Mike Barnhart
Appearances
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
As leaders, we are dealers of hope. And there's this phrase, without hope, the people will perish. And so we have to be providing hope for everybody that's part of our team. And literally, I don't think a week goes by that I don't think about that, is that we as leaders are dealers of hope so that our people don't perish.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And you do. Well, your business is so different than mine in the fact that if you have a replacement, you're probably not going to see that customer for a long time. Unless you have, I don't know if you have memberships.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah, we've got 50,000. So 50,000. Wow. So last year we made a big push on memberships and we went out, we sold 10,000 memberships last year. So I heard like you talk about some of your core tenets this year, call center and marketing. One of ours is actually membership fulfillment. Like we have 30 students in our HVAC school right now to become clean check maintenance techs.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And they get good at the turnover? What's that?
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Right now, well, these are green people that have no industry experience. We're teaching them, and then we'll flip them to the LTO experience eventually. But for me, that's the biggest unknown part of our business. Like right now, our call volume is so high. And historically, we've always had about 70% of our customers be net new customers, and that's becoming 60 and 50.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And it's becoming more and more repeat customers. And I don't know what the impact of selling 10,000 memberships a year really does for your future call volume. And I think I have a different view on memberships than most people. On average, we create about 200, 250 new members a week. People are like, how do you do that many a week? And we sell for the discount.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And then we retain them because they offer a good level of service.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah. But all these best practice groups are always like, no, don't sell it on the discount. Don't sell it on the discount. I'm like, why not? Like if I end up in three years with 50,000 members, do you know how strong that makes me as a company?
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
You know what I mean? Does that make sense? I do. And as a CFO of the company, incentive plans have always been one of my biggest things that I focus on. So our strategy has always been, why can't we pay the best and be the best company at the same time? Right. But for anybody that's not using Configurable Payroll and Service Titan, start using it.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
It creates visibility for your technicians to understand how they're going to get paid, when they're going to get paid, what they're going to get paid every single week. And, you know, you can really design pretty good incentive plans through configurable payroll.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
We tested Lace AI, and then we ended up adopting it in the entire call center because it is a really good coaching. It teaches even the reps how to be better. I did just hear from Service Titan on Friday of last week that they used to have this feature called Second Chance Leads.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
But there was only a few on Phones Pro, and they just opened it up to everybody.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah, and some of them probably aren't financial, to be honest. Some of them are more operational. But definitely, I'm always looking at the quality metrics. So we're looking at recall rates. We're looking at how many members are we rebooking or canceling. How many canceled calls do we have? Those are what I call the quality metrics. You're looking at your reviews every week.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Every week we get about 360 reviews right now on average. We have about three that are under four stars. You're addressing what those quality measures are up front. I heard you say you're going back to all your one, two, and three star reviews to try to fix them. I will say that some of them are more around our radio ads.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
They do get removed. But definitely looking at quality metrics and then looking at – certainly in our business model, that turnover percentage is super important. So bring that up every week. The way that we actually sold 10,000 and created 10,000 new members last week, we talked about it every single week. So Aaron and I still get – on a 7 a.m.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
call every Wednesday with the entire field staff across all locations, and we talk about certain things. And, you know, for 52 straight weeks last year, we brought up memberships. That was something we just weren't going to drop until it was really adopted within the business.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah. So, I mean, I love budgeting actually. It's one of my favorite times of the year. And there's a couple of things I always do is one, when you say everybody needs to have a budget, you're entirely right. If you ever look up, you know, the four steps of execution, we always call it the five steps of execution. You got to have your mission statement. You got to have your KPIs.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
You got to have your visual scorecards of whether you're winning and losing. That creates accountability and then you can celebrate it. If you don't have a budget, you can't literally do any of those things. So that's number one. Another thing that I always like to do with the budgeting cycle is reflection on the past year. Successful people, they do two things.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
One, they reflect on what is happening in their lives and usually the readers.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
um but one of the things that we do in in our business is you know jim collins he had a book called great by choice talk about bullets and cannonballs and you know you have you've got your i heard you on your podcast you've got your four cannonballs you know you've got your call center your marketing we do the same thing as we look at throughout the past year what are all these bullets that we fired
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And what are all the small things that we tested out to see if they were going to work or not? And which one of those should we actually dedicate a lot more traction to within the budgeting process? Getting at the budgeting level, I actually work with the GMs to build each of their budgets in each location. And we start out at the department level at your basic KPIs. How many texts do you have?
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
How many calls per week are you going to run? What's your conversion rate? What's your average sale? And that should drive revenue. We do budget a lot of other metrics on that. Every time I do that with the GMs, we did that this year, and our budget ended up at $91 million this year. They created a budget of about $115 million.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
What's up? I got to fix one of those numbers. We did $73 million last year. We're going for $91 million this year.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
So you've got to teach people, hey, it's not so easy to drive these metrics up. You get something called budget euphoria, where you start to, I can just increase conversion rates by 3%, and I can create an extra $80 on my average sale. But it's not that easy. You have to tie that back to behaviors.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
I mean, there's two kind of areas of top grading, especially what's happening in our businesses right now. One is people. When you find the right person, it just all seems to work out.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
We just found an HR person in the past year that's really just clicked within the business, and she's done a great job in taking people to the next level, taking recruiting, taking onboarding, all that stuff to the next level. So investing in people ahead of where you need them is always the right move.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Especially when you think about top grading right now at the size of our business, we're about 400 people. Data scientists can be very helpful. and project managers can be very helpful. So very similar to you, we have our kind of six initiatives for the year, and each one of those has to have a project team around them.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
It's like this is a team that is going to solve this for the year, and they're responsible for, A, implementing that, and then, B, communicating that out to our team. But you need to have a project manager that's able to facilitate to make sure that project is staying on track throughout the year because they are bigger projects. The other idea of... top grading is using technology today.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And there are certain things that you talk about. Yeah, it is very hard to increase average sale. But lately, we've been using HVAC sales presentation software. And we've just seen the amount of add-ons go through the roof. We've seen our average sale pick up. We're in non-peak season. And we're over 50% conversion rate on replacements.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
We actually are really changing these metrics through a company that is really obsessed with the customer buying experience and providing a better buying experience through technology.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
I mean, 15% is a good one. If you can get to 17 or 18, you're doing even better.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah. I'll say I look at it once a month and just see how we performed on it. I do like the metric because it kind of just tells you how efficient you're being in your company, like how much kind of fluff do you have. And to a certain extent, it should be able to tell you how profitable you are. And It is kind of weird about how every industry is.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
This isn't like art, just our industry, like kind of every industry. It kind of works out if you do this, you take your revenue, you divide it by the total number of people, not technicians, but like, you know, your call center, your admin staff, your finance team. everybody included, it works out to somewhere between around $250,000 per person.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And you have really bad companies that are operating around $160,000. You have really lean companies that are operating around $330,000. That doesn't necessarily mean they're good companies. That just means they're lean. And they're probably pretty profitable in doing so, but they also might be stressed out.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
So it's worth looking at because it's really hard to be profitable if you're not, you know, let's call it over that $225,000 mark. You're definitely not going to have the profitability that you want to be at.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
I mean, the other financial metric that you're really going to look at within all our businesses, a lot of people call it the big five, but you can call it whatever you want. You're managing your top five expenses, which in every one of our companies is... direct labor, direct material, office wages, vehicles, and marketing.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
In the best of companies, that's operating 75 percent of your revenue typically, 70 to 75. In the worst companies, that's 90 to 100. And you're looking at what those benchmarks are. Your labor should be around 24%. Your material should be around 20%. Your office wages should be around 11%. If you can do it. Marketing, depending on the market, might be different.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
But as a total company, hopefully you're under 10%. And your vehicles, which typically range around 5%. But that's where you're targeting with a lot of those metrics. Interesting.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Fully burdened, including sales, commissions, installers, service, everything.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah, I mean, best-ranked companies are probably around like 33.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Our strategy has always been in green fielding. But still, our Cincinnati location, we still lose money in it today. And we're a year and a half in. But our advertising spend is 35% of revenue right now. So you're doing that because when you look at the success story of it, like our Dayton location, we opened up in 2021. This year, we're doing $20 million in Dayton.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
It's an interesting question of when is too much. When is it too much?
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
That's a good accountant right there.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah. I mean, I think there's two things that we need to be careful of going into this year. One is, if prices are changing, we have to be ahead of that. Otherwise, we'll lose ourselves because you're not pricing yourself correctly. The other one is, and I think this is our entire industry. I talk that I really value data scientists and some of the people that really understand statistics.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
But I've yet to actually meet a company that is really heavily invested into pricing strategy. Whereas, like, you know, my background is in FP&A, and I worked for a medical distribution company for a long time. It was about $150 billion. Their goal was to get to 1% profit. They usually never got there.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
But they had whole pricing teams that are looking at elasticity, that are looking at ways to when they can target, like, more surge pricing, when they can do this. Like, there's, you know, Amazon's doing this. There's no reason we can't invest more into understanding what our pricing strategy should be as a business. And that's probably where you really maximize profitability.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
So that is actually something we're investing into this year.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
But your best guy is probably going to get a yes from that customer if your garage door replacement is $10,000 or $12,000, right? He's probably going to do it. But there's other indicators that would make the customer more likely to say yes to a $12,000 if we were doing it around demand pricing properly. And that's a little bit of my argument.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And it's super cash flow positive. It's actually the highest margin in location business right now in our business. So it is a little bit different as you're scaling and how that changes.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah, as a CFO, CFO is always like, hey, let's not offer financing plans that have any dealer fees because they don't want to pay the dealer fees. They want to control the margin better. And this takes that away. If it's automatically building it in, let the customer pick whatever they want because we're not paying for it anymore.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Right. And we think about that a lot from the opposite. I think it's probably hard to think about that while you're running the call. I know you have some really top-end sales guys. We've got one named Adam.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
I talk to Adam all the time. I mean, this guy's super passionate about sales. And I remember I went on a road trip with him one time, and he spent four hours replaying his calls for me. But he's got this saying that we've kind of adopted in our sales team. Because we asked the question of, how do you stay excited doing the same thing three, four times a day every single day?
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And he says, when I knock on the door, I say to myself, it's showtime. This is my show. And, you know, I start playing my role. And, you know, I get excited for it because, you know, it's showtime.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah, I mean, we are actually pretty close to 3 to 1. But you start talking about certain ratios, like, yeah, I mean, you can look at an income statement. But an income statement can be misleading. You asked me, is 15% that benchmark? Well, then really, what's the benchmark of cash flow on that? You know Carl Icahn?
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
One of his famous sayings is that happiness is positive cash flow. Because that's really what matters at the end of the day. Are we generating cash from what we're doing? You can hide stuff on an income statement by putting it on a balance sheet. You can never hide stuff on the cash flow statement. It's really going to tell you the true story of the business. So that's one that we always look at.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And if you're generating... Even if you're generating 15% of profit, after you're paying taxes, after you're doing all the distributions and everything, you should still be looking to get 7% to 8% actual free cash flow at the end of the day.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
We are transparent on our income statement, but I don't think people are really going to understand paying taxes. Yeah, that's true.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
So I mean, I'm actually kind of famous in the company of not telling anybody when I change the prices or increase prices. I don't usually tell anybody that's happening because I don't think the price is the price. This is what we need to do in order to be profitable. I don't think I actually need to communicate it out. And people ask like, hey, did the prices change? And I'm like, yeah, they did.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
But that should just be part of business. It shouldn't be really important.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah. I don't think that they're looking at, you know, they're trying to understand the entire cost of the business and what our sold hours should be, what our efficiency should be. You know, obviously we want to become more efficient as a company. If we can, we'll become more profitable. But you're not going to plan on becoming more efficient.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
You're going to plan on operating your business as it currently is.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
So in the HVAC, we're testing this. It's a product we're testing in HVAC sales right now. So it's not across the entire business, but we are seeing some positive results. And it's a third party company, so you could sign up for it if you were selling HVAC.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
systems but they you know the way that they present to their customer is the way they present to the customer is it is you know very much a toggle method of like here's the options and but you can see very if I don't want you know this humidifier I just press a button and toggles it back off and it's the price changes and you can see you can really you're putting that power into your
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
customer's hands rather than service side and somewhat static, like here's the estimate. The other thing, you're building the financing fees in. Another cool aspect of it was that you are, anytime they cut, like if you don't close right there and a customer re-engages with that estimate, like they open it back up. You know when they get notified. And the salesperson gets notified.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And it prompts the salesperson to say like, hey, do you have any questions you want to ask about this or is there anything I can help you with? So it's better communication. It's better buying experience. HVAC, it's a newer thing to us. If you took it back, we've only been doing it for three years. I mean, our conversion rates used to be like 25%. Now they're pretty much 50% on a regular basis.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
So we've been doing a lot better. Um, and then our average sales gone up to, I mean, that, you know, that's the crazy part of our business. Like when you look at, if you look at a business that's going down this year, um, well, you know, in HVAC, well, we've got the 454 transition, which will probably raise your price is 10%.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And then you've got tariffs, which might raise your material price is 10%.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
So in HVAC, they switched energy efficiency from $410 to $454, but it raised equipment prices about 8% to 10%. If you're not growing 16%, you're basically static to last year.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah. They brag about growth, but yeah. Yeah. So that's one way to look at it. But another thing with that one is important. You are having these things that are happening with your business. And Aaron knows this. And I love to get a win in negotiating. Negotiating is my favorite thing to do. But regularly, just going back to our vendors and saying, are we going to accept these price increases?
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Are we going to at least have a conversation about it? Because you can literally save, like, 10% across your business just by negotiating stuff. And I mean, like any piece of software out there is negotiated. I mean, we've got one deal that right now we have like our phone systems are basically being, our iPads are basically being paid for for three years for switching over to this other company.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
I agree with that.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
It is slower, for sure. And you talked to Tom Howard. I remember I asked Tom one time, I was like, tell me about a tuck-in that didn't go well. And he's like, they've all gone well. So maybe some people are better than others. But with greenfielding, it's kind of crazy. Because yes, it does take three to four years to really adopt in the market. But once you've hit that kind of threshold,
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah, I mean, I've got a few thoughts. I mean, recruiting across our trades is if you don't have a dedicated recruiter, you should. At $10 million, you should have a dedicated recruiter because it's that important in your business, even if you're just recruiting students. Back in 2019, we were booked out like three weeks for plumbing services.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
So we looked at it, and we said we have to create a school. We got that launched up. And we even knew when we launched the school, we said, you know, this first class is probably going to suck. But the 10th won't. And now we're on, like, 16th. And, you know, it's a pretty good program that really brings people into the trades.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
The other thing about recruiting is, like, you have to have, you know, whether you call them your core values, your guiding principles, you have to have the right fit of people. I don't know. I mean, you grew in your business from the ground up. And I remember, like, a... I remember reading this book called Sapiens, and I read it right around the time we were around 150 people.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And it was like, hey, once a community hits 150 people, it fragments into another community because that's about as many people as you can know. And so if you're not recruiting well, like right now we're at 400 people, like, yeah, I have to spend most of my time walking around saying, hi, I'm Mike, because I don't know the people in the company anymore.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
So you have to make sure that you are recruiting for those values that you really think are important. And that's where a good recruiter will be worth their weight in gold. The other thing that I will say about creating the own people in your trades, and I know you have a great training center here. I toured through it. It's amazing. People don't think about this.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
It creates that alma mater effect. We've had people leave. you know, for whatever, $5 more on the hour or something. And they come back because they're like, well, all my friends are here. This is where I learned the trade. This is my school. Like, this is my university, whatever, you know, you call it.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
It creates an alma mater effect that you're giving back to the trades, but you're also creating this kind of community of people that you brought into the trades.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
It's like you've always been there. It's like you've been there for 20 years, even though once people do pick up your name. And really, I mean, anything that we've ever – I don't know if you've seen this, but any time I've ever made a change or we used to just be plumbing only and we added excavation and we added HVAC, we added electrical, we added other locations.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
You know, we actually thought the same around our budgeting conversations this year. We had a similar conversation that our mission statement was too long. And we really just switched it down to one statement of to create great tradespeople, advance their lives, and win big. That's what we want to do. It's not necessarily about the customer experience. It's about what we're doing for each other.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah, I mean, Jack's on the team. He's on our leadership call every week. He's been amazing to work with. We were going through the budgeting cycle this year, and we talked about the importance of budgets and the importance of missions and core values and all that stuff. And one of the things that he talked about is that as leaders— we are dealers of hope.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And he actually, this is from like the King Solomon Bible. And there's this phrase, without hope, the people will perish. And so we have to be providing hope for everybody that's part of our team. And that has sat with me since he brought up the concept.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And literally, I don't think a week goes by that I don't think about that, is that we as leaders are dealers of hope so that our people don't perish.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
I mean, one of the things I'll just mention that I think I've always done pretty well throughout this, and I remember when you called me back in 2015. You probably don't remember this. You called me, and I'd only been at Eco for about six months, and I'd kind of implemented ServiceTitan, built out the price book and all that within ServiceTitan. And you called me, and you were like...
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
um, Hey, I want to get on service Titan. I heard you're on it. Cause I think we were like the 30th customer are a pitched Aaron individually. And, you know, you start talking to me about it and I know, I know you got onto it. So, you know, you were very persistent, but I was like, man, this guy is special. Like, and I was like, Oh, you got to talk to this guy.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
You have these changing points within your business. And from the minute you make them and you start to enact them, they all seem to take like 36 months to get some traction. Maybe you can make it a little faster than that with as many, as good as you are, but it always has taken me three years to really build something.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And I know you and Aaron are now like best friends, but you know, I hooked you guys up to start talking, but, um, the importance of building your network, whether you're a CFO, whether you're a manager, I just connected my GM and another GM from a company today that I thought that they should know each other.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
You really just need to spend time building your network, both professionally within the industry. And then, I mean, there's like, I'm part of a group called YPO that I've really enjoyed. And I mean, sort of like, you know, your hundred thousand dollar group, it's a, you know, you just building these relationships with people that are thinking about things the same way you are.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And those relationships tend to just open so many doors, to help out the company and to help out you.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah. I mean it is actually strange. So I'm from Ohio and it feels like – and the Buckeyes are big. But wherever I travel, people are wearing – I'll be in the most random places and I'll see people wearing Ohio State. Oh, yeah. Ohio State stuff. Like I was doing the running of the bulls and the guy is wearing an Ohio State hat. I was like, we're in the middle of Spain.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
I think I have children, and you think about what kind of life you want for them. Do you really want your children to be happy? I don't know that – I'm not sure that I need them to be happy, but I do want them to live a life that has purpose and that they feel like I'm doing something that's important. I feel that way when I come to work every day. So to me, it's like –
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
this is something that I'm doing to show the appreciation that I have for my team that's out there every day. I mean, you guys have nice weather here. It was negative, you know, five degrees in Ohio yesterday. So, you know, that they're out there every day, they're working so hard. They're, you know, in these trades that are really helping their community. And I want to see people win big.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And so, and I want to see people celebrate things in their lives and, and, So, you know, as long as you're feeling content that you have a sense of purpose in what you're doing, it doesn't really feel like work to me. I've never been good at separating work and life.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
I should be probably maybe somewhat better at it, but I really like both aspects of it. And I do travel a lot, so I like to get out and have fun too.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah, the best way to get is my email. It's mike at geteco.com, G-E-T-E-C-O.com, or hit me up on LinkedIn. LinkedIn, there you go.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
I have it right here, but... Barnhart, B-A-R-N-H-A-R-T.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Why? Uh, yeah, a few of them. Um, I always pick a book from my favorite year. So in 2022, I loved The Almanac of Naval Ravikant, talking about wealth and happiness. In 2023, I read this book called Unreasonable Hospitality. So I'm always the bougie one in the company. I'm the one that likes to buy Cristal to celebrate if we're winning a month or something like that. I like nice things.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
I like fine dining. It's a book called Unreasonable Hospitality. It's really good. It's about Eleven Madison Park, which these two guys got really obsessive about food and customer service and being the best at what they do. They were an unknown restaurant, and they became the number one rated restaurant in the entire world for two years in a row, and it only took them about seven years to do it.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And that was a really cool journey of their story. If you ever just need an audio book, you can't go wrong with Greenlights. It's just a fun one. Yeah.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
yeah i mean most off i just feel a deep sense of appreciation um yeah i've loved the partnership that i've had with aaron i've loved you know the partnership that i've had a lot you know as you become bigger it's really hard to build those relationships but you know whether it's jack or elliott or barbara or different people that have come and gone on the team you know just building those relationships with them
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
has been a great experience. And I feel really proud of what we've accomplished. So there's a real sense of pride. And I don't really think necessarily about like, I have this abundance mindset. I always have, like I'm the eternal optimist. I don't really get, like, all right, we need to protect it. I just think, like, we're going to lose it. I just think, like, what's next?
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
You know, what are we going to do next? And how are we going to keep innovating? How are we going to keep, like, modernizing the home experience for the customers? How are we, you know, just going to stay on top of our game? Because, you know, whether you're acquisition, whether you're greenfield, you know, the world is ours to go take, you know, like, There's no reason for 100 million today.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
It can't be 500 million in five years or whatever. You know, whatever you want to do is is possible if you're willing to put the effort in and do it.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Well, I mean I certainly agree with you that you should build your company and sell it. Even if you are planning a transaction, you should never say, I'm going to operate my company differently because I plan on transacting in 12 months, and I'm going to cut all this stuff.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
You should operate your company like you're going to continue to run it forever, but it's going to be a profitable company at any given point in the next – if we want to sell sometime in the next 10 years. At any given point in that time, I should always be happy with where I'm at and to sell it.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
But even when you look at the reports that are out there still, I mean, both our industries are so heavily fragmented. It's like even with PE coming in, they still only own a very small percentage of the total. What do you see the percentage being? I'm just curious. I haven't looked at that recently. Yeah, I mean, there's some reports that come out each year.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
You have to usually pay for them to get them, but they're usually pretty solid reports. And, you know, it's about 12% in the HVAC plumbing electric industry. You know, for us, we have we do have a little bit different strategy. Like we know we're we're really good plumbers and we're learning HVAC and electric.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
So we have a little bit different strategy of how to grow there than maybe some other PE groups do. But Overall, I just think that it's still a very open market to do whatever you want to do.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah, and I heard your podcast. Can you open a company with $20,000? Well, probably not anymore. You can, but you're going to spend 10 years trying to build that thing. You do need some investment. And these guys can provide great investment.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
So, yeah, I mean, you know, to look at it throughout the years, I've been doing it for 11 years now. We've gone from 1.9 million to, you know, 91 million this year. It's been a really rewarding journey, for sure. You know, you do have those kind of pressure points along the way where you do hit these parts of scalability that feel really rough, and then you kind of push through them.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And a lot of that really comes down to the infrastructure that you build within your company. You have good people. You've got the right meeting cadences. You've got the communication rhythms. And for me, it's... You know, I've never stopped being really curious about the business.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
You know, for any CFO out there, one of the things that I do every Sunday and I've been doing it for 11 years now, I send out an email to the whole management side and leadership side of the company of here's what I think about last week. And, you know, I go through about 20 different reports that, you know, I've got kind of flagged on my side.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And I look at them and I look at them every Sunday and I start to see trends. You start to understand that business and then you become a really good storyteller. And, you know, you're not going to do that if you're not curious. But once you get able to tell that story, like this year I was actually I went to the management team and I was like, hey, I think I'm going to stop doing this email.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
I'm still going to do it for myself. And they were like, no, you have to keep doing this email because it's It really does highlight out what is happening within the business, where we have areas for opportunity, where are there anomalies in the business.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And then you can, you know, I'm not the one that's most of the time fixing them these days, but I'm helping people understand what's happening so they can address it.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah, I mean, at the basic level, it's like you don't have to – the nice thing about ChatGPT is how easy it is to use. I just load our PDF financial statements in each month. And then I'll ask it questions about it. And I'm pretty good at understanding the business. But it will pull things up that I didn't actually see within the business. Because you can ask really specific questions.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Like I could put January of 24 and January of 25. But it has every month in between. I say, compare this against the last quarter and compare it against January of 25.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
by location and i want to specifically look at the sewer department and it'll give you like a really you know detailed answer on on what's going on with that and you know you're i don't know why every cfo doesn't do this because it's the time it takes to do it is under a minute and you know i was doing all the chat gbt yesterday how do you you know i got the app
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah, and that's the really intuitive thing about ChatGPT. I do use the desktop version more than the app, but you just load it right in there. It doesn't have to be in any sort of format. It knows how to go read it and pick up the correct information. And you can ask extremely detailed questions if you want to get in on it.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
A lot of times I'll look at location differences. So I want to see how locations are scaling on margin. As CFOs, we definitely care about margin. And that's the nice thing. When you're green fielding a location, you can get to margin stability before you can get to cash flow stability. And you want to keep focusing on how do I actually just
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
make this a margin profitable business where some people have gross margin of 50%, some people are 55%. It really depends on what your trade is. If you're heavy HVAC replacement, you're probably going to be lower than if you're an electric residential service. But trying to manage that 50 plus percent margin across your business is always going to keep you super healthy.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
So we did the brand, started in 2022, so we were about $40 million.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah. Oh, yeah, he just showed me your pickup truck wrap. That looked pretty good.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
I want one of those. But the... Yeah, we worked with them because we added HVAC and electric and we worked with Wizard of Ads on that one. It was adding electric was pretty last minute decision. But, you know, the brand is eco plumbers, electricians and HVAC technicians. That's very intentional. It's not eco plumbing. It's not eco electric. It's eco plumbers. It's eco electricians.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
It's about the people. It's not about the service. And so we rebranded as that, made it more focused on the eco. So it's very in your face. Even this year, so we're almost up to 300 trucks now. And we realized we don't need billboards in Columbus, Ohio anymore. We have 250 of them going around. So let's put that money into a different part of marketing.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah. So, I mean, you know, I'm the finance side of the business, and I do some ops. But, you know, I've always been super lucky. Like, Aaron's always handled marketing and sales strategy. But Roy seems to really like me. He calls me Bear. But, you know, the... We have a good relationship with them.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And, you know, I think the interesting thing is the way I look at marketing and the way that Aaron and him look at marketing are way different. So like every time I've had an idea, he's basically like, that's a terrible idea, Mike, because I don't think that like I look at it like, you know, maybe connecting with the logic or the value of a customer.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And he thinks about marketing more about storytelling and being an entertainer and really just like, you know, taking a minute to allow people to think about something else from their day other than what's actually happening in their lives. And for that, it's been a really good partnership. We've definitely created a storyline that happens within the business.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
And he's done a great job for other companies as well.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
Yeah, him and Aaron still talk every week.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
You know, I've heard it from certain companies. At the same time, we just didn't experience it much. Like we did 25% organic growth last year. We're doing on right now. I mean, yesterday we had our largest sales day in company history at almost $600,000. It's just, it seems to be moving in our direction the right way.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
But I have heard that some, even some of those PE groups have, you know, been down year over year, you know, four to 5%.
The Home Service Expert Podcast
Harnessing AI for Financial Insights with Mike Barnhart
I understand.