[00:00:00.090] - Brandon
Chris sir.
[00:00:00.640] - Chris
Yes, sir. How are you doing, man?
[00:00:01.990] - Brandon
I'm good. I got to come out of the gate swinging now so you don't steal my opener. So, yeah, I peed in my corner on that one. You see how fast I came in swinging.
[00:00:11.510] - Chris
You're always good for like I love your little analogy. Find these little words.
[00:00:16.160] - Brandon
I used to say stuff like that. Like when we secure fired job be like, did you guys piss in your corner? We probably should unpack that in the show sometimes.
[00:00:23.800] - Chris
Oh my goodness.
[00:00:24.550] - Brandon
Hey, who's our guest today, my friend?
[00:00:26.640] - Chris
So today we have the founder and CEO of Restoration Brokers of America, Mr. Goco Pat Monibon. Second time. Yeah, on the show. And I think what I really appreciate about him, he's obviously one of the preeminent brokers in our industry. I think the last statistic we heard was like 600 million in restoration transactions. Incredibly successful.
[00:00:53.040] - Brandon
No Slouch.
[00:00:53.920] - Chris
No Slouch works with some of the top brands in the country and just when you talk to them has a real holistic view of businesses. I think you kind of anticipate when you start talking mergers and acquisitions and, you know, I've got a little experience with private equity ourselves and it's like you just expect it to be so numbersdriven and sterile and black and white and it is what it is. And then you talk to Goco and it's like he embraces all of the intangibles. And I think we didn't get into it heavy today in terms of selling your business and all that kind of stuff. But one of the common themes with him is all those intangibles matter a whole lot.
[00:01:37.810] - Brandon
Yeah.
[00:01:38.620] - Chris
In previous conversations we focus more on bench depth and how mission critical that is for the value of your business. But today one of his themes and I just loved it, was dig a moat and build a castle and we won't break that down too much. But he talks about the importance of profits and he gives some really practical advice and we contrast a bit in this conversation between businesses that are just not sellable and some people listening are going to recognize themselves as part of the conversation.
[00:02:10.270] - Brandon
Absolutely.
[00:02:10.800] - Chris
And then contrasting with high performance businesses, he's seen just some of the behaviors and priorities that they have. Another thing too I want people to listen for is he talks about there are some really good golden whenever Brandon and I are writing notes. Anyway, we know it's been a great show, but he talks about the four job descriptions that business owners really have to graduate through as the business graduate.
[00:02:39.480] - Brandon
Through is the key parts of that.
[00:02:40.920] - Chris
Yes, and I'm just going to give to a little teaser, but he talks about when every business owner starts their business, they have to put on the rainmaker role. They have to be focused on sales. It's just the nature of things. Like they have to make the phone ring.
[00:02:58.320] - Brandon
Right.
[00:02:58.810] - Chris
They are the primary sales leader. And then and it depends for people usually around that two, three, four, 5 million mark, they realize I have to become a team builder. I can no longer be the face of the business that's making the phone ring that's generating all the sales. I have to now shift my focus to building out a team that can make profits.
[00:03:21.060] - Brandon
That's right.
[00:03:21.580] - Chris
And he goes on, and it's really good. So listen for that in the show. But there's just some great advice. I think this show is if you're an owner of a restoration company, this show is really specifically for you.
[00:03:33.990] - Brandon
Yeah.
[00:03:34.500] - Chris
It doesn't mean that all the rest of us maybe who are aspiring owners of restoration companies or GMs or whatever, I mean, there's lots of good stuff in here, but boy, if you're an owner, man, he's talking directly to you.
[00:03:42.990] - Brandon
In this house, for sure. Yeah. Let's get into it, then.
[00:03:45.580] - Chris
Let's do it.
[00:03:46.050] - Brandon
All right.
[00:03:53.140] - Chris
Welcome back to the Head Heart and Boots Podcast. I'm Chris.
[00:03:56.790] - Brandon
And I'm Brandon. Join us as we wrestle with what it takes to transform ourselves and the businesses we lead.
[00:04:03.580] - Chris
Man, I love this industry.
[00:04:07.240] - Brandon
Gokul. Welcome to the show, my friend. This is round two, hopefully round of two of many. Man, you've been in the heart of not just growing your business, but obviously everything that's impacting Florida and all the things. But in the midst of that, you made time for us, and you literally started out our conversation together. And you said, guys, I've been thinking through what makes a high performance company, and I don't know that there's too many people in our industry better suited to give us some perspective on this, but let's get right into it, man. High performance company, I think first, what does that mean to you? Like, when you evaluate something and you say, hey, these fall into the high performance category, what does that look like to you? And then take it away, man, like, you've been chewing on this.
[00:04:55.560] - Gokul
Yeah, I've been thinking about this a lot. So thanks for having me, guys. I really appreciate it. And it's the end of the year, and I'm a small business owner, like, probably everybody here listening to your show, and it's a great time to reflect on what's working and what's not. And when I hit you earlier today, I've been thinking a lot about it. It's really a personal journey. Like, I've been thinking a lot about RBA and what does the high performance RBA looks like. And then I look at we're in a very unique spot. We look at companies and talk to owners from all over the country, so we get a really unique viewpoint of what's working and what's not correct. Like, we look at more PNLs and more financials and talk to more owners than probably anybody in the country as far as how the business is run and how they valued and what they're doing, just from the role that we play within the industry. So it was kind of trying to learn from that and understand that and then looking at my own company and just saying, okay, what are the things I should be focused on?
[00:05:57.040] - Gokul
What are the things I should not be doing?
[00:05:59.290] - Brandon
Right?
[00:05:59.850] - Gokul
And it's simple to say, but incredibly difficult to achieve, right? So to me, there's some companies out there. Every once in a while I'll talk to an owner and you just look at the company and you're like, wow.
[00:06:10.560] - Brandon
Right?
[00:06:10.920] - Gokul
And then you look at some of them and you scratch your head and you go, what is the difference? There's a lot of differences, but at a really high level, it's very simple. They're on purpose, right? The company knows exactly why it exists and what it does and what it is supposed to be doing. The employees understand their vision and mission clearly, without a doubt. And they're rolling. You've got an owner that's engaged and on purpose.
[00:06:35.350] - Brandon
Correct?
[00:06:35.800] - Gokul
I mean, it's literally those three things, right? Easy to say, but incredibly difficult to achieve. And I've been thinking about that far RB as well.
[00:06:43.680] - Brandon
Let's get into this, because I think the reality of it is that sometimes we talk about some version of these topics and we think, gosh, we're kind of repeating the same message. And what I'm shocked by, not just in our own operation or the businesses we see, is this is the message that has to be repeated. Because we get so caught up in chasing shiny things that we lose touch on these core aspects of our business that take years to master. And really, the more time you spend energy and resources mastering them, you only continue to get more and more return. I don't think there's a point where you tap out on the return from your investment of energy in these categories. So walk us through them. Where do you want to start? And let's just start hammering on that particular focus.
[00:07:29.650] - Gokul
So let's talk about that, right? I think the reason your comment resonates, because I think the reason why some companies fail and some companies do succeed, people are always looking for the next shiny thing and it doesn't exist. You know what I mean? Delighting your customers today to grow your business was the same 100 years ago. So the fundamentals of the game never changes. And I think me included. You just got to stop searching for all these magic formulas and say, what are the fundamentals? And let me make sure that I block and tackle, right? I mean, that is really the name of the game, right?
[00:08:08.290] - Brandon
Yes, I think you're right. It's fundamentals, right? Every good sports coach, if you're going to hang in the sports coach analogy, right? It's the men and women that get refocused on the foundational elements, the foundational practices. I heard somebody say I was listening to a podcast this morning, and the individual said, look, I've never done anything extraordinary. I've done the hard things consistently. Correct. And I think that's exactly what you're talking about is we have to do the hard things consistently. So what are the hard things? Man, you put it into three categories. Hit those again, and let's tackle one.
[00:08:40.990] - Gokul
Yeah, man, I think about it, and I think about all the companies we look at and think about what are the really good ones doing? Well, right? And I wrote some notes down. Let me just read them to you. Right?
[00:08:49.870] - Brandon
Yeah.
[00:08:50.460] - Gokul
I can tell you they're all extremely customer centric. Okay. Those companies are built around the customer. There's no doubt about it.
[00:08:57.640] - Brandon
Right.
[00:08:58.000] - Chris
You stop there for a second, give some examples of because you're getting in and you're having all kinds of interactions with people at different stages of, I'm getting ready to sell my business. I'm not sure if I want to, et cetera, but how does that show up? A customer centric business owner or business? What are some of the attributes of that?
[00:09:15.490] - Gokul
I'll give you some examples. So if you go on Google and you look at customer reviews correct, it's the little things, and you'll see some reviews there where they're really connected. In business, you got to connect before you convert. And that's what customer centric is all about. When we go to a loss or when I talk to a customer that wants to sell a company, there's a tendency to rush to the technical side of it and say, hey, how do you want to do it? How can I help you? How can you help me? The real great customer centric companies are connecting first. That means they care. Hey, how can I help you? What can I do for you? Once you connect and develop the High Trust, then anything is possible out of that foundation.
[00:09:56.460] - Brandon
Correct.
[00:09:56.890] - Gokul
So great companies connect with their customers, okay. Whether it's helping out in the community, being involved in the community, the way they approach a loss, the way they talk to the customer that first ten minutes they are there, the way they continue to talk to the customer every other day throughout the loss. It's the little things that cost nothing.
[00:10:15.780] - Brandon
Yeah.
[00:10:16.030] - Chris
We talk about how we make people feel the most of doing. Our process is the paramount thing in.
[00:10:22.990] - Gokul
World of tech and automatic emails and robots and cloud based systems. I think the world is just starving for companies that just want to shake your hand and say, I got you. So I don't think the bar is really high. I just think you got to be reasonably customer centric.
[00:10:41.290] - Brandon
Dude, I love that. I think this is probably one of those topics we could hang all day. But two things I just want to highlight connect before you convert. That's monster. And I think people need to really think about what you just said there, write it out somewhere, guys, and come back to that in your thinking time. But then this idea of people are desperate for somebody to shake their hand and tell them, I care on care for you. It's huge, man. It's huge. And it's what a lot of us got into this industry.
[00:11:10.840] - Gokul
Everybody wants to shoot you an email. They want to shoot you a text. They want to shoot your video bomb on video. They want to give you user ID passwords for their portal so you can look at updates. Nothing substitutes a quick five second phone call that just says, here's my update on your job, right? And when you look at connecting and it doesn't matter, you got to convert before you convert. Whether you're connecting with an adjuster, whether you're connecting with a referral source, an insurance agency, a property management company, let's just go down the road. Your customers, it doesn't matter. Your adjuster, the basis of all incredibly meaningful advances in your business comes through connection.
[00:11:57.110] - Brandon
Correct.
[00:11:57.930] - Gokul
I have owners that will call me and say, oh, I wish I could run a business without customers, and I don't need to go anything beyond that. I know that business is in the toilet. It's an unsellable business worth next to zero reality check. I can tell you that, right, because I can tell you because they're not connecting. They're hating it. They're on the other side of it, okay? And there's no reason for them to exist. I don't even need to look at the financials. I don't even need to look at anything or charge. I can tell you pretty much where the company landed the date is only.
[00:12:29.290] - Brandon
Going to affirm the original story.
[00:12:31.600] - Gokul
Yeah, I mean, listen, it's a world of all this tech and all this stuff and mass emails, and there's nothing like picking up the phone and updating your customer once every so often.
[00:12:43.050] - Brandon
Yes. I think storms like we've seen in Florida remind people of that, right? Like, there's so many examples in these condensed formats of people just needing a hand up. Right? This just a friend, somebody to say, this sucks right now, but it's not forever, right? It's huge, man. Okay, customer centric. You got two more?
[00:13:05.050] - Gokul
Totally. I'll give you some good ones for the day.
[00:13:07.110] - Brandon
This is great, man. I love it. Yeah.
[00:13:09.860] - Gokul
So that's number one and tell you and then unforced errors is number two. And when I say unforced errors, the things that we make mistakes because nobody forces us to make them, we just take the eye off the ball. Correct. I mean, that's an unforgive like dropping a ball and football would be an unforced error.
[00:13:24.930] - Brandon
Correct.
[00:13:25.720] - Gokul
So companies that are really great, they don't drop the ball a lot, and that's the little, little, little things.
[00:13:33.790] - Brandon
Yeah.
[00:13:34.360] - Gokul
Okay. It's the mindset of the owner. It is making sure the warehouse is clean. It's making sure that if you have an angry customer, you're returning the call before the end of the day. So it doesn't fester. If you know you've got a bad employee, that's ruining the morale. It's taking it out, it's making the micro decisions that don't allow you to make any unforced errors. So great teams block and tackle really, really well, day to day.
[00:14:02.380] - Brandon
Yeah.
[00:14:02.920] - Gokul
The basement, you know what I mean?
[00:14:04.590] - Brandon
Yup, yup.
[00:14:05.290] - Gokul
You know, so if you look at an owner or a team that takes a customer recovery call an angry customer on a Friday at 03:00 and they don't connect with them, let's say till Tuesday, there's nothing I need to know about that company. I know it's not a high performance business. It'll never be. They don't know how to block and tax.
[00:14:22.540] - Brandon
Yeah, the foundations are missing. We call that gas and that's called givea. And then you can fill in the remainder there. The higher my team members, gas is normally the better customer experience I tend to get. Right. You can't push a string. I can always tone somebody back a little bit or give them some different ways to deploy their energy, but I can't make people have enough energy to give a crap. And so I think that really is massive.
[00:14:50.590] - Gokul
It's unforced errors and other things too, right. It's holding people accountable for the little things. It's making sure people are doing the job. It's being really good at exactimate so you don't leave money on the table. So to me, this whole unforced error game is really what the owner tolerates. So what you tolerate becomes your standard in your company. Okay? So if you tolerate things that things are falling through the cracks and things of that sort, then you just know that your company is going to make a lot of unfair. So all it is, is the standard you're setting for your company day to day, everyday, block and tackle.
[00:15:25.380] - Brandon
These companies do it really well, really well, consistently. So that's interesting. That's hanging there for just a minute is I think most owners that we talk to fill this sense of overwhelm and a lot of times it seems like they're attempting to control everything. And I think one of the things that we try to teach and work through with people is the return on investment of your energy. And as soon as you've removed your ability to inspect your company right, inspect our process, inspect execution in the field. Like as soon as you do and you stop observing and providing oversight, then that's when that begins to just completely, I feel like unravel out from underneath you. So in your sense of wanting to control or be cheap or try to have a skeleton crew, we ultimately are just creating this ongoing pain and chaos because we can't get above the fray enough to see the ship above the waves kind of thing. Is that's kind of the idea, right? Is that what you're talking about here is just making sure we're in the right lane as a business owner to ensure we can expect what we're doing.
[00:16:36.550] - Gokul
Yeah. I mean, it's understanding that you cannot make unforced mistakes as a business. There's all these other pressures that you cannot control. Correct. You can't control interest rates. You can't control not having enough employees. These are macro kind of things. When I say unforced errors, it's saying, look at your business and saying what you control. You do it really well and forget about everything else. And that, to me, comes more from an owner mindset of having clarity on what is important in business. The minute you lose clarity, you lose focus. If you don't have clarity, you don't have standards. If you don't have standards, you tolerate everything.
[00:17:13.120] - Brandon
Yeah. It's all left for interpretation, right?
[00:17:15.070] - Gokul
It's all left for interpretation. And it changes week to week. What's the flavor of the month? The flavor of the quarter? These things happen, and then employees don't take you seriously, and then you can't set a standard anymore.
[00:17:25.710] - Brandon
One of the things that we see so much of in fact, Chris and I were just talking about this a lot in our personal life is just how hard it is to do the normal stuff enough times in a row that you actually yield the benefit from it. Just that consistency compounds and how hard it is to be consistent. And I think to myself within our businesses, like, if I can't journal five mornings in a row without some kind of accountability, how much harder then is it for an employee to show up every day and execute the way I want them to, consistently, without providing enough support or contingencies or processes or systems for them to execute that way? Because they're going to take the path of least resistance. We're all going to have a bad day, a bad week, right? All the things yeah. Okay, the third one, man.
[00:18:16.690] - Gokul
Let's keep going. Here's what I find. I find great companies are focused on entrepreneurs, and owners are focused on profits.
[00:18:24.060] - Brandon
Right. And not the top line is to.
[00:18:27.040] - Gokul
Create profit and to be able to do things with it, good things in your community. And it is amazing how many owners are focused on all these other things other than the reason a business exists is to serve your clients, serve your employees, and to create a profit while doing it. Correct.
[00:18:47.280] - Chris
How often do you engage with prospective client or a client and they don't know, they don't have a clear understanding of their EBITDA, how much money they're actually profit, they're actually making at the end of the day?
[00:19:00.130] - Brandon
Like, what percentage?
[00:19:01.270] - Chris
Percentage?
[00:19:02.340] - Gokul
Great question. Over 50%.
[00:19:04.360] - Brandon
Wow. Okay. It's higher than I would assume, and I'm not surprised at the same time. Right.
[00:19:11.890] - Gokul
Listen, when you look at mine, said everybody's running the business out of a checkbook, it's like going to eye doctor for a headache. It doesn't tell you anything about your business, right? Correct. And you talk about fundamentals when we talk about you've got to run it out of PNL, you cannot run it out of your checkbook. And I've seen companies with 20, 30 million in revenue where the owners have no idea what's going on.
[00:19:32.700] - Brandon
That's so unbelievable with all this new age stuff.
[00:19:36.720] - Gokul
I mean, it goes back to my earlier point of everybody trying to look for the next shiny thing and what's next and what's next. And I've heard all these creative names. I'm a chief culture officer. Like, what the hell is that? You're the CEO. If you don't want to be it, then don't be it. But you're not a culture officer, you know, you're not a chief peacemaking officer. You're not a cheap anything. If you own a company, you're the CEO, period. Okay? You either like it and grow into it, or you don't. But that's my opinion. So I'll get off my I like it.
[00:20:11.470] - Brandon
I'm spicy, man.
[00:20:13.020] - Gokul
I heard all these different names, man. I'm the strategic adviser. What the heck is all about? And all that does is cloud your judgments on why you exist as a company and why you should exist and why you will continue to exit. Exit, right. So clarity is a lot when it comes to focused on profits. And I tell this to my team all the time. I said, guys, our job is only one thing. Dig a moat, build a cast. I tell it to them all the time. Every staff meet, I'm like, how are we digging a moat? How are we building the castle?
[00:20:45.460] - Brandon
Okay, you got to unpack that. You got to unpack that. Digging a moat and building the castle. What does that mean?
[00:20:50.590] - Gokul
Dig a vote. Build a castle.
[00:20:53.060] - Brandon
So am I hearing like defensible? Right? Build a moat is the platform.
[00:20:58.530] - Gokul
Yeah. Digging a moat is getting your branding and getting your differentiation and your value proposition and your customer service so good that no competitor ever come and read your cast.
[00:21:10.020] - Brandon
Yeah.
[00:21:10.630] - Gokul
That's what digging a mode is. Do you understand?
[00:21:13.000] - Brandon
Yeah, absolutely.
[00:21:13.980] - Gokul
Building a castle is building profits. I always tell them, I say, I can sum up all the business in that one sentence. Dig a mode, build a castle. That's what every CEO should be doing.
[00:21:24.970] - Brandon
Correct?
[00:21:26.510] - Gokul
Yeah. And that's what I'm saying. You've got to be focused on profits. Or another way to say it is you got to be everyday. Dig a moat, build a castle. That's the only job everybody in your company has. There's nothing else.
[00:21:38.320] - Brandon
You're touching on something, I think that crossed over into a couple of different lanes. So first off, I have two thoughts on this. One is the ego. So for me, even in previous experiences, I will be the first to admit that learning how to keep profit was a skill set that developed later in my career versus earlier in my career. And there are people in my sphere of influence that can attest to that. But one of the things I always had fun saying was, we have multiple locations. And it's like, top line is XYZ, and we have multiple locations. We're a regional provider. And I see now even talking to companies where they have six, seven plus locations. And when you really look at a lot of them, they're not profitable because we've got these repeated expenses to make it sound like we're bigger than we really are. But that product is not producing any profit, and it's probably because it doesn't have some of these other things in line to create that. So anyways, that's one thing I just like to get your perspective on is, like, how often are you having to tell people, this isn't about an ego, this is about real life, fruits of your labor kind of thing?
[00:22:46.240] - Gokul
Oh, it's one of the toughest calls I make every week. Every Friday afternoon, I make calls. I call it my customer recovery hour. And what it is is calling my clients and telling the business is not sellable, or it's not worth what it's giving them bad news. And I've been doing this for 15 years, and I still can't get used to it. You know what I mean? I got to drag myself to do it. And I'll be honest with you. Sometimes I'll write their names in the back of an envelope, and I'll go sit somewhere and do it. It's tough. I got to find things to give me some Novocaine, so to speak, before they're incredibly tough. The things that we're talking about today affects people in big ways, and they're not some theory sitting in some PowerPoint presentation. I mean, these are things that we have inherited and we've researched and we've talked about from real people, hundreds of restoration owners that we talk to. I'll tell you, in the last quarter I just got the numbers yesterday, we talked to 104 restoration owners last quarter wow. At different levels.
[00:23:50.760] - Chris
And how many weren't ready to sell?
[00:23:53.170] - Gokul
94.
[00:23:56.740] - Chris
That's a lot of difficult conversations.
[00:23:58.750] - Brandon
Yes. For those of you like me that are a little math challenged, that's very high.
[00:24:04.990] - Gokul
Yes. There you go.
[00:24:07.460] - Brandon
Unbelievable.
[00:24:09.370] - Gokul
Yeah. Not focused on profits. And, you know, some of those calls are great because we'll advise our clients. We'll say, here's a roadmap. Here's how you got to go get there. And they'll take it and really make some changes and go do it. And some of them will hang up, you know, so it's like it goes to the extreme. They're just really mad because they find themselves backed against the corner. So you got to focus on profits, but if they consciously work on digging a moat, building a castle, how did you do this?
[00:24:36.490] - Brandon
Right.
[00:24:37.540] - Chris
So we've all had a lot of experience with restoration company owners not focusing on the profits or not having a clear understanding of it. When you look at high performance companies that you've worked with and help sell and so forth. What are some of the critical disciplines or language or behaviors that you see them doing that focuses on the profits?
[00:24:59.920] - Gokul
Oh, it's real simple, okay? Real simple. All the owners understand financials. They understand accounting not from taxes and CPAs, but they understand basic accounting and basic ratios on what's going on.
[00:25:15.250] - Brandon
They're looking at it.
[00:25:16.450] - Chris
They know what they want.
[00:25:18.190] - Gokul
If you understand, then you look at it. You know what I mean? If you don't understand, you just depend on your accountant or whoever, your bookkeeper, whatever it is. So accounting is the language of business. And if you're playing the CEO role, in my opinion, you got to know it. You don't have to be a CPA, but you got to know your way around financials and you got to know your way around what a balance sheet tells you, what a PNL tells you, what cash accrual reports, gross margins, net margins, year over year comparison, year to day comparisons and some basic ratios. Capex how much money you're investing back into the business opportunity. Cost is another one. Hey, if I go do this, what else am I losing on? And is that a better investment for me? So there's some basic, basic things. A rate of return. What are your net margins, your adjusted EBITDA? So there's about ten things you need to know. So that is the number one difference is people understand it. And along those same lines, the best and the most profitable companies either have a CFO, a chief financial officer that watches the numbers for the owner, and they outsource that part of it, right?
[00:26:35.220] - Gokul
So they literally have a financial guy looking at your numbers all the time and saying, hey, here's something you should look at, or here's a red circle that you should look at. We need to make adjustments here. And I know you opened the second branch, but it's sucking up all your profits. And you need to make a decision whether to shut it down and become profitable again or be breaking even for the next five years and say, that's a better opportunity. So I'm going to go with the pain, right? I'm going to endure the pain. These are the kind of decisions that you got to be making from a financial perspective. So it's a real simple, man, I tell you, the people that are focused on profits are the people that are looking for it. And the way you look at it is in your PNL.
[00:27:13.990] - Brandon
Yeah, 100%. Right. And probably the bulk of that starts at the old gross profit margin line, right? Like, if we're not starting strong, don't even worry about reading below the line because that's going to be a tire fire too.
[00:27:25.680] - Gokul
Yeah, it gets really tough. And I'll say a tip. When we work with our clients, a lot of times we give them evaluation, whatever. Let's just say $5 million. I really needed to be 7 million. That's my number. Okay, then I teach them a very simple trick. You got to make at least a 15% or 17% net margin. And I tell them, I said, take the net income line in your piano, go put it right below the revenue line. OK, so let's go in here that we want you to run at a 20% margin. I know it's high, but let's just assume that. Let's assume a business has got $2 million in sales or 5 million in sales. That means it's going to make a million dollars in profit, right? That's the goal, right, at 20%. So you would take 5 million, put 20% next to the net income, which is a million. Now what's left is four. Now go build out the rest of your PNL.
[00:28:24.410] - Brandon
I like it.
[00:28:25.510] - Gokul
You see what I'm saying? It's taking the most important number, which is the last line, and making it line number two.
[00:28:32.680] - Chris
That's how we start with the end in mind, right?
[00:28:34.800] - Gokul
Start with the end in mind. And it's a great exercise. I think every business owner should do it at least once a quarter. And it's amazing. You'll find out all the leaky holes in your bucket when you do that.
[00:28:45.190] - Brandon
I did it. It's interesting because it's such a against. We always want to be presenting rocket science to make ourselves feel better, but that is a simple visual to remind us. It's like, what the saying? Pay yourself first, right? We think about personal finance. That's what you're doing there as a business owner. You're telling people, look, this is the number you need. Really? This is the one that matters. Now use this gap that's remaining to decide how you're going to run, how.
[00:29:14.490] - Gokul
You'Re going to run your business.
[00:29:15.540] - Brandon
This is the non negotiable, right?
[00:29:17.700] - Gokul
Here's the thing. Listen, the answers you get in your mind depends on the questions you ask. If you ask dumb questions, you're going to get dumb answers. If you ask different questions, you'll get different answers. So the idea here in this exercise is to ask the right answer. So I got 4 million left. How do I run this business? Then you start looking at things. You start finding opportunities everywhere. Listen, we've doubled valuations in companies by doing that one thing over two years, two and a half years, we work with someone, we have literally doubled valuations of companies.
[00:29:52.240] - Brandon
Hey, friends. Hey, listeners.
[00:29:53.730] - Chris
We're doing something a little bit different with our ads. So you've been accustomed to hearing some ads with our favorite partners and companies in the industry. Now we actually have a product page, our partners page, on our website. So Floodlightgrp.com Partners want to give you a quick rundown, though, of the people that we're partnered with and we believe in as really go to resources in the industry. The first one is restoration erp.com, right? ERPs are an important part of our sales process. Our customer development process and why reinvent the wheel? The restoration ERP platform is awesome. It can be customized to your business, branding and all that kind of stuff. It has all the components to really create a value add for your commercial client. Accelerate job management software. Everybody needs job management software, and we've just found Accelerate. Not only is their team just really great to work with, when they get ideas from customers, they throw it into the product roadmap and they implement it. They're really advocating for the contractor and trying to create a software solution that works for them. Actionable insights. We recommend actual insights all the time, right? All of us as restoration operators, are looking for turnkey resources and training solutions that we can take our team to the next level and AI, when it comes to estimating and matterport and a lot of the other essential tools we're using, they're an awesome resource and they're always coming out with new great stuff.
[00:31:15.090] - Brandon
Super influential in the industry. Super Tech University. Soft skills development training for your technicians, for your frontline personnel. Let's face it, frontline personnel are the heartbeat of our company. They are the ones that connect with our clients and create the customer experience. There is no better investment than investing in the ability for those individuals to represent themselves, our clients and our brands well.
[00:31:39.040] - Gokul
So super.
[00:31:39.640] - Brandon
Tech University. Surety. They essentially are cutting down this lifecycle between delivering service and then getting paid, stepping in, removing the middleman in terms of mortgage companies, refining that pipeline, making sure that there's at least friction as possible so we can go out and do a great job, and then our businesses don't suffer while we're waiting to get paid. The money is coming and it's coming quickly. And then the last one, guys, is lifted. It's kind of a newer entry to the industry. They're driving Google reviews so they're a turnkey partner that we can literally go out, provide a great customer experience, hand that name off to our trusted partner in Liftify, and have them go chase.
[00:32:18.480] - Chris
That Google review conversion rate, which is industry wide, people tend to average 5% of people you ask for. If you actually convert Lift, the five bumps out to 25. We were such a big believer. We're a customer and they've been generating all of our floodlight reviews and in a matter of a week and a half, or close to 15 reviews in just a short period of time.
[00:32:38.140] - Brandon
And I think people just underestimate what happens organically with your SEO search activity when you're getting these new and active five star reviews from our clients. And we just can't let the pedal up on that because of the effect on our business is long.
[00:32:51.630] - Chris
Big deal. So check it out. Check out our partners page. Do business with them. You won't regret it. We're confident in that. Floodlightgrp.com partners.
[00:33:00.400] - Brandon
Thanks, guys. I'm kind of ashamed to say it, but it's like I'm reengineering in my own mind right now. It's like, okay, tomorrow I have a conversation with a brand new client. I'm literally thinking to myself, I'm going to hear your voice in my head and I'm going to go the first thing I'm going to do is I'm going to show this person why this is going to be so important and I'm going to take their bottom line number and put it right up against their revenue and do this exercise. It's freaking brilliant. But there's a little bit different theme than where we started out.
[00:33:33.660] - Gokul
I'll give you my address after the show.
[00:33:35.430] - Brandon
After the show.
[00:33:36.300] - Gokul
Sent me the royalty checks, the cocos.
[00:33:40.180] - Brandon
We've now adopted the Goqual system. Okay, man, hear me out on something. Okay. This is a slightly different theme than where we started, but I'm hearing two things that really stood out to me so far, and I want to get your perspective, kind of synthesizing these two things together. So I'm going to go back to that statement you made. Dig a moat and build the castle. And what I'm interpreting with that is focus first on creating the differentiators between you and your competitors. Like, what are the values? What is the thing that's going to protect whatever it is you now spend your energy building? I love that. It's like start with the end in mind. And then I'm hearing you say that again with this visual representation of we literally start this perspective by saying you need you need to keep that. That's the non negotiable, right? Yes. And we are believers in the 20%.
[00:34:32.170] - Gokul
Yeah. Okay.
[00:34:33.060] - Brandon
But you need this. This is the part that's non negotiable. We can start working around with the how based on this remaining money. Again, starting with the end in mind. Do you see where I'm going with that? Those are the two things that stood out to me. What does that mean to you when you're talking about a business owner's mental shift to build the boat first, start with the 20% 1st. What's happening, I guess with this.
[00:34:59.640] - Gokul
So when an owner starts a business, we all, as entrepreneurs, go through different job descriptions and different mindsets that go with it, correct?
[00:35:09.330] - Brandon
Yeah.
[00:35:09.960] - Gokul
So when you start a business, you're going to start as a rainmaker because sales is really important to you. And then you start building a team. You got a 1500 square foot warehouse or 2000 square foot warehouse. You may have a couple of trucks and ten employees. Now you got to learn to bit. Your job description completely changes to a team builder. You have to switch mentally and acquire the skills to do it. Right now you're growing, growing, growing. I don't know. You're reaching 7 million, 8 million in revenue. Now you got to customize everything because you need the same performance over and over and over again. Your job description changes to a Systemizer. You see where I'm coming at?
[00:35:48.660] - Chris
It's a very different job description.
[00:35:50.290] - Gokul
Yeah, very different job description. Then it grows. It grows, it grows. And then from there, you have to look at your company as an investor, right? And that's what big in a mode. And building a castle comes from if your mindset is as an investor, your only job is to dig a moat and build a castle. Because now you're looking at the business and you're protecting it, right? You're making sure no one can come in and take all your customers. You're making sure that, for example, if two of your key people leave, no one could raid your castle, that you got a replacement for them. You're looking at you made such great connections, not conversions, but connections in your area, in your city, that it doesn't matter if a national player buys somebody one of your competitors, or it doesn't matter if some private equity drops an office next to you. Your connections are so strong that you're good, you don't have to worry about it. That's what they're going to mode is that no one can attack the castle.
[00:36:53.830] - Brandon
Yeah, right.
[00:36:58.010] - Gokul
It's been great for years now, and you're just hyper local, and you're just dominating. Not just dominating with ads, because you can't build a mode with ads because someone bids more and they take you out. Let's say you have content, maybe you have videos, maybe you've helped the firefighters, maybe you've helped the police in there. Maybe you've done all these things. It doesn't matter if someone came in with a $10 million budget, they're never going to replace those connections, okay? That's big in a mouth. If you look at talent, you look at the team and you go, man, I got the best talent in the city. And they're happy. That's billing them out.
[00:37:35.880] - Brandon
Say that again.
[00:37:36.630] - Gokul
That's what I mean by building them out.
[00:37:38.140] - Brandon
Say that part again. Google the talent part. You got to say it again for us, because we hammer on this all the time. The differentiators are people, right?
[00:37:46.420] - Gokul
Listen, you're only as good as the players on the field. It's really that simple, right? And so talent becomes really important. And great talent is part of that mode that you're building around your firm. If you got great people, they're going to fend off anything that's coming out.
[00:38:01.030] - Brandon
Yeah.
[00:38:01.570] - Gokul
You know what I mean? Along with the right knowledge, the right skills, the right purpose, that's a mode that it's going to take such a deep mode that it really doesn't even matter who comes and who's your competitor, because then it becomes me versus me, us versus us. It never becomes us versus somebody else. You got the best talent. It's all about just upping your game all the time, right? So that's the investor CEO mindset, that is, as your job description changes. That to me, is the pinnacle of the entrepreneur and a small business owner. From a mindset level. If you become a true CEO, investor mindset and you play that job description, you are going to be thinking only about how to dig a moat and build a castle.
[00:38:47.140] - Brandon
It's simple. And I think that's what we all need help with, right, is that it's not easy. That's not what we're saying. But it is simple. Like where we need to focus our attention is more simple that I think than we allow it to spin out from underestimate, I think.
[00:39:02.250] - Chris
So one aspect of this that kind of underlies everything that we've been talking about is sales and what kinds of attitudes, behaviors, perspectives do you see or observe in high performance companies when it comes to sales?
[00:39:18.070] - Gokul
I think really great companies when it comes to sale, do fewer things, but do it better. Correct. So I've seen companies where I talk to owners, we're doing this 50 things to generate revenue, and we're not generating revenue. Why? Because you can't be good at 50 things. When I see great companies, they're like we do these three things that we dominate. You see where I'm coming at? It could be content creation and SEO. The dominate. It could be relationships with just property managers and they dominate. You see where I'm coming at? It could be a relationship with plumbing or other professionals in the area that dominate. Okay. So I think when it comes to sales, it's a mindset of do less but better focus. As we talk about spread yourself too thin. It's really hard to build a name and a brand recognition. And coming back to my original point, it gets really difficult to build connections when you want to be everywhere. Even if you just do internet and emails and SEO and content, you never shake hands with the community. You still have to build connections.
[00:40:28.390] - Brandon
Yeah.
[00:40:29.020] - Gokul
Does that make sense? You still got to build connections through your videos, through your content, through all these other things. Right. So the companies that have great sales are the ones that have connected the most within the community. You know what I'm saying?
[00:40:43.440] - Chris
I do, yeah.
[00:40:44.820] - Gokul
That family run company in Connecticut, man, we know them. They sponsored this. They're in the parade. They're in the Christmas parade. I see their ads, but they've done something great for the community. Whatever they did, a pro bono or something for the school, it's the connection. The owners teaching baseball, the local Y, whatever it is. So I think it's like sales is all to me about connection.
[00:41:09.540] - Brandon
Right.
[00:41:10.240] - Gokul
You cannot have sales without connecting to whoever is going to give you those sales. Whether it's your end customer, whether it's a property management group, whether it's whatever insurance agency, it doesn't matter. It's connecting meaningful connections. And meaningful connections happen by having time and not being rushed and taking the time to know each one of your referral sources. Meaningfully?
[00:41:34.380] - Brandon
Well, yeah, personal relationship, to me, it's very counterintuitive.
[00:41:38.830] - Gokul
I tell you, we're doing 2023 marketing plans for my own right. And the idea there is we've cut off 25% of everything we're doing in 22. You see where I'm coming at, and we're just saying, hey, we're going to just pare it down, but we're going to take our time and get to know and connect better. We're doing the same thing in RBA.
[00:41:57.280] - Brandon
Yeah.
[00:41:58.540] - Chris
How important is diversification in this topic of sales? We've got a lot of sort of engines for revenue in our business. One of them is TPAs. Right. And of course, we see scenarios where companies are really dependent on TPAs. We occasionally come across people at 80 or 90% of their income is from TPAs versus direct commercial sales versus referral partner portfolios. Do you have some perspective on that? When you look at high performance companies that sell for high multiples, their valuations are super high. What is that diversification look like? Is that an important priority as a CEO?
[00:42:38.410] - Gokul
One of the most important things, yes.
[00:42:40.620] - Chris
Okay.
[00:42:41.530] - Gokul
Again, let's talk about creating a moat and building a castle. If 80% of your revenue is coming from one source, and we have a company right now that we have that issue, what if that goes away? You don't have a castle anymore. You don't have a moat. Diversification is part of that mode. Does that make sense?
[00:43:01.720] - Chris
Absolutely.
[00:43:03.110] - Gokul
When it comes to TPAs, and there's always numbers. But I can tell you, when buyers look at companies, they don't want more than 12% of their revenue coming from a single source.
[00:43:12.870] - Brandon
Wow, 12%. That's a pretty small number. I mean, if we're honest with ourselves.
[00:43:19.390] - Gokul
Not in any other business, it's not.
[00:43:22.540] - Brandon
Yeah.
[00:43:24.110] - Gokul
You know, in our industry, we've just kind of gotten used to it.
[00:43:27.160] - Brandon
Yeah. No, I agree. I think that's a solid reminder. Yeah. 100% 12%. Okay. What we measure, we manage. Right. So that's a number we should be cognizant of. For sure.
[00:43:44.760] - Gokul
Yeah. I think when you're doing marketing plans and sales plans, you got to know where your fishing holes are. Right. And then you got to understand, what kind of warm am I going to put out there? How much fish am I expected to catch? When am I expected to catch them? And then you track it, and then you make your adjustments. But from a revenue perspective, you really don't want the tail wagging the dog.
[00:44:07.410] - Brandon
Right.
[00:44:07.710] - Gokul
I tell you, we have a company right now, and I had to tell him his business was unsellable last Friday. He had 70% of his money coming from a single source.
[00:44:17.220] - Brandon
Wow.
[00:44:17.770] - Gokul
We canceled. Great company, great profits, great no diversification of revenue.
[00:44:23.800] - Brandon
So susceptible. Yeah. Hey, so we have to be really sensitive with your time.
[00:44:29.580] - Gokul
Otherwise thank you for that. I'll go through my last three really quickly.
[00:44:34.330] - Brandon
Yeah.
[00:44:35.170] - Gokul
Owners are engaged, so they're playing that CEO role. Okay. This is a huge problem. Owners know for years they're not engaged in the business, and they continue to run it. You cannot run a high performance company if the owner is not 100% all.
[00:44:47.910] - Brandon
In, 100% all in.
[00:44:50.100] - Gokul
Okay. You got to be all in. Or let somebody else take over your company and be all in. But you cannot have a high performance organization as an absentee owner, as this is one of my ten projects I'm doing, I've never seen it. Okay.
[00:45:04.990] - Chris
Right.
[00:45:05.790] - Gokul
They make huge investments in HR and culture. COVID has really brought that to the forefront, hasn't I mean, companies that had great culture and a sense of family and belonging did not have as much HR issues as companies that had not so good cultures where the owners maybe have not paid a lot of attention to it.
[00:45:27.030] - Brandon
Yeah. Agreed. Yes.
[00:45:28.140] - Gokul
You know, COVID, really I mean, we saw companies that had almost no HR issues during COVID and we had companies that were staffed 30, 40% levels because they couldn't find the people. They had the job. The claim volumes were there.
[00:45:41.500] - Brandon
Yeah.
[00:45:41.880] - Gokul
They didn't have the job. Right. So now when I talk to people, everybody's talking about talent acquisition and all culture. Those are the conversations. And I think that's probably one of the better things that's come out of COVID for us, because I think our industry is going to start paying attention to it's not just a position and an employee and an employee number and a badge, and it's real people, and maybe they need flex time. Maybe they need some kind of recognition. Maybe they need a path. So I think that's coming on. And then the last one is employee satisfaction. If you went out and surveyed employees in high performance companies, I'm not going to say they're ecstatic and jumping off the moon, but here's what I'm willing to say. They're reasonably happy in their jobs. Yeah.
[00:46:26.380] - Chris
Right.
[00:46:26.980] - Brandon
Yeah. We're not asking for shoot for the moon.
[00:46:30.120] - Gokul
They're reasonably happy. You know what I mean? Like, you put on a scale of.
[00:46:34.420] - Brandon
One to ten, maybe they're 7%.
[00:46:37.620] - Gokul
You can't get them to ten, but you don't want a number two either. You don't want it to be ranked number two on it.
[00:46:42.670] - Brandon
Right.
[00:46:43.200] - Gokul
So companies that have great employee satisfaction have unbelievable performance. Those are my top six.
[00:46:50.920] - Brandon
That's it. Yeah. And I love it, man. Two things, and we got to let you go. One is I want to highlight something that we've seen from our very first exchange with you, and that is even though your business is driven by analytics and data, okay. It's a very black and white business. There's no negotiation about that. However, the importance that you place on talent HR focus right. Like this human capital component, is unquestionable. And so I think it's important for all of us as restorers, to be reminded of that this is a data driven business and how important it's showing that these people elements are. So we want people to go hang with you for the reason that you at minimum, will do a great job of telling them what they really have. So where are people going to learn to get the vitals on their business so that they can start making some different decisions regardless if they're ready to sell today or not, right?
[00:47:45.580] - Gokul
Yeah, I mean, listen, we got all kinds of information and one of the best things about our job is talking entrepreneurs around the country. And every job has got that 10% that's like a root canal and it's got 10% that's like a chocolate cake. That's the best part of your job. Right? To me, helping entrepreneurs whether they're ready to sell now or later, but giving them a path to how to get better and better and better at what they do. Man, that's like my chocolate cake, you know? I mean, I love doing it, so it's great.
[00:48:13.290] - Brandon
Yeah.
[00:48:13.620] - Gokul
You go to our website, all the information, all our videos are there, www.rbsls.com. People can fund it there. So thank you for that.
[00:48:22.120] - Brandon
Of course, my friend. And thank you again for hanging out with us.
[00:48:25.050] - Gokul
Goku.
[00:48:25.410] - Brandon
And we'll be seeing you hopefully soon in some other endeavors.
[00:48:29.020] - Gokul
Yeah, we'll do more on this topic soon. Yeah.
[00:48:31.090] - Brandon
Alright, buddy.
[00:48:31.980] - Gokul
Appreciate you guys, doing great. Thanks, guys.
[00:48:33.990] - Brandon
Alright, bye. We'll see ya.
[00:48:35.320] - Gokul
Bye.
[00:48:37.390] - Brandon
Alright everybody, thanks for joining us for another episode of Head, Heart and Boot.
[00:48:41.940] - Chris
And if you're joined the show, you love this episode, please hit Follow. Only known to subscribe, write us a review or share this episode with a friend. Share it on LinkedIn, share it via text, whatever. It all helps. Thanks for listening.
