Watch Fergus founder, Dan Pollard, share his story of how his 19 person plumbing business got through the 2011 recession by developing new income streams
Thank you for joining on time for those of you who don't know me. I'm Dan Pollard, founder of Fergus and sort of my story is my dad's a builder. And at 17, he said, you'll be a plumber because they make more money than builders. Okay?
And so I started so I started my plumbing career. And then, at 22, I was working for myself. And very, very quickly hit a couple of guys. But sort of 2425 might had to close out from didn't pay tax bills, and I was stressed.
So it's kind of head had my first burnout and I, and then I do work as a contractor for a couple of years to both that text it. And then I started at 27 again for myself. Once again had a couple of guys close that down 2 years later, this just from stress and quoting and cash flow, and working all day and paper all night. So I close that down and then took a year off, and then came back at 30. Hit read a few books about business, and started another plumbing company again, and this one was more systems focused and then it sort of 8 years.
I grew that plumbing company from just myself to 25 staff. 2 branches had 2 kids had done 2 software startups and went through that message. Recession and grew through grew through it all.
So. and Fergus, and in this old deployment company just when I was 40 for a bit and just on a 1 million dollars to do focus full time. And now, Fergus, 90 staff in 3 countries, and you know 20,000 customers using the product right?
So kind of kind of worked out how to do business. And so this talk is about all the things I sort of learned and did in the time to get through that sort of really bad recession time. and so then feel free to ask me questions as we get going.
So I'm just going to start my presentation to help me. Remember what I'm supposed to be talking about. Hmm, right? So for those you know, I see, the
there may not have been a recession, but this is technically they might not have a recession. I've talked to enough trainees to know that some yeah lot of you guys are just hand-to-mouth, right?
And I read what the days were like. You get to the Friday, there's nowhere for the Monday you start the Monday. There's half a day's work, and this kind of just keeps keeps coming in. So there's a lot of you, as I know, are in that same position.
So how did like, how did I kind of get through the recession? So, as I said, the scene. This was 2,011, you know, hosting a Rugby World cup opened, was flooded with visitors. There's all this money coming in. Apparently the the economy was booming, and I remember I finally had got the office out at home. I'd list a little space above a merchant not far from home. I had office staff. I had vans and guys on the road.
And we had no work, and there was nothing I could really do to get more work in it was, it was the those 3 months was probably the most stressful time of my life. And so technically, we were at a recession, but for those 3 months in a row. So I didn't want to sack my team, because, you know, once you lose good tradies like what? How to get them back. I had office. I had vans. I had leases to pay on the vehicles like it was like.
you know, I was head of websites. I was trying to do marketing. I was trying to do everything. and it was the first time in my life where I literally was paying out more in wages and costs than I was earning. And it was. It was a really terrifying time. And so I've always have remembered that phrase from Star Trek. It's possible to do everything right and still lose. And I was it. I was in this. I was in those time frames, and I was like.
I will give it one more month, and if it doesn't come right once the World Cup finishes, then I'll have to close it down, but that's how bad it was. And so even up
say that 2,000 precision had to pivot. And then 2,011 came along, and it was the worst time I've ever experienced, and we still got through it.
So I've been in all these difficult situations over the years.
So what it comes down to is if you're in, that's in that position right now. so we've we talked about before the 2,008 recession. Right? So before the 2,008 recession, I was
like doing renovations and sort of high-end new housing, because that's the work I liked.
It meant I didn't have to do that much customer service.
people's kind of paid the bills, and the money was kind of good, and it was kind of a much simpler business to run.
and but I've been through many, many recessions before smaller ones, so I kind of had was used to the pattern. And so
I knew I had these 3 options right? And so obviously, the first option is like literally changed, and I think
ignore it and hope it comes right.
And there's a very stressful strategy being there done that didn't like that. The second one was to change a few was change a few things right?
So cut my cost. Increased prices. That is a viable option. And looking back, that needed to be given more serious consideration because I decided to keep my premises and my staff, and all those things, which means I had to go and get a lot of work. and so that necessitated a lot. A lot of changes was one option I could have done which was to cut a lot of costs and move everything home again.
But I don't want to do that because I've been working from home forever. And I was enjoying having office staff and trying to grow. So I decided to go, for the third option was change every link and go where the work was. And I sort of like as I'm going to talk about this one of the things I'd kind of worked out was if you kind of want business to go well, it's kind of like if you think about survival the fittest. If you're in the jungle.
The lions have to go and chase the animals in catch right. The work never comes to you. And so I was like, Okay, I've got to change and go where the work is right. I have to go and have a business and do marketing, and go and get, go and get the work, go to where it is and get it. And so that's kind of what this talk is about is like, how do you go and get the work like, where is it?
So if you're forever waiting for the work to come to you, you're you're probably going to starve. It's a very special place to be. So this is how we changed everything. And so because it wasn't my first recession. So these are the patterns that I've noticed when things are changing quite dramatically. The audience company fall over. I've seen the main seals fall over this world.
It's harder to get credit. And so you'll notice that the building company. So when a developer wants to build a little development which is townhouses or a small office building. Whatever it is. it's very difficult for them to get money from the banks right cause the banks are very risk averse.
So they generally go to the second tier lenders to get their capital from, because they, the second tier lenders, offer more. take more risk, but they charge more interest. So when there's a recession happening. Those second tier lenders also close their shop up, which means the money dries up for the developers, which means the work dries up, and that's exactly what you're seeing now is consent set down in New Zealand about 20% year on year.
And because there's no money in the system. And so what happens then is all the guys who are doing new housing those spec developments. They then flood into the renovation, bespoke housing and maintenance work, and it just gets tight for everyone.
And then what happens is the work goes from weeks in front to, you know, day-to-day, hand in mouth. So that's a scary. Scary but I also knew it was probably gonna happen. So wasn't the first time. So what did I do? So back then I was called Mount Albert, plumbing and gas. which was also a brilliant name. I've learned I was my first company was Plumrite services Limited.
Terrible name. There's so many plumbers called plumbers. Plumb that plunk quick, you know people could never remember the name. And then I was Dan Paul applying once again a terrible name, cause people knew as to end the plumber.
No one could really ever remember my name, but manoeuvre up humming ended up being a great name, because for some reason people remember a geographic region easier to search. But as we grew they ended up being limiting. because people sort of don't want to call you, because I don't want to feel they have to pay for travel time. And the business way to get to the job.
So I was like, Okay, I need to change my name. And then there's a plumbing company going out of business called you or local player. and I found out about that, and so I bought his brand name because he had the domain name your local plumber and yop.co.nz. And those were good domain names, and so I knew that those were good. So I bought those for 5 grand, which turned out to be one of the best investments I ever made.
And then I had to go about building a website, because up to that point, I had a very basic website. So it's just doing new housing and renovations right? No big deal. So I needed. I know you need to do a website so he can say it came to the outsourcing which is like endless. Knew nothing about websites back then. But I had been very good at learning just to pay people to do stuff I didn't like. I call it sap.
which stands for shut up and pay, and so, as trades, we expect to charge well and get paid well. And so I just take they've taken that same attitude to everything I do, right as I'll just pay the right people to do the right things and get it done and get it done quick. So then I just contacted a few development companies and got them to build me a proper website. So then I could do proper Eco and Edwards and campaigns, and then found companies that could do SEO. And so we went about building website. So we did that.
And then the other thing I had kind of worked out. So the reason I'd worked at my that my plumbing companies in my twentys hadn't really worked out is because I've never really worked out what customer experience really meant and you know, often talk about. My attitude was not deliberately wrong, but I was definitely wrong, and so I used to think of look at people as as walking wallets, and my job was to get money from their wallet into my wallet. And and that was kind of the game. And this actually turns out to be a really poor way to view things right.
And it just doesn't set the whole situation out to be a nice culture and nice business. So then we had to really think about what does a good customer experience look like. And so the I really have gotten good at thinking, okay, what is it like for a customer to experience my business and so put yourself in the issues is like when they call you, what's that like to someone? Answer the phone, right? What's the terms of trade like, like, are you committed to turning from time to call when you're late? Do you call for extras like? What do you do? Right. So we'll talk about a bit more with that. And the other one is team culture is like, okay. So when you've got staff.
What's that likes like, how do you build a culture where the staff do all the right things. So the customers get a good experience because I kind of knew to get through this whole thing. I was gonna have to go into maintenance right? Because I knew that the renovation high new housing, which was gonna drop like had done the other times. So like, okay, I got a pivot into customer into maintenance work. And so therefore, if I could. if I want to get paid, the customers have to have a good experience. Right?
So all these things have customers have to have a good experience. Right? So all these things have to have to go together. So that's what's called adaption and resilience. And so and I did that very quickly. So within 3 months of that big 2,000 session coming.
I was like, man. This is bad. and so I pivoted us very quickly, and to buying the domain name, getting website, sort of undertaking content creation, not on defense. Just website, creation, SEO adwords. And then we were. We were then doing maintenance work.
So I did. That very quickly does mean it was perfect, but it was working very quickly. And then I think our budget back. Then this is a long time ago now I think we were spending 2 or 3 grand a month on adwords, because you've got to spend money to get money coming in, even though you you feel you haven't got that money to spend. If you don't spend money on marketing, you're not going to get the leads. And right you have to. You have to do the marketing.
So if we think about what was happening. it was a very stressful time and then I also was doing other things at the same time, which was like I was expanding my scope of work, so that what happened is geographically and you gotta remember, there is no grand plan. It's not like I knew exactly what was doing, knew exactly what was going. Wanna make it really clear. I was flying by the seat of my pants, and I was kind of just taking advantage of opportunities as they were coming up and sort of following my nose.
And so one of those things that happened was we ended up just by luck, doing some work on Waiki Island. So if you don't know Auckland, so that a half hour ferry ride. You can go to a place called Waiheke on it and one of our builders got a job over there and said, would we go over there? So we started going over. and then I saw that was an opportunity. And so what I did was then I asked and the team if someone wanted to, because I were going over a whole week at a time. So we're staying in motels to do these to these houses, and that they're kind of spread. And then I asked if anybody or team wanted to move to Waiki, and I would pay the rent for a house for a year for them.
And so one of my guys put his hand up and he moved to Wahiki because we paid the rent from the house for a year, which is cheaper than you know, paying for motels. And so he went to Waiki, and that means we were sending Staff over every week to Waiki, and I would say, and his house and the motel. I was a little bit, you know little bit messy, but within sort of 2 years we had 5 full time staff and Waiki, and that became a major source of work, and because we went to Waiki. We we started doing work on Great Barrier Island, and we were sending veins over to what? To Great Bear on to do the work. And so we ended up sort of just developing a bit of a reputation of doing all in work in Auckland.
But it was awful. I just ran and followed. Our noise! But that's how I opened up a second branch just by luck.
Now. The second one was in Team Ross. I needed to keep employing people as the business group. And one thing I did also worked out was most, when you, when you get away from doing high-end new housing and good renovations, and you're moving into maintenance.
You don't actually need the best trades in the world. But what you do need is the trays you give the best custom service like trays, you actually care about being nice and friendly. Right? So that's a really important thing is that the team, depending on the type of work you're doing. You need the right team who would genuinely care and enjoy the work they're doing. So we had to sort of change a lot of people out, and and the people we employed were ones that were, friendly, like customer care they got. They had to call customers call the office talk about extras, and
it was just critical that we had good people. and the third, the third part was in the services we provided. And I'll talk a bit more about the types of services we provided to support this this new type of work. And you can ask questions, too, by the way now.
Some of the other things that we ended up doing and like looking back, it all seems it was a great plan, let me tell you there was no grand plan like it all kind of just worked out, or I remember we ended up doing water play for preschools in becoming so what happened is on one job. We is a landscape architect called us and says, Oh, can you come and do some drain laying down at this? You know, preschool they're doing for. and when we got there, then they were asking, so, could you help me help do some water play and do this for stuff.
I was like, sure. And so we ended up just trying to trying to work with the landscape of architect. And you know, since we had a lot of water pumps and recirculations and downpipes, fuller. So all the Pre school kids could end up just playing with water and making can pumps and all that sort of stuff, right?
And so then that kind of like, I mean, there's an opportunity here. So then, we kind of worked with that landscape architects, and then we went up to preschools and just worked with them to do water play for preschools, and so then we brought her a bit of reputation, and people talked to other people, and then we just started doing water, play features and preschools and got a name for it.
That was no plan. Just kind of happened, but I put it, but I am very good at following my notes. and another one that happened was, we got a call from a company that says. Have you, ever installed drinking funds? And these are these big, heavy steel things that are kind of vandal proof. And we went. No, but we'll have a look. And it was a big, big job. I think we could do 20 in a school over the Christmas period.
And it was a big draw, right? We had to do. 3 or 4 guys here for a few weeks, you know, trenching around the school, cutting concrete. You know, all the dramas are having to be, you know, re reactive and adaptive, and to solve the problems of trenching, cutting, concrete round around the school. And so we did that, and then we built a reputation with them, and then they recommended us to all the schools to install the water fountains right that tended to be a great little niche.
And the other thing that I also did was I ended up making a capital investment in link detection, and cameras. And so one of our guys was a German guy, very technical, and he liked learning technical
And so one of our guys was a German guy, very technical, and he liked learning technical. And so he mastered the leak detection business. And so then we ran, created landing pages on our website. And then we did targeted campaigns for leak detection.
So then the leads come in. You know what we're going to do? The lead detection, the lead detections of like you. You do them for no money, right? Cost no money. But you get the dig up to repair the water main, which is what I knew would happen in the same with the camera for unblocking drains. Right? We don't wanna block drains, but the drain, on blocking invariably to a dig up for repairing the drains. Right?
So you can take a lost leader. I mean, I see you do a and find the Lead Detection Company about the exact cost was like, you know, 200 bucks or whatever, but that will often lead into a 2 or 4 grand water main replacement job, right? And so those those ended up being very good little lost leaders to keep the workflow going. So once again.
All those jobs are little, but the margin's very high. and so then you can make good money doing small jobs to, pay the bills and grow the business, and if you give good customer service and turn up on time, finish the jobs and you cash flow comes right. And so once again, that is all just flying by the segment of pence, taking advantage of opportunities.
But it did mean that I would if we did a good job and said, all that's good. I'll go and see the business owner of the fountains and schools and see if we can do stuff together Right? So I think this might be the wrong place. That one
I think it's supposed to be the end. Now, rebranding and an online presence. I think I've opened the wrong presentation. I've eaten this. That's right. branding is really important. So if you think about it as a trades person, when trades person turns up to someone's home. Man. They don't know you. They don't know you from from Adam Ahamar Reeve. But what they do know is that sense of trust right? So if you, as a firm, haven't invested in a really good sign writing for your vans.
Well, this this is pre-face it. If you're doing new housing in Big Reno's. We work for builders, then, Brand, it doesn't really matter right. But in a recession that works going to dry up. Now, you can either fight your way through it. But if you need to pivot and go into the more maintenance service work where there's more margin right? There's always work right. There's always work in repairs and maintenance. Then your branding in your signage and your uniforms need to go up to a high level. That's just. It's that way. If you choose not to be that way, then you make your your life much more difficult. So it's the classic.
What I say to people right like the surest way to win is this way. So if you don't do it, you know it's not like when you're quoting right you if you. If you always quoting and the most expensive guy, you may win some jobs. But that's not the way to bet. The way to bet is if you give the lowest price you will win the job.
So the way to bet the weight that's this best way to think is okay. The the best way to think is to win this work. If I'm the lowest price. That's the best way to win. It's the same thing with service work, the best way to get repeat, refer customers is to be professional care about customer service turn up on time, you know.
Do the work on type one budget to the agreed outcome. And part of that, though, is also when your vans heard it on site they're clean. They'll wash the guys come out in in uniforms and pilots. You know I personally hate when trays turn up in a T-shirt. I like it when they're in a good pilot. They've got to, you know a brand. I was also very good at making sure they had their name printed on their on their polo, so the customer would always know it's Steve, or it's Dan, right? And so it just shows a little bit of care. It's important that you have a good website, right?
Because of what if you don't do those things. What it shows is you're not really committed to a customer experience. Right? Shows you're not really all in for your business. The other thing that is also important. If you're doing this is getting a call center in to answer your phone. If it's not answered. If you're doing that sort of service work. There's nothing worse than when you call somebody.
Phones were answered. It goes to voicemail like everyone hates that. So we use answer services. They're still here. To this. To this day you set up a service. If your phone is answered, they wants the phone and go. Hi, it's it's Dan here from answer services on behalf of your local plumber. How?
Well. yeah. kind of take. Take your details. They take the customer's details and a short message, and then they will text that to to you and email your office at the same time. And so the customer's phone call was answered, right? So you never lose it, you never lose a call.
So the other thing you need to do is you have to do a diversification of services. Well, you don't have to. But if you don't change the way you're doing, you're gonna you know, if you you can't, if you keep doing the same thing to keep you the same results. Right? So if you want to change the way things are, then you actually have to change a lot. And so, as I said. We went. We shifted from renovations to real estate work and call our services. I'll talk about a bit more about that later on.
And then I also made the strategic investments in those capital. Right? So I think that leads to texting gear back at the time was like 10 grand or something. Can't quite remember then the camera was also like 10 grand. And so when you think 2,008 is probably like 20, grand is in space made. So those are quite big investments.
But, man, did they pay themselves off so quickly? So when you think about your business, you're like, okay, what can I get into what things can I invest into to give me, and an edge that I can run a target, a campaign and then out source for efficiency. So like, for example, we don't employ people full time to answer your phone. Don't do that, you know. Just go to contractors to build your website, do your SEO do all the things you don't want to do.
We talked about that. So if we talk about the expansion in growth, I think there's really interesting. So even though I hit that really tight bump in 2,011, that was a really weird bump, right? And so. But if we think about just outside that really weird bump, even though there's a really big recession and like it was really was really tough. I was still putting on 2 or 3 people a year right?
And so I kind of want to talk about. how does that work? How do you keep growing when things are difficult. And What the one thing that I have learnt to know is true is. Getting from the customer what the agreed outcome is right. and so I work with so many
Companies who just don't seem to forever kind of get what is the customary outcome that they're trying to achieve. And so. What was critical on making sure we delivered the outcome is that we, as an office, as a company, we learned to capture
The outcome that the property owner was trying to achieve, and then making sure that was always on the job card. And so it would go something like this. The probably owner wants the kitchen tap finished by 4 30 on Friday, and doesn't want to spend more than $500, and the new tenants moving in on Saturday morning. And so what you've done in that little statement is you've captured all of the details
So that the Tradesperson can deliver that outcome on time on budget. Because when you think about it. This is one of these key insights I had many, many years ago, which was like, hopefully, you all know, the time cost quality, triangle and construction.
So you know, the property owner wants the lowest time. Yeah, or fastest time, right? They also want the lowest cost. and they want the highest quality for warranties, right? But you, as a business owner, also want the same thing right? You want the trays, you know, on site sort of for the fastest, shortest amount of time. So you can get the thing done on time.
You want them to use the least amount of materials, and you want the highest quality, so that you don't have warranty claims. So what happens if you think about the the property owner and the business owner. You basically, you all have the same. Actually. you've aligned on the same outcomes. So then, where it all goes wrong is that the trades person doesn't understand what the outcome was right, because they've got no center for lowest time or Low Scott. It's not their problem. however.
Most trace people are actually really good at delivering the outcome if it's explained clearly to them. And so once I worked that out. we made sure that that description was always put on the jobcast, so they always knew what had to be achieved in the time frame. And the why. So the most important part of that is the why right. The tenants moving in on Saturday morning. okay, that makes sense. I'll get it done by 4 30.
And so the other thing I was very good at doing then, was always talking about money with the customer. always talking about money and putting it on the job card now, and this is the next part of the success, then of why it grew. In fact, there are so many factors actually, that goes into sex here. It's not just one there's so much to talk about.
So the next thing that I worked out with people there's most people like against like 90, 95% of people are conflict adverse. And so you think most tradespeople like 95% of them. They like, as I say, turning up the site, drilling holes in a swim, piping cable. That's what they do right? They haven't come to work to then do quoting and invoicing and talking about extras and having contact on site. They're like, no, no, that's office work. I don't want to do that.
And so once I kind of went, oh, yeah, Tracy, they just want to come to work, install, pipe and then go. And so once I'd worked it out, we brought in a couple of rules which was okay. and the job's gonna take 2 or 3 h. It's gonna do 200 bucks materials. If it's gonna go over that. you have to contact someone you don't have to call the owner. That would be cool if you could. But you have to call someone. That's the deal. So you can call the office. You can call one of the foreman's, or you can call me. You can do anything so. But what you can't do is not talk to anyone right? So that was the deal, was it you?
You don't have to communicate to the customer, but you do have to communicate to someone. You just cannot spend someone's money without approval. I've got a slide at the end, and I often say, and also quite a few times, you absolutely have the right to be paid. But you absolutely don't have the right to spend someone's money without approval. Absolutely don't.
And so as soon as you start backing it into the culture, then that's when things start to really turn around and in your company, because what then starts happening is that the customers don't get bills that are far and ex and exceed of the sort of expectation which means they then pay the bill faster, but they also use you again right? And then you're starting to get your firm into this virtuous circle of the right. You know of the right sort of behaviours, because the outcomes are being delivered.
But all of this whole cycle starts at capturing clearly from the customer at the start of the job. What is the outcome they're after? And the why, and then putting that on the on the job card.
Sure, here is the transcript with timestamps, line numbering, and instances of "Dan Pollard: " and "you know" removed: Right? And so then, you assign to maximize your potential to achieve the right outcomes. Now a couple of questions which will answer now one are deposits necessary in this climate. I absolutely love deposits. I think it's the best thing. Yep, I would say, yeah.
We got to the point where, when we were estimating 14 jobs after $2,000, and we didn't know you would ask for 50% deposit that is worth, without a doubt, the best thing we've ever done for cash flow. Because it did 2 things that weeded out those who didn't want to pay, and we're going to cause trouble.
And the other thing it did is it meant the customer only had half the bill to pay at the end, which lessened their burden to pay, and it ended up being actually quite a game changer one for us. So deposits absolutely, and also means you're talking about money. And I also like putting in the right the right sort of pressure in a business.
And what I mean by that is, say, you've quoted 2 grand 5 grand for a job, whatever it doesn't matter. I actually love quoting. and the reason I love that is, then, if you lose money on the job, it forces you as a firm to work out. Why did we lose money? Right? Is it because we undercoded on the others, or was it because we were inefficient and slack with running the job.
Because quoted as soon as you start quoting and pricing and delivering on pricing, you get paid fast. That's that's that's the core thing of how you fix cash flow is pricing and sticking to your price? Adrian's asked, moving from new builds. Reno's into maintenance. pricing and payment. Yeah, I'll talk about that later on.
Thoughts on hiring contractors over employees as work ebs and flows. Personally, I dislike contractors over employees. And the reason for that is, you have no loyalty with the contract, or those. Come and go and leave you high and dry and once you get confident in business and marketing.
Then that's quite scientific. So once you get the right mix of marketing and the right sort of SEO company help assisting. And you're doing some campaigns, that work will come in. and so, if you're not confident there's a hard place when you don't know that it's quite scientific, and it can be worked out. And so then this is when joining like a group of master plumbers, finding other people in their organization to help you find the right companies to help make sure your marketing works is really helpful because marketing does work. But like, I think it's a science has to be done right.
So in office attendees. Do you prefer quoting over? Charge ups? Charge up can be quote. The answer is. every firm that gets to like 1520 people and above.
they never do charge up. It's always priced because it's just the best way. It just takes out all the arguments. But what you learn to get very good at doing is all the quotes or estimates. But when you get very good data, you start to manage the job. and this is the critical part part of building a business is you have to manage but if you're abdicating me management of your company to your employees by trying them to get into quote, invoice, do variations on site.
Guess what?
Not going to work? Because what if you have a business like that. That means you need the best employees in the industry working for you. And there's not. That's not the way. That's not the way to bet the way a bit is that you're probably going to have average tradespeople right? Who might be nice. but they're not going to always do the quoting and voicing charge open slash! It's just not gonna happen. It's not the way to bet.
The way to bet is to put in office people that they can call to have those difficult conversations for you for you. That's the way that's the way to build a bit of business. So no, I don't like, charge up all big businesses. Don't do charge up because it just leads to 2 disputes.
I think there's more to answer the question now. So that oh, that's how we grew. So that's what leads to all that growth, right? Because we would just deliver jobs on time on budget to the agreed outcome.
Yep, that was good. So this all just niche work, and you've all got niche work. If you just look at if you look at the work coming through. Yeah. So adaptability and resilience. And I think that's we've talked about that. We've talked about that you just have to follow and go, okay, where is the opportunity like, where is the money being spent? And where can we go now?
So I wanted to get real estate work because I worked out real estate companies have lots of lots of work. So how can I guess? How can I get their work now? So this is back in those times when I knew nothing about cold calling appointment setting. knew nothing about it. So what I did was, I went, okay, I don't like doing that stuff. I don't like cold calling. And so, as it turns out. the market has plenty of companies out there that will do the cold calling they call it appointment setting on your behalf.
So I called them, talked to them. and they were so helpful. and so they then told me what marketing material I should provide. So when I kind of find it about a USB
which yeah, unique selling proposition. And I remember then we made. Got a really good little graphics person to make us up our little folder with branding did all that, and we had a blurb on the inside of what it is that we would do right. Why would you use your local planner? Why would you give us a shot? And so we crafted a message in a campaign, and then that company cold called real estate companies in the area, and she made appointments.
And then I would go with my foreman, and we would go and meet them and have a meeting with them and talk to them about our service. And so that's how we got. That's how we got appointments in new, in new industries that people have never met meant. I didn't have to do it right, because I didn't want to do it. And so that's how you get new New Portman's new business. And then she called all sorts of companies, and so we ended up getting doing apartment work, and we got Blue Chip in the day we got Ray White in the day. Gosh! We've got so many companies because she was prepared to call. However, this was my patch.
I was like, why would you give me the time of day? Why would you use us now? My pitch wasn't drop your existing plumber and use us because they will have the existing clubs. I says we're happy to be your third or fourth plumber. If no one else can get there, call us, and we will do the work, because I was pretty confident that over the course of time we'd pick up most of the work, because I always had an office.
And I had answer services. So the phones were always answered by a person, so nothing would would go missing but what I'd also done was had worked out with my guys a proper 24, 7 call-out service. right? Because the one thing is, everyone hates doing call outs right? So you can go to a real estate company and go. Well, this is our promises, our commitment. We'll always answer our phones, and we'll always be on call 24, 7. So that was the patch.
So how do you actually make that happen like who loves doing cool like no one?
So. however, the the point of doing call out work was to be once again a lost leader. Right? And so I just want to see so many people do in business is they're not prepared to do a lost leader.
So you've got to remember this a few years ago. Now surprises have gone up so. But back then. for the team to actually be on call. we, I think we pay them $300 a week, just to be on call just just to take the phone home.
Now, what we also learned about to do with that is, if they didn't answer, the phone would go to answer services right? And so we had to do was he had to give answer services to also text me and a foreman as well as a trades person. That was so. The trades person knew that we would get a text message and we would know that a call was had that you didn't take right? So there was that accountability. So we knew they had to take the calls, and then we would check the jobs we've created, or they'd gone right? So we had to head with that checking system in.
But on the what we had to pay right? So there was retained to be on call. But what we had to pay was, if they went out they would get 3 h, pay for the first hour, and then double time for every hour after that. So that meant we made no money on call outs right? It was basically a lost leader.
But it was. But we had to work with the team to work out at what rates we had to pay them, so that they they would actually be happy to do the work they would actually go. And so that was that that was that high amounts we had to pay right.
But what it meant, because we did that we ended up becoming the default favorite for quite a few of those firms, because we always answered our phones, and we always did the callouts, which means we became the the default plumbers of choice that would just cause for every job right? And it was on that backbone of doing the rest of that work that we always had work coming in right always had work and could always kind of keep. Keep. Keep us busy now, yeah, the mid diversification of mitigates risk. And so I remember sort of coming out of that recession and going, man, we will never be single point sensitive again.
And so once we came out of recession. Yes, we picked up going back into sort of new housing and Drain Lane, but I always kept the maintenance arms going. We got more into a bit of small drain lane kept the islands going. We kept a broad range of work going again, so I would never run out of work like I did through this big recession, because it was just so scary.
Now, how do you understand? Trends and identifying growth opportunities? Man, I don't know. I just followed my nose where the work was, that's all. I did nothing, nothing real rocket science.
So Maxwell says. Do you just get a first job with the new clients and margins of Slim, so you can get your foot in the door and show them how good. Aabsolutely mate, couldn't agree more with. Just do whatever it takes to get those first few jobs in the way. But if you think about that whole that whole thing, Melissa, you know I talked about. What's it like to do to deal with your business from the get go like this? Remember, if you haven't all read the book, the emith for contractors. You should all read the book. That's what set me on the path. When I was 29, read that book and realized all I'd done wrong with my flying company after that time is the single best book you can ever read.
and it talks. One of the examples he talks about is, let's say you're going to get your hair cap for the first time you go to New Barber, and it's a great experience, right? So there you go. Oh, that was great! It's tentative, really. Good job.
Right? You go back a second time second time. He's actually distracted. You waited. But he's inattentive. You're like, oh, that was a bit crap. The third time you go back you have to wait as someone else you're like, oh, man, is it terrible? You never go back again. and he goes to Mcdonald's. You go. Okay, Mcdonald's you go. It's you know. It's the food's kind of crappy. But you go back and the reason you go back is that it's crappy food every single crappy time, right?
And so you've got to think about. He talks a lot in your businesses. How can you create a repetitive customer experience? So every time they call you, it's the same experience time after time. So if you're going to go anywhere to try and generate new business. and so call the first time they call. You answer the phone right? So you set this expectation website to deal with you. But then over time we all get tied like, oh, I know there's that customer pulling. I'll ignore them. They ignore, and then they get, they get frustrated.
And then this. So you can win this work, and then you can lose the work. So what you gotta do as a firm. You gotta go. You gotta go. Okay as a firm. And we're committed to a customer experience, which means we will always answer the phone every time, or it will be answered by someone. We'll always return an email within 12 h. We'll always book a job, and that will always happen. And then, by Hogg, you have to develop your systems and processes so that that customer outcome always wins.
And will you do loss leaders? I love loss leaders. They're a great way to get to get a foot in the door and to establish that you're a good friend to deal with, and then, if you deliver a customer experience. Time after time they'll use you again. Then you can go at some more rates, and because price always starts to disappear once the service comes up now. So it's one of my favourite questions I've just put on here is, how do you start to get this right? How do you start to get people willingly wanting to work for you. How do you? How do you willingly get people to do the right things? And how do you get your customers willingly wanting to pay you right? Because that's the key question. How can you willingly get people to do all the right behaviour so that you're not always having to thrash them and drive them.
And the answer is unfortunately a little bit complex. It's not just. It's not just one thing. I just wish there was one thing I could say to say, this is what fixes all things in a business, but it's not. There's so many things you have to get right for it to go. Well. we'll start with the Secwinkle. That's the easy one. How do you get your customers willingly wanting to pay you? That actually tended to be a surprisingly simple one to answer.
And the answer is, you deliver the job to the agreed outcome up front right? So all you have to do is capture on that job card. I want the kitchen tap fixed by 4 30 on Friday, and I don't understand more than $500. That's actually. But if you deliver that, you get paid, that's super simple, super great. Now turning that statement into the reality, this is where the tricky bit comes right. And it was kind of that tricky. But that kind of led me down the whole software. The software readers like man, I actually have to build software that allows me to.
They'll level this information in the format. And let's everyone know what's going on right. And so now, the best way to deliver that outcome is another framework, not mine. It's called the right information to the right person in the right time in the right format right? Okay. So we've got to talk about culture. So in order to deliver getting your team willingly, wanting to write things, we now have to talk about the people you employ. As soon as you start employing people, you have to talk about culture.
Now, what the heck is culture now, as I say, and culture is there to deliver cash flow? right? So I'm not big on culture, that is just there, for being kind and caring was like man. Don't. No, no.it's the 50 50. So culture's about what I call the 50 50 deal right? So you, as a firm, will do these things, and then you, as an employee, will do these things. It's the 50 50 deal this 50 50 deal would will deliver cash flow right, and if we have cash flow. That means I can pay you, and I will pay you well. So that's your deal. Okay?
So what does a 50 50 deal, then look like right? So the 50 50 dealers you is affirm. but you will guarantee to provide them 40 h of work a week. You will provide them the right system tools. right? So they can do their job. Professional, you know, uniforms, fans, you know, marketing, advertising payroll. Your, that's your 50 50 deal, right?
So it's your job to be the professional company, right? And this is why I'm a big proponent of getting. So how does that work? Right? So the values I kind of like. professional, friendly, reliable, or pace external results. Right? So what we want to build is a culture that delivers a customer outcome because that comes to cash flow right? So that's the way things work. So you, as a firm, will guarantee that you will capture the outcome that the property owner is going to want. That's your job, as the firm. That's your first part of the 50 50 deal. So in order to do that, you have to train your internal staff not to abdicate responsibility to trades person on site that doesn't work.
So you gosh on every call we've got to start talking about money. So that means you've got to create little cheat sheets for office people, right. So it's very easy to do. You know, you just work out in previous history how much a toilet system repair cost a kitchen tap repair cost a hot water cylinder repair cost, so they can quickly say to the customer, Oh, a hot water cylinder install is about 2,800 plus Gc. Is that roughly what you were thinking and they go. Yep. Call you okay? Sure, the form into a price it properly, or a kitchen tap. You know it's about $700 replaced out of your budget. Don't do the job right. So you're talking about money upfront straight away. You're putting the outcome of the job card.
So now, that's also part of the 50 50 deal. So what's the other part of the 50 50 deal of how it really works? Now? How so this, how do people actually work? And so this is why this this works. So if you think about people, people. we're more motivated by pain, avoidance than by reward.
The example I like to use right is let's say I've got your thumb and a pair of ice scripts here really hard right, and let's say, in this thumb. But this hand I've got your favorite treat, or dessert, or holiday destination of the world.
But by squeezing your thumb really hardy with a pair of ice scripts. and so you can. You can either move towards the pleasure or you can move away from the pain which one. Do you choose which one is the greater motivator and it's pain, avoidance, pain, avoidance is a greater motivator for people than moving towards reward.
So even if you say Well, if you if you if you call the customer and you quote and do the reactions, I'll give you an extra bonus per every week for doing that doesn't work. So what happens is you'll get the excuse. Oh, and I was really busy, so I couldn't talk to the customer. Oh, no, I was. I was late, you know. Oh, no, I had to get this done. I was and I forgot. I forgot. You'll get all the excuses of why they couldn't talk to the customer about the variation, call them why, they're late. All those things doesn't work.
So what you want to do in your firm, if you want to be successful, is you allow them to avoid pain and still follow the system. And what does? What does it look like. It means you have to put in some office resource for someone that they can call when things go wrong. So you can say, Okay, the deal is you can call the office. You can call a formant. You can call me. You can call some, but you have to call someone. so we can talk to the customer. But while we're going to be late, it's going to get over budget right? And so then you've got to put those resources in, and I call it alternative means of communication. so that they can actually communicate.
Because that's the critical thing that they you have to allow them to avoid paying, but still get compliance with the system. So the customer gets the outcome. Because if you want to get cash flow and profit and customs repeating and firing, referring. And then you cannot spend their money without permission. It's just the way it goes.
So that's what I mean by shifting towards an outcome focused mindset. So as a firm, you're just always talking about the outcome that's trying to be achieved by the customer. And you're helping trades achieve that outcome and also hoarding the pain of conflict. Right now. then, you have to work out the reward systems for your staff when they're doing all the right behaviors right.
So if you've allowed them to avoid the pain, achieve the system, then what is the reward system at the end of the week or the end of the month for them achieving that outcome. And there's no specific formula for that. Now. what does work, though, is that you get your team? Is you ask them. Funny. One thing that I learnt is that
Me as the business owner, if I talk, try and talk to my staff around what they would like this kind of silence, and I'll get a few weird things because it just because you're the boss. You're the authority figure. They will never tell you the truth. So what we had to do was put one of our guys, who was very effable and everyone liked, and he was sort of the spokesman for the team. And then they would have the meeting, and I wouldn't be present. and then they would tell him what they wanted as the as the reward system. That's how he worked out what we needed for the call out system.
And that's how it worked out that once a quarter they would go off, or you know they'd go bowling or go out, and I would just pay for it right. But the one thing that they wanted was they wanted there to always be beers and barbecue on a Friday, after work. That was a big thing that they wanted. So it's like fine. We'll do that.
But just because it works for my firm doesn't mean it will work for your firm. You guys have to work out your own reward system, based your own team and your team, deciding what it is, what they want, and you yourself, as a business owner, can't be present when they're working that out right?
So that's the 50 50 deal is, you say, okay, is a firm. I will do this and Cynisk also has to be consequences right? The consequences are, you have to give people warnings and move people out of your business if they don't, if they don't follow the systems and processes we're carrying a lot of ground. And
Yeah, I think the human touch and communications is really important. And so I was really quite inspired by a
Let's see, it was a Brady New Zealand interview many, many years ago, and it was Linda Clark for those of you remember her interviewing a guy who'd really helped the New Zealand army turn around their recruitment and retention of new recruits in the army and she was. He's had a track record of doing this. And so these an army is always looking for good recruits right and getting this, how they come with it to experience, get bit of work, not bit of work. Stories about it was.
And yet people weren't signing up for the campaigns. And so, as he went through the contracts, what it was was. if the recruits didn't last one or 2 years there was quite a significant penalty for withdrawing from the contract. Right it was. Can't remember the day. It was like 20 or 30 grand. It was a massive amount of money and so he said to them, so he says, what what the recruits have worked out is your marketing message is not aligned with the contract because if you were truly thought that the army was a great place to come and train and be, people wouldn't leave, so that you don't need to be punitive.
So therefore, you guys are not fully behind this experience because you don't fully believe you can create this experience. That was a delivered outcome. Because if you did, you knew you wouldn't have to have that term in the contract.
And so what I'll let this use an army to do is like, oh, we actually have to fully commit to our training program of actually making it a great place to train and be and remove that from our contracts. And if people leave then what have we done wrong? It's actually our fault. And for me it was one of those like sort of life-changing moments of like.
Oh what is it that we're doing wrong that's achieving this result with these customers while they don't want to pay for us. It's like, Oh, I'm always to blame And so what that means is, you go through your terms of trade, and you actually make them very reasonable. You you strip out anything punitive like, you know, we just really wouldn't put penalty fees in for late fees and whatnot, because most people actually really really good to deal with. Right. If you, if you talk about money upfront and the timeframe expectations and deliver that you get paid. Now it's when you deviate from that you start having to go to arbitration troubles, calls, need or disputes.
So the thing to look at as I started this is when you look at your business, what does it like to interact with you like, if you're consistently getting into that pattern of late payment struggling to get money, no cash flow. What is it that you're doing wrong?
And so I think it's really helpful to always go. I'm the problem. I don't know. I'm doing something wrong. I'm not delivering a good outcome. The expectations are coming. What is going on on my firm? Where is it breaking down? What I need to fix, and from that that point of humility, then you can go. Oh, these are the systems and processes that I have to build into my business and the hard thing around there is often and you have to build the business your customers want, not what you want.
And I think that's probably the one of the biggest mindset shifts I see when I'm going around talking to tradies doing this is so many people say to me, I want my business to be like this and I'm like, frankly, I don't care what I want. Your business to be like. What I want to hear from you is my business needs to deliver customer outcomes like this. That's what I want to hear from people right?
Because when people say I want my business to be like this that often goes hand-in-hand with says they want the guys to quote on site, collect money, do invoicing on site order materials right? That would. That's the way you want your business, because that would be good for you, because to be, you know.
And so the thing to look at as I started this is when you look at your business, what does it like to interact with you like, if you're consistently getting into that pattern of late payment struggling to get money, no cash flow. What is it that you're doing wrong?
And so I think it's really helpful to always go. I'm the problem. I don't know. I'm doing something wrong. I'm not delivering a good outcome. The expectations are coming. What is going on on my firm? Where is it breaking down? What I need to fix, and from that that point of humility, then you can go. Oh, these are the systems and processes that I have to build into my business.
So when you think like that, that means you've got to invest in really good system tools, you know, like Fergus, like Xero, you then have to invest in office resources to then make sure the system's complied with
You then have to put in answer services right? You have to do all these things that you don't want to do. but it delivers, because the only way to deliver a customary outcome is through your team. Right?
So therefore, you have to invest in your team so they can deliver the outcome in a way that allows them to avoid the pain right of conflict.
And so when you go about building that, then your business starts to grow. And so anyone who says that a big business is not profitable. It's just not true. You know, having that 25 staff was a very profitable business. You know, set me up for my entire life. And it's was. It was amazing to build it.
Was it difficult? Yes, or the stress? Or yes, but it does work. And yeah, and anonymous is so basically great communication at the start, a well earnest job, tidier for structure and as large as a possible deposit will ensure great cash flow in high. Tb. Yup. There's a lot you have to get right to put it all together right as well as pivoting to to where the workers as well. Right? So there's always 2 sides to a business right? There's the sales and marketing, and then there's one side, and then is the operational side, and you have to do both together like you can't do one without the other. Is it challenging and difficult? Yes, but what's weird is? It's only challenging and difficult until it isn't right. It's it's like, when you're an apprentice. I mean, that's first to use, or a nightmare, right?
And then, all of a sudden, it's like, Oh, it's pretty easy now. It's the same with sales and marketing and operations. At first it's difficult, and then it's not. The other thing I was very conscious of is margin versus volume, right? So I really don't like all the talk about always charging as much as you can. I really I don't like that. If you think about the best way to build a best business is is to actually to be as cheap as possible.
So you think it better when you go to Bunnings, and there's 2 identical products on the shelf. You'd generally always choose the cheaper one, because, like that makes sense. So all this coaching about charging more and charging the Max, I actually disagree with it. So the way I run my business is that as I need to make enough gross margin to pay my overheads plus a profit margin. Right?
So there, I was always trying to be incredibly efficient with my, with my labor. We're going over. But if that's okay, I'll just keep going for a bit longer. Got about 3 or 4 slides to go. Because I know this works right, because I grew my business through some of the toughest, toughest times, because I was actually quite cheap.
So the way the way you can be very cost effective is to make sure you're maximising your trees on site. So the only time you, as a business is making money is when the guys are on site drilling holes, installing piping cable. And so the big thing to remember is.
You guys can install roughly a hundred dollars an hour worth of materials right? Roughly retail. That means you're also making about 40 to $50 gross margin on the on those materials. Right? So you say, you're charging a hundred bucks an hour labor that's run slight working. You're also making $50 an hour margin on materials, right? So there's 150 an hour.
So every hour that drive in getting materials, you're actually losing out on $50 an hour. Even if you can charge that money to a job, you're still losing margin on materials, right? And so you think you got 3 guys 2 HA day? 6 h times 50 is 300 times 5 days is 1,500. Right? That actually adds up really fast how much money you're losing on the table. Just by being inefficient. What the impact of that is, that means that your cost of quoting goes up. which means that your quotes are dearer to make the margin, which means you win less quotes because the safest way to run your business is to be as cheap as possible when quoting. That's the way that that's the way you end the work. So the way, then, is to be as cheap as possible, which is to be as as effective as and efficient as possible.
Because that's how you grow your business. And so even on our retail work, even it is on charge up I would not fleece a customer like I'm not going to charge you, you know, full retail on PVC. Pipe. I'm not going to give you bills that are super expensive, 60, 70, 80% gross margin because it's expensive for you. So therefore, as a firm, I'm happy with 15% their profit.
So you know, that means a lot of my charger workers on, you know, 50% gross margin, which means your bills are reasonable. and what happens is when your bills are reasonable. Customers repeat and refer. and that's how you grow a business, and that says that means you don't not always spending massive amounts on marketing, trying to get you clients.
So I'm not a proponent of always charging the Max. I'm a proponent of of actually giving lowest value. So you're still profitable. Right? So that means you work on being effective to be efficient so that you're cheap. So I was always like trying to be 10 or $15 an hour cheaper on my top price.
But I tried to make my my margin, and people know when they're being fleeced, too, by the way they know it. And I think this is probably as much as like, Fergus were in 3 countries, 95 staff, it's actually, it's a really big deal. But that's the thing I'm actually still the proudest about is keeping all those guys busy and having my cash flow at 27 days paid like there's I still can't believe we managed to pull that all off right. You know I had to build software tools. But all the build, the people culture, branding all the things I had to learn to get that right is still one of the things I'm still the most proudest about today. And yeah, what's interesting about that is the biggest mindset thing I had to learn was that all the answers are out there in the in the world, right? It was just my inability to think correctly would stop me from, and understanding what to do now that I've learnt the lessons it's like, Oh, I know how to repeat that.
And so hopefully, I've I know we've talked about an awful lot. But hopefully from from it. I've left you with a distinct impression that the answers are actually all out there. and if you can just ask the right questions. If you think about like life. especially in business, not talking about, you know, esoteric quantum mechanics. Right? Just talk about normal life, normal business life. There's not a single question that has not been solved. Right?
Like people have worked out the answers to pretty much everything, especially in business. So to get the answer is easy, right? Just type into Google or chat. Gbt, you'll get the answer. The problem is that we don't ask the right questions because we don't have the wisdom and experience to ask the right question.
And so, as soon as I had that really big humility and I still try and character, this day is like, it's my inability to think correctly, which means I can't ask the right question, which means I can't get the right answer. And so the best way around. That is, then you have to get professional advice on what is the right way to approach solving this problem, and as soon as you get into that that phase? It's kind of easy to get the answer.
And then, of course, the second part is, you got to bring in sefas shut up and pay, which means you've got to normally pay someone to help implement that in your business. But then you do, and then the business has to work right. And it all starts to come right. I think we talked about that. Yeah, meriting to 2 things together through process and policy. That's probably the biggest thing to understand. So if you think about the structural thing we're trying to do in a business, we're trying to get cash flow and profit. That's all that matters right, that's all that matters.
And you want people to willingly do that for you. Right? So you're not always having to flog horses. So the 2 big things you want is telling your team. I want the customers to get their agreed outcome. What will it take for you to willingly do this job every day. All this right? And the other one you ask is your customers what do you want? So you pay the Inquisit completion right?
And then your job is to marry those 2 things together through post processing policy in your systems. So obviously, Fergus is a system, and 0 is a system, right? Very good systems. But the unless you have the process and policies. they're useless. Right?
So then, that's why Fergus has so many tools around notifications. Chat, mentions checklists, tasks for you, name it. You can run a business to 25 people in Fergus easily if you set it up correctly and are committed to the concept of the right information to the right person and the right time in the right format. Right? And Fergus will deliver that all for you.
Now I'll answer a few questions, so it's always fun for me to answer questions. So it's the bit I love the most of this, so please feel free. I know we've covered a lot and gone over.
That's just it solves so many arguments, and it forces the business. I'm not mentioned before I mentioned again. It forces the business to ask itself the right question, which is. What are we doing wrong? And our pricing like do we under quote, or we just disorganized.
So Adrian says, if you've office stuff giving an estimate of the phone. Then Forman, quoting, would the format be completing a site? Visit a lot of time to quote or quote case? So a lot of your. And if you know what you're doing, a lot of your quoting should be done over the phone. Now, boy, right? And so when you're what you should be doing is office people. Just give a rough pricing guide, because I'm always amazed how many customers can be like
5, 10, or 20 times out, and what they think something will cost. It's amazing how many people think something will cost like 100 2,200 bucks. and it can be, you know, grand to 2 grand. So the office, the office people's first point, of course, is just a weed out complete people who are just so out of touch with reality. So weed those out the second. Then it goes to your foreman. Who then does a call video call to kind of assess the situation
to then do a a better rough, pricing guide to get alignment, ask for photos, maybe. Do a video call you? Wanna you obviously wanna avoid going on slide as much as possible, because it's just expensive in time.
So then, when they are on site, then it's really sort of just confirming the the outcome they're after. Now. The way you win more quotes on site is on those when your form is talking about the outcome they're trying to achieve. That's the way that you get your quote when rates above 40%.
Now, it's really hard to get quite win rate, about 40% because that means you're probably too cheap, and if you're winning less than 30%, you're too expensive. So 30 to 40% win rate is where quotes will will lie And that's a lot of my talking over and done with. So ask me any questions before I bring this webinar to an end.
Thank you all for listening, and there's an awful lot of information I downloaded at you, please. Give the feedback to Beth, when the form comes out, so we can know how we can improve or do better, or and ask her what else you'd like us to talk about next time as well. and I'm always happy to talk to customers on any business problems they're having as well. I really really enjoy it.
So oh, you're welcome, Bevan. it's always nice to get feedback if I've done well. So thank you. Thank you, Bevan. But if not, there's no no more feedback.
We can bring this to an end. Thank you so much for attending, and I will talk to you all again soon.