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Even vacation can’t stop John from talking about the new, heavy equipment for his excavation and drainage business. He and Jack talk about the nature of working in HVAC, drains, and excavation, why pipelining is great, and just how much a machine for draining cleaning can cost a business–and how much it makes back when you start to tie upsells into your sales practices. Do you know the difference between the excavation and pipelining business? Find out.
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John Wilson: @WilsonCompanies on Twitter
Jack Carr: @TheHVACJack on Twitter
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John Wilson, CEO of Wilson Companies
https://www.wilsonplumbingandheating.com
Jack Carr, CEO of Rapid HVAC
https://rapidhvactn.com
Owned and Operated Episode 135 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.
John Wilson: Let's get into it.
John Wilson: Recently we've been buying off supplyhouse. com and we've been able to get plumbing, HVAC, and electrical stuff off there and my biggest concern was timeliness like, hey if I need this thing pretty quick can I get it? And you for sure can. So that was awesome. So delivers your fast, they ship coast to coast and you can call them and you can get expert support with real people, which is awesome.
John Wilson: So check out supply house. com for buying the stuff you need.
Jack Carr: Welcome back to owned and operated. What's going on, John?
John Wilson: Living it up. I'm overlooking a body of water, so I feel good.
Jack Carr: Beautiful, beautiful living the dream. Sounds that sounds like a great time.
John Wilson: Yeah,
Jack Carr: I I never viewed Michigan as a great vacation spot until I met you.
Jack Carr: I need to get up there and take a look at it. I bet it's absolutely gorgeous around the great lakes.
John Wilson: Yeah, it is like the air literally smells like pine.
John Wilson: Yeah, I don't know. It's good. The only downside is the water's cold.
Jack Carr: I know. I love a good cold plunge. What's the real estate
John Wilson: like?
John Wilson: It depends. So we stayed at three different spots this summer and it is beautiful. It looks like it's a white sand beach in some of these places. It's it's insane. It's just that, but yeah, the houses, I have no idea. I really don't know. I have no worries.
Jack Carr: Yeah. I was just curious.
Jack Carr: Cause my wife grew up at Lake Tahoe, same thing, like gorgeous pines Lake, but if you want to buy a house, you got to have, 6 million. You
John Wilson: know,
Jack Carr: it's one of those things. I'm always looking and I love Tennessee. Tennessee is a beautiful state. I'm not talking about Tennessee, but I'm not going to go swimming in any of the lakes around here, just say they're a little bit mucky, a little bit dirty for my spoiled Tahoe taste.
John Wilson: Yeah.
Jack Carr: I'd be down to fly out to Michigan. It's not far from us though.
John Wilson: Yeah. Even just up to Detroit so the. A month ago, we were in Michigan and we were staying, I think it was like Port Salinak or something, and it was 30 minutes outside of Detroit, maybe an hour outside of Detroit, but it was phenomenal.
John Wilson: The house was 50 feet off this white sand beach, the beach was 50 feet wide, the kids just stayed on it all day, it was amazing.
Jack Carr: That's cool. That's cool. Yeah, that was great. What's going on in your world? I heard you have a new toy at work. That's a very exciting. I'm a nerd. So this is right up my alley and I love this.
Jack Carr: We bought
John Wilson: a sewer lining machine. So sewer lining if you don't know, there's a couple different ways to fix a sewer. You can excavate it and you can dig it up and you can replace the pipe. Okay. And the alternative. So yeah, so you can do this lining and the beauty of lining is so excavating is always good, right? In HVAC the top of the value ladder is replacing the equipment. You do a tune up for 98 and you hope to get equipment replacements out of those tune ups. It's how the business works. Make sense. Drains is basically the same thing where there's this funnel of, okay, you come in with a drain cleaning.
John Wilson: Now people do it in different ways. It can be like we don't do the 98 thing, but some people do. Um, we're still like full premium on cleanings. So it just means we do less but we just don't have capacity, but so you can do these drain cleanings. And then when you do them, you can basically upsell same as, HVAC.
John Wilson: you come in, you do a tune up, you try to upsell it into air quality and maybe flip it to a comfort advisor. Drain cleaning is the same exact thing. You come in, you do a cleaning, you try to upsell to a jet or a patch repair or like a whole house jet or something like that. And then. You also try to flip it to a sewer salesperson.
John Wilson: So that's the model. It's HVAC, both drain, both drains. Excavation is like the big thing. So average ticket depends on where you are. I was talking to someone in Texas the other day and their average ticket is like 40, 000, but it's because they have to tunnel under the house in order to replace the sewer.
John Wilson: Which I had never heard of that. Apparently that's just Texas.
Jack Carr: Is it because they're on slab or something like that? The way that they're slab and their building is done, they have to actually tunnel under and They tunnel
John Wilson: under the home.
Jack Carr: Yeah,
John Wilson: it's insane. So while I was on the phone with them last week, they sold an 80, 000 replacement.
Jack Carr: Before
John Wilson: under a home.
Jack Carr: Yeah. I like that. That's cool. That's insane. That's insane. But a very large lift to actually sell that, right? Cause your average person won't even the average homeowner won't even qualify for 80, 000 worth of funding to get there without doing like a full refi on their home.
Jack Carr: So it's not easy to sell. I'm sure. So yeah, there's alternatives.
John Wilson: Yeah. So anyway, so we've been excavating for probably four years, five years. Drains has been like a slow burn for us where we started really doing drains in earnest in like 2018, 2019. Just as we did more plumbing, we just got more drains with it
Jack Carr: and
John Wilson: yeah.
John Wilson: More drain cleanings, we bought jetters in 2018, I think. And that was a really big investment and just, we've continued to do that over the years. We went from leasing the equipment for the excavation to buying it. It's really felt like a slow burn and it's a good part of our business, but it's still only about 4 million.
John Wilson: So as like a part of the whole yes, that's a lot of money, but as a part of the whole, it's still a small department for us. It's not like the big banana. But every now and then there's a step change and this is the new one. So the step change for us now is we're going to go from excavating most of our drains, all of our drains really, to we've now added this pipelining equipment and what pipelining does is in certain scenarios, you don't have to excavate.
John Wilson: Now, sometimes you do. If the, if it's a break or if the pipe is collapsed or, there's different reasons that you would still have to excavate in some capacity. But if it's roots, a root intrusion or a few other scenarios, you can do something called lining and the benefit to lining.
John Wilson: Is that you don't have to excavate, which that sounds obvious, but that's the benefit to literally everybody. That's the benefit to the customer. And that's the benefit to us. So that is that is the benefit. I don't have to tear up your garden or your hardscapes or your street or your sidewalk.
John Wilson: I can just line the sewer.
Jack Carr: And people's right so sometimes it goes through multiple people's property and you have an easement and now you're digging on someone else's land and the liability. It's dig excavations. Not a joke. It's a big undertaking for this stuff.
John Wilson: No, it's yeah, it's real.
John Wilson: It's a pretty big deal. And excavation for us has been good and bad. Like tickets are really good, but we've struggled with profitability in it. And a lot of callbacks, a lot, just a variety of issues in excavating the more and more we do of it which we do, millions of dollars a year of excavating.
John Wilson: So
John Wilson: service scalers is running a promo right now, where if you sign up for a year of service, you get a free website, which is awesome. We just did this in one of our businesses and it really helped a lot. There's a brand new look. Plus we got great SEO with it and PPC to help. So make sure you check out service scalers.
John Wilson: com. Promo code owned.
John Wilson: Pipelining. It's exciting because you don't have to dig. So most of our issues. Go away and it's also a premium product because you don't have to dig. So now like I could sell a sewer for 10, 000 and I could sell a lining for 10, 000. I would make far more on the lining and the customer would be happy, happier, much happier.
John Wilson: Even if I charge 6, 000 for the sewer and 10, 000 for the lining, the customer would still be happy because they didn't have to pay five or six grand in landscaping. That hidden cost at the end or the ugliness of their yard for a year while the dirt settles.
Jack Carr: Exactly. Yeah. And can you talk a little bit about what the machine looks like?
Jack Carr: How much did it cost? What's the process on that?
John Wilson: Yeah. So we started small. There's two different ways to do it. You can do like a patch setup, or you can do what's called an inversion kit. We started with the patch setup and our buy in was 60 grand or so, which was not a lot. We already had the trailer that it was going to go in.
John Wilson: We already had the truck. So it was really just that 60, 000 for equipment that we've placed inside, inside the trailer. The complicated part was hiring. That is a very special expertise to run this equipment, which is not. It's not like a normal Hey, let's just get someone that knows how to excavate.
John Wilson: This is no, who has done exactly this before and how do we just hire them and get this to be successful? So that took a little bit of time, but so it was only 50, 60 grand. A full inversion kit could cost anywhere from 180, 000 to 250.
Jack Carr: But
John Wilson: What we've been trying to do is we want to just step into it.
John Wilson: So half of the stuff that we bought for our kit. Can be used for the inversion kit. And we just want to make sure that one, we can sell it. We've got the right talent. We understand how it works before we drop a quarter of a million dollars.
Jack Carr: Yeah, that makes sense. And so how has the, so you've been, how long have you had it?
Jack Carr: And have you noticed a really what's the customer's reaction to offering both?
John Wilson: Yeah. Customers have been asking for it for years. It's just that we haven't, yeah, we just haven't been, we haven't made the investment. So People do know about it. They know that it exists. So it was actually funny cause we finally got the equipment and our team went through training last week and we're doing our very first liner today. And yeah. So we're excited. And, um, and the team that, that helped like that we bought the equipment from, like we trained down there last week and then they're on the job with us today, helping us line. And I think they do one or two jobs with us. But so people have been asking about it.
John Wilson: So selling it is really going to be very easy because it's just like people already want it, like they want, they don't want to dig, they just want this patch system. And there's already education out there in the market. People know that it exists, let's maximize every day. And that helped a lot.
John Wilson: And then we also added lining, which is now a second crew. So that way. Are we hope our lead time is under 2 or 3 days now to get a super in that's what we're aiming for. So we can line in the next day or 2, or we can dig in 3 or 4. So it'll be a little bit more feature than it's been for us.
John Wilson: We've actually never really. I've never had to be concerned about the install schedule for excavation in four years because we've always been booked out a month to a month and a half, which I understand is a bad thing. Because we could pull up that revenue and do more and sell it for a higher price.
John Wilson: But. That's just been our reality.
Jack Carr: I'm excited to, to get some updates as you start utilizing this more and see the outcome of your Slack channel as I mosey on by for that workshop and all I hear is ding. And I hear your voice saying, Oh, we sold another liner. We sold another liner. Oop. We sold another liner.
Jack Carr: And then just be completely jealous of all of that. So that's awesome, man. I think that's a really cool tool. It's one of those auxiliary tools to like duck cleaning machine, or that tend to just add so much value to the business. They're just high upfront costs. I'm on board, I'm going to stay on board because 60 K isn't.
Jack Carr: Unreachable it sounds like a lot in the initials. Kind of standpoint, but that's, 3 or 4 jobs realistically, maybe 5 jobs and it's paid off.
John Wilson: Yeah. The 1st job was 16, 000 dollars. So that's already making a pretty big dent. In that and then we think we'll sell more. And a lot of it.
John Wilson: I think we're just going to send an email to our customers. Making them aware of what's going on. Hey, we have this new thing. Here's what it looks like. Here's how the technology works and we'll see if we get any leads. Other than that. Our pipeline for sewers has always been full, so being able to just turn around and say, hey.
John Wilson: I know you didn't want to mess up your yard or hey, now we have these two options. So we've started presenting them in tandem and it's been going pretty well. Like we're, yeah, we're pumped, so big investment, but we're really excited about what that looks like for dress.
Jack Carr: Very cool. If you like what you heard today and you want to follow up and see if John's, New machine actually makes him some money all along on our podcast.
Jack Carr: Give us five stars wherever you listen and go ahead and over to the web page and check out owned and operated dot com sign up for the workshop we're doing in September. We are really excited really excited to meet some of y'all really excited to get that camaraderie and to share some of the silver bullets in that juice.
Jack Carr: Hope to see you all there. And until next time,
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.
John Wilson: You can find me on Twitter at Wilson Companies. I'll see you next time.
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