Home based service business how you can make millions with Tommy Mello - Part 3

Transcript

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Hey guys, Jamesrice here from Marketing Secrets for Electricians and today is the last episode with Tommy Mello where we look at the service-based industry and how you can utilize it to make lots of money basically. If you found this useful, please go to the Facebook group and tell us what you like. I'd love to see what idea you'd like and then implement it like it's all good listening and finding out good stuff but if we don't take action we're just consuming information which doesn't take us much further than where we are. I also like this last bitty, there's a good tip, a marketing trick I learned from Tommy here that I didn't use and I wish I used it in my business. It was a good start-up trick so stay tuned for that.

So here's what I hear a lot. That's the question. Join me and follow along as we search for the answers. at 3 there's something to be said about culture, about guys not having trucks that are breaking down or having issues or their air conditioning goes out or whatever happens. So that's a big one.

I say the biggest thing by far is ultimate focus. It's understanding and how to pick the next big thing to work on so there's a good book by Michael Michalowicz called Fix This Next. He's got a lot of good books but as you can see in the back here I'm a big reader but I became readers or leaders read a lot, do a lot of podcasts, get involved with going to see somebody, get out of your element. If you really want to be successful fly away from your hometown and go follow somebody for three days and find out what they do, ask a lot of questions but ultimately it's focus and a lot of people start making money and they start investing in real estate and going on vacations and buying that second home and let the money work for you and focus. Don't all of a sudden say, "Oh I finally made money in this business.

Now let me go invest it in another business." It doesn't make sense. You've built all these great structures in your business. You finally started to make money. First thing you're going to do is go divest the thing that made you money. No, no, no.

You're not going to be a real estate investor. If you want to buy your own building that's fine for your business but don't do the mistakes I made. I used to buy different houses and flip them and I made money. That's the sad thing is I made money. It's easier to do it when you make money but man if I would have put all that time, energy and focus.

There's two books. One thing by Gary Keller and Essentialism. Those two books really changed my course of just focus, focus, focus. I think that's the biggest mistake. There was a time I walked into my work.

There was three people outside smoking. The phones were ringing off the hook. My manager I found out was dating one of my CSRs. This was five, six, eight years. Shoot, this was at the old, old, old building.

Probably eight years ago. That's the day I said, "Man, I've got to get control of this mess." It's too much of a mess. You could have 100 good people. One bad system will ruin 100 great people. Remember that.

One bad system could ruin 100 great people. If your business is run on systems, standard operating procedures, key performance indicators and you're inspecting what you expect, you could run the whole business off of minimum wage employees and still run a better business than having Harvard grads in your entire company. Very big on systems. I guess that's the moral of the story. If you can take anything away from this, start building systems in your business.

Do you test the systems? You build them once and do you just like, "Okay, that's it." No, it's a living breathing system. The system has to be spoon fed. I'm working on a new system right now and every word matters. Do we sign the contract or do you say sign the agreement?

The agreement sounds much better than a contract. Every little thing that you do needs to be systematically thought of. Then you need to test stuff. You need to A/B test certain things. They're living breathing organisms.

They're always going to be modifying and making changes. Don't think all of a sudden, "I've done it. I've done it. I'm done." Anybody that thinks that you got to change with time. New things are coming out.

New algorithms are coming out with Google. New ways to form relationships like Zoom calls. If I would have told you six months ago I was going to be building relationships on Zoom, I would have said, "How's that possible now with COVID-19, coronavirus?" Everybody's like, "Hey, I say let's do a virtual lunch. I'll order you some Uber Eats. We'll eat together and we could hopefully be your next garage door company because I want to have a day you're not doing the customer any favors by saving that old ass part that you can't even get to.

I want my stuff fixed when you come here. If you've got to go back to your shop and band-aid it and everything else, it's just not the way to do business. If you're starting to market to those customers that want things done cheap, you're always going to be broke. You're always going to be broke. Do not market to those people.

Why would you want to market to the cheapest people out there? People said, "Tommy, with all the metal you make, imagine if you took the copper out of there. I'm like, "You know what? I'm going to do $70 million this year. I could maybe make some money off taking copper out, but then I've got the why.

Why not be a specialist? Let the metal company deal with that. I'm not going to take apart everything." There's a lot of things that you can find money within your business, but keep your eye on the ball. People are going to come up to you and they're going to say, "Hey, I got a job for you." You can make $30,000 doing it. Trust me, I've taken on $50,000 jobs, walked out of there with nothing.

I made five grand. A commercial job, I'm not set up for that. I have some now, but I needed to rent scissor lifts and get all these specialists in there and then get a welder. Why take on the work that you're not comfortable doing like you do every day? Especially if you're not going to make a profit, like if you're spending all this energy.

I've done as well one 10, 20, 30 grand worth of work. It was something I didn't normally do, but I was like, "Hey, it's a lot of money." I basically broke even on it at the end of the day. I still made money. If you pay yourself zero, you had to go up 10 times to fix it. You had to pay for the market.

How much was it worth to hire somebody in your accounts receivable because they were net 90 and you didn't get paid for 180 days. Your bank account was on zero. There's all these ancillary things that nobody thinks about. All these backend costs, essentially. Exactly.

Cool. We've done the worst type of stuff. I can probably guess this answer. What makes your company successful right now? A lot of times people say it's the people, but I say it's the process in which you pick the people.

The people are 100%. The business is the people, but if they don't have processes to follow and they're not good at creating processes and they don't have a structure and know how to stay in their own lane, you see nobody should have more than five direct reports. Only had 12 disciples and he was the Lord. I say you should have five direct reports tops. When I see businesses start to fail, they go through peaks and valleys.

They hit their valleys because the managers take on too many reports. Then stuff starts getting in the weeds and stuff starts slipping through the cracks. I would say create a really good organizational chart. Put structure into what each job is responsible for. Build key performance indicators on every role.

Make sure you're inspecting what you expect and don't leave any area for gray. Make it black and white. That's what you need to do to be on your way to a successful home service company. The system, do you actually find how often do, just out of curiosity, do your technicians actually review or do they have a big thick manual? Is it on the iPad?

Do they review it once a week, once a month? Once a week, every Thursday, we read three pages out of our manual. It's about 45 pages total. A lot of times we'll get questions about inventory. We'll read those four or five pages that day.

We're reading it, but they spent a lot of time with the manual in the training, that six weeks of training. They're learning about all of it and they've got a copy on their iPad to see what I need to do for time off. The other thing when you build a manual is you don't answer all their questions. You say, "Go to your manual, page 37. I think you'll find what you're looking for." Make them familiar with it, consistent with it.

Use the index. My manuals, we were organized as an index to it. It's all the same format, every single manual. There's no pictures in these manuals. It's all grammatically correct.

Everything's got a page number. Make it organized. Make sure the 80% is there. Don't worry about the 20. The one-off issues.

It's like the guy that says, "What about the time the guy didn't die because he didn't have a seat belt on?" I'm like, "That's once in a lifetime." It's very rare that that happens. Do you allow them... You still want them to think for themselves, but follow the guy like the rulebook. You still create them. I learned them to say, "Don't say it differently than me.

You don't even have to make it your own. Make it exactly like this. This is a beautiful home." Let me ask you this. How long have you lived here? Tell me exactly what's going on with your garage door.

When was the last time you had somebody take a peek at it? Those are the three questions we asked. If I got one of your technicians out, they would ask those three questions. Those are the questions. The only time that's different is when we're on a door quote.

One of the things I ask is, "If everything sounds right, you're happy with what I have to say. I'm sure you've done some research on our company. When were you looking to make a decision?" I want to know, because if they say, "Look, Tommy, if you say what we need to hear, I'm going to make a decision today." I better be walking out of there with a closed sail. You know what I mean? There's some questions we ask every single time, but we also have a field supervisor now that's doing virtual checkups to make sure everything's done properly.

Making sure that customer's happy. I can vouch for that. I've had a guy who installed all these lights or outside lights in the house, and then an hour later, the customer called up and was like, "Hey, the lights are wonky." They're like, "And we didn't check up on him." Basically, I then have to go out there and fix the lights. If you had a system in place like that, it's automatic. It gets fixed off.

That's wonky. Your supervisor could come and get the guy out before the customer even noticed. notices what's going on. You find it, not the customer, because that's bad. The supervisor could be a better opportunity to help you make the sale of any additional upsells.

They could also help you get reviews from that customer. They could also tell that supervisor if they're not comfortable with the technician that's there, if you're able to get them alone. There's a lot of opportunities when you get that second voice on that fixes most problems in the company. They talk differently to the person who's higher up type of thing. When I get on the phone and they're talking to the owner, they're like, "Oh my gosh, you're the owner." I'm like, "Yeah, and I want your door to be safe." Safety is a big word for me.

I want your door to be safe, and I want to make sure that you don't have this issue again. Here's what a lot of times guys call me up and they say the customer doesn't want to spend $500. When they get out the phone with me, they're spending $1,000. just tell them straight up, "This is exactly ... You want your door to be safe, don't you?

Let's go ahead and make this safe today. Let's go ahead and get this fixed right." Yeah, totally. Electricians' electricity, big on safety, that's like a whole area. If you do something wrong, that can burn down your house. Oh yeah, that's huge.

Yeah, another. There's even people who go up in the roof and try to do electrical work on their own, but they end up getting electrocuted because they've got a tin roof and it's not earth. All this other stuff. There's definitely a big selling point to help push what you need to, to make sure your customers are safe. That's cool.

I like that. Have you got any other tips or anything else you feel you'd like to share? Technology is going to run your company. Find an amazing CRM that takes care of everything. If it's expensive, that's a good thing.

That means they're well-funded. That means they've got good people to develop more code. Make sure that it's online in the cloud, that you don't have to host it yourself. I used to host my CRM 10 years ago. Some of them still make you do that.

I just think automate as much as you could. Automation helps growth. Remember, if you're not growing, you're shrinking most of the time. Understand how a business sells and make sure to get a plan because you're going to find out that when you sell, you're going to get a lot of freedom. I know a guy that's bought and sold six of his companies.

He's on a 6.1 and he's got his own private jet. I think that's a point. When you've done it once, like, for example, if you sold your company today, you could pretty much turn around and start another service business like this. I can do it again in any industry now because it's not about garage doors. It's about getting the customer.

You need to get good employees and good clients. You match them up together. I know how to make the phone ring off the hook. The difference is, is most people don't know how to recruit and train somebody that's never been in the industry before. I am not getting technicians that have ever had any experience.

I'm finding someone that wants to learn. They've never been burned before. Electricity is a little bit different because you got to go through a little bit more of a learning curve and I understand that. But think about it as planting seeds for the future. You got to have a really good company, though.

You got to be somewhere where they're not going to want to leave because last thing you want to do is train an apprentice for a long time. And then all of a sudden, boom, they found something better. You need to teach them that it's not only about the money, it's about the ancillary benefits. And there should be a lot of them. I mean, build a culture, build a family that they don't want to leave and it'll be worth it.

It's like investing in your stock, in the systems, in the future of your business. And to invest in them, you need to charge the right process. You got to charge a lot of money. And, you know, if you read my book, I was going to grab I might have a copy right here on the shelf, but it's the original version right here. It's a little bit different cover, but it's kind of like this.

I talk a lot about Ellen Rohr was one of my consultants and she says, charge the right prices. You know, I can't stress that enough of charging the right price. Don't be cheap and buy the best part. See, people always say apples to apples. I sell oranges.

No one else carry the parts I carry. I think they don't. I get them custom made. I got them trademarked. I got my springs.

They're taller than me. I'm six foot three and they're powder coated red. They say Max life on them. No one else can carry those rates. So if you're going ahead and head against me, look out because I'm going to take you back to my truck and show you why to go with me.

I had a customer two weeks ago. One of my guys was out there. I said, he was one of my supposed to do. I've got four trucks parked behind me waiting to give this customer a bit. I said, I want you to take them out to your truck.

The nice, beautiful, large wrapped truck. Show them our core values. Show them our parts. I say none of these companies are going to be able to do this and just call me when you get done with them because I want to do what I can do to earn your business. The customer called him up.

His name's Russ. He said you're a thousand dollars more than all of the other three companies, but we're going with you. A thousand dollars more, but we're going with you. Hopefully the listeners got something out of this that a lot of people have this misconception that I can't charge that. They go, he doesn't know what it's like here.

There's 500 electric companies. There's 830 garage door companies in Phoenix. So I know what it's like. I know what it's like more than anybody on this podcast. I know what it's like when someone is going to go in and they're advertising to be the cheapest in town.

Trust me. And just if you got a problem with it, there's one person to blame. Look in the mirror. And if you're the best at what you do, congratulate yourself. Pay yourself on the back.

But don't tell me. me that I don't know what it's like because I know what it's like. You don't even have to be licensed to do garage doors. You could just be a guy that barely speaks English from Mexico and you could be the cheapest garage door company in the world. And you can buy it way cheaper than I can because because believe it or not, the manufacturers, the distribution centers will sell to unlicensed guys.

So I've worked in every I've worked in about 20 different states in this industry. And all I know is everybody that's a loser says the same thing. Oh, he doesn't know what it's like. It's a different industry. Or he doesn't know what it's like here.

I'll go anywhere in the world. I know human beings. And that's all that matters. And it's the same in everything, even everything. People buy the brand new iPhone to barely have any money.

So I don't want to hear it. I just I've heard that too much. Learn how to sell financing. That'd be my last step. Like if they've got like a 10 grand drive or whatever it is, they don't have the money.

You can sell your the finance or you get a third party. No, I've got a third party. We use green sky, but we still have thirty two hundred dollars. We call it the worry free special. It's two hundred and sixty seven dollars a month.

Same as cash for 12 months. So, you know, a lot of people say, well, I don't think we need to sell financing. And I'm like, well, if you learn how to sell it right, it's the best thing that will ever happen to you. See, the problem is a lot of people don't like change. They say that's not the way we always did it.

And you know what? Most of those companies are out of business because they used to do the yellow book. The guys that were the king of the yellow book probably now don't have a business because they didn't know how to change. Totally. Do you find I don't know, have you ever tested like giving them like the is there an uptake between getting like the credit and getting just paying straight out?

Do people. Yeah, they spend more money when they spend a lot more money when it's the pain of today to spend a cash is different than. Oh, same as cash. Oh, oh, OK. That's like a credit card.

It's like a box or whatever it is. Like that's nothing I can afford that compared to. Yeah, yeah, they love that stuff. See, you know, they don't realize it's not the same pain as today. They don't see that money coming out of their account.

They just see the monthly payment. So you sell with monthly payments instead of saying this is nine thousand eight hundred and twenty six dollars. You say this is just four hundred eighty six bucks a month. And it just sell the monthly fee easier, easier. Well, it is.

That's cool. With that, do you do you have like we've talked kind of about like a lot of lot of what you do is the back end of like marketing when you found the customer. What's your kind of main thing or what do you suggest for people to actually find the first customer? Where's that? You know, that first contact made.

Well, you got to get good on Google. I'm a big fan of online. So make sure you've got your online reputation. Here's a little trick. You go find.

You tell your first technician to talk to 100 people. They've got neighbors, friends and family. And the way you do this is you find your best friend. You say, give me your mom, your uncle and your grandma's number. Then you call the grandma.

You say, give me your three best friends, numbers, grandma. You get their name, their address, their phone number. And then you go out there and you service their electric, their fans or whatever. I service the garage door for free. And I say, if I do a good job, I want you to leave me review on all these places and give me a testimonial online and a video.

I say, by the way, when I'm out there, I'm doing everything. I'll tune up your door for free. If you need a new bottom rubber to keep all those nasty bugs out, I'm doing it for half price. If you want a new opener, I'm doing a huge discount. Anything you need that I point out, because for me, it's going to get me comfortable in my CRM since I'm new for my technicians.

It's going to get me comfortable in the garage door, comfortable with the new van they just got. They're going to go get comfortable with people they know, kind of like a soft opening of a restaurant and get great reviews out there. So build your online reputation up. Every technician that you start, that's very clever. That's like, use the resources they have.

And a key thing, I think, from what I've found talking to other electricians, there's a lot of resistance on free, like giving something away for free. There's like, you know, a lot of resistance. Like I'm not making any money. You will. Like you're going to.

You go out to that house. Here's the thing. You're going to find shit wrong. Most like you're going to say they're going to say, look, I've been I've been talking about replacing these fans or getting a new breaker box or or getting one of those large surge protectors from the house, whatever it looks like. You're going to make money.

But that's how you got to start out. And you're not losing money. You're building your online reputation. Someone's going to go to buy you. They're going to be like, how many reviews do you have?

If you got 10 guys that each got 100 reviews, now think about this. 10 times 100 customers is a thousand. You're asking each of them to leave five, five thousand just off of 10 employees. And there's there's also a big kind of study. People nowadays will search online more and find those reviews.

They want to review you before they hire you. Absolutely. It's a huge advantage if you have a thousand and your competitor has one or none because they have the reviews and then get those relationships. You know, I can't tell you enough. I'm a good networker.

So I get a lot of our jobs. I mean, I booked 10 calls a week just for my cell phone. People call me up. That's just not a lot of jobs. I mean, we ran sixty seven thousand jobs last year.

And do you have a lot of maintenance work like keeping up? We sell service agreements. We've only got a couple thousand service agreements. That's my goal this year is to increase that because you're putting a gate. You're putting you're putting a fence around customers.

Yeah, exactly. You're like you're getting yearly revenue or whatever it is, but also you're staying in contact with them. And that's like a huge not just doing the job and running away, which I find like a lot of cheaper guys do that. Just do that and run away to the next one. But yeah, I love that.

So we kind of said this before, but who would you recommend to be featured on podcast next? L.E.V. L.E.V. used to be involved in more of this kind of stuff anyway. So he's definitely a guy you want.

And I'll give you guys an introduction. But he's if you want to read my book first, The Home Service Millionaire, it's not audible. And then Al Levy did a great job on The Seven Power Contractor. His is an audible as well. If you like the book itself, you could get it on homeservicemillionaire.com/free.

And all you got to do is pay for shipping. Cool. I'm in Spain at the moment. I can't get they've actually walked down our borders, which is a pain. But the audio, you can get the audible.

But Spain's awesome. And then you can get me on home service. The Home Service Expert podcast. I'm up to like 120 some odd episodes. I have a lot of fun on that.

The thing you do with this. Yeah, it's fun to interact, meet people, build relationships. And especially now when you can't meet people as so much, it's good to still get make those connections and build a relationship, which is the core foundation of any business, essentially. I think people miss now is an opportunity if you take advantage of it. Yeah, like most people like, oh, I've got no work or whatever.

And they go bankrupt or whatever. But if you take the time, you've got savings. So you're not going to go bust in the first week, but you can take the time to explore and and build relationships. Go on do online. I love the what you talked about with the online zoom blunches.

That's that's cool. That's something new. I've done that with friends, but I haven't actually thought of doing that with a business partner. So or business customer. Yeah.

So, yeah. Thanks for coming on the show. That's been great fun. Lots of good advice. I hope everyone listening has been able to gather some insight as to how it relates.

What you're doing relates to electrical because it's a different trait of the same thing, the same concept with helping service the industry, which is everyone has a house. Everyone needs electricity, garage doors, these type of things like it's not going to go away. There's plenty of work available. People still got money. You just got to find it.

So with that, I'll end this one and talk soon. Thank you very much. Appreciate you letting me know. So my challenge for you today is make up or create your dream customer. Who is it you want to serve and reach out to us in the Facebook group marketing secrets for electricians.

Share with us who you have created. What is your name? What are they like? What interests do they have? What are their problems they're having?

And if you're not sure about it, let's get on there and work this out because every left hander is a good person. Each business needs to have a dream customer and guess what? It goes where are all individuals and different? Each business is going to have their own unique customer that they want to serve. So look forward to seeing you there.