For a lot of business owners, there’s nothing more important than getting on top. Ryan Englin talks with the founder of Service Nation, Inc., Matt Michel, on some of the most common challenges faced by business owners in the trades. Matt is an internationally recognized and highly acclaimed motivational and informational speaker on the significance of learning the craft of the business and going back to the owner’s school. While many business owners fall into the trap of focusing their end goal on success, Matt points out that they are forgetting the basics, including the goal-setting process that is highly significant in order to start walking the path to success. Join him as he reveals more insights every business owner needs to know.
It’s Time To Go To Owner’s School With Matt Michel
Our guest is very involved in the trades. His organization has over 5,500 member companies. Everybody from electricians to plumbers to HVAC contractors, remodelers, people in solar and even in the construction space. He is no stranger to what is going on, what some of the challenges are. He’s got some great insight on how to overcome some of the most common challenges faced by business owners in the trades. He believes that community is one of the most important things business owners can have now, whether it’s local, online or even in one of his groups. I want to take a moment and welcome to the show, Matt Michel from Service Nation.
Welcome to the show, Matt. One of the questions I love to start with is what’s the big myth in your industry? What’s that one thing that everybody believes about your target market, the skilled labor guys or anybody in the trades? What’s the biggest myth that you want to shatter for our readers?
I don’t know that it’s a universal myth because we’ve got a number of people that have disproven it in our group, but I think the biggest myth, probably overall, is that you can’t make money in the trades. You can make a lot of money in the trades. You can become very successful. You can build a great business. The millionaire next door is a contractor. I know a lot of millionaires and not very many of them went to college. They learned in the school of hard knocks. The tuition that they paid was the tuition of mistakes, failures, getting better and improving, but if a person wants a great career, I think that there are very few places that are more accommodating than the service trades.
Having grown up around the trades, I see it. I know a lot of people that love getting their hands dirty. They love being out there building, creating, constructing, fixing and they did well. Especially when they start operating a little bit more like a business, then you start thinking, “I need more hands than just mine to go do something impactful.” What do you think is the number one thing holding business owners back? I know a lot of guys that get their first truck. They go, “This is great. I’m selling it. I need some extra help.” Maybe they hire a friend or a buddy, a brother-in-law or something. They start growing their business, but they still hit these plateaus where they can’t breakthrough. They can’t seem to make it more than just a job. They can’t find that millionaire-next-door status like you’re talking about. What do you think is holding them back?
It’s themselves. We’ve got guys who know how to turn a wrench, they don’t know how to turn a profit. They may have been to trade school, but there isn’t an owner school. Fortunately, there are resources out there that can help them now, but they’ve got to trade their craft for the craft of business. As much as they enjoy getting out and working in the business, as Michael Gerber says, “They’ve got to start working on the business.”
Until they do that, they will never be able to get out of their own way. Another part of this is guys got to understand that growth is a good thing. I talked to probably 40% of the trade and they don’t want to grow. They want to run a lifestyle business and that’s okay. There’s nothing wrong with running a lifestyle business, but you need to understand what your sacrifice is. You need to make sure that you have accounted for your family in case something happens to you and you can’t work. The single truck operator, the most independent guy in the world, is also the most selfish because if something happens to him, there goes the business, customers, income and maybe the house.If you want to be successful, find five other successful people and associate with them. Click To Tweet
Growth is incumbent upon people. The thing that most contractors can’t see, and when they do see it, that’s when it becomes amazing, is when they build a business that can exist without them. Until that point, they don’t have a business, but they have a company or they have a job and it owns them, they don’t own it. When they build a business that can run without them, every business owner has things that they don’t like to do, things that they hate doing. They can delegate those to somebody else. They can hire people to do the things they don’t like and aren’t good at and they can focus on the things that they want to do.
Abraham Maslow, the behavioral psychologist, came up with this Hierarchy of Needs. A lot of people have seen it. It’s like a pyramid. At the very pinnacle, when you’ve satisfied everything else, you’re self-actualizing, which means you’re working on the things that you enjoy, the things that make you happy. That’s where I live as a business leader and that’s where a number of contractors I know are. When you’re at that point, that’s when a business truly becomes fun.
What are some things that these guys can do to get there and realize that and have a business that they own versus a job that owns them?
One of the things they need to do is associate with other successful contractors. Jim Rohn says that you’re like the five people you surround yourself with most. That’s absolutely true. If you want to become successful, find other successful people and associate with them. Here’s the irony. Most contractors think that the most successful guy in town won’t have anything to do with them and won’t share anything with them. That’s the guy that’s the most likely to share.
Successful people are the most likely to give back to others. They’re the least fearful of you taking something from them and hurting them. Nobody’s going to take your customer from you unless you screw up. That’s the first step. The second step is to listen to podcasts. If you’re in a truck a lot of times, you can learn a lot from podcasts, which are free, from audiobooks, which you can download by joining Audible.com. You can get them from the library.
There are a million ways that you can turn that windshield time into productive learning time. You can transform yourself. I also think it’s important to go to events where contractors are. Get involved with your local trade association. Go to national events like the Service World Expo. Those types of events are where you will run into people from all over the country, even all over the world, who have been there, done it and have a closet full of t-shirts.
What you’re doing right now with Service Nation and all of the different products and groups that you have is giving people a platform for that. Is that correct?
Correct, and one of our core values is community. We’re all about community, we create environments where communities thrive and relationship building begins and grows. Business is all about relationships. Businesses grow on relationships. We put contractors together, whether it’s in the Service Roundtable, which is about 5,500 member companies from around the world or the Service Nation Alliance, our best practices group, which has roughly 500 members, but this is an extremely intensive group. We also hold events like the Service World Expo and the Barefoot Roundtable in Clearwater Beach, Florida. It’s going to be outside under a tent. It is going to be on the sand and shorts are required.
If I’m thinking about joining a community and I want to be a part of people that have leveled up their business and have gone to that next level. I agree with you on what Jim Rohn says about the five people you surround yourself with. If I want to be more successful, I need to hang out with people that have been to the mountaintop and that has seen that success. I see it a lot to where often people are afraid to share because they think they’re going to lose customers. I don’t know about you, but I don’t know any single contractor that’s got more than 5% market share in any market. The ocean is vast. There is a lot of fish out there. There are a lot of customers just waiting to be taken care of. What do I need to look for if I’m looking to join a community? What are some things that you’ve seen work or don’t work?
It’s the attitude. There are a lot of contractor groups that are out there. Some of them operate more like a country club. Everybody tries to one-up the other person. It’s one where you see more of an attitude of service and it’s, “You’re a member? Come on over to my shop and let’s talk.” I don’t know anybody in the Service Nation Alliance, for example, who can’t call up another member, drop in on them and visit them. That’s the great thing about contractors. I don’t know an industry where people are more giving and more open to helping each other than the contracting community. I’ve worked in high tech and I did some marketing consulting with major corporations. None of them are as challenging or have people that are as down to earth as the contracting world.
How to get started in either looking to join your community or maybe even finding a community that maybe it’s a better fit for me? What’s one of the things we can do?
Most groups have some type of recruiting event. We have successful days. We hold them around the country and several of them every month. There are other groups that have those as well and you can search for those online. The Service Roundtable is a very low barrier to entry. It’s self-service that’s $50 a month and you can engage people online through it. It’s getting involved with those but also come to the national events like Service World and Barefoot Roundtable. It’s there where we’ll talk to people who are in different groups and at your local trade shows. These are going to start back up and we’re going to get away from the virtual world, which is great.Millennials are hard workers if you can find the right environment for them. Click To Tweet
I was at the Conditioned Air Association of Georgia’s annual meeting. They had a couple of hundred people and it was great to be back face-to-face. When you talk to other contractors, you ask them what works for them, “What are the things that you like?” They’ll tell you and be honest with you. Every group has a reputation. They’re not hard to find. You can go to the online forums and there are online Facebook groups and people will share those with you. What you have to find is somewhere where you feel a fit and you feel comfortable. When you find it, you’ll know.
A lot of the work that we do is helping contractors hire better people faster. It’s no secret hiring is, and probably will be for a long time, one of the largest challenges for contractors to find good people. We help them focus on fit. I can teach you to turn a wrench. I can send you to go get another certification or something like that but what I can’t teach you to do is to be the right person for our team to feel like you belong here and make a difference.
I would say that finding the right people is not one of the greatest challenges. I’d say it’s the greatest challenge. That’s where most contractors struggle with. You want to hire people that fit your culture. I didn’t get culture for the longest time. I knew we had a culture. I just didn’t understand it. I knew it was there but I didn’t realize that you can design a culture. I went to the Disney Leadership Institute and it changed my outlook and it blew me away.
At Disney, they believe that culture can be designed because culture is the shared values. These values drive behaviors that drive results. There are certain behaviors that you will or will not do based on a value system. If you identify what those values are, you can see what the behaviors are and the behaviors drive results. This is why Peter Drucker said that culture eats strategy for breakfast. A great strategy has to be executed, but a great culture is self-executing. An important part of the hiring process is identifying your values. What are the values that are important to you, your company or your organization and develop questions? I’m assuming you can help these guys do that.
Identify the underlying behaviors that are consistent with that value. Now you’re bringing people into your organization who share the value set you have. There’ll be less conflict, more harmony and productivity. You’ll have a better organization. When the pandemic first hit, we asked a number of our members who were seeming to get through this without much of the struggle to get on a webcast with us. The thing that struck me listening to these guys describe their experience after what happened in March 2020 was they all mentioned the culture of their company. They had strong cultures that got them through. If anything, COVID has brought out the importance of culture to a business and the need to make sure that you’ve got a strong culture.
In a couple of things that you said, one of them I like is that the values are the behaviors you’re looking for. It’s what drives the behaviors. We tell a lot of people, “Your values should be a verb.” It should be something you can do, not just be something that you are, because you want to see that show up in the actions when you start executing that strategy. I liked that piece. The other thing too is COVID made it so that a lot of people said, “We’ve got to figure out how to do this remote workforce thing.”
The thing that most people don’t realize is that the trades have been doing remote workforce since ever. They were the first ones that were remote. Whether you’re working on a job site because you’re constructing something new, you’re doing tenant improvements or you’re out there servicing something. They’ve had a remote workforce. I think to your point that culture is what’s going to help you bring the right people together. The more intentional you are about that, the easier it will be to find the right people and keep them because that’s the other big challenge. It’s one thing to find them. The other thing is being able to keep them. I can’t tell you how many times I’ve heard somebody tell me, “I lost Jimmy for a quarter more an hour.” Jimmy didn’t leave for a quarter more an hour. For a lot of other reasons, the quarter is the excuse he used. That’s what helped him justify it. Let’s talk about this learn to craft the business. Go to owner school.” Can you elaborate on that a little bit for me?
The first thing that we start with is goal-setting. You need to understand the goal-setting process and how you set goals that are out of reach but not out of sight, so you have to stretch for them. We do an annual success plan. The goals ripples through the organization. It goes into manpower, planning and looking at available days and making sure that you know, you’re looking at what type of production you’re going to need through the year and that you’re going to have enough bunch of trucks to be able to fulfill that. You can work on it in advance. Too often, a contractor waits until Jimmy is gone and now, “I’ve got to find somebody.”
You should be working on this. We advise that the business owner should be working on recruiting 30% of his time year-round. Do you have a recruiting brochure? I have a recruiting brochure just like you have a company brochure that promotes your company and the benefits that you offer to prospective team members. If you don’t have a recruiting brochure, you’re not serious about that. Work on building relationships up. A lot of times, we’re interested in the trades because we’ve got all these people that think they have to go to college, and I don’t think they do.
There’s also a group of people out there that are willing to work hard but aren’t going to go to college. It’s not because they aren’t smart or bright, they just aren’t going to do it. How do you identify them? How do you find them? Go to the Catholic Church and talk to the priests about some of the Hispanic kids that may be looking for the trades as an opportunity or go to an African-American church and talk to the pastor and say, “Who’s coming up in the youth that might find this as a great career?”
That’s something that we’re negligent in doing. We need to be doing more than that. We need to be doing more of reaching out to the high schools. This is incumbent upon every contract. That’s all part of it. We’ve got some contractors whose path is they hire an apprentice for every truck. After two years, the apprentice gets his own truck. They are constantly building and growing and doubling. It’s a slow approach, but it’s a steady approach and it works. Let’s talk about the need for good retention programs. That’s huge. We’ve seen contractors lose their entire team before. How does that happen? One of the things is they are meeting the technician’s or the plumber’s needs.
In the past, we’ve always been good at tech trade. We were good at technical skills. We do a lot of training in that. In the previous years, we’ve gotten pretty good at soft skills training. That’s standing up straight, smiling and looking people in the eye, the whole deal. The knock on the door, step back, hand a business card and put on sheet covers. All the soft skills, we’re better at that than we have been. We’re finding that the training is not just technical skills and soft skills, but we also need life skills. Why does the guy leave for another dollar an hour? Because he’s broke. Why is he broke? He’s paid well. How is he broke? He’s broke because he doesn’t know how to manage his money. Why didn’t he know how to manage his money? Nobody has ever taught him. We’ve got contractors who are out there teaching and we created a course for our members to use with their guys that teaches them personal financial management. Once you start to get control of your personal finances, you’re less likely to leave for an extra dollar an hour. It goes beyond finances. It’s character. It’s how to be a good dad or husband. It’s all kinds of things that people don’t learn anymore and they used to learn growing up. The guys that do this and do it well, they select.If people in the company aren’t growing, then the business won’t grow. If people are growing, then the business will grow. Click To Tweet
One of the things that we coach our clients through is everybody has got a joke about a Millennial. There’s somebody that’s got something bad to say about Millennials. I think of two things. Number one, some of the hardest workers I’ve ever met are Millennials because they know why they get out of bed in the morning. The other reason is that Millennials have the greatest economic buying power in this country. You better learn to like them. They’re around. They’re not going anywhere.
One of the things that we found out a while back was that, to your point, life skills, these guys don’t come to work because they want to turn a wrench. That’s all they want to do. They want to earn a good living. They want to take care of their family. Sometimes, we have clients who have gotten into this mindset of, “We need to finish raising them a little bit. We need to give them the life skills that the schools let them down on or that their parents didn’t teach them because they were too busy out pursuing their careers and doing their own things.”
One of the jokes is, “Millennials never show up to work on time.” They talk about that all the time. I was like, “There’s software out there that you can get, that will send a text message to him that says, ‘It’s time to get up and get out of bed and get to the job site.’” It’s those little things that we can do to coach this the next generation and help them with life skills. Help them understand how to be more give more of a contribution to not just the company but also their family.
We also have to change the way we manage because I grew up in a Theory X environment, “What do you mean you don’t want to do that? I’m your boss, do it. What do you want? I give you a paycheck.” We’ve got to manage Millennials like we manage a group of volunteers. I don’t know if you’ve ever managed volunteers, but the way you manage volunteers is you thank them for showing up. You give them lots of pats on the back. You tell them, “Good job.” You celebrate them. You have pizza. We’ve got to start doing some things like that with these guys. The thing about Millennials is that they are hard workers if you can find the right environment for them. Let them know what they’re doing is important. Show them their value they’re providing.
We went through 60 hours without electricity at 0 degrees in my house in February. We had a pipe burst. When the plumber shows up. He is a hero and a savior. He’s allowing us to live in our house. It’s the same thing for the air conditioning guy when he comes to work on the broken furnace or the air conditioner and it’s 100 degrees outside. What guys in the trades do is important. That’s why they’re all essential workers. They keep homes cool in the summer and warm in the winter. They make sure that the toilets flush and the showers are hot. They make sure that the lights come on. They help rebuild homes to make them more livable. This is valuable stuff. They are some of the tradesmen to be looked up to, not looked down upon. A lot of them have gotten the attitude where they look down on themselves and they shouldn’t do that because they’re providing a vital role. Frankly, you’ve got to work with your head and hands.
I can’t agree with you more on that. The thing that many people don’t realize about the younger generation and frankly, the modern workforce, and I know Gen X-ers feel this way. They’ve stepped away and changed their mindset about what work is about. Work is no longer about a paycheck. Work is now about a purpose. We tell people all the time, “The Millennials traded a paycheck for a purpose. They don’t care about the extra dollar an hour. They want to know they’re making a difference. They want to know that the work they’re doing is contributing to something bigger than themselves.”
I see many owners that don’t know why they’re in business. They’ve forgotten that they did this to create a lifestyle, take care of their family or contribute to the community. They’ve forgotten that and it’s all become about, “I’ve got to get the next job. I’ve got to reduce expenses and increase profits.” They’re focused on that that they forgot about their purpose, the reason why. If you can align people on that, if you can give them that sense of belonging and right now more than ever, as human beings, we want to feel like we belong to a group whether it’s a company or a group like yours.
What’s the higher calling? What’s the mission? What’s the bigger purpose? What’s the vision? Everybody wants to be a part of something bigger than themselves. Every morning since the pandemic started, I post a short motivational video on a Slack channel for my company. I usually write some messages. I ask a question at the end of it, “Tell me why this day is going to be a great day? Tell me something good.” I took some Jim Rohn and some Doug Hanson stuff. I used a motivational speaker that we had in one of our meetings. Doug Hanson said, “Everybody works on a to-do list and that helps you get things done, but what you also need is a to-be list so that you’re working on yourself. What do you want to be because you can become more than you are?”
Jim Rohn echoes that message, “It’s the sense of purpose that’s got to go beyond just the company, but what are we doing to grow ourselves?” Look around in your backyard. Everything is either growing or dying. It’s the same way with a business and people. If people in the company aren’t growing, then the business won’t grow. If people are growing, then the business will grow. This fits in with what we’re looking for in Millennials and Gen X-ers. They all want to grow. They all want to become more. Here’s the cool thing about these kids. They don’t see a dividing line between work and life. They don’t go home and just turn it off. They’re interwoven and interlinked. If you’re flexible with these people, then they will be loyal to you.
We used to work with an HVAC contractor. They all have GPS tracking in their trucks. At the end of the day, they would pull the reports to see where the guys went. If they made a stop at a Home Depot or something, they would reprimand them. They’re like, “They’re doing side jobs.” Their turnover was ridiculous because of that level of scrutiny. I love that modern workforce. The Millennials, especially. There’s not a difference between life and work. There’s not that work-life balance. They don’t understand that concept. I remember when I was in corporate, there were all these initiatives about work-life balance. I’m like, “I work 90 hours a week, then you give me 90 hours a week of home life where I’m sleeping and recovering.” That’s not balancing but that was the way it worked.
They don’t see the difference. A lot of Millennials clock in at 9:00 PM after the kids have gone to bed and start working a little more. How do we put these two takeaways into practice? What are the things that they can do now? Those reading are like, “I’ve got to go do something with this.” Associating with successful contractors and learning the craft of the business, what are the things they can do to put that into action?
This is self-serving but I think the first step is joining the Service Roundtable and committing to come coming to the Barefoot Roundtable. Everybody wants to get out, go somewhere, do something and see people. That’s a good place to start. If you go to ServiceRoundtable.com, you can learn about the Barefoot Roundtable. If they want to try us out, we’re $50 a month, but I’ll give them three months for $75. No harm, no foul. If they don’t like it, they can quit and leave. We don’t handcuff you. There’s no long-term contract. We have to win our members’ business every month.Everybody wants to be a part of something that’s bigger than themselves. Click To Tweet
Email me at [email protected]. Mention it and I’ll have someone get in touch with you. That’s a good starter. If you have a local trade association, go and get involved with the local trade association. Business is building relationships. Start building relationships and the craft of the business. Start reading the books that are essential. If you’re an air conditioning contractor and you haven’t read Ron Smith’s HVAC Spells Wealth, you’re not serious.
Read The E-myth. You’ll see yourself in the pages of the E-Myth. There’s The E-Myth HVAC Contractor that Gerber wrote with my friend, Ken Goodrich. Ken is a guy who started by sitting outside of the supply house. They told him to wait while they were taking care of their good customers. He’s sitting there with his mullet, as he describes it, mad, scratching out stuff on a legal pad and setting goals for himself, and he got so mad that he went out and started achieving those. He built a $100 million company. After that, he did it again. Now he is in the $200 million range. He was growing hand over fist. The guy has his own jet.
Another book I’d love to add to that is Profit First for Contractors. It talks about the craftsman cycle, “Go out and get the work, go out and do the work.” It’s this roller coaster of, “I’m busy doing these jobs. I can’t go sell more.” It’s like, “You have to always be selling so that you don’t have these ups and downs in revenue.” Those are fantastic books and I’ve read HVAC Spells Wealth and I’m not even a contractor. It’s a fantastic book. You have the best practices group as well.
Service Nation is the company. We run the Service Roundtable, which is our large self-serve group. We have the Service Nation Alliance, which is our Jesuits or Marines. These are the guys who are serious about success. Every one of them joins, then they get placed on an advisory board with other contractors and a consultant who guides them. They meet weekly, they go over KPIs, they go over their personal goals and hold each other accountable. The success and the growth that these guys have attained are amazing. They’re helping each other become more than they all can be as individuals. It’s the old adage of, “The smartest guy in the room is not smarter than everybody else in the room.” If you can take advantage of the insights that everybody in the room has, you’re going to be way ahead of the game.
I love that piece about accountability too. For a lot of guys, it’s lonely at the top and they’re only accountable to themselves. You probably know this, but I’m the hardest person to hold accountable. Getting involved in a group that can hold you accountable is fantastic. I’ve enjoyed our conversation. I’ve learned a lot. I’m sure our readers have learned a lot. Reach out to Matt. Take advantage of that Service Roundtable offer. It’s a fantastic group. They’re doing a lot of great things and great value is coming out of it. Matt, thanks for being on the show.
Thank you. I appreciate the opportunity.
- Service Nation
- Matt Michel – LinkedIn
- Service World Expo
- Conditioned Air Association of Georgia
- Service Nation Alliance
- Barefoot Roundtable
- Disney Leadership Institute
- [email protected]
- HVAC Spells Wealth
- The E-myth
- The E-Myth HVAC Contractor
- Profit First for Contractors
About Matt Michel
Matt Michel is an internationally recognized and highly acclaimed motivational and informational speaker. He has spoken about marketing, branding, sales, pricing, leadership, strategic planning, and goal setting from Istanbul to Australia and every place in-between.
Matt founded Service Nation Inc., which operates the Service Roundtable (the world’s largest contractor alliance), the Retail Contractor Coalition (a contractor branding and marketing program), the Service Nation Alliance (an elite contractor best practices group), Roundtable Rewards (the service trades’ largest contractor buying group), and the Service World Expo (the service trades’ largest residential conference and show). Previously, he founded and created the Aire Serv Franchise System, which is the oldest continually operating HVAC residential franchise network.
Matt is the 35th and youngest person to be inducted into the Contracting Business Hall of Fame. The Air Conditioning Heating & Refrigeration NEWS presented Matt with the 2018 “Legends of HVACR” Award. Contracting Business Magazine named Matt one of the 22 most influential people in the history of the residential HVAC/R industry. Contractor Magazine named him one of the 18 most influential people in the history of the plumbing/hydronics industries (Matt is the only person to appear on both the Contracting Business and Contractor lists). The Air Conditioning, Heating & Refrigeration NEWS named Matt one of the top five business advisors in the HVAC industry.
Matt is the inaugural recipient of the HVAC Golden Toolbox Award, presented by North American Technician Excellence and Contracting Business Magazine to “recognize industry leadership and support of technician certification.” He has also received the Significant Sig (distinguished alumnus) Award from the Sigma Chi Fraternity.
Service Nation has been named to the Aggie 100 (“The 100 fastest-growing Aggie-owned or Aggie-led businesses in the world.”) six out of eight years entering it. Service Nation has also been listed in the Dallas 100 and has made the Inc 500|5000 six years running, including a ranking in the top 300 for Business Products & Services.
A popular writer, Matt is published more than 60 times per year as a featured columnist for The Air Conditioning, Heating, & Refrigeration NEWS, Contracting Business Magazine, Contractor Magazine, Contracting Canada, Plumbing & Mechanical Magazine, Southern PHC Magazine, and CB Hotmail. He also publishes the popular Comanche Marketing blog.