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In this episode, experience John and Jack's journey as they explore two unique business opportunities in the home services sector: chimney sweeping and generator service and installation. They also share some key factors like cost per click, labor acquisition, and overall business viability. Additionally, they discuss the challenges they've faced dealing with unexpected issues in their daily operations within the home services industry.
Episode Hosts: 🎤
John Wilson: @WilsonCompanies on Twitter
Jack Carr: @TheHVACJack on Twitter
Looking to scale your home service business? Service Scalers is a digital marketing agency that drives success in PPC and LSA.
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The Owned and Operated Weekly Insights Newsletter
John Wilson, CEO of Wilson Companies
https://www.wilsonplumbingandheating.com
Jack Carr, CEO of Rapid HVAC
https://rapidhvactn.com
Owned and Operated Episode #71 Transcript
John Wilson: I'm John Wilson. Welcome to Owned and Operated. Twice a week, we talk about home service businesses, and if you're a home service entrepreneur, then this is going to be the show for you. We talk about our own business in residential plumbing, HVAC, and electric, and we also talk about business models that we just find interesting.
Let's get into it.
If you're a home service entrepreneur that's just starting out, or is early on in the journey, and you haven't broken the five million dollar revenue mark, we've got an event for you. This spring in Cleveland, March 19th to the 21st, we're hosting an event at my office. It's going to be awesome. Honestly, some of the most impactful visits of my career have been visits to companies that were larger than we were, that we could take lessons from, and see how they're doing stuff.
Like get a behind the scenes look, how are they structuring warehouse? How are they thinking about call center? Can I talk to their managers? Can I understand what their KPIs are? We're going to dive into all that stuff. We are here to help people get above 5 million in revenue. So join us in Akron, Ohio, March 19th to the 21st for a breaking 5 million event.
Love to see you there. Details are ownedandoperated. com
Jack, how's your week, man?
Jack Carr: Welcome back to Owned and Operated. Yeah. Hey, week was good. I know I'm coming off a really rough loss of personnel.
John Wilson: Yeah, the smiles too big. I'm like, are you drinking tonight? Like, yeah,
Jack Carr: no, actually I'm not being facetious. It was actually really good. We sold in like the last three days.
We sold probably I think like 90k. So we had two big accounts that we've been working on, like a three unit all high seer with IAQ and ductwork and another two unit and So it was a good week, three duck cleanings. Like the team has been just, we lost a few people and the team's like, Oh, we better kick it into gear.
So they've been hustling. We've all been hustling though.
John Wilson: Yeah. Like off camera, we were just talking about TikTok and Facebook. Are you driving duck cleaning leads through TikTok? Cause I feel like that would hit. We tried, uh. So visual.
Jack Carr: Yeah, we tried duck cleaning. We tried IQ. Neither of them hit it like we hoped.
I think my cost per lead or when I did that was like 125. And that's not close lead, it was just getting quoted out. This is mostly maintenance, driving to, doing a furnace check, and then seeing if their ducks are dirty and then flipping that. But we got three of those, a two system and a one system. And we have some IQ on us.
I mean, it's been a good week. I like being out in the field. As crazy as it sounds, it feels good to be out and working with the guys and doing that. Though I know it's not forever. For right now, it's nice to be back out there for a little bit.
John Wilson: That's fun. Cool.
Jack Carr: What have you been up to? Honestly,
John Wilson: it's like nothing interesting, but it's all good.
We pushing right now a little bit, like lead flow dipped a little bit. So we're like pushing hard to regain that. We're in the middle of a bunch of marketing projects. We're just in the middle of a bunch of stuff, right? So we're launching seven days a week and that goes live December 1st. We've hired an insane amount of people to make that happen.
We have a bunch of lead flow stuff going on. The marketing team, we've added two full time people in office. So like one started Monday, one is starting next Monday. And that we're like dividing up those roles into like project based and proactive and reactive and the different ways we think about that.
So that's been a big project.
Jack Carr: Is it all local talent?
Okay. Sweet. Akron, Ohio, man. It's got the people.
John Wilson: There's a ton of universities in right where we are. And there's a giant university, like 40, 000 kids or something, like 10 minutes from our new headquarters. And so when we posted anything marketing, dude, I got so many freaking resumes.
It was ridiculous. And it was a bunch of like interns and that type of thing. So actually it was very easy to fill.
Jack Carr: I could imagine. Yeah.
John Wilson: Yeah, so I think just like, I don't know what else we can do and draw from that talent, but I'm gonna find out. But yeah, Akron was represented for sure, so that's been really good.
So it's fresh college grads, but they'll be good. And then we have a bunch of hires. Mainly for like weekend, but also just Administrative shifts. And the big thing is like, we're figuring out our phone booking rate. We're trying to understand by like lead source, what is our booking rate per lead source?
And we started diving into this because our booking rate on LSA is way lower than it should be. So we're like, all right, what's going on. Let's go. We spend a ton of money with LSAs. And then we find out that half of our leads from LSAs are commercial. We don't do commercial, so we don't book them. Like it's literally 50%.
50 percent of our budget of LSAs is going to a work type that we don't do, and Google won't give us the money back. So we're trying to decide what to do, because that is doubling the cost of any lead that we actually do book, to like unsustainable levels. Like the money doesn't make sense. So we're really trying to hammer down on how to solve that one, but yeah, so a lot of like big projects, but it's been sort of a slower week as a, some of the big stuff that I've been working on over the past 90 days has evened out.
Jack Carr: Yeah, no, that's really neat. And it's funny you say that because we're working on the same thing as we've talked about, we're increasing plumbing. Right. And so I want to big shout out to our sponsors, service scalers. We've just doubled budget with them doing such a great thing for us.
John Wilson: I just found out, yeah, like we're genuinely organically bringing this up.
I just found out our cost per lead with them got cut in half.
Jack Carr: Yeah, we've increased it. I talked to him. He's like, yeah, we've been trying to optimize you. We lowered your cost per lead 70 percent and then we've also got you 300 percent more leads in the last week. And I'm like, it's been only two weeks. I know.
Google hasn't even fell in love with us yet. They're doing great work. So we've been really happy with them. I'm really happy.
John Wilson: Yeah. PPC is interesting. It's a weird game, but I'm, yeah, I'm glad it's working out for you.
Jack Carr: I'm glad that I have someone who is playing the game and is a good steward on my money because like I said, and I'll say it a hundred times on this podcast, I ran PPC through two or three different agencies and always bad.
And this is the first time I was like, I'll give it a try. Yeah,
they've been kicking butt.
John Wilson: Yeah. I think knowledge of the industry is good. I think knowledge of like what's the total value of a customer is good because I think that's where you get dangerous. Like not capping leads and stuff, not knowing, or like during the onboarding, people will be like, all right, what's the lifetime value of your customer?
And someone will say, a hundred thousand dollars. So they're like, okay, so you're willing to spend 2000 now. No, like no one is reasonably willing to spend that for a lead today. I think there's a lot of nuance there, but probably the big thing there is like pick an agency that you can work with that communicates well and knows your industry.
Jack Carr: It drives results. I mean, driving results is the big thing, right? They need to be able to do that. So anyway, I just wanted to shout them out. It really, truly was organic because they've just been doing an awesome
job for us.
John Wilson: Yeah. They took our cost per lead from like 54. It's in the 20s now.
Jack Carr: On PPC, that's nuts.
John Wilson: I know like simultaneously while I'm like, yeah, my LSAs just found out they were double as expensive. Basically. Like we have to cut our LSA budget in half because we're just not getting quality leads out of it. That's like. 30, 000 that's gonna have to go somewhere. So we're like trying to figure out what to do with 30, 000.
Jack Carr: Yeah, it's those streams that have been flowing. It's flowing back into PPC and then we're gonna have the same conversation. Oh, in a year.
John Wilson: Yeah, it changes every year. I've said that before, but it's more noticeable now. But like everything works for a year and I think the big lesson with marketing and advertising is you just have to keep trying new things because you never know which one's going to be a new good funnel.
Like we're experimenting with broadcast right now and I think that's going to be a really interesting new funnel for us. There's like TV aggregators that let you, you know, when we brought broadcast historically, it's been like, we go to Fox eight and we buy their broadcast. Now you can aggregate across a few thousand stations like streaming and it is really interesting and you can still cover all the big ones.
We're going to do that. We're going to try.
Jack Carr: I've always wanted to jump on some YouTube. I've seen the same people who advertise on there.
John Wilson: I see windows direct, right? Like we're a direct to consumer market.
Jack Carr: I was going to say garage door repair. Yep. They're almost in our market and that's who's bought up.
So speaking of that, we have a throwback today. We are going to throw back some biz models. Biz models. I'm excited. I'm going to take the lead. I'm starting on biz models today. I'm so excited. It's mostly anger that has driving all of this. Like I said, I'm exhausted. My kids are sick, and my anger is driving me through here because I lost a great installer.
Hands down one of the best installers I've ever met. Guy was awesome employee to a chimney sweep company because they are moving into HVAC. And we talked a little bit about that. They offered him a deal of a lifetime. If you install one unit, we're still going to pay you the rest of the other 32 hours at your hourly rate.
You can be out fishing and we'll pay you it. I'm going like, man, I can't, like, there's no way that I can match that. I'm sorry. I'd love to, but some weeks are slow and I can't just, or a size of our company can't meet that, so I'm trying to figure out, Hey, how the hell are these guys going to be able to do that right there?
Yeah. They're a chimney company. They just started HVAC. There's no way they have a full schedule and they don't. I talked to him today. I called him up and he's like, yeah, I'm doing like one or two a week. And he's getting paid 40 hours on the back.
John Wilson: Like HVAC install?
Jack Carr: Yeah. So he's a commission only. Right?
Like a lot of HVAC installers are, so he makes a commission rate and then the rest of the time they pay him 30 35 bucks an hour to sit at home. And not work for anyone else, which of course he's going to go and do side work. So it works perfectly for him. But anyway, so back to it. I needed to find out about Chimney Sweep companies.
Because I was going, how the heck are these guys doing it? I never thought that they were that big.
He said they thought it might be a 15 million dollar Chimney Sweep company.
15 million dollar Chimney Sweep company. And so I talked to him a little bit about it today. And he said, yes, it's 15 million. They have multiple locations.
And then so I called my buddy and he says, yes, that's pretty common. What you're going to see on average location probably maxes out in a big city about five mil. So he's got one here, one in Atlanta and one in Raleigh, North Carolina. And so he's got three that are all about the same size. Yeah. Bounces between them and they all get to about 5 million pretty easily.
And then that's why he's diversifying. So rather than opening up another chimney sweep company in a different city and having to greenfield that. What they're doing is says, you're saying, Hey. They're doing exactly what we've been talking about in this podcast is they're saying, Hey, let's go to the HVAC chimneys close enough.
Let's do it. And I'm jealous. I mean, we'll start it off the top. I mean, they all were, I'm not going to speak to them specifically because they wouldn't give me any direct numbers. So I had to. Don't find somebody who would, but for all intents and purposes, it's a home service company, right? They're advertising on PPC, they're advertising LSA, it's all B2C directly to the customer, traditional advertising through and through, same stuff as HPC.
They have a low ticket maintenance, right? Where they're going in, they're checking, they're camera ing your chimney to make sure you don't have excessive buildup. Whatever it's like 125 bucks, it's a maintenance service. And then what they're doing with that is they're saying, Hey, let's convert that into a higher ticket item, deep cleanings, oil to gas conversions, smoke tests, scans, acid test, whatever that they can do to raise that ticket up.
And then on the backend re pointing and tuck pointing, which is masonry work. So they'll also pick up some of that, which is apparently a super hard trade to learn and really valuable. I think that's like four to seven bucks a square foot. So you think about how big a chimney is. Yeah. And then not to mention, I wouldn't be surprised if they pick up some brick buildings, houses, whatever on, on kind of these older houses, repointing, which for anyone who doesn't know repointing is they go in, they scrape out the old grout and they essentially put new grout in, which is great for keeping your brickwork up to date.
So. Digging in a little bit. 5 million in revenue. How big do you think it is? How many people?
John Wilson: Oh god, now I don't even wanna know. It's like 30,
Jack Carr: 22. 22 and five of them are in the office.
John Wilson: That's amazing.
Jack Carr: So 17 techs and they do between three and $500,000 a truck, like right in line with HVAC numbers, right? In line with plumbing numbers.
Yep. Doing really great. They come in 5 million at a 12% margin. So that 10 to 12 is pretty, pretty normal. But he said that. They can get up to 20, so very similar HVAC map. They can get to those 20, 15 to 20 level. It's a little harder, usually a little smaller, but still you can get there. It's amazing.
John Wilson: What was average ticket?
Jack Carr: Oh, I didn't ask him average ticket. I shouldn't have.
Yeah.
Missed on my part. But I mean, you could probably do the
math. They have to be running with...
John Wilson: 5 to 700, I guess. I don't even know. That's what I would assume.
Jack Carr: I mean, if you inspect any chimney, if someone calls you out there to inspect their chimney...
You're going in there and cleaning it like no one's calling you out there to just look at it and not clean it. And so I'm, I'm assuming they're doing a test that, you know, two, 300 test, two, 300 cleaning. And then you're out there for 125 bucks, you're at five to 600 easy. My favorite thing of this entire, right?
So if I'm looking back, right, going into HVAC was a very difficult right out the gate because one, lots of competitors. Everybody and their uncle could huck an HVAC unit in area. Like, there's just so many competitors in the space of HVAC. There's a decent amount of competitors in plumbing. There's a decent amount of competitors in electrical.
Like these are all very well known trades we have in our area, it's Hiller or Lee company, which is the governor of Tennessee. Governor Lee owns Lee company, which they do HVAC, plumbing, electrical, appliance, repair facilities, maintenance, but you know what they don't do? You know, Hiller doesn't do, you know what nobody in this area does except this one company is chimney sweeping, which is how they grew the 5 million.
Is
John Wilson: it like how much of it is partnering with other HVAC companies? Versus just direct to consumer.
Jack Carr: It's almost all direct to consumer.
Beautiful.
So this guy he's up in the Pennsylvania area doing this and I think like Pittsburgh around. And he was saying there's in all of like the big Metro of Pittsburgh, there's three companies.
John Wilson: Yeah. When you brought this up a couple of weeks ago. I think there's three here and they are literally one or two guy companies. Like, there's nothing meaningful here. There's two.
Jack Carr: And one of them is the, the person who stole my installer. But yeah, there's two chimney sweeps in this area. And. I'm looking at it going, this is crazy, minimal competition.
They don't really advertise because they don't have to. There's nobody who's going against them. And the crazy part too, there's no licensing for any of this stuff. So like, I know when we talk about these models and we talked about how easy is it for somebody to start this up? Yeah, no licensing, which is a huge limit getting into the trades, right?
You want to become a GC or a plumber. You got to get the license. There's no license for Chimney Suite. There's no license. It's low asset. You need a truck, probably a ladder. Some of the materials, intro materials, it's 40 to 80K to start with your single truck. Crew, obviously buying into it and knowing the industry helps, but I love it.
Man, yeah. I saw this first. I probably wouldn't have bought an hVAC company.
John Wilson: I'm, I'm sitting here just like, this is good. I don't know. I'm so fascinated. By all these home service companies, Chimney Sweep's one of them. I heard about a lumber cutting one the other day. They get to like this 5 million range, which 5 million is a good range.
Like that's a nice size company. 20, 30 people. You can afford a GM. You can do stuff. And it's just like, one, this is awesome. Two, I'm still like blown away how we got to the size we are. Without having such a strong sense of marketing. Cause when I look at literally everyone else, it's like, is it low competition?
Are you that much better at marketing? Like, how are you driving their leads? Did you get a sense of how they're driving leads?
Jack Carr: They have a few billboards. I know that they have two billboards and they're just running PPC, LSA and wild. That's it. Like two sources of advertisement. I was talking to him. It's almost identical to appliance repair where we talked about appliance repair.
You have a cost per click on HVAC, 50, whatever it is, 25 in your case. That's pretty standard. Appliance repair is 5. There. Oh, yeah, dollars for chimney
John Wilson: electrical is still like 11 because there honestly are not electrical service companies, which is like I don't know that's still crazy to me But yeah five dollars excavation was six or seven last time I checked
Jack Carr: And yeah, what's septic?
John Wilson: It's like cheap.
Yeah, it's cheap. I don't remember exactly what it is, but it's very low.
Jack Carr: It's right in line with those and I love it. I mean, I'm, I'm looking at that going, going, oh, maybe happy to get a vertical index to chimney sweeps to get them back. Yeah. Just outta, like I said, outta site. Low model.
John Wilson: Yeah, the model's good.
I think the only downside, like, yeah, the upsides are clear. Low asset, no license. Relatively easy to start. I think probably not a lot of training required. Can probably shadow somebody for like a few months. So, I think this could be a very easy one to start. Are you good with heights? Can you be on a roof?
Jack Carr: I bet insurance is a pain. Yeah. Like roofing.
John Wilson: Yeah, it's like roofing, but W2 instead of 1099. And now maybe you can do it with boom lifts. Maybe there's ways to like get around that without actually getting up on that roof. But I know that's a consistent problem around here. It's like our chimney sweeps, like, Hey, we've got a ton of slate roofs.
Like we're an old city. I don't think you can walk on slate roofs. So I don't even know what they do. They have to do something different and like three story buildings, four story buildings. So you gotta be good with heights. And I think the same thing as appliance repair, which like, yes, it's not complicated, but it's still a labor pool.
And where do you get them?
Jack Carr: Yeah, that's definitely one of the hard points is finding experience chimney sweeps to hire. Yeah,
John Wilson: well, I think you can only hire probably one or two and then you just have to train the rest. Whereas like plumbing, electric HVAC, that's so mainstream that there's a lot of talent available.
I still get made fun of for this, but like I looked at buying a bowling alley like two years ago.
Jack Carr: I remember that.
John Wilson: Yeah, dude, it was a great idea. It's going to be great. But like the main turnoff for me, like literally the main one. Was they have a maintenance guy that knows exactly how every bowling piece of equipment works?
It's a very specialized skill, and there's like only three bowling alleys per city. Yeah. So like, highly specialized, everyone just has one person, like, if you piss them off in an acquisition, if something breaks, you are just down. Your bowling alley is down.
Jack Carr: One lane gone.
John Wilson: Yeah. And it's like the maintenance guy, like he controls that business.
Jack Carr: You definitely have key man risk and it's probably the same here, right? You have, especially if you're starting up versus buying, if you buy or you're getting, you know, like this size, 17 guys out there on the road. I assume that you get a few that know what you're doing, but yeah, I wouldn't buy one. It would definitely be rough to start one up, hire a key man and try not to piss them off, keep them busy.
Sweet though, I'm in on this one.
John Wilson: Yeah dude, I think like, is 10 more difficult and 1 is easy? Yeah, sure. For today I would be. I feel like this is like a 2 or a 3.
Jack Carr: I'm also feeling like this is a 2.
John Wilson: Like, you could do this with a pickup truck and a ladder if you had to. Like LSA, no licenses. I don't know dude, this is good.
I'm into it.
Jack Carr: Yeah, I mean, once again, we're saying this as complete naive people who don't know anything about chimney sweeping, the actual physical chimney sweeping. I don't know what that looks like.
John Wilson: Well, I've had mine swept and it honestly reminded me a lot of a
Jack Carr: duct cleaning. Yeah. I would assume that's exactly.
John Wilson: It's a vacuum with a brush. You shove it down.
Jack Carr: They probably use some kind of block, you know, smoke test at the block off both sides of the ceiling. Yep. Very true. Zero comes out. I mean, nothing's crazy. Video scans, same as plumbing, you scan it, look for some certain things, external stacks or internal stacks.
All they do is they run a metal tube in there and then they put a piece of flashing that then makes where the smoke go not out of the side of the chimney and it's instead of going out this metal piece. Nothing's that crazy there. I love it. I say that it's a two..
John Wilson: Yeah. Same. Alright, mine, backup generators. So I'm getting a little bit obsessed with this business right now. It's a branch of electric.
Jack Carr: Let me clarify. Is it like the water heater pros where they only do water heaters?
John Wilson: Yeah, this is actually really common. And I'm finding this out because we compete against them. And I've tried to buy a few. I never had any idea that this was a real thing. So I think it's entertaining for a couple of reasons.
So one, mine's a little bit spiteful too. So one, this is all that they do. So what usually happens is you need an electrical license. That's one of the downsides, but like what will happen is electrical service is kind of a weird business where 10 years ago, I honestly don't know that it really existed.
Like obviously people needed stuff served, but electricals, maybe a decade or two behind plumbing and HVC and like the service install model. So like. Leads are way cheaper. There's very little competition. We are the largest electrical service company in Northeast Ohio. And like, we started ours a year ago.
Jack Carr: And you're specifically home service, right?
John Wilson: Home service. Yeah, home service.
Jack Carr: It's the same model as HVAC, same model as plumbing or...
Okay.
John Wilson: Electrical. Yeah, it's just very different. And I had no idea how few there were, but after getting in there, it's a lot like what we're describing chimney sweeps where like the average, you know, it's like plumbing 20 years ago where the average plumbing company 20 years ago was five guys, right?
That's the average electrical service company, maybe three to four. But what they did become is these electrical service companies would launch from some electrician. He started his own shop and they couldn't stay busy because it didn't use to work that way. Like lead gen was hard, whatever. So they turned in to generator only businesses. And it is fascinating. The labor pool is totally different. You don't need electricians. And the whole idea is you build a recurring book of business, similar to HVAC, also weather dependent. And all you do is slug in generators. So I looked at one last year and they were doing like two and a half million in revenue.
And they had like 4, 000 generator maintenance contracts, tons. Crazy. Oh, they were putting in eight generators a week is all they did. They slammed them in. These guys were so good. They were doing two a day, just like four tens, bam, Monday through Thursday.
Jack Carr: That's pretty wild to be known while bending conduit and actually wired like I could getting it in place.
All you have to do is wired up so I could see that you hook up gas and then you wired up. It's the easy version or was an HVAC unit, but still, man, that's a lot.
John Wilson: Yeah, it's a lot. And so like we're competing against them because you know, we're doing more generators than ever and we keep running into these generator only electric companies.
So they started off as an electric company, but then they're generator only. And they're funny for a couple of reasons. Cause one. That's all they do. And it's a totally different labor pool. And two, they pretend to be Generac. So Generac is like the biggest generator dealer in the U S. And like, they will provide you with like co op and they'll wrap your trucks.
And they'll do a few other things if you're like a premium dealer, but what you have to do. Is your truck has to say Generac. And when I say has to say Generac, only Generac. So it is a fascinating thing to compete against these companies because you come out and they're like, yeah, Generac was just here.
It's like Generac. That's not how that works. Like Generac is not just here. That was like Fred's generator company from Canton, Ohio. You're like Generac is a billion dollar manufacturer, but the way they present it. Looks like distribution from like Peloton, right? So all these consumers believe that Generac themselves is providing them this unit, like it's hard to compete against that even price because they believe that they are getting authentic service direct from the manufacturer. Same as Peloton. So like that's wild. Second, labor pool is easier. It's auto mechanics. You don't use electricians.
Jack Carr: What's the benefit there?.
John Wilson: So the annual service for generators is changing the oil.
Jack Carr: Oh, no way. That's wild. That makes sense. All this is engine.
John Wilson: Yeah, it's a small combustion engine. So what these guys do is they go hire a bunch of auto mechanics to run these annual maintenances, easier labor pool to tie into, um, mechanics that maybe didn't work out in the shop or whatever, and cheaper then electricians by a long shot, and they just have them go around service generators all day, like 10 a day. Cause it's very quick.
Jack Carr: I bet that's great money too. They're not charging the same low fee that we're charging because there's no real upside for them. So they have some kind of decently price.
John Wilson: For generators.
Yeah, so the ones we compete against are usually lowest in market, but it's a gross profit dollar problem because what they're doing is they can be cheaper than us because it takes us a full day to do something that takes them four hours.
Jack Carr: I'm referring to the maintenance side of it. I bet that's true.
I'm just thinking like the recurrent revenue side do it has to be. Yeah. Actually, so we'll zero out our retro revenue because we want to get into the house and take a look at their furnace that yes, we'll get that larger ticket item on the back end. But with them, I'm sure there's no real larger ticket item once it's in.
It's just, yeah, no, that's it.
John Wilson: It's just a recurring maintenance. You have it for 10 years, then you replace it again.
Jack Carr: It's an oil change on your car.
John Wilson: So you install it, you do 10 years of maintenances. You get paid 300 bucks for, and then you replace it again in 10 to 15 years. And like, that's the whole model.
So I think it's slow growth. None of them that I've seen are huge, but they're all several million dollar things. And I love the service install component of any business. Like, do you have the small stuff? Do you have the big stuff? And I think it's a great business. I like how you can hire mechanics. I like that you only need like one electrician out of 10 people.
Don't like that. You do need licensing. It is a permitted job in electric, but I just think it's a really interesting take on electric.
Jack Carr: How are they driving leads? So are they using traditional advertising, but just for generator only?
John Wilson: A lot of TV ads, a lot of newspaper postcards.
Jack Carr: Yeah, because I remember seeing one of them a long time ago, and I believe that they, I want to say that one of the, right, so Generac, because people think that Generac is installing, they will actually get those leads in, and then they'll ship them out to these people who are their Generac official dealers.
Yeah. So they get a bunch of free leads that way as well. If I remember correctly, I think I was looking at one in Indiana, and boy, I have to go back and search it. But I think that's exactly what they did is they just sat around and waiting for people to call generac
So I think
John Wilson: you can do it in a few different ways.
You can contract with Home Depot, Lowe's, install their generators for them. Same as appliance repair, but that's what Hoffman was doing. So you can do that. Then you can drive direct to consumer. I think it is still marketing, but it's a big ticket item. These are 12 to 15, 000 and it's very like backup power.
That is a luxury. So you're dealing with a luxury purchase and that's probably one of the only downsides. Is it's luxury. And what we've noticed is the demand is very focused. So sometimes you'll have no demand. Maybe there's no storms, there's no snow, there's no power outages, whatever. And then power goes out for two days and like,
Jack Carr: you get a slew of them.
John Wilson: You couldn't put in enough, right? So it's like worse than HVAC in that way. But I think if you build up a solid recurring maintenance piece, that would be good. My quick take on this is it would be much easier to buy an existing one than start one. Because I think that recurring maintenance piece, being able to feed you existing leads, is pretty valuable.
Jack Carr: Yeah, it's 4, 000 maintenance contracts times 300 a year, what's that, 120, 000? That's a decent little payday on just recurring revenue. Yeah, 1. 2 million? To do the math.
John Wilson: I think it's 1. 2.
Jack Carr: Holy cow. That's what you want right there. That's a gorgeous roll of if you could get a few of those 10, 000 contracts at 300 bucks a year, come out and service and maintain it, which I can't imagine would be out of the question.
Maybe it's a little cheaper, but still, you're still in that high six figure mark.
John Wilson: No, I agree. And then you still have the added benefit of slamming in some gens. Yeah. Big dollars.
Jack Carr: And you get good at them that you can do two a day. When you hit that rush, you're just. Boom, boom, boom, boom, boom. Yeah. Oh. So I, I looked at another company a while back that did a very similar thing, but only installed air compressors, like large air compressors.
John Wilson: Oh, interesting.
Jack Carr: Very similar. And then they would come back and they maintained them because they had little filter dryers on to pull out oil and stuff. So very interesting. I love this kind of sector of specialized large equipment installation.
John Wilson: Well, yeah. It's like electric, but it's not electric. So like, yeah.
Quick economics here. Yeah. Annual contracts, I think about 300 bucks a piece, and you build up an army of these things, usually from the ones you've previously installed. And then the generators themselves, some are between 10, depends on the size. So, where we put them in, most of them are larger generators, those tend to be 15, 000 is probably a good number, but these are 3, 000 to 7, 000 square foot homes, larger homes.
But we have, uh, some of our competitors, their average installed size might only be like 10 KW, whereas our average install size is 22 KW. So ticket size varies a lot. We'll go up against guys that have like an 89 95 generator installed. And it's like, yeah, it's probably a 10 KW, very small generator, but for small homes.
So big difference in average ticket size. But interesting business, equipment based, and if you get good at it, you can really slam down.
Jack Carr: So startup custom, or startup rating on something like this, I'd say probably significantly higher. This is your 7, 8, 9 range. It's not actually hard to do the install or get the leaf.
John Wilson: I think if you don't have the maintenance contracts, you're going to be really pushing hard on Mass media advertising.
Jack Carr: We don't have money for the mass media right out the gate. So if you're saying I'm going to put in 100k to this thing or 200k.
John Wilson: I don't even know that's what you need. I think you can get a little bit selective. Like, hey, where are places that tend to have more power outages? Yeah. And what hasn't been built in the last 10 years? And like, they probably don't have a generator. Because anything new that's custom these days probably is a generator. Like when we were doing new construction. We're like big remodels on a custom home.
They all get gens. I have a generator in my house. I don't want to lose power. Losing power is a pain.
Jack Carr: Yeah. Still though, I think the hard component, right, is either finding an electrician that you'll work with who wants to do this and is willing to run dry for a while. Like you said, if you're not getting power outages, you're sitting and you're not doing, you know, outlets on the side, you're sitting dry for a while and then you don't have maintenance contracts compounding just yet.
John Wilson: There has to be something more to it than I'm understanding because like these companies they don't touch electrical at all.
Jack Carr: Did they just branch at one point and be like, hey, this is easy. Let's just keep this bread and butter. Once you get, you know, a hundred of those contracts or they, they got to do with Home Depot as a small electrician.
And then you just went, we're just going to only do this. Like if someone offered me tomorrow, say, Hey Jack, you're only going to install units, but it's going to be like a crazy rate and you get great maintenance on the back end. Okay. Sweet. Yeah. I'm in.
John Wilson: Yeah. You have to do three things like service a unit, install a unit, bill them. That's it. Sounds pretty all right.
Jack Carr: Yeah. I put that at higher, but I think if you were to buy one, I think that would drop significantly. Yeah. Maybe like a four. Yeah. You're still competing with John Wilson. So yeah, that's going to be difficult. So
John Wilson: best of luck out there, folks.
Man, these were two good ones. It's a chimney, sweep and generator service and installation. Solid two home service companies. I love that we were able to bring that. Thanks everyone for tuning in. Owned and operated. Owned and operated. Uh, hey, make sure you check out owned and operated.com. We're throwing updates up there. We've got an event coming up. Got a newsletter. So owned and operated.com. And follow us on Twitter at Wilson Companies and
Jack Carr: at the hvac. Jack, you forget every time. .
John Wilson: No, I remember this time. hvac. hvac.
Jack Carr: I appreciate you all.
John Wilson: Thanks for tuning in to Owned and Operated, the podcast for home service entrepreneurs. If you enjoyed today's episode, please hit the like button and subscribe to the podcast. If you have any questions or topics you'd like us to cover, feel free to reach out. You can find me on Twitter at at Wilson companies.
I'll see you next time.
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