Episode 8 Podcast Transcript
Speaker 1 (00:00):
Running a business is less about being a great tradesman and it’s more about being a great people manager.
Speaker 2 (00:11):
Hi everyone. Rob kropp here. Welcome back Dan. Good to be here.
Speaker 3 (00:14):
Thanks Rob. Yeah, great to be back. Welcome everyone. Great to have you back listening. We’ve had some great feedback, starting to get some momentum. So yeah, really, really loving what we’re putting together and the feedback that you guys are giving us.
Speaker 2 (00:26):
Yeah, good stuff. How you been? What’s been happening this week?
Speaker 3 (00:30):
Been good. Last week was a big week. I had a couple of big things going on. I went to the Pink concert, which was amazing. So that was a good date night with my wife Carly. So I really enjoyed that. And then I had, my mom flew out from Singapore based up there. My brother lives up in Singapore, so that was pretty cool. So she’s been out for the week, so that’s kept us all busy and having a lot of fun. And then on the weekend I was lucky enough to be invited to speak to the Vic Country under 16 girls basketball team who are preparing for nationals in July. So really good to get in front of them and do a little bit of a workshop on their team and getting their foundations for setting up the team for what will hopefully be a successful campaign. So yeah, plenty going on in my world over the last week. Hopefully it, little bit of settling down soon, it’d be nice. But it was great to get all that done and had a lot of laughs and fun. How’d you go? Did you get up to much or you got much coming on?
Speaker 1 (01:25):
I did mate. I did. Before we do that, teams and basketball is a big thing in your world, isn’t it? Teams and basketball. It’s just a big part of your life and your world, isn’t it?
Speaker 3 (01:34):
It is. Not that I play it or coach it, but my wife does. She’s involved in the WNBL season, which just finished with the Bendigo spirit and she’s the head coach of that under 16 girls state team actually. So she’s in the high performance programme there. So that’s big. And my son plays as well, so my involvement’s limited to doing a lot of watching, but I enjoy it and my son plays in the Vic State League for Big V Youth League. So yeah, it’s a big part of our world. So there’s a lot of talk around teams and basketball and coaching basketball and all of those sort of things. So it takes up a fair amount of our weekends or it has over the last 15 years, but as the kids get older, they learn to drive, you don’t have to do as much, which is good. So I’m starting to recover some Friday nights and watching the footy and all those good things and wondering what I’m going to do with myself. So usually it revolves around thinking about teams and basketball and what’s going on, waiting to hear all the results. But no, it’s a pretty big part in our world. How about you and your weekend, Rob? What’s going on in your world? I know you’ve got a couple of things coming up which are pretty exciting. So what’s your update for the last couple of weeks?
Speaker 2 (02:42):
Yeah, had a good weekend last week and had a bit of a daddy daughter time. So we’ve got three kids, two girls and our little baby Ben. So yeah, it’s good to spend a bit of time with Grace and Maddie got out in the garden a bit. I love my garden
Speaker 1 (02:56):
And I love looking after my lawn and getting out of the garden. We’re moved back into our renovated house, so getting out and doing a few things and catching up with mates this weekend and Formula One coming up in Melbourne this weekend. So going to try and sneak down on Sunday with the fam and check it out. I know you’re a big F1 fan, but yeah, that’s what we’ve got in store at the moment, which is good.
Speaker 3 (03:20):
Excellent. Tell me about the garden. Have you hit the veggie patch stage yet? Are we growing our own food in the backyard? What’s the go?
Speaker 1 (03:29):
Absolutely. We’ve got some herbs going at the moment, setting up veggie boxes at the moment, so that’s the next little adventure, but just working our way around the garden and doing some planning and all those types of things. So yeah, loving. It’s really good.
Speaker 2 (03:43):
Fantastic.
Speaker 3 (03:44):
I’m sure the girls are enjoying the setup of all of that and getting their hands dirty.
Speaker 1 (03:49):
Yeah, I think I love it more than they do, but they come along for the journey, which is good.
Speaker 3 (03:52):
That’s right when you get them to start it off, that’s the good part. You can get away with anything, Jack, you’ll be listening. Yeah, cool. You can go and do that with the girls and then it’s really for you. So you’re using that as your beachhead is the girls getting involved in it and then you can take it on from there.
Speaker 1 (04:07):
Absolutely.
Speaker 3 (04:08):
Good stuff, good stuff. Well we better kick into this episode, Rob, we’ve got plenty to talk about today talking about unlocking capacity and growth and really that concept of unlocking unsticking and starting to build out the business in a way that’s probably achievable, consistent and sustainable. But talk to us a bit about what your idea is for this episode. Frame it up and let’s sort of get into what is a really big topic and probably something that’s common to everyone who is running their own business at the moment.
Speaker 1 (04:43):
Yeah, I think it’s one of those things that a lot of people get into a lot. A lot of people get into business because they want to get more out of life, they want to make more money, they want more free time and that’s why they get into business. Business is a vehicle to be able to live a great life. But unfortunately for so many people it’s that all two common scenario where they already start to, they take the steps, they’ve already started to build people in around them, they build their business, pull it in a team in around them because they realise that they’ve got to start leveraging their time, but they’re busier than ever. They get more stressed than ever. They get more trapped than ever. And what they do is they find that they get to this point and that their business plateaus and they look around them and there’s all these opportunities around ’em and despite the opportunities and all the steps that they’ve taken so far, they don’t know why they can’t break through to another level. And so we see this so much in coaching and we see it all the time, don’t we? The guys just get stuck at this point.
Speaker 3 (05:51):
It is. It becomes a repeating pattern and whether it shows up, and I’m sure if you’re listening and you’re thinking I’ve been there, I’ve grown, I’ve had to shrink, I’ve grown, I’ve shrunk. It’s a repeating pattern that we see guys, that they’re all for this sort of idea of, yeah, I’ve got to grow, I want to grow, this is what I’m in it for. And then they do that, but then they end up going backwards or they end up plateauing, like you said. I think the other thing that plays into this a lot is the beliefs that they have that we run up against. Things like, well if I start, whenever I do this, I start making less money. I feel like I’m going backwards. It creates more work for me. There’s no more good people out there, I don’t have time. So all these beliefs kick up when we start talking about growth and I think being able to get in there today and start to pull apart some of those and blow those beliefs up a little bit and really examine those because we can get them out of the way, then that’s sort of the first step to unsticking.
(06:41):
So if we were going to summarise who the episode’s for today, what would be your sort of summary of who this is for?
Speaker 1 (06:48):
Yeah, I would say if you are sitting there and you’ve realised that you are feeling stuck, trapped and your results are plateaued and you’re feeling frustrated and almost a little bit burnt out in terms of where you’re at at the moment and you know want to be able to make more money and get more free time and free yourself from the day-to-day grind that absolutely this episode is for you because what we’re going to be talking about today is how do we continually keep unlocking the capacity so we can keep taking our business and life to the next level. And we just want to talk through some key strategies. So for you listening, you can really keep unlocking that capacity to keep moving forward.
Speaker 3 (07:28):
Awesome, I love it. And when we do this, we’re talking around this idea of capacity and growth and the strategies for that. I think people get into the trap of they’re looking for that silver bullet and there’s thousands and thousands of strategies we’ve probably got when we do this topic with clients and we’re live in rooms, we talk around sort of two scenarios for this and there’s probably one scenario where there’s a set of growth strategies for that and there’s another for this one, maybe talk about that first scenario where we’re talking those initial things for growth in that first scenario of a, let’s call it a product company. Just talk through that quickly and what those sort of key strategies are and then we’ll dive into the other side.
Speaker 1 (08:06):
Yeah, scenario one is even though it’s still in the trades and construction space, I know we’re working with a client at the moment and he sells product into the construction industry and he’s got the ability to be able to do anywhere between half a million and up to around $800k months at the moment, that’s where he fluctuates and that’s a month and he’s got the ability to do that with about half a dozen people. And in that business, the way that that business is structured is he can do very much high volume in revenue and highly profitable business with such few people. And that’s because that business creates scale and profitability through leveraging more through good systems and good processes, but more through the sale and the amount of product that they push through their warehouse. So that’s scenario one where it’s not about selling labour, it’s a product-based business and there’s plenty of them out in the construction space, but the construction industry is so much more than just product based businesses.
Speaker 3 (09:23):
It’s the idea of just moving more product, doing more volume of sales is a way to unlocking growth in that sense. I think everyone would understand that and it makes sense that that would be the obvious thing When we get into that second scenario and you started talking about the other side of it, service-based business. If you’re a service-based business and you’re not necessarily going to be pushing more product, if you do more work, then obviously you’ll be using more materials as a result of your work. But really what’s the second scenario that we talk about in that trades business space?
Speaker 1 (09:56):
And I think the second scenario is we have to accept that when you run a trades business like a plumber, a sparky, a concreter, a mechanic, whatever it is, when you’re in that space as a trades business, regardless if you do maintenance service or project style business, we have to accept that we’re actually in the game of selling labour. And so when you’re in the game of selling labour, if we want to be able to keep growing, the only way that we can keep growing our business is the ability to keep selling productive labour along the way, and this is where most business owners get stuck and caught is because they get to the point where they get to half a million dollars, $750k and $1.1m to $1.5m, they start moving up through those revenue points and they plateau because they get to the point where everything becomes so overwhelming and they’re like, well why is it that I’ve got a couple of tradesmen, a couple of apprentices, but I’m getting stuck. And they get to that point and they, no matter what they do, they can’t keep going, can’t keep going when the reality is when you run that style of business, if you want to be able to keep going to $2 million, $2.5m, $3m and beyond you have to keep selling. You have to keep unlocking the capacity in what we call our ground crew. And the only way to keep growing is to be able to put more labour on to be available for sale.
Speaker 3 (11:30):
It is. And talk a little bit about that step. I mean I know you mentioned some numbers there, one to two to three, there’s a real sweet spot for this in terms of if you all aim is to go and get more time back or to get more out of your day to day or be able to do other things and pursue some other interests, whatever it is that you are in your business to do, then there’s a real sort of sweet spot to this and it’s sort of the trap that guys fall into is thinking, well, I’m going to grow, I’ve done the growth, where is it? And they fall into this trap in between, don’t they?
Speaker 1 (12:01):
Yeah, they do. And there’s a couple of sweet spots along the journey. When you’re a one man band, generally you can do around $250k, $300k in revenue and you bank most of that because you’re doing it. I’m going to talk very broad brush terms. When you’re running a trades business, generally you’ve got to be able to get to that $1m to $1.2m to maybe a little bit bigger, to have four to six people in your ground crew and a blend between tradesmen and apprentices. And what you do is you go from being the guy on the tools to being the guy, managing the people on the tools. And so that then becomes another sweet spot. But all you’ve done is replaced your income with a couple of people around working in around you. But that still becomes a challenging point in our opinion at Prav group. All you’ve done then is become a highly leveraged, highly risky self-employed person that manages half a dozen people. The real sweet spot for a trades business is anywhere from two and a half to $3 million plus. That’s the real sweet spot around that space.
Speaker 3 (13:11):
And that then involves, and let’s be clear about this today, it’s probably a future episode. The skills to run that sort of business is more how do you manage that crew? Like you said, you’re a manager of those people doing the work rather than being the person doing the work. So I think being clear on where we’re going with this episode is, well, it’s not so much how do you manage that crew and succeed when you’ve got them? This is the step before that and how do you reconcile the fact that I’ve tried this before, I haven’t got what I wanted out of it, it doesn’t seem to work for me, but if I try it again, how do I get started? So I think that’s a real distinction we need to make today.
Speaker 1 (13:45):
It is, and the reason why I say around that space is because most people don’t want to grow a business for the sake of growing a business. Why do they want to grow a business is because they want an outcome. They want to be able to make more money and have time freedom from the day-to-day grind in their business. That’s why they want to grow a business. If you’re doing anything less than that, in my opinion, it’s very much not worth your while. You may as well go and be a project manager or an estimator or a supervisor for someone else. You can go and earn $150 grand a year, have your four weeks holiday, have less stress, do it in a 40 or 50 hour week. The reason why that business has to be that certain size of what we call in that family and freedom zone is at that size business.
(14:36):
You’ve got the structure around you, you’ve got the people in around you, you’ve got the economies of scale to be able to do it in that amount of hours. Plus you’ve got the business that makes the revenue, which drops profit on the bottom line to actually make it worthwhile to carry all the risk of running a business because we see it all the time. What’s the point in running a business if you’re not going to be financially rewarded for it and also have the time from running to have the time freedom from that business as well?
Speaker 3 (15:07):
Yeah, I love it. And that just blends beautifully into this topic. So what you’ve got to do is unlock capacity. That’s really what the name of the game is. So let’s go a little bit deeper on this and we have this conversation so many times and I’m sure you’ve got it at the moment, the client voice in our head, and for some of you listening, I’m sure you’re sitting there going, well, that’s all well and good. That sounds great, Rob, love it, but it’s not going to work for me. And you’ll have a reason why. And this is sort of those beliefs we talked about before, these blocks that you have before you even entertain the thought, there’s something that kicks in and goes, bang, this isn’t going to work. So let’s look at these. Let’s look at probably five I’ve got as a list.
(15:47):
I’m going to run these through past you Rob and hear what your response is to this. I’ve heard you do this so many times, but let’s go through these five and really hear what these responses are. And as you’re listening, challenge yourself to think, well is this me and what if I did take this approach? So the first one I’m going to talk about is, all right Rob, I get it. I’ve got to go down this path. I’ve got to put time into building my team and unlocking some capacity. I get it, but I’m booked out. I can’t take on any more work, let alone more people. Are you crazy? I’m booked out.
Speaker 1 (16:20):
I think when I hear a client say that that I’m booked out, the thing that I hit back to them straight away is reminding them that they’re booked out for their current team that they’ve got, they’re at capacity, they’re at capacity with their current team. And what that does is when you say to yourself that I’m booked out, that then becomes a limit in the mind of how we take a step forward. And so if we’ve got half a dozen people in our team and we’re sitting at around $1.5 million dollars and we know that we want to be able to get to the next level, when you say I’m booked out, what that does is subconsciously prevent you from chasing more opportunities, pushing into new markets, preventing you from trying to win new work from new builders or strata managers or pushing marketing campaigns out into their end of the B2C space. When you have that mindset of I’m booked out, it almost becomes a subconscious blocker from actually taking progression and steps forward.
Speaker 3 (17:31):
So what you’re saying is it’s like the blast doors come down, it’s shut. You’re shutting yourself off from any way of moving forward. So if you’ve got that, the first thing is to hear yourself say it almost because it’s obvious when I hear you say it back to me, it’s like, well, alright, that makes sense. But if I don’t think that and I’m just reinforcing that idea, I’m always just going to stop at that first hurdle, aren’t I
Speaker 1 (17:53):
Correct? And so say you’ve got a four or six people in your team and you know that on average they can do $250k, $300 grand per person on average in terms of revenue. If we don’t then start unlocking the capacity of our team to be able to go, well, who is our next hire? When do I need to hire them? Where am I going to get the revenue from? What’s the work I’m going to chase and how do I actually create capacity in my team? Then this is what causes that plateau point within the business. Because if we keep just filling our team of six year on year, on year on year, then no wonder our years are just a repeat of revenue and the same results. We’re doing the same old thing, creating the same old results, and it’s not because there’s a lack of opportunity out there in the marketplace, we just don’t have any more capacity within our team as the business owner we’ve got this mindset is I’m booked out, I can’t take on any more work. But it’s important to remember you can’t take any more work on for your current team. So we’ve always got to be thinking what are our next steps?
Speaker 3 (19:04):
I love it. It breeds that next step. So the next challenge then would become for someone who maybe hasn’t got that block, someone who’s listening that goes, well, the bigger I’ve got Rob, the more people I’ve brought on, it seems to have cost me more time and money than it’s given me. So why do I keep doing this? Why would I bother?
Speaker 1 (19:21):
Yeah, I think it reminds me of that time I had a conversation with a guy called Matt. He was a sparky coaching him at the moment. And when I first spoke to him, he is like, Rob, I’ve been in the same position for the last couple of years. I can’t understand why I’m not getting any further down the line. And I had to explain to him to be able to go that the revenue that you are bringing in on your business is in direct proportion to the size of the team that you’ve got. And I was alluding to before, I’d had to say to him, mate, you’ve got six guys on the ground in your ground crew, unless you keep opening up that capacity to be able to bring on more workers and bring in extra projects and take on extra revenue, then this is what you are destined to be over the next few years unless you start to make change.
(20:16):
But then he was like, Rob, but I feel like the bigger that I’ve got, the less money I’m making and the less time that I’ve actually got. And that’s because he was working out of a sweet spot and into an ugly zone in his business where he was replacing his income. And so the key for him was he had to keep pushing through that ugly zone. And in coaching we call it no man’s land where you’re too big to be small and you’re too small to be big. And in that phase you have to keep pushing past that breakeven point in your business because the next uplift in revenue beyond that point, that’s where your overheads don’t increase, but the margin that you make on your work from your 7th, 8th, 9th, 10th person, that’s when your bottom line increases because you’ve gone beyond that breakeven point of recovering your own wage and recovering the general costs of running your business. And so when he was feeling that symptom of not making any more money and not having any free time, it’s just because he was sitting in no man’s land of an unoptimized structure within his business.
Speaker 3 (21:32):
So you are saying that it is no man’s land, but you can’t stay in no man’s land. You’ve either got to go forward to get to that sweet spot, do the necessary work, grow in certain ways, which we’ll talk about, or you are going to retreat back to what you knew or back to when you thought it was working. So that’s going to be the option, but you can’t stay in no man’s land because that is literally going to, you can see it already, it’s going to sink you if you do stay there.
Speaker 1 (21:59):
Correct. And so when I unpacked that with Matt and he got real clarity in his mind, he’s like, okay, now I can see why I’ve been stuck. Now I’ve seen why I’m spinning my wheels now I understand why my results have plateaued and I can understand the journey that I’ve been through. Then once we unpacked the roadmap to be able to get to the next level, and the key to that was to be able to chase more profitable work and match his resourcing strategy to be able to deliver that work. That was the thing that unlocked the next phase of growth to be able to move out of that ugly zone and into a new sweet spot, which enabled him to be able to create more systems and processes and hire more team in around him, which gave him more time back and the extra revenue at the right margin dropped to his bottom line and that’s where the more time and more money came from. But he had to unlock the capacity in his business to get to that next level, to be able to make it a more viable and sustainable model to be able to operate from
Speaker 3 (23:06):
Big mindset chip, the big belief switch, a big commitment to commit to going forward rather than retreating back. For sure you did. Well done, Matt. If you’re listening the other one, I think that that’s great for Matt, but then there’s the next one, and this is one we love to hear because it’s so prevalent, but Rob, I can’t. I’ve tried, trust me, I’ve looked everywhere and no matter what I do, I can’t find anyone that can do it like me. It’s always more problems, it’s always more issues.
Speaker 1 (23:36):
How many times do we hear that is it saves me time and energy and money if I do it myself and there’s just no one out there. Everyone else is just every good person’s working for themselves. How many times do we hear that?
Speaker 3 (23:47):
All the time? All the time. There’s no one that can do it like me until they get someone in who can do it probably even better than they can and then it all unlocks. But you’ve really got to, I think, unpack this one and really get to grips with the fact of what you’re saying to yourself. It’s a bit like the first one. It’s one of these barriers that you’ll always have if you keep it. So it is something that we’ve got to challenge as a belief with everyone that brings it up.
Speaker 1 (24:11):
Yeah, correct. And I think we’ll do a whole nother episode around this around how to find and hire really good ground crew even in a tough labour market. And no doubt over the last couple of years it’s been an employee’s market and they’ve been able to name their price, name their conditions because the demand for labour has been so high. But I’m sure if you’re listening to this at the moment, you’d probably agree that the market is changing and we’re seeing it at a lot at the moment, aren’t we, Dan, that our clients are finding it easier to find better labour and more of it. There’s a lot more out there isn’t there?
Speaker 3 (24:55):
There is, a lot of those subbies that were demanding big wages are now turning around and saying, Hey, have you got any work for me? I’d love to come on wages. So we’re seeing that those conversations with good guys happening more and more every week. It is changing and it’s part of the cycles of business. I don’t think there’s anything super to read into it. It’s just being aware of it and accepting that there are good people out there. And it comes down to how hard you’re looking. I dunno if we’ve got, I suppose it’s another one of those sort of limiting ideas that people have that they’ve got to get past. But are there any stories you can think of that maybe you can share with us about these people that have kept that belief of it? There’s no one good out there, no matter how hard I try, versus the people that get beyond that belief in what becomes possible then.
Speaker 1 (25:42):
I do. And it is one of those things that I love it when clients say, Rob, there’s no good people out there. Everyone, anyone good just works for themselves. And it’s just like, come on mate. The first question that I always ask them is, so how active are you actually recruiting at the moment? What are you actually doing right now? And they’ll go, oh yeah, but I’ve got to seek out. Okay, great, and what else are you doing? And they’re like, oh, well, a couple of weeks ago I spoke to a few of my mates and I’m doing that. And the reality is is that recruitment and finding really good ground crew, whether it’s leading hand, tradesmen, apprentices, labourers, whatever it is, you have to be a hundred percent committed and you have to be a hundred percent active in the recruitment of people in coaching. We talk a lot about it where we talk the difference between active and passive recruitment. Most people play a passive recruitment game where they put an ad up and wait for people to contact them.
(26:46):
But the reality is when you are trying to unlock capacity and bring on your ground crew, you have to be day in, day out, actively recruiting. You’ve got to be posting over social media, running campaigns if you need to seek ads, which is more of a passive thing. Talking to suppliers, talking to mates, talking to non-competing industries, poaching people and headhunting if you have to. But the reality is most people think they’re actively actually recruiting, but they’re their behaviours and their execution isn’t in alignment with how bad they actually need someone. And that’s fundamentally the problem.
Speaker 3 (27:29):
It is, and I like to tell guys when we’re coaching them around this that you’ve got to think of it as you go out and you try and build your client base, you do sales and you’re trying to attract clients all the right time, you want the right clients and attracting the right clients, you’ve got to work just as hard to attract the right team members these days. You need to be working just as hard on your client acquisition as you are on your team acquisition and bringing good people in. And you should always be on the lookout for the next great person to join your team. So it’s not a well, we need them, it’s a, I’m always looking, I’m always got that radar up in terms of where are these people going to come from.
Speaker 1 (28:05):
And the scenario that I like to consider, we’ve got two clients who are both in the same industry, both in the same city and both do similar work. And one client, he is going from strength to strength to strength at the moment and he’s chasing more work, winning more work at a really high margin and he’s magically finding really good tradesmen and apprentices who want to be able to come and work for him. On the other side of the coin, same industry, same space. They can’t find anyone no matter how hard they try over the last six to nine months. And I look at that and go, well, why is it that this guy can do it? This guy can achieve it, but this guy can’t when they’re in actually the same space. And when I peel back those two scenarios, the guy who is growing his business unlocking capacity, winning really good margin work and unlocking his capacity through bringing on really good tradesmen, he believes fundamentally his belief is I’m going to grow this business.
(29:14):
And there are good people there who want to come and work from a business. That’s the first primary mindset. He also believes that not everyone wants to run a business and that there are plenty of tradesmen out there who just want to come and work for someone and have that stability and security. But then what he does is on a day-to-day basis, align that behaviour with that belief where he is proactively getting into the marketplace day in, day out through socials, through seek, through pounding the pavement every single day. He’s constantly looking for good guys constantly. And that’s the reason why he is moving forward. And that’s the difference between the other scenario where they can’t find someone to save themselves is because they believe that there’s no one out there and their behaviours aren’t congruent with that. So if you are listening to this at the moment and you are wondering, well, why is it that I can’t find good people out there? We’ve got to ask ourselves, is it a belief thing or is it an execution of strategy thing? They’re the two things that we’ve got to unpack.
Speaker 3 (30:28):
Yeah, I’d summarise that with you. It’s amazing how often we find exactly what we’re looking for and if your mindset is there’s no one as good as me, you are going to find that there is no one as good as you because that’s what you’re looking for. If you are, on the other hand, as you were telling that story, the other person who’s out there saying, Hey, there’s great people out here, they want to work for me, I just have to find them. That’s what they’re looking for. So I think we get what we look for and it’s a matter of then exploring what it is we’re telling ourselves where we’re really looking for. So that belief that we’re carrying is so important. I think’s those first three, if we really look at it and just recap before we move on to the last two, which are probably more strategic, but those all three that we’ve looked at the on book out, I can’t take on any more work.
(31:15):
You’ll find that if that’s what you’re looking for and constantly reinforcing for yourself, the bigger I’ve got, it’s never worked before, it won’t work this time. I’m losing time and money every time I do it. These reinforcing rules, the bias of self confirmation bias will kick in and you’ll actually see that happening over and over again and you’ll look for it and find it. And same with the last one as we just talked about. If there’s no one as good as me, I guarantee if that’s what you’re telling yourself, you’re going to find that when you go out to the market because all you’re going to be looking for is all the people that aren’t as good as you rather than the good ones that are out there. So I think we’ve covered those off really well and hopefully squashed what you can do if you are in that space.
(31:54):
And that is really examine those beliefs and start telling yourself a different story. The next two I thought we’d cover off is the challenge of it’s more of a practicality and it’s that idea of, I dunno who to hire or when, and we get this question a lot, well, when’s the right time to do it? I understand that, the importance of it, but when is the right time? I think I’m ready for it, but I’m not sure. So have you got anything we can talk about in terms of that? And I say, have you got anything? I don’t know, but what’s your take on that idea mainly about when to hire, I think future episode we can look at how to go around hiring and attracting the right people through scroll, stopping job ads and building out your ground crew and all that sort of stuff. But what about the idea of not knowing when to hire?
Speaker 1 (32:44):
Yeah, I think you’re right there because we can’t just go, well, I believe there’s people out there, where are they? Obviously we’ve got to shift our beliefs, but this is now where rubber meets the road. And in coaching we talk a lot about when we’re building out our ground crew, we talk about the matching principle and we’ve always got to be looking around, well, where are we at the moment? Where are we trying to go? And it’s about thinking, well, how do I match recruiting the right people at the right time of where my revenue profile is going? And sometimes you’ve got to win more work and then you hire the right person at the right time. Other times you’ve got to be able to put the horse before the cart and hire the person to unlock the capacity to then go and chase more work to be able to get more time back to be able to go and get more work.
(33:48):
And so if we think about the one where you’ve got to be able to the horse before the cart, a great example of that at the moment is we’ve recently started with a guy who’s doing around $100k months running an electrical and a security type business. He was just working nonstop. He was on the tools doing around $100k, he had a couple of people in around him and he knew that he had to keep chasing more work and put more people on, but he was in that position to be able to go, he’s like, Rob, I don’t have any time to be able to chase any more work and I’ve actually got all these quotes sitting on my desk at the moment and I’m not even getting to them and I just don’t have any more time. So when you’re in that position, the first thing we said to Chris was we unpacked his team to be able to go, well, where are the holes in your business?
(34:41):
What is it that’s keeping you getting caught delivering the jobs? Where are you getting stuck on site? And we unpacked the situation to be able to go, well, what we really needed, we didn’t need someone in security, we need a really good experienced tradesman to be able to take on that electrical work, which then bought back one to two hours of Chris’s work, which then enabled him to be able to get the time to be able to take a step forward. So in that scenario, the work was already in front of him, the opportunities were already there, the quotes were sitting on his desk. It wasn’t about going to winning more revenue. He had to get the right person on right now to free the time up for him to be able to take a step forward.
Speaker 3 (35:28):
Yeah, I like it, I like it. So yeah, getting the right person in, again, unlocking capacity, not in terms of how much work you can do, but how much work you’re able to win is an important one. The other one I see a lot as well is the guys that have got the work and they’re trying to time it perfectly and trying to get to that point where I’ve already won the work, I’ve got a heap coming up, when’s the right time to hire? And then they procrastinate, they let these fears kick in and it gets to a point where I need these guys right now. And then you’re settling for who is available. And I think the other thing we can talk to then is the idea that how long it takes to actually bring someone on because, and when you talk about your revenue profile, maybe clarify that a little bit in a sec, but when you talk about that knowing where you are going to be doing work in the next couple of months, putting that cart before the horse and saying, right, if it’s an 8 to 12 week cycle, from the time I say, right, I’m going to form up what this job role is, get my ad up, start doing those strategies, hire someone in interviews, that whole cycle maybe just sort of, it all lays people’s fear when they sort of hear that mapped out.
(36:33):
So maybe if you can map that out and just talk a little bit about what you meant by revenue profile when you start talking about this one.
Speaker 1 (36:39):
Yeah, so when we talk about revenue profile, revenue run rate, depending on whatever is in the mind of how you manage your business, but if you know you’re going from a $100k, $110k, $120k, $130k, $140k, revenue run rate months, and if you know that you’ve got the ability to look forward and go, well, my revenue is going up, then you were alluding to before if you from, if you win that work and you get to the point going, oh shit, how am I going to deliver it? It’s way too late for you to be starting to think around who am I going to hire and when am I going to put them on? It’s way too late. And so the best time for that is, as you’re alluding to before, is about understanding the timeframe of how long it actually takes to recruit acceptance onboard, train, and get them up and running by themselves.
(37:40):
Sometimes that can take six weeks if you’re really quick, more like three months. Sometimes it can take four to five to six months to be able to find the right person. And so it’s about being strategic in the timing and really having the ability to take a step back, understand what’s my revenue run rate doing going forward, and how can I make sure that I align my revenue to my resourcing strategy? Because if you can get that right, that’s how you can continue to grow your top line, which is going to drop to the bottom line. That’s how you continue to grow to your top line because you are going from four people to 5 people to 6 to 7 to 8 to 9 to 10 in your team over the next 6, 12, 18, 24 months. You are unlocking growth by building out your ground crew, not getting to six people and going, I’m booked out. I can’t take another step forward.
Speaker 3 (38:40):
And that reduces, I think that fear that people have too, if you really understand it and you can start to play this game of when and have something in terms of, well, just because my gut tells me we need it and you start to use numbers and we talk about this a lot being informed in that decision about what the numbers are telling me, we’re going to need these people, then it gives you confidence to pull the trigger on that stuff. I did this with a client over the space of probably 12 months. We rode that wave of ratcheting up revenue, seeing it going up in a few months with one another. It was a volume plumber and one another, 50 houses to build. When do they start six months, right? We’re recruiting in three weeks time, we’re going to start ads for that period.
(39:19):
And it was scary as hell because we were growing through that time and unlocking capacity. But the thing that made it easy, we had this strategy to say, well, let’s match the revenue, future revenue against the resources we require. And we got through that period and didn’t trip ourselves up along the way and we got to get the best guys. We weren’t being rushed, which I think plays into the last point we’ll talk to today is I didn’t get into business to run a daycare centre, Rob. And that’s what it feels like every time I do this. I don’t want to manage more people, more people’s a nightmare for me and it feels like I’m running a daycare centre.
Speaker 2 (39:54):
But mate, we hear this all
Speaker 1 (39:55):
The time, it’s like, yeah, but Rob, I didn’t get it. I got into my trade because I’m really good with my hands and I love problem solving. And then they go, well actually I don’t want to settle for a nine to five job and I want to be able to go and pursue more in life. Great, I’m going to go and start a business. And then they go on that journey where they’re like, oh shit, it’s not as easy as I thought it was. And maybe this thing about being a boss is not as harder than I realised. They put on a couple of people and then they realise that running a business is less about being a great tradesman and it’s more about being a great people manager.
(40:36):
And we say to our clients all the time is that what makes you a great tradesman does not make you a great businessman of a trades business. And they’re completely different skill sets and it’s about having that level of acceptance that sure, being a great tradesman may have got you into business, but the big skill going forward to be able to run a great business, especially if you want to make more money and you want to be able to have time freedom. The secret to that, and the key to that is being able to build a great team. And we used that scenario at the start, sure you can go run a product business if you want to, but that’s about moving volume of product. But if you are a plumber, a spark your roof or whatever it is in the trade space, you have to accept that you’re in the game of hiring and managing a high performing team of individuals. You have to accept that. And the key to be able to do that is having the skillset and going on that journey not to be a better tradesman, but being a better people manager. And for a lot of people, their lack of willingness to go on that journey becomes their greatest limitation to growth.
Speaker 3 (41:52):
It really does. And I think what they do is then, and this is my mind’s racing with future episodes as you talk about this, but I think what people do is they go from being that great tradesman thinking, all right, I’m going to have a team. And rather than invest in their management journey in that new phase of it, they just become a better mate to the guise and make sure everyone’s happy and that they get to that mate thing. So maybe future episode, let us know in the Trade Den community, but let us know if you’re interested around hearing this sort of thing. This concept we talked to about mate to manager and really graduating from being a guy that’s got some guys and we all get along and look at us, go to being a manager who’s starting to really run their business and run their team. And we’ve seen so many clients, it’s the foundational journey. I think that’s common to nearly everyone that goes through the Pravar programmes.
Speaker 1 (42:40):
It is. And I think of a story of a guy who run an electrical business and he got to the point where he had a few guys in around him and he’s like, I hate this management stuff. I hate it. It’s not for me. And you know what? I didn’t get into business to manage people. And when he started saying that more and more and more, what often happened is once he got to a certain number of tradesmen and apprentices, he started pegging, well, I don’t want to manage more people. And that then became a limit to how big his business became. And so in his world, he was actually six people within his team. And because he’s like, it’s got too hard, it’s got too out of control. I’ve got some guys in around me and you know what? I don’t want to manage more people.
(43:27):
So that’s enough for him. But what, it’s not that he had so much more capability to be able to do more things and run a better business and get better rewards from his business, but he subconsciously limited the size of his business because he pegged it on how many people that he wanted to be able to have in his team. And it wasn’t until this guy through coaching developed how to manage people, how to delegate, drive accountability, how to find really good guys in your ground, crew and girls, how to hire admin, get some project management support. It wasn’t until he went on that journey to be a better manager and a better leader that he started to realise going, actually, I can do this and I’ve just got to go on that journey to be a better man manager. Then his mind opened to be able to go from 6 to 8 to 10 to 12, and he realised that the opportunities were endless because getting his business to the next level wasn’t about how hard he had to work. It was determined about how well he managed and how well he led people. And so that story of that tradesman really hits home when I share it is because it’s not that there’s a lack of opportunity out there for a business to be able to grow the lack of opportunities in the mind of the owner and their lack of willingness to want to manage more people because they just haven’t developed the skills and what it takes to be a great manager.
Speaker 3 (45:00):
Yeah, I love it. Absolutely. Absolutely. And it’s great to watch when guys do that and they do accept it. They go on that challenge, they unlock a part of themselves, and it’s not just capacity for the business, it’s unlocking capacity in yourself to become that manager, that person that you’ve never sort of seen before. And really getting into that journey is it’s so rewarding. And that’s the journey that does unlock the time and the freedom and the family time and the profits and all of it comes from that journey and what we’ve talked about today, which is great if we really sit back for the listener now who’s thinking, right, those myths are busted, I really do need to make some changes. What’s that? Probably step one action. I know there’s so many things we’ve covered at so many stages of this journey, but what would you say would be your first step for someone who’s like, right, what do I actually now do? I’ve got this in my head, I understand I want to do something. What would be your first coaching point to them in terms of an activity?
Speaker 1 (45:58):
Yeah, one of the first things that I would recommend is getting straight into completing what we call your next hire exercise. And there’s two parts of it. It’s about understanding, doing a bit of a gap analysis within your current ground crew to be able to find out where are the gaps in my team and who’s that logical person that I need to be able to put on? And then it’s being able to get into going down that path of actively recruiting to be able to take those steps forward. So when we’re doing a gap analysis, what we want to be able to do is we want to be able to look at some specifics, whether it’s a specific position, maybe it’s a specific ticket or level of experience or a skill that you need in the business that’s going to unlock that next phase of growth.
(46:53):
And so what it’s often doing is if you are on the tool still a lot at the moment, it might be because you are shorter a level of experience or you are a person that holds a certain ticket within your business. We’ve been there with clients where they’re the only one who can drive a truck or they’re the only one who can get deliveries because they have that truck licence or they’re the only one who’s got the excavator ticket. So every time there’s certain work on site, they have to get called in to get that, which drags them back on the site rather than being able to get pushed forward and keep pushing the business forward. So sometimes it’s simple as going, you know what, once I take a step back and be a little bit more objective, how do I pull apart my team and boom, I just need a really good tradesmen in that space.
(47:41):
Or it could be your tradesmen heavy and you need a good couple of apprentices to be able to balance out your team and bring your cost down. Other times it’s a specific ticket skill, which mean you might need to invest in some training for your team, or maybe it’s just a certain level of experience where you are getting dragged back because you just don’t have a really good site foreman or a leading hand. So there’s no one size fits all approach to it. But I think if you’re listening here today, it’s always going to boil down to either a specific position, a specific bit of experience that you’re missing or a specific ticket or skill in the middle, which might be missing as well. And if you can pull apart your team and do a bit of a capability gap analysis, what that’s going to do is identify, well, who do you need to be able to hire to unlock the capacity to be able to move forward?
(48:40):
And Dan, what we might do is put through a bit of a template for those listening to be able to complete that. Then from there, once we’re really clear on who we need, let’s go to the market and actually find that person. And let’s not just get passive about it and think, well, let’s just put up a seek out and off we go. Let’s get our asses into gear and actually be recruiting and find that person. So moving forward, that’s the exercise that I would be recommending is what’s the gap and let’s get busy recruiting that gap and boom, bring them on, and then we’ve got the ability to take a big step forward.
Speaker 3 (49:17):
It’s not the gap in terms of, well, what am I going to go and find that I haven’t got? It is what Rob said. Sometimes within your current team there’s gaps. So that gap analysis isn’t just for who’s the new person that I’m going to bring in? It’s where are the gaps in terms of my existing team and what’s that telling me? Sometimes it’s just a shuffle. It is a ticket, it is a skill, and getting those people and getting your existing team filling in those gaps, and then it’s the next high that we need as a result of doing that full analysis on what we’ve already got.
Speaker 1 (49:47):
It’s like I spoke to a guy the other day and I rang him and he runs a multimillion dollar business and I rang him. I’m like, Hey mate, how are you going? I like, it’s noisy in the background. He is like, oh, you have the hardware store picking up supplies. I’m like, mate, you’ve got the most overpaid delivery guy for you. He is like, but that’s what I’ve got to do. It’s like, no, you don’t, mate. That’s a low value task. But you’re right, sometimes it’s not about hiring more, it’s just making what you’ve got more efficient.
Speaker 3 (50:12):
And I think that’s sort of a big theme for this episode and let’s summarise with some of these key takeaways, but that awareness, and I think I’ll give the first one and then Rob, if you want to chime in with what your takeaways are. The first one is though, I think, and this is the acceptance factor, so you’ve got to accept a couple of things and really challenge what your beliefs are around this. Those first three challenges I threw at Rob today was all around that acceptance that the amount of revenue and profit that you make in a service-based trades business where it’s all around labour and hours and things like that, it’s always going to be proportionate to the size of your ground crew. You can’t escape that. And if you are telling yourself something else, then there’s a belief there that you really need to challenge. So I think that’s the first thing they need to accept.
Speaker 1 (50:54):
Yeah, my takeaway to add on top of that would be it’s different if you’re in a product-based business. Product-based businesses, it’s all about selling volume to be able to get leverage. But when you’re in the service game team is what sets you free from the day-to-day grind and gives you the time back to be able to continue to grow your business and to be able to have time back more with your family. And so my big takeaway for number two is that team is what sets you free.
Speaker 3 (51:26):
Yeah, definitely. Definitely. The last couple we’ve got there, I think we’ve, you have to get good at hiring. That’s what I took out of all of those things that you said. It was a theme that ran through every response you gave. Getting good at hiring the right people at the right time, really understanding that idea of matching revenue and resource requirements and going beyond, geez, we’re busy and we need someone now. So I think that’s a real big one that I think people need to take away from this episode if you’re listening, then getting good at hiring the right people at the right time.
Speaker 1 (51:55):
And I think the thing that, the last one to be able to add to that is that it’s not just about building your ground crew, but you’ve got to be to manage your ground crew well is what unlocks capacity. It’s about not just about finding them, but you’ve got to be able to manage them well is what continues to unlock capacity. And so there are our four key takeaways from today. Wasn’t it a great episode, Dan? And gee, there’s some golden nuggets in there for those. If you’re listening, gee, there’s some great nuggets in there, isn’t there?
Speaker 3 (52:25):
Yeah, I think there is. There’s some big game changing moments in there if you are feeling what was stressed and tension and even anger towards this idea of how do I unlock growth and capacity. Hopefully by the end of this episode, you’re now sort of starting to feel like there is an opening and a way forward, which would be great. And we’d love to hear you tell us about that in the trade and community and jump in there. We’re ramping up every week with more and more feedback and more and more comments, and it’s getting lively in there, which is really what we want. And sending in templates and stuff like that’s what we want to do. So the more of you that join, the more we’ll invest time and resources into giving you what you need in there. So keep talking to us through those channels. And if you haven’t join us on the Facebook community, just search up The Trade Den.
Speaker 1 (53:12):
Great. And the other thing they can do is hit follow and share it with your mates. I’m sure that you’ve got mates in the industry who are feeling stuck, trapped and confused at the moment, and they just don’t know what they’ve got to do to be able to get to the next level. Like we’ve spoken around today, the key to getting to the next level is by unlocking the capacity with your team. So if one of your mates is struggling with this at the moment, follow it yourself. Share it with them, get them to follow along, and let’s help as many people as we can to be able to build a business that gives them their life back. And that’s what in the end of the day, this is what this is all about. It is hopefully you enjoyed today and looking forward to being with you on next week’s episode. See you soon.