HVAC Success Secrets: Revealed

EP: 240 Luke Boyenger w/ Cruzumi - Building a Business That’s Built to Last

• Luke Boyenger

Share episode

Send us a text

Our latest episode of HVAC Revealed features an enlightening conversation with Luke Boyenger, the majority owner and CEO of Kruzumi. In this episode, Luke delves into the essential business fundamentals that can drive lasting success in the HVAC industry and beyond.

Hosted by Thaddeus and Evan, this episode is packed with actionable advice and personal anecdotes that emphasize the importance of mastering the basics to achieve greater heights in business.

3 Key Takeaways:

  • Seek Help to Succeed: Luke underscores the value of asking for help, especially in areas where you may lack expertise. His own journey shows how seeking guidance in sales helped him build a thriving financial services firm.
  • Master the Fundamentals: Much like athletes, business owners need to perfect their fundamental skills. Understanding key financial metrics and ensuring accurate bookkeeping can significantly impact profitability.
  • Profitability Over Revenue: Luke cautions against the sole focus on revenue growth without profitability. He advocates for strategic financial planning and tracking profitability at different levels to ensure sustainable business growth.

Don't miss this thought-provoking episode! Tune in now and join our Facebook group to share your thoughts and keep the conversation going. Let's improve the HVAC industry together!

#HVACRevealed #BusinessSuccess #SeekingHelp #Fundamentals #Profitability #Podcast #FinancialManagement #Leadership



Find Luke:

On The Web: cruzumi.com
Via Email: luke.boyenger@cruzumi.com


Join Our Group: https://www.facebook.com/groups/hvacrevealed
Presented By On Purpose Media: https://www.onpurposemedia.ca/
For HVAC Internet Marketing reach out to us at info@onpurposemedia.ca or 888-428-0662



Sponsored By: 

Chiirp: https://chiirp.com/hssr
Elite Call: https://elitecall.net
Service World Expo: https://www.serviceworldexpo.com/
On Purpose Media: https://onpurposemedia.ca

Luke Boyenger:

The biggest thing is they just mastered the fundamentals. You think these large companies have probably got all these big trade secrets and fancy algorithms and stuff that you gotta have billions of dollars in revenue to be able to figure out, and that's why they're so successful. They've got the secret weapon, the magic sauce.

Thaddeus Tondu:

Hey, welcome back to another episode of HVAC Success Secrets Revealed with Thaddeus and Evan. I'm Thaddeus. He's Evan. It's going to be a good episode. In today's show we have on Luke Boyenger from Cruzumi Cruzumi, Jesus. I was having a tough time with that before. So my apologies, Luke. So Luke Boyenger from Cruzumi, who is a fractional CFO firm and really, I what, one of the journeys and what we're going to talk about, pain point, having come from an industry, his grandfather built a successful construction business, but couldn't sell it due to poor exit planning, right? His parents ran a business and had to end up having it ended in a bankruptcy. And so having watched all this from the external peripherals, The importance of making sure there's good financials, sound financials inside of a business are key. And I'm excited to unpack some of those in terms of some of the importance with it, cashflow et cetera, pain management in terms of how do you start something out of pain, which is super exciting. So it'd be a good episode.

Evan Hoffman:

Yeah, definitely at the end of the day revenue is vanity and profits are sanity and I'm excited to dive into that. And. Just make sure that companies are taking care of themselves, especially with uncertainty around any economy. It really doesn't matter what's happening in your economic environment. You want to make sure that you're taking care of yourselves and your pocketbooks are lined and you make sure that you don't run a nonprofit business.

Thaddeus Tondu:

And accidental non profits some of my words. well, Let's get into it. Of course, today's show is sponsored by we wouldn't be being able to do this without our sponsors. They're sponsored by Free2Grow, Chiirp, Elite Call, and On Purpose Media. Those are in no particular order and if you ever wanted to transform your home service business with The ultimate automation toolbox. You can capture more leads, connect instantly and skyrocket your sales. Chiirp integrates seamlessly with platforms like ServiceTitan and Housecall Pro, offering automated text, emails, and even ringless voicemails. You can boost your Google reviews and customer loyalty with their proven rehash programs. Super important for this time of the year. By the way, schedule your demo with them and get an exclusive 25 percent off your first three months visit chiirp.com/hssr to start boosting your revenue today.

Evan Hoffman:

Awesome. Tired of dealing with after hours call centers that struggle to get calls on the board with lackluster results? What if you could cut your acquisition cost in half for new customers? With Free2Grow, you can do just that with their AI after hours booking service. The scripts are completely customizable to your business, and they directly integrate with Service Titan, Housecall Pro, Jobber, Field. Pulse and ServiceFusion, on average, they're answering their AI answering services booking 82. 5 percent of their after hours calls. directly into your job board. Don't believe me? Call 757 550 3534 and test it out for yourself. the end of the call, you're going to get that same text message that your technicians would get with a summary of the call and the recording. Go to freetogrow. com to learn how you can get started today.

Thaddeus Tondu:

Cool. Love that. 85 percent after hours booking rate. That's fantastic. So and now once you have those people, you now you might need to outbound your database to fill your dispatch boards with lucrative service and sales appointments and you can boost your memberships too. That's where Elite Call comes in. A US based call center that does all those things for over 20 years. Their dedicated teams don't just make calls, they directly integrate appointments into your CRM and fill your dispatch boards. Don't let your competition get ahead. Let Elite Call connect with your customers first visit elitecall.net today.

Evan Hoffman:

Love it. Love the guys from Elite Call. I can't wait to see them again this fall at all the events. And last but not least, we have On Purpose Media. Enhance your online presence. With On Purpose Media, your go to home service marketing experts for everything web design, SEO, and PPC, they build stunning user friendly websites that are built to convert visitors into phone calls, enhance visibility on Google with both SEO and pay per click advertising. Let's turn your online presence into a lead generating powerhouse. Visit onpurposemedia.ca to start your digital transformation today.

Thaddeus Tondu:

Welcome Luke to the show.

Luke Boyenger:

Thank you so much. Appreciate you guys having me here today.

Thaddeus Tondu:

Yeah, it's going to be a lot of fun. So let's just jump straight into it. Having watched a grandfather build a business that he couldn't sell and parents going bankrupt. Man, that must've been quite a journey to see that.

Luke Boyenger:

Yeah, it's it's been an exciting road for sure. There was success along the road, on the way. There were good times, there were bad times. And, ultimately both of them probably ended up Not as positive as we probably would have hoped that they would be in the end.

Thaddeus Tondu:

So I'm curious how watching that and seeing that formed what you're doing today.

Luke Boyenger:

Yeah, it absolutely is the foundational reason for why I'm doing what I do today. No, I obviously come from a family of entrepreneurs and I've got entrepreneurial drive of my own. I always knew I wanted to own my own business. Watching my grandpa not really get the value out of his company when it came time for him to not work anymore and seeing a business go bankrupt, parents, I wanted to make sure I did it the right way. So I have made sure that I closed my accounting and finance skillset gap before I went the entrepreneurial route. Went back to school and studied accounting when I was 24, got my degree, got a CPA license, spent six years auditing Fortune 500 companies. Really just wanted to make sure I understood the right way to run a business before I went into entrepreneurship. Kind of merged the two and ended up doing entrepreneurship. In the accounting and finance space where I'm now able to take the skill set I've developed and use it to help smaller business owners like my parents and my grandparents have been.

Thaddeus Tondu:

Six years auditing Fortune 500 companies. That's, and obviously they're big businesses, they're massive. In translating that down and bringing that to smaller service business, service businesses, home service businesses, what are some of the things that you saw in the Fortune 500 companies that home service businesses just missed the mark on completely?

Luke Boyenger:

Yeah, absolutely. The biggest thing is they just mastered the fundamentals. You think these large companies have probably got all these big trade secrets and fancy algorithms and stuff that you got to have billions of dollars in revenue to be able to figure out and that's why they're so successful. They've got the secret weapon, the magic sauce, but it's really not the case for most large companies. Mastered the fundamentals, they do them really well, they do them consistently and they invest in them even when they're not cool, fun, or sexy to invest in, spending money on an accountant is about as fun as buying tires for your car, right? It's not something you get excited about doing, but you just have to do it because it's hard to get traction if you don't, right? So that's really the biggest difference between the large successful companies and the small ones. They're investing in the right spaces, even if that right space isn't something that's fun to invest in.

Evan Hoffman:

I remember having a conversation was it, I think it was last winter and he went out and spent way more than I ever had on tires. It was 1, 300, 1, 500 on winter tires.

Thaddeus Tondu:

Okay. Needle Ridge Grappler, anybody that wants, that has a Cal tire, that wants a good set of tires in Canada.

Evan Hoffman:

And I questioned him on it. I was like, why? And he's that's the only part that is touching the road when I'm driving with my family and I need to be able to rely on it. And when you relate it back to, to finance and understanding what it is that's happening in your company, you can't do Any of the fun investing that you talk about, anything fun that's invested in including training and coaching and all the other things, softwares and technologies, marketing, you can't do that if you don't have the fundamentals down and being able to manage your profits.

Luke Boyenger:

100%. It's like the kid that wants to play in the NBA someday. So he goes out in the backyard and jacks up a million Steph Curry three pointers. That's not gonna get you to the NBA, right? You gotta get in the gym and master the fundamentals of dribbling and ball handling and footwork and be really good at the basics. And when you're better at the basics and everybody else, then you got to go add an advanced skillset to it. That's when you unlock the power to be best in class.

Thaddeus Tondu:

Any, like you can shit and input any sport, right? And they always say the fundamentals, the basics, go back to the basics. You're having a, you're having a tough time, you're struggling with something, go back to the basics. Let's take a look at CFO type stuff in financials. What, somebody's okay that's great. I don't even know what the basics are and by the way, if you're that business, then That's okay. Okay. That is okay. If you don't know the answers to these questions, it's seeking that knowledge, right? So if you're looking at this, okay, we're talking financials. We're talking basic fundamental shit. What are some of the basic fundamental things that somebody needs to master in their home service business?

Luke Boyenger:

Yeah. And yeah, we can certainly touch on that, but people don't know what the fundamentals are because they don't have the skill set to even recognize what the fundamentals are. I wanted to get better at golf, so I went to the driving range and I hit a couple thousand golf balls and guess what? I didn't get any better because I didn't know how to practice correctly. I hired a coach for three months and I got significantly better. Over a three month process because I had somebody who understood what the fundamentals are and taught them to me. And all I had to do was go execute on what a knowledgeable experienced person was teaching me and I actually made progress. So a lot of the reason that business owners aren't getting the fundamentals right in the business is because they don't know what they are to even go implement them in the first place. You've got to get someone in the business with the skillset to be able to point you in the right direction on the fundamentals. Things like you've got to know. Your numbers. And that's a vague term that people throw out there. So what does that really mean? It means having a competent and reasonably compensated accountants in the business that is doing the accounting. They're recording your transactions. They're reconciling your accounts. They're paying your bills. They're doing your invoices. And they actually know what they're doing. They weren't a high school English teacher yesterday. And now today they're an outsourced bookkeeper. We'll do all your bookkeeping for 50, 50 bucks a month. And you think you're getting a great deal. You're not getting a great deal. You're getting screwed over by somebody who doesn't know what they're doing, about evidence by the price they're charging, because they know they don't know what they're doing and they don't think they can charge very much. You see the same thing in your industry as HVAC guys, right? The person out there doesn't know what they're doing. They have to undercharge to get work. Look, bookkeepers and business people do that too. So make sure you're, you've got somebody who actually knows what they're doing, has a resume and a level of experience that. illustrates they know what they're doing to get the accounting, and can, and that they can explain it to you that they can go over the numbers with you every month and say, this is how profitable you were. This is what happened with your cashflow. Like just some basic level reporting so that you're armed with good data about how your business is actually doing.

Evan Hoffman:

So you mentioned consistency with that as well. How often, so you said monthly, you meet with the accountant. How often should you be reviewing the numbers in terms of profitability? Average tickets margins on jobs, things like that.

Luke Boyenger:

It depends on the metric. We're talking about profitability on jobs. I'm wanting to have some kind of job costing or whip reporting functionality in the business where I can review it weekly. And see how am I doing in my jobs and am I profitable? Am I not profitable? And that probably varies by business size too. If you're a large commercial HVAC company and you're doing massive jobs that take several months to complete, that's probably a different question than if you're a basic home HVAC person where, a big job is two or three days. It's a very different scenario. So it depends, but profitability probably at the job level, weekly profitability at the company level, monthly, I say monthly at the company level, because there's certain company expenses that are monthly expenses. So if you review profitability weekly, it's not really telling you the whole story from an overall company profitability perspective.

Thaddeus Tondu:

Sorry. Vehicle payments is an example, right? Just like whatever people are wondering. Yep.

Luke Boyenger:

Yeah. If you have all your vehicle payments hit in the last week of the month and you're reviewing your business profitability weekly, first three weeks of the month, you think you're killing it. Then all of a sudden the fourth week hits and you're like, crap, we lost money. Yep.

Thaddeus Tondu:

Even like annual stuff, right? Like you would buy some of the annual like our business, we have annual expenditures and now we write softwares, right? Do you use some of them are annual. And so understanding that, Hey, this is going to hit in this month. And that month sucked because while you had annual software dues, right? Evan, sorry, what was your what was your question about other KPIs?

Evan Hoffman:

Just asking what other finance numbers we need to be paying attention to. you get into like percentages going to COGS versus overhead and anything like that?

Luke Boyenger:

I would. Yeah, I think there's a couple of major metrics that every business owner should know. That are just very fundamental. The first one is gross profit, just at the end of the day, revenue minus your costs to complete your good or service and deliver it to your customer. What is it? How much are you making net profit on the work that you're doing? Sorry, gross profit on the work that you're doing. So gross profit margin and then net profit margin. Okay. You take your gross profit and you use it to pay all of your operating expenses that are not job related. There's costs of running your business. What's your final resulting net profit margin? And find some kind of basic benchmark to compare yourself to, whether it's the classic 20 percent gross profit, 10 percent net profit, that's a great place to start and let that be your standard and push to hit it.

Evan Hoffman:

Now, is that specific to construction that you see 20 percent gross, 10 percent net?

Luke Boyenger:

It's pretty common across all trades. It's pretty common with general contractors. It's probably definitely different than that. So it's more about knowing your industry. And honestly, commercial HVAC is probably different than residential contract residential HVAC in terms of margins. Understand your industry, your competitors. What's normal for your industry and are you above or below that?

Thaddeus Tondu:

And we've heard various numbers in the industry. HVAC for example, most are like, some people say two to five is net profit. And some are like that's, it's five to eight. And it's averages, right? And so we have other people that are like, you gotta be hitting 20%.

Evan Hoffman:

I remember talking to, yeah I remember talking to Josh Kelly and he said, everyone should be striving to get to 20 percent that now that takes being a larger company that takes buying power that takes negotiation when it comes to your wholesalers. There's a lot that goes into that and obviously he's got a lot of experience with that and working with Parker and sons, but all of those are important factors to consider as well. I think striving for 10 to 15 percent net as a smaller company is a good number when it comes to HVAC.

Luke Boyenger:

I totally agree. And a lot of people end up in that three to 5 percent net profit range cause they're chasing revenue instead of profit.

Evan Hoffman:

Now, how do you recommend Like a company that who's growing with the intention of trying to sell versus a company who's growing and they're not, they don't see that exit yet. So they're willing to invest more into their company and take a little bit more off their net. How do you advise someone who's in those two different scenarios and what they should be paying attention to?

Luke Boyenger:

Yeah, when we work with a business owner, we're doing, we're basing everything we do on the specific goals that business owner has for that specific company. So we don't have generic recommendations that we give across the board to our clients. Oh, you're an HVAC company, you need to go and do ABC. No, it's what is your business? What do you want to achieve? Where are you trying to go? And then we help build a plan to get there. So if your plan is to exit in the next, I don't know, 18 to 36 months sell out to private equity or something like that. There, our plan is going to be all about let's go out and make sure that we fully understand the most common valuation method in your industry. And then how do we drive that valuation method in your company? So if it's multiples of EBITDA, if it's multiples of EBITDA, we're going to go push for financial health from an EBITDA perspective. Get your EBITDA as high as we can so that you get the highest multiple on your EBITDA and get the best sales price out of your company that you can. If you have no interest in selling your company, you're trying to build a generational business and hand it off to your kids, then that's a completely different consideration. We're talking about driving net profit and cash flow to build a sustainable long term business that can last for generations to come.

Thaddeus Tondu:

Yeah, again you should know when you're looking to potentially do them. Sometimes you don't. Sometimes it just comes out of left field. You might get an offer and in a way you go cool. Let's jump into the random question generator, favorite part of our show. I like it. I actually read the questions beforehand and I I'm really, there's two that are really good on here. Cause I'm not going to take that from you. Of course, a random question generator here is brought to you by the folks over at On Purpose Media. Hey, that's us. If you're thinking, Hey, I'm not sure about my marketing. It's the end of the year. How did it do? Should it be better? Hit us up at onpurposemedia.ca/second, where we can give you a second opinion on your digital marketing, whether it's good or it's bad. It's free. It's no obligation. You can do whatever you want with that. You can take it to your current marketing company or, maybe just hire us to fix it. If it is. That is, if it's good, then we'll also tell you that. So I actually got off the phone with somebody today and he's I'm actually really happy with this one service line. This is PPC provider. He's I need a website and SEO. I'm like, great. I'm not going to tell you to switch your PPC if you're happy with them. That's the big thing. All right Luke, we have three questions queued up. You actually don't get to know what the questions are. You just get to choose. Do you want question one, two, or three?

Luke Boyenger:

No, I'll shoot for the middle. Why not?

Thaddeus Tondu:

If you were a stripper, if you were a stripper, what would your stage name be? Sorry, what's that?

Luke Boyenger:

The ones where you take like your they have like the charts where it's your first name and your the first letter of your first name and the last letter of your last name. It comes up with your stripper name. I presume he was my gamer tag in high school. So we'll just stick with that.

Thaddeus Tondu:

Yeah, there you go. Yeah, it has it in there so.

Evan Hoffman:

What did you play? Hold on, we gotta, you can't just throw in a gamer tag in high school and not tell us what you played.

Luke Boyenger:

Yeah my friend and I, we were into some of the first person shooters, your classical Call of Duty type of stuff, Battlefield. We really liked strategy games like Civilization and more of those Civilization, building, war type of games.

Thaddeus Tondu:

I never mind, like I actually enjoyed playing them, but I hated when they had to like you to wait for such a, like for your stuff to get built that was always the one I didn't have the delayed gratification. I wanted to instantly and I wanted to do it. So I was at a tough time with those. The Call of Duty were definitely fun ones, but I definitely enjoyed the first person shooters, especially back in university. You're sipping on a couple of pops and with the headset and chatting away. Yeah. they were good times. They were good times. One of the things that that you do in your business that is a little bit unique to some and maybe some to not to some, so is that you and your mother actually working in the business together. Very interesting dynamic. It is not your wife. It is your mother for anybody that's wondering, looking at the photo. Yeah, we got that cleared up. If for those are when I put my foot in his mouth and said it was his wife, it's his mom. There we go. Hopefully that assumption doesn't happen very often, but if it does, maybe I'm not the only one. But anyways, I digress working with your mom probably brings its own inherent challenges in working inside of a business. I think working with any family for that matter in terms of keeping your guys's bond and your strength tight in terms of the mother son, what are some ways that you guys are leveraging that inside the business to be able to keep the division between mom and son and working in the business?

Luke Boyenger:

Yeah, great question. honestly, a big part of it is how we structured the business in terms of I am by far the majority owner and she's a minority owner. So we don't get into this head butting of she wants one thing, I want something else. It's, Sorry, I'm the majority owner and CEO. We're following my path and I welcome your input and your feedback. We talk openly, but at the end of the day, everybody knows that I'm the majority owner. I'm the CEO. I'm going to make the final decision and we're all going to be happy with it and move forward. We don't waste time arguing about stuff that, isn't going to make a difference because at the end of the day, it truly is my decision. Whereas if we had structured it more 50 50, now everything is a back and forth and a debate and what do you want? What do you want? And we get to avoid a lot of that just in terms of how we structured the business. we also, it's nice. Everything we do is virtual, so we're not working in person. Everything we do is on the computer, so we're just used to the fact that we're on a Zoom call, we're talking work, we're working, we're doing work. And then when we see each other in person, it doesn't feel like work because we don't have to work in person. So there's this natural distinction that happens there. Where when we're in person, we're not really talking about work but when we're on a Zoom call and we're working, then we are. Just because of the two differences in those environments. Plus neither one of us are workaholics by any means. So we're not the type of people that just want to talk about work 24/7 either, which helps.

Thaddeus Tondu:

Work life balance is that important key and some people say work life balance is a myth. Others say it's super important. I think it depends on your personality to be honest and whether you could actually shut the work off and take some time to be able to recharge the batteries or some people just thrive on the work all the time. And so understanding those subtle nuances between it are our key distinguishing factor between it.

Luke Boyenger:

Yeah. I don't love the term work life balance. Myself, I prefer to think about it from the perspective of personal goals and we're getting really crystal clear on what your personal goals are and then you go build a business or you take a W 2 job, whatever your approach is that aligns with what your personal goals are and what you're trying to achieve. As a person, it's not about balancing work and life. It's about your job or your business being a means of achieving a goal that you've set for yourself personally.

Evan Hoffman:

Don't make sense. Working to live or living to work, right? Like it's getting crystal clear on that. That makes sense.

Thaddeus Tondu:

In some business owners they've essentially bought themselves a job too, right? Like they haven't built a business where they've replicated themselves and removed themselves and now they're stuck owning a business, but they're working a job versus actually running a business. Yep. I think it's common and common in a lot of businesses.

Evan Hoffman:

What's your mom's role in the company now?

Luke Boyenger:

She's the chief operating officer. She handles a lot of the day to day administrative operational side of the business in terms of she does all our bookkeeping. She pays all the bills. She does a lot of the client outreach sales marketing. A lot of the administrative side of the business is where she spends the majority of her time.

Evan Hoffman:

Got it. No, I found it fascinating when you mentioned that at the beginning of the show about, before we even came on, that she went and studied bookkeeping after the business, she had a failed business in the beginning going to fix that mistake and learn what it is that she felt was lacking. And there was pain there. And now being able to own a business as a minority owner. But being able to own the business nonetheless and be able to thrive and help this business grow in a way where the previous business failed and using that pain as motivation to go and find the solutions that you need to move forward. That's really cool.

Luke Boyenger:

Yeah, She's really poured herself into understanding bookkeeping and accounting at a deeper level To make sure that she knows the right way to do it and she advises some of our clients on the bookkeeping side of the house also So she's out there helping other business owners now get the level of clarity that we probably wish we had always had all along in our own business.

Evan Hoffman:

I love it. Now you got your CPA your mom's a bookkeeper You But you're running a CFO and an advisory firm. So what is the main difference? What is the separation there between an accountant and a CFO?

Luke Boyenger:

Yeah, great question. CPA is a very commonly misunderstood title because the vast majority only ever interact with the CPA. When that person is doing their taxes, they come away with an assumption that CPAs are people who do taxes, but it's a little bit like saying professional athletes are people who play basketball. Which isn't really the case, right? Professional athletes can do a lot of different things. They can play basketball, they can play football, they can play soccer, and accountants and CPAs are the same. Tax is just one thing that a CPA can do. It's just the one most people are familiar with, because that's the only thing they ever personally use a CPA. But CPAs do taxes. They do accounting, they do audits, they do financial statement compilations. They do a lot of different things. So I, I went the audit route, spent my years auditing companies, financial statements. So I'm a CPA. I'm not a tax expert. I learned enough about tax to pass the CPA exam and I really haven't touched it since. I'm not your tax advisor. I'm definitely not going to be the one doing your tax return, but my expertise is in the realm of financial accounting and really data analysis and how do we use financial data in a way to get strategic about how we're running our business and really understanding what our financial statements are telling us. It's about what we need to do differently. What do we need to stop doing? What do we need to do differently? What do we need to start doing? It's all in the financial data if you understand how it flows through the business and what it's telling you. And that's really what my expertise is as a CPA.

Thaddeus Tondu:

Let's do a little start, stop, keep exercise here. I was hoping you were going to go that route too. And so start, stop, keep something that Trent Booth, one of Evan's old mentors and more of it for Evan than me. I know who he is. Never really considered him a mentor, although he was a super fun guy. And I think he was one of our first guests on our podcast, but no, actually Nick Johnson was, but he was anyways, been on a couple of times. Great guy. So he has a thing called start, stop, keep. where you look at a business or a person or a thing or an entity or whatever, there's one thing that you should start doing, one thing you should stop doing, one thing you should keep doing. You've probably seen this a lot in terms of looking at trade businesses financials. And you've probably seen some commonalities on one thing that most people need to start doing, one thing that most people need to stop doing, and one thing that most people need to keep doing. What would be that one start, one stop, and one keep?

Luke Boyenger:

Yeah, they need to start focusing on margin and earning a healthy margin on all the work that they do and turning away work that doesn't fit their margin requirement and being okay with letting that revenue go away because it's not profitable enough to waste your time with. So start focusing on margin, stop focusing on revenue. There's too many companies out there that are doing 5 million a year in revenue and earning a 500, 000 net profit on that all so that they can go on to become a 10 million revenue company that earns 500, 000 in net profit. You didn't achieve anything. All you did was make it twice as hard to earn the same amount of money, which is pretty pointless. Stop focusing on revenue. Start focusing on margin and hold that margin consistently as you grow. If you're going to go from a 5 million, 500, 000 net profit company, you better go from a, to a 10 million, 1 million, 1 million net profit business. Your revenue doubles, your net profit should double as well. Otherwise you're doing something wrong. What they should keep doing is being excellent. Do the vast majority of the time I talked to business owners, they have a great reputation in the market. They're really good at what they do. There may be just not exceptional business people know finance and accounting and how to run and grow a profitable business. Healthy company and scale it effectively in a way that maintains profitability and streamlines cashflow. So you're not constantly worrying about running out of money. keep focusing on the quality and your service and product. Because that is absolutely critical to growth and scale. You've just got to go out and find someone who can help you understand how to leverage that reputation in the marketplace effectively to turn your business into a, an efficiently growing profitable company.

Thaddeus Tondu:

What do you say to the people though when like you the growth, right? And you go from one, I may forget the numbers, 5 million, 500, 000 to 10 million, still at 500, 000, where they come back and they come back to you with we're investing in growth. We're reinvesting in the organization. We're reinvesting in the company. What do you say to those people?

Luke Boyenger:

I tell them they didn't grow. Growth is about profit. It's not about revenue. if you doubled your revenue and your profit stayed the same, you didn't grow. So you, if you're telling me you invested in growth, I'm going to tell you, you failed because you didn't grow at all. All you did was make it twice as hard to earn exactly the same amount. I would call that shrinking. Actually not growth. So I would have a realistic conversation about that with them about what does growth actually look like? You tell me you want to grow. Doesn't that mean you want to take more money home? So if that's the case, let's go look at the revenue that you're bringing in. You just doubled your revenue. Let's go figure out which revenue streams we need to cut. What's the type of work we need to stop taking? And let's go from being a 10 million company with 500, 000 net profit. Let's go from being a 10 million company with 500, 000 net profit. Let's go to a six or 7 million company with maybe seven or 800, 000 net profit. Isn't that better?

Evan Hoffman:

That's headache. That's for sure. I remember we had Travis Ringe on the show, gosh, two years ago. And I remember having a conversation with him and he, I think it was before we, we hopped on or after the show and. He said he had two friends that sold their business both ended up with the same end number. One was running a 10 million company. The other was running a 50 million company. And they both ended up at the same number at the end. And it came down to efficiencies and profitability, right? The one company was 10 times more profitable. And so they ended up with more and they had way less headache. And way less overhead to worry about.

Luke Boyenger:

Yeah. A strategic buyer is going to be looking for profitability and cashflow that is sustainable. They're looking at systems and processes and controls and revenue concentration risk. If you're doing 10 million a year in revenue, but it's all from one customer, one large general contractor that sends you a whole ton of commercial work and you kill it, great. You probably got a really nice income for yourself, but nobody wants to buy your business. Because you don't have diversified diversification across your revenue streams. So that one general contractor fires you and doesn't want to work with you anymore. Your business evaporates. It's not worth anything. So there are, if you want to build value into a business, there are things, there are ways you have to approach strategic growth. In a way that is attractive to a strategic buyer to get that multiple and that valuation as high as possible.

Thaddeus Tondu:

Also predictable sales in some cases.

Luke Boyenger:

Yeah, absolutely. They, you love that your reputation is so awesome that all of your sales comes from referrals. A strategic buyer hates that. They want to see that you have an effective sales and marketing team and process in place that's driving consistent leads, has a proven process for closing those leads and converting a predictable number of clients and earning a predictable amount of revenue growth over a predictable period of time.

Thaddeus Tondu:

Remove one of those factors. And now you probably don't have as much of a, you run into the issue of your grandfather, right? I don't know if that was his particular issue, but you run, you remove one of those and now you don't necessarily have something that you can sell or as high of a multiple.

Luke Boyenger:

Exactly. My, my grandpa was the business. When he wasn't able to be in the business anymore, the business didn't exist. value of the business was the auction value of the assets.

Thaddeus Tondu:

That's a sad reality. It'd be tough to watch.

Luke Boyenger:

Yeah, he spent 60 years building that business and it did really well for him and my grandma. It just. He didn't build a business that was worth anything to somebody else when it came time for him to exit the business.

Thaddeus Tondu:

Well, Evan, did you have any other final comments on the start stop keep?

Evan Hoffman:

Nope. Nailed

Thaddeus Tondu:

it. Perfect. The essence of all our timing that 37 minutes flew by like nothing. Thank you for dropping some knowledge. Of course, if anybody wants to get in touch with, you can visit Cruzumi. Nailed it that time. C U R Z U M I dot com. That's the website there. You can find him on LinkedIn, linkedin.com/in/luke-boyenger. We'll put these in the show notes. Don't worry. And if you have any questions, hit them up on the emails, luke.boyenger@cruzumi.Com. But before we go, of course, we've got one final question here for you, Luke.

Luke Boyenger:

Okay, let's have it.

Thaddeus Tondu:

All right. What is one question that you wish people would ask you more, but don't?

Luke Boyenger:

Oh, that's a great question. Am I the problem? I wish more business owners would ask me, am I the problem? Because a lot of times the answer is yes. And it's the business owner that needs to change for the business to be able to change. I unfortunately talked to too many business owners They're stuck. They're in a rut. The business isn't growing. It may not even be profitable and they come to me and they want help. And then they're basically saying, Luke, I want you to help me transform my business, get it growing again, get it profitable, turn it into a cash generating machine but also I want to do it exactly the way we've always done. And it just doesn't work. And at that point it's the owner, that's the problem and until the owner changes, the business won't change. You've got to be willing to do something different if you want to get a different result.

Thaddeus Tondu:

How do you self identify that then? Like it's, if people are sitting there, they may be, they're scared to ask that problem or ask that question rather than am I the problem? That's a and if their team is around them, their team might tell them, no, you're great. How do you self identify that?

Luke Boyenger:

I don't know if you can self identify it. I think you've got to just ask somebody who has the qualification to tell you the truth about whether or not you are the problem and then trust them. And I know that's a scary and hard thing to do, but I always tell people I would much rather be bragging to my buddies in the bar about how I grew a 50 million company because I asked for help. Then brag to my buddies in the bar about how I grew a 5 million business all by myself without any help from anybody. There's this over importance placed on pulling yourself up by your own gosh darn bootstraps. And by golly, you did it all yourself and you didn't need no help from nobody. Aren't you cool? No, not really. You settled for a 5 million business when you could have had a 50 million business if you had just put your hand in the air and asked for help.

Thaddeus Tondu:

That is a hard truth for a lot of business owners because it's a pride thing. So will raise my hand and say that I am guilty as charged on getting pride in the way of sometimes asking for help. So I said, sometimes I still ask for help. Just not all the time.

Luke Boyenger:

Yeah, absolutely. Even as a practical CFO, when I started my firm, I was really good at doing finance and accounting, but at no point in the process of getting an accounting degree, obtaining my CPA license and doing finance and accounting for large firms and large corporations across America for over a decade, did anybody teach me a thing about how to sell? Anything. So when I started my business, I had a product that I was really good at delivering and no clue how to sell it. So I had to put my hand in the air and ask for help and say, I need somebody to teach me. How do I take this valuable skillset that I have and sell it to people so that they can buy it and I can actually give them the help that they need in their business. I had to have someone to help me and teach me how to do that cause I didn't know how to do it. So we're all in that same boat. If you want to be at the top, the people are the ones who ask for help.

Thaddeus Tondu:

That is true and you know what success also leaves clues too, because they're leveraging people that have been there, done that. And guess what the people that have been there, done that are doing. Asking people that have been there, done that and it's a never evolving cycle. Even the coaches have coaches unless you're just a coach, coaching coaches on how to get more coaches, then you're probably not a coach at all. Sorry, I couldn't resist that one. So, Luke, thank you for taking the time to come on and chat with us. Some enlightening things here. Some great parts, great nuggets sprinkled throughout the episode. I really liked the start, stop, keep. And I really liked that last part am I the problem? I think those are some great things for people to self recognize and self realize and have those tough conversations. Themselves first and foremost, but then raise their hand right after and say, you know what, please help me. Especially when it comes to the world of finances like most trades and service based businesses don't have a clue on, and this is not a knock to you guys listening, don't have a clue because it's just not part of the lexicon and what you learned in order to be able to do what you do. So reach out, ask those questions, ask for help, let's get better. Let's get stronger together as an industry. So thank you, Luke, for allowing people to be able to do that.

Luke Boyenger:

My pleasure. And thanks again so much for having me, on the podcast today. I enjoyed it and appreciate you having me on.

Thaddeus Tondu:

You're very welcome. Thank you. And until next time.

Evan Hoffman:

Cheers.

Thaddeus Tondu:

Well, That's a wrap on another episode of HVAC success secrets revealed. Before you go two quick things. First off, join our Facebook group, facebook.com/groups/hvacrevealed. The other thing. If you took one tiny bit of information out of this show, no matter how big, no matter how small, all we ask is for you to introduce this to one person in your contacts list. That's it. That's all. One person. So they too can unleash the ultimate HVAC business. Until next time. Cheers.