, bro. But I can give you an example. Maybe a guy doesn't price the way we priced or his flat rate look at and set up the way you rcs. But he's, but he's doing 58% gross margin. And Service. Okay. Okay. Keep doing what you're doing. We'll want to worry about something else right now. Yeah, exactly. You know, and so, um, maybe before you would've said no, we gotta change that a little bit. You've been a little less flexible if, right. All right. Yeah, I would say, you know, just coaching, you know, coaching and being with members is, you know, I've learned to be more flexible. I've, I've learned to, you know, and I think I've always done this interrupted for a second though, cause I don't want anyone to misconstrue what I just heard. What you said is you're flexible when they're getting the result, right. You are not flexible just because they're doing it a different way and they're getting mediocre results. It's not like, well, you know, that's your way. It's so if they're getting a high, they're producing at a high level and may be getting there in a slightly different road, you're not going to tell them to turn around and take the other, the other path. Right. All right. And, and the other thing, Jack, too, is I'm also watching for, for a trap. Yeah. So if there's a trap coming down the road that they don't know about that I've seen before, whether it had been my own business or other members, cause they could be doing it different, the next Nexstars doing it and getting a result, but they've only got three technicians and it's, so, it's not a big deal, but I can see it's going to be a trap when they got 10 technicians, then we'll just go ahead and fix it. Now if they're using some sales techniques that aren't exactly the right way to do it, that's a trap, right? Yep. That can be a trap that's coming in. I look at it, I'm getting all these sales. Well let's talk about that. Right. It didn't happen in the way it needs to happen. Yup. Right. I may not that you know, that even that point and brings up a member that you know from a couple of years ago that said, hey, you know, I've got an HPAC sales guy that's, or an HVHC service technician selling tech that is absolutely selling like crazy, but he's not doing it ethical, you know, and, and, and the guy, he said, I don't know what to do. The Guy said that, you know, the member said, hey, I don't know what to do man. He's got all these sales. He's grown the department, but I know he's not doing it ethical. And he said, what should I do? Fire him today. That's what I said, fire him today. And cause he'd already talked to him. It was, you know, all the, all the chemo had already been put on him. And uh, so there was no more put in chemo. It was time to get the knife out and cut. But I bet when he told me about, she basically said nothing good is ever going to happen from that. Yeah. And ended up fireworks. It's going to end and the fireworks show and you don't want to be a part of it. And sure enough, a year later, we so excited that the business had grown even past what that guy was doing. He'd got him off his team and now he's doing everything ethical in all the other employees knew it and it, you know, it was a big, big lift plus time hard for,

Speaker 1: 44:51

and I've written that now I'm not going to say I've had the ethical issues per se, but you know, you've had some performance. It's been okay, but you just don't feel good about it. Either they got the wrong person and they're an irritant in the business or they're, you know, not a good team player and you kind of endure it, don't you? It's tough. That's a tough move.

Speaker 2: 45:07

Yeah, it's a, it's a tough move. But you know, once you've, you know, once you've, you know, you've got to keep your customer first, you've got to make sure that, you know, you lay your head down at night and know that you're doing business the right way, you know, and, and, um, if you think about all the goals that we set and in these businesses, Jack, you know, a lot of service technicians, you know, their goals are set for 35 to 40% efficiency, maybe plumbers, 40 to 45% efficiency. So we're already built in that, you know, 60 to 65% of our time we're not going to be billing. So there's no reason to ever be unethical about anything. You know, it's our, our prices already built to just go out and deliver great customer service and, and, you know, do great things for our customers and make sure they know what's fully going on with their systems. And, and then at the end of the day, you know, we've got everything priced right where we don't have, you know, undue pressure on the technicians.

Speaker 1: 45:57

Well, I've seen that, you know, and it's really easy to be ethical. I'm going to say this in a way that when you got money, meaning you know, you can afford a call back, you know, like, you know, you're, you're a high profit business and if something goes wrong with the system and while you can get you, you can afford to send somebody back, just do what it takes on this pricing. Right. But if you're not making any money, if you're nine 42 in debt in that system goes bad, there's gotta be a temptation to that. Now let's just not call him back for a couple of days to see if this goes away. I can just see it. Yeah. I just know how people are

Speaker 2: 46:26

some of that. Yeah. Some of that it's gotta be tied to your, for lack of a better term, to your DNA, to who you are as a person, you know. Um, I'm not, I'm, you know, that that may happen in shops around the nation that you and I are not familiar with, but for majority of Nexstar members,

Speaker 1: 46:43

a lot of them like myself would put yourself out of business trying to take care of customers, I suppose. Yeah. I suppose that's right. Um, so that's speaking for myself. Uh, more money I got, the more, the more generous I am. So absolutely. That's how I looked at it.

Speaker 2: 46:56

Yeah. And you know, you know, we've got, uh, you know, we've got a line in the profit price or for customer give backs for customer refunds, just put it in your profit price or you know what's going to happen and men take care of it, you know? Yeah. That makes sense. Once you, you know, once you know that you're going to take care of a customer, um, no matter what, it's empowering to your employees. They know we're going to take care of customers. It's in, in Sim powering the you and you know, customer calls in, they got a complaint. I mean, just let them know, hey, before we hang up the phone, I'm gonna make this. Right. Yeah. And once you've got that power, because you got it built into your price and you feel confident in and hey, if you built 50,000 a year and you're priced to give back to customers, then you then you feel good about doing that and making sure you're taking care of customers and then fixing whatever happened, you know, so it doesn't happen again. Yeah. Employees feel better charging it to absolutely. You know, they know that's what's happening behind the scenes. They can look in the customer's face. Yup. Yeah, that makes sense. Okay. So Jack, a couple of things you ask a while ago about, you know, what are some things I'm seeing with, with members as well as, you know, not knowing the goal. Um, and then, you know, especially, um, you know, really just starting to expand the horizons on things like tankless water heaters, you know, expanding the horizons on, you know, tech generated leads, how many, how many HPAC service calls should turn into a tech lead. The generator business on the electric side is a phenomenal business. Yeah. You know, really just trying to expand these guys and say, Hey, you should get, you know, get you get your head out of the trees for a minute and let's pay attention to, you know, every time we run a 10 year old system, how many of those turn into a tech lead? But we know it should be six out of 10. But I'm coaching some members in very successful companies too, that that number is three out of 10 and they've kind of figured out, wait a minute, now we're missing, you know, we're missing three or two x. That's, Oh yeah, it's, it's a no, it's a big number for them. And so some of that is not only not knowing your goal, but then maybe not knowing the key performance indicators or, or the things that we should be, you know, the opportunities within the numbers. Yeah. Some of the opportunities within the numbers. And so that's, that's really neat cause once they learn it, you know, and I remember over and over in Oregon, I had a service manager called me one day that after I'd got off a call and had told, told him and the management team that they should be turning six out of 10 on the over 10 year olds. You know, the guy called me after the call and said, man you, he goes, you can't be saying that on a call. You gotta be messing with it there no way that can happen, you know. And I said, well, only thing I tell you, if you're turning three out of 10 on the over 10 year old systems, there is absolutely no way your service technicians are following the next our service system using the ABC process and doing a handwritten summary findings. And I said, I've never been to your business before. I've been there twice by the way since then, but I've never been in your business before. But I can just tell you that's not happening. Or you wouldn't be getting three out of 10 you'd be getting more like six out of 10. And quite frankly, this service manager did a great job. And within, I would say within probably 90 to 120 days they were getting six out of 10 on the over 10 year old systems and the business has completely grown, you know, through the roof because of it. Yeah. And it's been, that's, you know, another, another one of those that just been very gratifying. Oh well wow. You have a fun job, John. Absolutely. But thank you for sharing some of your experience here. What a great journey. You're welcome. You know, cause I know you, you didn't come from a successful necessarily business there in Memphis. You grew that yourself and with, with a good team, right, with a really good team and you've had a great life experience here. Selling the business, working for a large company, learning a lot, and then coming back home to next door and doing some amazing works. I want to thank you on behalf of next door and behind our membership for all you do. Oh, you're welcome. It's, it's exciting and it is truly an honor to be here and it's a, it's, it's fun watching it and you know, some of the conversations can be tough with members and then, yeah, and I've told I've welcomed any member and I've told them, look guys, you tell me when you want to, when you want to have a fun conversation. Cause I love fun. You know, I love deer hunting with my sons. I love duck hunting. I love, I love wakeboarding and Turkey hunting and, and uh, in fishing. And anytime you guys want to have that conversation, let me know and I won't help your business at all, but I'll be glad to have that conversation and nobody else you'll get off of call. And you'll feel better and I won't beat up on you on the call, but I mean, it won't help your business at all, but nevertheless, uh, um, it's, it's a exciting, exciting to be at Nexstar and, and very gratifying.

Speaker 1: 51:07

Well, what's going to happen here for those listing is tomorrow we're going to have a leadership mastery class where we do this four times a year and a lot of our newer members come in and I'm going to watch, and there's going to be some of those fun conversations. I'm going to see John Conway, the corner man, and he's going to talk to some of these, these new folks, and it's gonna. The magic continues and life's continue to get altered because of your good work. So thank you, John. Oh, you're welcome. Yeah, thank you all. Listen, this really fun additional leadership lounge as Jack test with the John Conway and we'll catch you next time. Thanks.[inaudible].

Speaker 3: 51:37

What.