Dachdecker-Konzern: Von 140 auf 250 Millionen Dollar

0:00Unternehmer/Gast My name's Cody. I sell roofs to people. We did 140 million last year. Sick. Trying to do 250 million this year. Bad ass. Trying to figure out how to follow the principle of giving away more in you know guarantees and and bonuses when I have such high hard cost >> Yeah. and such a high ticket item. Yeah. Well, what are gross margins right now? Uh 40%. Gross. What's net? 10 to 15. Okay, got it. Um Do you want to sell it or do you just want to keep it forever or Well, I actually just sold my roofing business and now we're part of a PE firm that that now I'm directing that that entire all sales

0:33>> you the platform? Yes. Okay, so you're the platform and how many tuck-ins have they done? Eight. Got it. How long has it been since they started? Uh about 3 4 years. Um I just got acquired 30 day or we just closed 30 days ago and now they're trying to roll everything into my brand and I'm Chaos. spearhead. Yeah. Yeah, got it. Okay, so sorry. Go back to the original question cuz now I have like better context on this. So, how do I give you know follow the principle of of give away more value, make the you know offer so good Yeah.

1:01You got to feel dumb saying no when I have such high hard cost. I you know I can't really do a money back guarantee. I can't really give away more than a you know a a roof. Well, the question is is that the constraint? Like is that the thing that's limiting the growth of the business? In in my theory, yes, because if I create a good enough offer, then I could roll that offer out to the other eight eight other brands and that would be the biggest amount of leverage that I could deliver you know in the shortest amount of time. And is everyone insurance based? Well, that's why they acquired us cuz we're retail. And so So, you're so you're the only guy selling just new roofs. Everyone else is doing storm chasing and damage repair and like that. Correct. And what they want us to do is bring the retail model to the other brands and add another layer as we sell everything 100% virtually. So, no in-home appointments. It's it's all you know digital. And so, that's what they that's the vision is is taking that you know nationwide.

1:46>> Centralized sales virtually. Correct. So, you want an irresistible roof offer. The greater the change, the greater the risk that the change doesn't yield the outcome that you want in the business. And so, fundamentally you're always making a bet that you're going to get a higher return off of incurring the cost of change than it cost you to do the change, right? And so, in this instance, he is now you know 30 days in or 60 days post acquisition of his roofing company getting bought with seven other roofing companies and for them to try and combine them. And he's the one who's supposed to like lead the effort of combining all the stuff. And so, the idea of like let's change the offer. The offer is one of the highest leverage things you can change, but it also affects every department. It changes how you bill. It changes how you sell.

2:26Alex Changes how you advertise. It changes everything, right? Which is why it can change a business overnight, but it can also destroy a business overnight. And so, when I see a business that in aggre between those eight has 140 million dollars in revenue and 30-ish million dollars in EBITDA, you're talking about a business that's got probably 300 to 400 million dollars enterprise value. I would be very hesitant to immediately change something that's obviously working. And so, there's lesser degrees of change that have higher likelihoods of working that could still materially impact the business in terms of increasing the likelihood that it exits, right? And fundamentally I'm guessing that's what he wants to get a slice from. Centralizing the sales would allow them to decrease costs because they could not have guys on the road. And it's just cheaper to do it. It's also easier to hire sales people who are remote. All of these kind of downstream cost savings. The other benefit is that when you hire remotely, you have access to a bigger pool. So, you can get better sales people at lower prices who close more deals and they could cut down all the the real big cost for this business is sales people who are unproductive.

3:22Alex All right. So, people who are they're losing leads on people who can't close. And so, by reducing costs, increasing talent, and increasing sales utilization, all three of those things reduce costs and increase revenue, which could disproportionately drive EBITDA, which is what that company is being valued on. And so, when I look at that, I'm like this is a change that you have to do in order to sell the company and will result in revenue and EBITDA growth. And so, let's do this massive change first before risking the biscuit, right? Because we might just found out that just from doing that, we get a 25% increase in EBITDA and that might be enough. Just bring everything together plus adding the 25%. You like you might be right as rain. And at that point, why risk it? I feel like if I were in your position, the first thing that I would do would be centralize everything first without trying to change Basically, I wouldn't I would take the model that I already know works. What was your revenue before you did the before you were acquired? Okay, you're doing 20.

4:16Alex So, I would like in terms of introducing levels of change. So, this is actually pretty good for everybody. Like I I would typically not try and change like five things at once. And so, you centralizing all sales is going to get cost efficiency improvements and you're going to be able to have higher sales utilization. So, you probably cut off the bottom third of the sales force that's low performing. That alone might give you a 25% lift in general because the best sales guys will take more of the sales and you'll have centralized all the costs like we have centralized all the costs, right? And so, you'll have an increase in revenue and a decrease in cost that's paired.

4:50Alex That would probably be my first step No, that was part of the acquisition deal. That's the only way I did the acquisition is if they were going to give me full control and centralize all the sales. >> but like I wouldn't I mean I know the question is about roofing, but like that's what I would do first and that will probably take you 6 months or more. Okay. Um realistically. Um in terms of in terms of the offer to roofs, um an offer that's worked really well in home services is instead of being a money back guarantee, um I position it as a profit guarantee.

5:19Alex So, it's like listen, um you want your thing to be on time and on budget, probably. And so, I guarantee that I will deliver it on time and on budget or I'll give you my profit, which is 20%. Whatever. And that way it's like you're not underwater and you still have 40% gross margins. You're not really losing on the deal. Um but then people are like, "Okay, so he's got skin in the game." And so, that's a way of closing significantly more deals cuz the two biggest um obstacles that well, you would know this, but in most home services it's on time, on budget. And probably for roofs it's like in how much am I going to be displaced? How much is going to interrupt my life? And so, I would put my guarantee around those items and then just have a marginal amount that's back.

5:58But it's really just cuz all they don't So, the big thing just for everybody with guarantees is that people don't want their money back. They want the roof. And so, they just want to know that you care enough to make sure the roof gets delivered. And so, that's really the the solve for the guarantee is it just pays down risk of them not getting what they want. And so, as long as that gets accomplished, you don't have to do with money back. You can just do it with some money back that gets them to say yes. Does that help? It does. Thank you. Perfect. So, he wanted a better offer despite all of those improvements and I was like, "Okay, I think I can I can think of something for you." So, if you if you look inside of the Offers Book page 125, I talk about guarantees. And so, this is the guarantee formula. So, whenever you're thinking about adding a guarantee, like this is what I think through. So, if you don't X in Y time, we will Z. Like that is fundamentally what a guarantee is.

6:43Alex And most people I would see a lot of times people just say, "I guarantee it." But that doesn't mean anything. You have to say what the terms of the guarantee are on a timeline. What do I get if you don't perform, right? And so, with this business and some people he's like, "Well, I can't give a money back guarantee cuz I would just lose too much money." Understandable. Now, if you have hard costs like he does, then what we can do is we can just give something else. We can either a lesser portion of money. We can give something else for free. And so, the guarantee is a consideration. It's what are we going to do to show you that we're just as invested as you in the outcome being positive, right? And so, we basically increa- we shift some of the risk from the customer onto us. And this is this is all you're doing as a business when you do a guarantee is they take some risk of buying and you're saying, "No, I'm going to take some of that risk."

7:25And so, sure you could take 100%, but in this in this situation, he would be taking like 200% of the risk. Basically, he'd be losing money, right? And so, the idea is again, you can add stuff. So, hey, if you don't get what you want, I can add things, which is like hey, if you don't hit your goal, I'll add more time, which does work as a sales tool. Sometimes though, in the actual in the real world, if someone's not getting a result, they're like, "I don't want any more from you. I hate you," right? And so, it does still work as a sale, but it's one of those like mid, right? Now, alternatively, you can go the reverse direction, which is take away negative, which is a discount, right? So, hey, I can't give you all your money back, but I can give you back my gross profit or I can give you back 20% or I can give you back 10%. All right. These are all things that you can choose to give back.

8:05And the thing is is it just shows that you have skin in the game. And all we have to think about this is the point of a guarantee. So, I want to make sure I'm very clear. The point of a guarantee is not to have the craziest guarantee. The point of a guarantee is to maximize net conversions. All right. So, we just need to increase sales more than we increase refunds. So, proportionally we net more sales. And if you can just do 10% back, then that's enough to change behavior.

8:30That's the point. Like if there's no difference between giving 25% back and giving 100% back in terms of the actual performance of the sale, then give 25. And so, you can move what you're guaranteeing in order to find the sweet spot and figure out what's actually compelling to your to your customer. And most times, the the things that you want to guarantee around are their biggest fears. In home services stuff, it's usually been around time and around budget, right? Are they getting it done on time? Are they getting it on budget? If it's other services, it might be different than that. And so, you'll know your services better, and but you want to you want to list out what their biggest fears are and then crush those with the guarantee.

9:03So, if you've hit a revenue ceiling or your entire business relies on you to grow, then I'd love to invite you out to our headquarters here in Vegas to learn how we scale. It's a my team spends 2 days with you to identify the thing that's holding your business back. And so, if that sounds interesting, click book a call and if you're a fit, we'd love to potentially see you out here in Vegas.