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Successful Life Podcast
The Successful Life Podcast, hosted by Corey Berrier, is a globally recognized show that ranks in the top 2% of podcasts worldwide. It offers expert insights tailored for contractors, focusing on business strategies, sales skills development, and the integration of artificial intelligence (AI) in the industry.
Successful Life Podcast
Lou Hobaica's Blueprint: From Apprenticeship to Leadership
Ever wondered how a family business can transform into a powerhouse in the HVAC and refrigeration industry? Join us for an enlightening conversation with Lou Hobaica, a seasoned expert with over 40 years of experience. From humble beginnings in his father’s business to leading it alongside his brother since 1989, Lou’s journey is a testament to resilience and innovation. He shares how they tackled the challenge of finding culturally aligned employees by creating a robust in-house apprenticeship program that turns novices into skilled professionals. Discover how this initiative not only filled the skills gap but also provided avenues for those who might not fit into conventional academic pathways.
In a city like Phoenix, where competition is fierce with 42,000 licensed rivals just in the plumbing, electrical, and HVAC sectors, Lou reveals the secret sauce to staying ahead: customer relationships. He recounts the cultural shift within his company, highlighting the transition from merely technical expertise to a customer-centric approach. This episode underscores the importance of likability and trust in today’s market, explaining why they choose to hire individuals who can be molded into this mindset over seasoned professionals resistant to change. Lou’s strategy reshaped their business culture, proving that human connection is paramount in maintaining a competitive edge.
As Lou walks us through the trials of the 2008 economic downturn, he offers personal insights into navigating financial crises through smart decision-making and unwavering faith. Discover how his strategic pivot from low-margin projects to high-value services, coupled with fortuitous opportunities, enabled the business to not only survive but thrive. Learn from Lou's experience on maximizing profitability by integrating product sales with labor, thus crafting a more sustainable financial model. His story is an inspiring roadmap for turning adversity into opportunity, showing how faith and strategic planning can lead to significant growth and stability.
https://www.audible.com/pd/9-Simple-Steps-to-Sell-More-ht-Audiobook/B0D4SJYD4Q?source_code=ASSORAP0511160006&share_location=library_overflow
https://www.amazon.com/Simple-Steps-Sell-More-Stereotypes-ebook/dp/B0BRNSFYG6/ref=sr_1_1?crid=1OSB7HX6FQMHS&keywords=corey+berrier&qid=1674232549&sprefix=%2Caps%2C93&sr=8-1
https://www.linkedin.com/in/coreysalescoach/
Welcome to the Successful Life Podcast. I'm your host, Corey Barrier, and I'm here with my man, Lou Abayka. What's up, brother?
Speaker 2:Good to see you. Glad to be here, Corey.
Speaker 1:Glad to have you Really excited to hear, really excited to get into this conversation, and we were chatting just a second ago about you know how things are turning for our country, which is just. I think it's a sigh of relief for a lot of people. But before we get into all that which we don't even have to get into, that, but why don't you tell everybody a little bit if they don't know who you are and some of the things that you've done? Just give us a bit of background, lou.
Speaker 2:Yeah, I've been around a few years, so my entire life Been in the industry, over 40 years, so quick little history. Grew up in the industry. Father here came to America at two years old, 1922. Served for our military, got out under the GI Bill, got an education in air conditioning, started his own business. At that time couldn't find good, honest, hardworking people to work for him. So him and his wife put things together. My mom and they had a bunch of kids there's nine in our family and basically we all grew up working in the business, in the trade. So at that time it was air conditioning and refrigeration residential light commercial. Refrigeration residential light commercial.
Speaker 2:So I was a helper at nine, 10 years old, at 16, I was a certified technician, so I had my own truck. I was running service. So our entire life of everybody in my family we were always working. We weren't out playing, causing trouble after school, things like that. So if there was a day off, it was a weekend, it was summer vacation, it was Christmas break, it was spring break. We were working where our friends were screwing off. We developed a really good work ethic, just hardworking.
Speaker 2:People understood the trades, just hands-on. My dad didn't necessarily want the trades for us. Like any father, they want a better future, something better for their children, so we all went to college. They want a better future, something better for their children, so we all went to college and we could do whatever we wanted. My oldest brother, paul, and I chose to stay in the business in the trades. We liked it. He had an engineering degree, I got a business degree and we bought the business in 1989.
Speaker 2:At that time there were eight people in the business, very small, and my brother and I were two of them and we wanted to grow this thing. I think $800,000 was top line revenue in 1989. So it was a small company. We had dreams and aspirations of really making something out of this. So I went to work and I got my license, not only in air conditioning, refrigeration, plumbing drain, sewer conditioning, refrigeration, plumbing drain, sewer, electrical security. And so I got all of my business contracting license and wanted to grow the business to own the home and focus on the residential market and own our customers with all the needs they may have.
Speaker 2:So that was our go-to in our business model as well as apprentices. I found quickly and from my father and seeing the people that went in and out of his store, that it was really hard to find good, honest, hardworking people that would fit your team, your culture. And so when we bought the business I ran around circles for about 10 years just hiring experienced individuals and they would bring their bad habits in. They wouldn't do it the whole bike away because it just wasn't worth their time. They already knew how to do it. Can't teach an old dog new trick, so pollute our culture. So we trashed that idea In about 1998, we started our own in-house apprenticeship program. So we grew our own personnel, our own field technical experts in all the trades from the late 90s and we still do that currently.
Speaker 2:Right now we have about oh, I'm going to say 15 to 18 that go through our apprenticeship program each year and we were able to trim that down in the late 90s. It took a year to get Corey, who knew nothing about any of the trades, to get him out on his own, so it took us quite a bit of time to be able, who knew nothing about any of the trades, to get him out on his own, so it took us quite a bit of time to be able. There weren't a lot of resources and available areas, avenues for us to be able to really get this thing working, so we had to make something work on our own, develop our own program.
Speaker 2:But as time went along, I'm going to say about three, four years ago we were able to trim that down to eight weeks. So today we have an eight-week apprenticeship program. So even though you don't know jack shit about the trades, you don't even know how to turn a wrench. Corey, you've never done anything technically mechanical in your life. You know what we can make something out of you. We can help you to reach your dreams and aspirations in plumbing, electrical, hvac, whatever trade that you choose. And then the next step is once you're fairly proficient and fairly proficient three, four months to where you can work on your own. You can perform a maintenance and inspection, cleaning, minor diagnostics and repairs Then we're going to introduce you to other trades. So all of our people at Hobica Services they're multi-trade technicians.
Speaker 2:And the key benefit is say Corey didn't go to college. It wasn't his thing. He sucked at school, hated sitting in the classroom, listened to a lecture. He even hated more reading and taking tests. That was all kinds of anxiety like the worst time in his life. So just didn't do well at school. So you went into the trades and now say maybe you were offered an opportunity for HVAC. You didn't know anything about it, didn't know what it was going to be like. So I got you on board with HVAC, you're out on your own. Now I introduce you to plumbing or drain sewer and electrical. So now Corey has all these different trades to like hands-on figure out what he likes best. And the interesting thing is, most individuals that are on board in the trade that they started with they end up in another trade. So what I found over the years is it's really interesting to see individuals like somebody that came in an HVAC and they end up in drain sewer the shitty stuff.
Speaker 1:Oh yeah.
Speaker 2:All that stuff going out out, getting rid of it, that nasty, smelly stuff, and they like it. Or plumbing or electrical. Or we have, and they like it, or plumbing or electrical. Or we have a wine cellar department in wine cellars. So they find their little niche and the beauty of it is they would have never had that opportunity to find their own way until they tried something themselves and they're not only well-versed in other trade aspects as well, but they're doing something that they really love. So that helps with culture, attitude, retention, just promoting the whole bike away.
Speaker 2:But that's a little bit about our history. And so I'm going to say two and a half years ago I partnered with a private equity my oldest brother, paul, my original partner. He had developed Parkinson's and was having some health challenges. So it was a time to be able to see what our opportunities and options were like and private equity was the solution. I had another brother that joined us somewhere midstream about 2001. So there were the three of us so sold, partnered with a private equity, and we did retain some stock ownership.
Speaker 2:But my oldest brother was Parkinson, exited about two and a half years ago, was able to retire, focus on his health, which he's improved and doing much better. His name's Paul, and then my brother Mike and I we continued and stayed on board. I was the president GM as I was, and my brother Mike was managing the install department and the wine cellar department. But we stayed on board and on 12-31-2023, we exited and we moved on to another chapter in our lives and trained the people to get them the right people in place. Andy's still there doing his thing, just killing it. But the company continues to be successful in just upholding the Hobica name and the Hobica way, as my father started it in 1952.
Speaker 1:Wow, that's a lot. I think it's really fascinating that you caught on to or you maybe, just maybe it was by accident, maybe you didn't even know but being able to bring somebody into the trade that's never been in the trade and in eight weeks or let's say in the in in its entirety, four months, total right. Then they have the opportunity to switch trades. That's a pretty short amount of time to say I want to switch careers after I've tried this one career out, because that's what you're saying right.
Speaker 2:Right. So they're not switching careers, corey, they're still able so. Say they came on board with HVAC, right, and then they jump into a little bit of plumbing, maybe some drain sewer, some electrical. So they're introduced to these other trades. They can perform all of them. So all of our technicians will perform an inspection, a maintenance, identify things that aren't right, communicate to the customer, sell solutions. Now, whether or not they want to pursue that repair, that replacement, take care of that issue.
Speaker 2:And most technical people like to learn more technical stuff. So it works with their mentality. But they're able to focus on whatever work they like the most. They're going to have their hands in a lot of the different trades at different times, but their main focus may be the plumbing or maybe the electrical. So they're going to have a good rounded knowledge about all the trades, because we introduce all trades to every technician. So at least they have an understanding and they know what they're looking at when they go into a home. So they know what doesn't look right when they're looking at just general construction, right, whether it's HVAC, it's insulation, it's plumbing, it's drain, sewer, it's electrical, anything, water systems, you name it they know what doesn't look right so they can communicate.
Speaker 2:This doesn't look right, corey. I came across this. I'm a little concerned. And well, lou, what's going to happen if we leave it alone? This is what I see happen with my own home, as well as customers that I work with. Oh man, I would hate to see that happen. My wife would kill me. Lou, what do I do? What are my options? So they can at least identify what's not right, communicate and then provide solutions. And then they're paid spiffs and bonuses on whatever they sell.
Speaker 2:Now they may come back and do the work with another, more experienced individual, or like Andy, andy was one that his skill set was selling himself, so it doesn't matter what Andy has to be able to offer, he just sells himself. People buy him, and that's really the key of any type of anybody that's successful in sales. Don't focus on the product or service, and that's what we promote and teach at Hobica Services. We're not here to sell heating, cooling, plumbing drain, sewer, electrical, wine, solar products and services. That's not our main objective. We're just here to sell ourselves. Each one of us. We hire for personality. We hire for likability people you like to be around, personality. We hire for likability people you like to be around In that statement.
Speaker 2:Then when you sell yourself and people buy you, they're going to like you. People buy and trust from people they like and at that point they're going to want to be around you and they're going to ask you for advice. And when they ask you for advice, that's the best place you can be. You're in a position of authority. They're asking Corey man, what do you recommend I do? I don't want that to happen to my wife and my kids. My family, jeopardize our home, our safety. What do you think I should do? What would you do, corey? And you're like man, that's the best place you could ever be. So selling yourself, just with likability, becoming that person that people like to be around.
Speaker 2:When you meet somebody, you go to a party with your wife and it's her work party, right, you don't know anybody, but you go because you're a good husband. So you bump into somebody and right off you can tell whether you like them or not. It takes you a minute or two and maybe you bump into somebody and they're all about themselves, no eye contact, talking down to you like belittling. You not listen to a word. You're saying it's like geez, I got to go find my wife, I got to go get a drink. Right. You want to get away as quickly as possible because you don't like that person. But then you bump into me and you say, hey, I'm Corey. I said I'm Lou, and bump into me and you say, hey, I'm Corey. I said I'm Lou, and all of a sudden we have good eye contract, good chemistry, we have similarities, we know some of the same stuff and the same people as commonality and you're like I like this guy, I like this, I like being around him. So that is all to do with selling yourself and just being likable. That's at Hobica Services. We are the most likable people you'll ever meet. You'll like a Hobica. So we have a jingle all built around that. But everything we do is built around likability and that's how we based our company.
Speaker 2:From the onset my father didn't really wrap his head around that and back in the day it was because I grew up in the 60s and 70s and even 80s. It was all about getting the work done. Customer service was really not a thing. Basically, if you could do the work, you were hired Right, and that's just the bottom line. And then come late 80s 90s, customer service started to become more and more important. So I understood the importance of OK, we got to really kill it with our customers. We have to create just a fantastic, memorable customer experience in order to get them to use us again and create a lifetime customer and have them share all of the great experiences with people they know. That's our best opportunity for continued success. So that's a little bit of our business model and what we do.
Speaker 1:It's funny because you mentioned you can't teach an old dog new tricks, which I 100% agree, and then you just mentioned how things were 70s, 80s, maybe even early 90s and how it turned. It's fascinating because that's the reason you can't teach an old dog new tricks, because they've been conditioned through those 70s, 80s, 90s to perform exactly like you mentioned, which is I just I'm here to come in and do the work. I don't need to build a relationship, I don't need to have a conversation, hell, I don't even need to be able to communicate, because I know what I'm doing and that's what you're paying me for. But that and I think that's where that old can't teach old dog new tricks comes in to play Right.
Speaker 2:Yeah, so that's part of it. You're 100 percent correct. But say, corey, maybe you've been in the industry for five or 10 years, all right, and you have expertise and you consider yourself a well-skilled technician in one of the trades and you've been around maybe another company or two floating around town, the Phoenix area. In Phoenix we have 42,000 licensed registered competitors in plumbing, electrical and HVAC residential markets that we compete with. So we have 42,000 competitors.
Speaker 2:So you're around a couple, three of these companies in your 10-year career and then you happen to float around and there's an opening where something didn't work out and you're looking for new employment and you can stroll in and find Hobica services and you attend one of our monthly hiring events to learn a little bit more about us. And Corey's got some 10 years experience, seems to know what he's doing might be a good ad for our team. So we bring Corey in right. The fact of the matter is the other companies that you worked at and the majority of them do not focus on selling the person. They don't focus on you selling yourself. You're building the likability. They're not focused on building that human connection and that trust they're really about creating an opportunity through marketing resources, really about creating an opportunity through marketing resources.
Speaker 2:Somebody has a need, identifying the problem, selling a solution and then moving on to the next one. So it's all about fixing the problem. Most companies don't really understand business owners. They don't understand the concept of. It's all about the human connection. It's all about likability. If you sell yourself and you're able to gain that trust and that acceptance with that likability like part of a family Lou is my guy. I trust Lou, I'm going to refer everybody to him, all my friends and family. So that's the person you want to be. When you're that person you've become that person then you're going to trust anything and everything I'm able to offer you, even if it's not something that I do I'm not licensed at, that's not my business. You may contact me or if I'm at your home, you're going to say hey, lou, I got a question for you. I'm having a problem with this. I know you don't do that, but I know you know people and the people you know are good people. So that's what you're thinking Like people, hang with like people and have like relationships. So even if you come to me with your 10 years experience, you know how to get the work done, corey.
Speaker 2:A lot of touchy-feely, communication, relationship building, likability a lot of things that are really necessary in order to build a relationship, that aren't even part of solving the technical problem. Right, they're not about fixing, they're about fixing the customer. That's who we want to fix. Before we even approach the mechanical issue, we've got to fix that relationship and create that relationship. That's most important. So they don't get that.
Speaker 2:But I already know how to. I'm skilled at HVAC, how to replace repair. I can take care of any problem. There's nothing I can't do. So technically you're proficient, but in my eyes, in our company, that isn't a valuable skill set. The most valuable skill set is you're able to sell yourself and create that human connection, that relationship, that trust, that likability. Then you can go on and provide solutions to problems, identify things that need attention and help the customer, because they trust you now and they're going to buy from you. You're not going to onboard with the whole bike away because it's touchy, feely, silly stuff. It's a waste of your time. You already know how to do it. So you're going to buck the system and not do the things and the processes that we want you to do to create that relationship, that customer experience, because it's just dumb and you're just going to go fix stuff right and then you're going to breed havoc in my company and spread, like this disease, across my culture.
Speaker 1:Look at Corey he's doing it his own way.
Speaker 2:He's not doing this, he's not doing that. He's like running his own little system and then you're going to create just a disturbance in my company that some others will be confused. Corey's not doing it the right way. He's not doing it the way Lou wants to do it. That's not our policy, our procedure, the way we're supposed to react with the customer and interact and perform the service call and I guess I don't have to and interact and perform the service call, and I guess I don't have to.
Speaker 2:We found very early I'm going to say, like I said, late 90s that the Corys weren't any good for us. So, honestly, we quit hiring anybody with experience come like 1998, early 2000. If you had experience you're going to have to really sell yourself pretty damn good in order for us to even entertain, to bring you on board, because you bring all your own baggage with you and it's hard to teach an old dog new tricks and those old, those new tricks, the old dog and the habits they may just be from five or 10 years, because the other businesses you worked at don't get it. Because the other businesses you worked at don't get it. They just focus on this craft right and getting you past that to understand that's not your main objective. Your main objective is that relationship, because if you have that, you can do anything with that and that's the key.
Speaker 2:Another thing that we focus on is business owners are always chasing after new business. They're always looking for new opportunities and I'm like no, quit looking for new opportunities. Focus on your existing customers, the existing opportunities. You created the low-hanging fruit, the stuff that's just sitting there on the table, the easy stuff. Created the low hanging fruit, the stuff that's just sitting there on the table, the easy stuff and maximize the success rate with that. We leave so much on the table and we just leave it and we run after new stuff and spend shit loads of money on new marketing and resources and time. So quit that. Focus on your existing customers that already like you and trust you right. Maximize everything you're able to offer them.
Speaker 2:That's why we're a multi-trade company. We can take care of most all of the major needs a homeowner has. If they like us, okay. So we get in on HVAC, we come to your home for HVAC and you just love us. Man, I love this Lou guy. He's the best tech I've ever had in my home. You're going to hope and wish and dream that Lou does plumbing and he can fix the toilet, or he can take care of your backup in your sewer line or he can take care of your electrical issue replace some fixtures or the breaker that keeps tripping, or better water filtration or water conditioning or anything and everything in your home.
Speaker 2:you're going to hope Lou does this because you like and trust Lou. He's your guy and people are really looking for somebody that they can trust to be able to take care of the things that they don't understand. In reality, the age group that's perfect for that is, say, 45 and up Below 45,. Most individuals are going to screw around. They're going to go for a low price and they're going to get burned. But by the time you're in your mid-40s you've been burned enough. You're really busy in life. You don't want to screw around anymore. You just want to find people that you can circle your life and your trust around, that will look out after your best interest, take care of you and your family and you're willing to spend a little bit more for that. You just want a good relationship. You want somebody that you can in your contact, right in your phone. I'm just going to call Lou, send him a text.
Speaker 2:Whatever the case is, you want that person to be able to rely on to take care of the stuff that you really don't understand and you don't know that about. So most homeowners don't know anything about how to keep up a home with plumbing, drain, sewer, electrical HVAC, any and all of that comfort, safety, things of that sort. That's a little bit of a long-winded story about that old dog, new tricks. Winded story about that old dog, new tricks. But it's even newer technicians with five years experience, 10 years experience. They bring those bad habits and they don't focus on selling themselves that likability, that relationship, and that's really all about like when you met Andy, and she's just all about just selling himself.
Speaker 2:He just exudes his personality. He's very likable, he's easy to get along with. I don't care what Andy has to sell, but you're going to buy whatever he has to sell just because you like him. So if you have a need, you're going to say hey, Andy, I'm having this problem over here, Can you take care of that for me? You're not asking for a price or anything, You're just saying can you take care of it? How much do I write the check for? When can you do it? So that's the differentiating factor. But getting individuals to buy into that that already know how to fix repair, have expertise, they just won't do it.
Speaker 1:Yeah, I agree, I totally agree. So let's shift gears for a second. Yeah, I agree, I totally agree. So let's shift gears for a second. And I want you to tell me about when building a business of the size that you have, over the amount of years that you have, that wasn't an easy path. So take me back to a time that you were maybe at a point where you felt like you couldn't make payroll or that hell maybe even have to close the doors because I'm certain of this many years in business, there's been some times that you have been stressed to the hilt and wondering some of those things yeah, definitely, yeah, yeah, there were definitely several periods and usually economic downturns that were they wreaked havoc on our company.
Speaker 2:I'm going to go back to 2008. We all remember 2008. We had a major market downfall, downturn and just everything collapsed. The Phoenix market was a very successful, growing market. Phoenix was hit really hard About $5.5 million in the Phoenix metro area, but we were hit hard. So we had about, I'm going to say, 60 employees at that time. And 2008 hit.
Speaker 2:We set the budget for 15%, 18% growth, something reasonable, and somewhere about mid-year we're able to determine that nobody's coming to the party. Things aren't looking good month after month and we weren't fully multi-trade at that time. So we were working, building our business up there. We were HVAC, we were refrigeration, we did some new construction. We hadn't gotten into the plumbing drain sewer electrical and really grown our wine cellar our business up there. But HVAC, we were refrigeration, we did some new construction, we hadn't gotten into the plumbing grain sewer, electrical and really grown our wine cellar department, things like that. So we were primarily air conditioning and refrigeration, residential and commercial, and set our budget and things just aren't happening.
Speaker 2:Typically, we would lose money in January, february, march in Phoenix and then start making really good money in April, may, June, july, august. We just kill it. So it would balance out. But here we are in June and we're still not making money. We haven't dug ourselves out of the hole. We still got a big asshole and I'm like, okay, we need to do something drastic here. I don't know what's on the agenda, what the future is going to hold, but things aren't looking good. And we got a half a million dollars in debt. We were maxed out on loans, didn't have any cash, having trouble making payroll.
Speaker 2:This is mid 2008. And we had the kind of like bailout. So at that point we just had a just a serious discussion with our whole team and they could see what was happening with the economy other businesses, people getting laid off. People weren't spending money. Nobody was spending money. Homeowners businesses instead of keeping their equipment up, they're shutting down half of the business or half of the office or half of the warehouse. They're just not using stuff anymore. Nobody's putting any money into anything. We can't sell anything. They could see the writing on the wall At that point. Some individuals left, some individuals did something else. Another occupation moved to another state we went from and we allowed individuals to go part-time because we didn't have enough hours for everybody. So we went from 60 people down to 28 people before the end of that year, before the end of 2008. So we shrunk it to less than half. That was the best thing that could have ever happened to us.
Speaker 2:So it's the most difficult things you go to in life and I've heard you speak before some of your podcasts that you've gone through some challenges in your life. But when you really hit your lowest of lows, those are the best things that ever happened to you and you look back you'd say I'd go through that again because look where I'm at today, look what I've learned from it. I'm better for it. So there was a two-year time frame that I didn't take a paycheck and my brothers didn't pay them either. They didn't get a paycheck. So my two brothers and I, we did not pay ourselves for two years and they kept coming to me because I'm the financial guy and they say, hey, look, when are we going to get a paycheck? And I said we're not making money yet. We got to get the company back on its feet. We got to get this machine spitting out some profit again. I said it's just not there. We got to dig ourselves out of this hole, right, we got to pay off our debt. What are we going to live on? I said you did really well before for a lot of years. I said, live on that, like not my problem if you don't have it anymore. But that was basically our message. So we just had to make things worse.
Speaker 2:So two years of not paying ourselves, just getting the business dialed in and I spent that two years on really digging deep and getting rid of the business, like the residential new construction. We were doing about 3 million of that Not a lot, but just a little bit. But it was super unprofitable. It was just crappy work, right, maybe you're making 5% bottom line on it and I'm like, okay, I'm a pretty smart business guy. I have a business management degree, finance numbers, p&l balance sheet. I got that dialed and I said, okay, that's crappy business, get rid of it. So started to filter out the bad business and stuff that we weren't doing well at and focus up what we could do really well at and make money at, as well as bringing on other trades. So that's when I really got serious about plumbing, drain, sewer, electrical, really dialing our wine cellar department and growing that owning the home of all the needs a homeowner may have.
Speaker 2:So we create this great relationship. They're going to have us do everything and not chasing after new business. So we're not marketing. 75% of our marketing budget is spent on existing customers. We want to maximize our opportunities with you. You already like us for this, so we want to make sure that you keep it top of mind and be there when you have a need of another problem in your home that you're going to say hey, I'm just going to give Lou a call. I have all these opportunities, these easy ways to be able to get a hold of him and these reasons to call back and use them some discounts as well, as I love Lou Owning that relationship and growing.
Speaker 2:We started that process, say, after we came out 2011,. God blessed us and we had a hailstorm come through the Phoenix area, which we were still in recovery stage from the major financial crisis. However, homeowners weren't paying for their demolished HVAC systems that were ruined by this hailstorm, which took half of Phoenix out. Insurance companies were now paying, so it's pretty easy to get things done when someone else is paying for it. So that was like our best year we ever had 2011. It's just because it just rained money. Insurance companies it's a little while to get paid, but they did come through.
Speaker 2:We did well and that was a rebound year for us, so we were able to get out of the hole, pay off our debts, start a clean slate onboard with all the other trades. I got licensed and everything else and then we launched the other trades to be able to own the home and continue to focus on the business that we already had, just maximizing more of it. If we're already in the home, taking care of your 8-track, looking at plumbing, looking at drain, sewer, a water system, insulation, duct cleaning if you want a wine cellar, so that's an interesting thing to look at. Individuals always said wine cellars, that's an odd business. Why would you do that? I said well, think about it. Who?
Speaker 2:has a wine seller, usually someone that's upper end, someone that has a lot of disposable income. Because wine sellers aren't a return on investment. They cost a lot of money. They're just a money pit. They take a lot of money, cost a lot of money. They're just a money pit. They take a lot of money.
Speaker 2:Say, you have maybe a $20,000, $30,000, $50,000, $100,000 wine cellar. How much wine would you have in that wine cellar? Investment-wise? Could be a couple hundred thousand, could be half a million, could be a million or more. Serious wine connoisseurs.
Speaker 2:Somebody that has a wine cellar, has a lot of disposable income, probably have a nice home, probably have a lot of HVAC, a lot of plumbing, a lot of rain sewer, a lot of electrical, probably have some electric cars, have some Teslas, they need EV chargers. So they need all of this stuff done and they just want somebody they can trust. So they've already been burned and they just want a partner they can align themselves to like Lou take care of this, lou take care of this. Whoever it is from Havaika has created that relationship and they want to be taking care of someone they can trust that's looking out for their best interest. At that point it's our perfect avatar, our perfect customer, because what does Corey's this guy with the wine cellar? We get in on a wine cellar. There are very few companies that can dial in, install, repair, make a wine cellar operate properly in the Phoenix desert climate, but we're experts at it. We're one of the only ones. Typically, these are HVAC companies that do a really poor job and they try to make it work with the wrong type of a system and the wrong application and it never works right. So we come in and we make it work.
Speaker 2:Right Now we have an opportunity to be able to win your business with everything else, because you probably have a plumber, you probably have an electrician, someone that takes care of your HVAC, but you don't love them. You have an electrician, someone that takes care of your HVAC, but you don't love them. You don't really trust them wholeheartedly. And you would love this Lou guy that just killed it with your wine cellar. I've never had somebody in my home that was anywhere close to Lou presented himself. He even looked at things that no one else did. He let me know things that no one else would have even had the courtesy or spent the time to dig into and show me about. They were concerns that other technicians have been by around and they didn't say anything about it. But Lou comes in and he lets me know all this stuff in my home that could become a problem, safety, health concern cost me a bunch of money and he just lets me know about it, just so I'm in the know. I'm no longer ignorant so I can either do something or I can keep my eye on it like this guy. So now we win business, we're taking care of all your needs.
Speaker 2:And who does Corey know? Corey knows a lot of people that have the same kind of stuff that Corey has. Right, they got big homes, they got lots of stuff. So Corey says, talking to a buddy he's having trouble with something in his home. He says I got the guy you got to call Hobike. You got to get my guy Lou. My guy Lou is a freaking rock star. Do whatever he says. So Lou goes over to your buddy's home and he just scores. He's in the door. Relationship they're like best friends right off the bat and it's just, it's game over. They got a great relationship and we treat you like no other individual companies ever treated you. Great customer experience and we take care of all your needs, looking out after your best interests in an honest, ethical way. So that's a little bit of our business drive and the way that we go after just creating those relationships.
Speaker 1:The way you describe that if I have a wine cellar that has a couple of hundred thousand dollars let's say a minimum of wine in it, that's, if you don't fix that cellar, I would imagine pretty damn quickly All that wine is going to go bad. Very so. That's such a it's such an interesting niche that they have to call you because they have their return on investment. For not calling you could go right down the drain Right, cause that's something very valuable to that individual, actually super close to their heart, I imagine, and yeah, they're not going to let that go sideways for sure. So how did that two years lou as a person finances aside, which certainly play a part in it how did that? How did you? How did that affect you personally, family-wise, how did it make your life more difficult? What did you see in yourself in that two years that you were struggling through after 2008?
Speaker 2:When we're going through the challenging time in our life, whatever it may be. It could be an addiction, could be a relationship, something that just unfortunate happened, could be a family member, a child, whatever. We're only able to see what we got right in front of us, just what's at hand, and there's just a lot of confusion, and it's like you're in a smoky room and you can only deal with what's right in front of you. You can't see anything else. We're not able to see the future. God's the only one that can see what the future holds for you. So you just have to trust in God that you're going to follow along.
Speaker 2:Whatever you think and messages that you're getting from God, whatever you think, your path is the next step to follow. So, just trusting that God has it all figured out. He has blessed you with knowledge, talent and just the ability to work hard. Whatever you've been blessed with, use those skill sets. Just use your abilities to be able to work your way through it. There are better chapters moving forward. We just don't know what they're going to look like. So they help you to be a better person. They help you to grow. They help you to figure out things that you were doing that you thought were good. Maybe there were relationships or it was business that you were doing that really wasn't good business. It allowed me to, really. So I went to business school and I understood the financial aspect, but I learned concept and theory as well as I do. When you learn concept and theory, it's like the professor that teaches the stuff.
Speaker 1:That's never done.
Speaker 2:He's never done it hands-on. The Ivy League really smart guru dudes that understand all this financial genius stuff but they don't have the know-how and the hands-on experience that a business owner does. That's been there, done that and really knows how, in application it works. Done that and really knows how in application it works. That whole concept of going through that timeframe and not really knowing what was lying ahead and not paying myself or my brothers and getting the business back on its feet, it allowed me to really okay, now I can see what happened. We can only see what's going on now and what's happened in the past.
Speaker 2:It's really hard to foresee the future. So we have plans, we have goals, dreams and aspirations, but we don't know how it's going to all roll out. So we continually put things in place and what I did is I just reevaluated okay financially and headache-wise it. Okay financially and headache wise. What wasn't good that we did in the past. Right. So eliminate all that business that we didn't do well at or we weren't really that good at or we just ran around circles trying to make picking up pennies and just not doing well at it. So cut all that business out and just looked at opportunities where we could do more business with the same homeowner, with our same relationship, just growing that instead of always chasing new business. It sounds like that was just like a light.
Speaker 1:Go ahead. It sounds like you leaned into your faith more heavily during that time.
Speaker 2:When times get tough and you really don't know where to go, what to do. I don't care if you're agnostic or you're an atheist. I said, when your life's on the line and you're going to die, even an atheist looks to God, looks to a higher power, looks to something bigger than him or herself. Right, they just do so. That's just human nature. I'm a Christian, faith-filled guy and when times get tough, it does bring you closer to a relationship, because you're looking for help and there's nobody here to be able to help you. It's like you're looking for help. So you're going to reach to what I know, as an individual's know, is a higher power, and I reach out to God and look for signs, a direction. What should I do? What's the best thing for me to do next? Which direction should I go? So you're looking for that.
Speaker 2:So it definitely did grow my faith, my relationship with my wife, with God, family, as well as bringing that into the business and focusing more on that in the business the importance of that, as well as the financial aspect, and getting rid of the business that sucked and just focusing on what we could do to build it, to maximize our opportunities with existing customers and increase revenue per employee, so that was another key factor. And increase revenue per employee, so that was another key factor. I started about that time to track revenue per employee for the entire company and that would be total number of employees divided in total revenue over an annual basis gives you revenue per employee for everybody.
Speaker 2:That's W-2 within the company Pretty simple and at that time we were like 150,000 revenue per employee. I didn't know if that was good or it was bad because there weren't a whole lot of comparisons to make back then, even on that number. But that wasn't really that good. I knew that because that was bringing us at that time about an 8% to 10% net profit net profit. So I said, okay, let's focus on maximizing our opportunities with every customer, our existing relationships Just when we're in the home. Instead of a $300 ticket, maybe we can double that. Maybe we can triple that by just taking care of providing more solutions, more services, more opportunities with the people that already like us and trust us, instead of always chasing new business. A lot of companies will do and then they'll not like a first date. Some go well and some don't go well. It takes a lot of those first dates to find one that's going to go long-term. So quit doing the first dates, just stay with the ones that you're used to and keep growing and building that relationship. So that helped us to be able to grow our revenue per employee from 150 to when I departed on 12-31 of 23, we were running at 400,000 revenue per employee. So 400,000 revenue per employee will give you in the 25 to 30% net profit. So that's where we operated at Very profitable. And when you're that profitable, you can pay your people twice as much money as they can make anywhere else. So they're going to stay.
Speaker 2:You got a great team of people doing the things the way you want them done, in the Hobica way. They're taking care of their family. They got a career they're in control of. They're in control of their income. It's no longer Lou telling you Corey, you're going to make 20 bucks an hour. That's 40 grand a year. The way you can make more money is you put in overtime. That's not a good formula for success. So we've always put our team members in a position where they owned their career. They could move whatever direction they wanted, any trade they could grow in any and all of them they owned their income. They could make whatever kind of money they wanted, because the opportunities are there. They just need to be successful with the opportunities, close them, create more, create better relationships, become the customer's guy, their trusted advisor, their consultant, and that's the team we develop.
Speaker 2:But that whole financial picture of revenue per employee, as well as another key thing that I'll throw in here because it's that financial piece I talked about learning concepts in school, right, just the theory part and never being able to put it in practice. So we all know that labor drives overhead. So when we're performing a business model that's purely labor-driven and we don't have a lot of stuff to sell with our labor, it's really hard to make money. So, like a landscaper, it's a tough business to make money. It's all labor driven. A painter, right, a cleaning company, anybody like an excavator, somebody that digs right, things like that, something in the ground, anything that takes a lot of labor and you don't have a lot of substance to go with, that it's a really tough business to make money at.
Speaker 2:And growing up, this opened up a little story. Growing up, my dad they're nine in our family he's got his air conditioner, refrigeration business and he worked six days a week. So I didn't see him until Sunday. Sunday was family day, but every Sunday afternoon about three o'clock he'd go into study. That's where he'd be every night. After dinner He'd go into study and he'd do his work and then he'd go to work the next day and they'd see him at dinner and then he'd go into study do his work. So six days a week. That's what you would see with dad Not a whole lot going on. But Sunday was family day Go to church, spend time with family. Three o'clock. I would knock on the door. They'd come in. They'd either come in with an envelope or leave with an envelope and they'd go into my dad's study, close the door behind them and they'd walk out either with an envelope or without an envelope.
Speaker 2:One of the two. And I'm like I'm a curious kid. I understand my dad's business. And so one day I said where are all these guys coming over? And they were regulars. Why didn't they come over every Sunday? He says, louie. He says they're either paying me on money I own, I own them, loan them, or I'm loaning them money. So they're either making a payment or I'm giving them money. And I said, okay, so they have other businesses and they need money. He says, yes, exactly. Why are you the one with all the money? Why don't they have money? If they have businesses, why don't they have money? And he yeah, you got nine in our family. We all go to Catholic school. You have to pay for our school, and I know that family and I know his kids. They go to public school. They don't pay for them. I'm trying to work out the numbers and I'm 10 years old and he's saying let me tell you and my dad taught me this at a very early age and I go to business school and I still don't put it into practice, and still until I really go through the really difficult times in my life of this 2008 to 2011, when the market just crashes and the business almost disappears. So he says let me tell you almost disappears. So he says let me tell you.
Speaker 2:It says businesses like that one or one was a junk business cars and trucks and scrap business. And like painter and cleaning company and landscaper and excavator all these labor driven businesses. He says businesses that just sell labor. He says you'll never make any money. So it's really hard to make money when you're just selling labor. You have to sell stuff with it equipment, parts, pieces.
Speaker 2:He says like my business. He says, louie, what do I do in my business? Because I work for my dad. A little kid I said you have air conditioners, you have refrigeration equipment, you have parts and pieces. We install that all the time when we're doing our work. He says exactly, so I'm able to make money off the stuff I sell as well as the labor. So the only way you're going to get ahead is focus on doing more work with more stuff that you're selling, more so than the labor.
Speaker 2:And so I understood that as a kid I said OK, that makes sense, those business models don't work, this one does. I understood that as a kid. I said okay, that makes sense, those business models don't work, this one does. Anytime I'm going to sell a part, a piece equipment, something that has substance to it, I can make money with it. So I understood this whole concept and I understood labor drives overhead. Labor carries all this overhead with it.
Speaker 2:But I was able to really put it in perspective when I went through the trenches and just dug myself back out of the hole and I calculated the number and this is true in the service industry type business of plumbing, hvac, electrical, any type of business like this $1 of labor will carry with it $3 of overhead. So bottom line cost of that dollar of labor is $4. That's a true number. $1 of parts, pieces, material equipment carries with it 50 cents of overhead. At most I'll give it 50. So total cost of that's a buck 50. What would you rather be selling Parts, pieces, materials, equipment is going to cost you about 50 and you can make money on that. Or would you rather be selling the $4 in cost of labor? Because labor carries with it insurance, marketing office, support staff, everything that's needed to support that labor. Those people, the personnel, they cost a lot of money.
Speaker 2:So at that time, after I got the business and helped the business get back on its feet, part of that was focusing on minimizing our labor exposure, so just maximizing everything we did with labor. And if it took a lot of labor, then I started to employ subcontractors to take care of that labor piece. Like when it came to plumbing, drain, sewer for digging and excavating, backfilling, concrete, breakup, reporting. I had a subcontractor take care of all that stuff and we just came in and did the grade specific work. Or you replace the sewer line, right, you got a lot of trenching, you got a lot of backfilling, you got plants and concrete. And I said of trenching, you got a lot of backfilling, you got plants and concrete. And I said it takes a lot. That's the majority of the job. If I can have somebody else do that for a fixed price, I'm locked in at that price. So that's when the light bulb really went off and I said, wait a minute. The subcontractor of the fixed price.
Speaker 2:So if Corey quotes me $1,000 to dig a trench, it's just like if I bought a piece of equipment and added it in my quote for a thousand dollars. There's no overhead that follows that. Maybe there's a little office coordination or maybe you got to do an inspection, quality control, visit. So maybe we'll go 50 cents, like I said, 50. So it falls in the same category as parts pieces materials equipment. So it falls in the same category as parts pieces, materials equipment that subcontractor. So Corey's $1,000 might cost me $1,500 in end result where if I performed all of that $1,000 labor it's probably going to end up costing me about $4,000. So do I want to have $4,000 of cost in my quote or do I want to have $1,500 in cost in my quote and I'm getting the same end result? Where's that other $2,500 going to go?
Speaker 2:It goes right to the bottom line. So when I employ subcontractors on the labor intensive stuff and we just focus on the critical trade specific things that we need to do and make sure it's all right and done, homeowner doesn't care. We're managing the project, we give them the quality end result product that they're happy with. And we end up making a much higher net profit because our gross margin may be fairly close to the same, maybe a little bit better. But what happens is all that overhead, that $3 compared to the 50 cents, so that $2.50 per dollar falls to the bottom. So at that point we were able to add another 20% to our net profit. So that got us to the 25% 30% net profit on a monthly, annual, regular basis.
Speaker 2:So we're making that kind of money and we're priced at the upper tier echelon of where we should be with our competition. But the service that we provide, the customer experience that we create, is like none other. No customer has ever had service like this before Anyone in their home, any technician that's done it this way before. They just love us. So that was a really game-changing time for me. On the revenue per employee, as well as the whole labor versus parts pieces, materials utilizing subcontractors, like cleaning it's all labor.
Speaker 2:How do you make money in that cleaning? You can't sell it, buy it, buy it cheap, sell it, mark it up, and even if you're at a 50% gross margin on that. So you buy it for $350, you sell it for $700, and maybe even give your employee a $50 SPF on that. So you got $650 net and gross. So at that point of that $650, you got $250 there to be able to filter down in your overhead. But what is taken out from overhead? Like literally nothing.
Speaker 2:So you end up with a really good net profit on that work to where? If you were doing that in-house, you're going to be lucky. If you're making single, if you even got to 10%, you're going to be damn lucky right. So it's going to be a single digit net profit. Insulation, same kind of thing, painting, excavating, digging, backfilling, busting up concrete there's a lot of different areas that we'll use subcontractor to minimize our labor exposure so we can just drop more money to the bottom line. So those are some big learning lessons in that time, to be able to just work smarter instead of working harder.
Speaker 1:Yeah, I think a lot of people don't use. I think a lot of people tell themselves that subcontractors are not going to do the job or they're going to do a shitty job and they have to go back out. But it's just a vetting process. You just have to vet the right people. But, based on how you treat your customers, if you treat the subcontractors the same way, guess what they're going to show up for you. They're going to do the job right.
Speaker 2:There's good people out there. There's good contractors just like yourself. You just have to find the right one that have the same intentionality. They perform business the same way. They're good, honest, ethical people. They're likable. You align yourself with those type of people and you're going to have good partners. There are painters right. There's insulation guys. There's duct cleaning companies, there's excavators. They like what they're doing. That's how they make a living. Let them think they're living that way. I'd rather not bust my ass and work so hard. I'd rather work smarter so I can make more money in the same time with the limited time that we have available and provide more incentives, more value, more money to our team, so we don't have people leaving us and we don't have to have just a revolving door about people coming in, people going out, like most companies do. You can create and maintain a great culture if you have people that really love where they're doing. So this is another concept that I've wrapped around and built my business on.
Speaker 2:It's the thought of have to versus want to. It's the thought of have to versus want to. So if you have to do something, you do it like holding a grudge. You really don't want to. Let's get through it as quickly as possible. I got to get this done. I got to go to work today because I got bills to pay, I got kids, I got a house, I got a wife. You got all this stuff and you have to. But what if you're able to flip it and you wanted to go to work today? I want to go to work today because I love what I do. I love where I work, I love my team. I love serving our customers. I love the way we can go about business. I love taking care of people in the best way, looking out after their best interest. I love this. And when you go to bed at night, you feel good about what you did. You're making an impact and you're making the world a better place. So you feel good about things.
Speaker 2:So, creating an environment of people that want to. They want to go to work, they want to do this, they want to be part of the team. They really enjoy their occupation. Sure, you have to make money. Okay, that's a have to. We have to make money, but when you want to do the actions needing to make the money, that's the game changer. With people and culture and mindset and just people that are happy in life, people that are pissed off. They're pissed off because they have to be there. They have to do that. They don't want to be there, do that. But people that want to, they're the ones that are happy. They go lucky, they exude with positivity, they got a smile on their face, you feel good being around them. So creating a culture of that want to is just it's game changer yeah, I totally agree.
Speaker 1:I often say, if I catch myself saying I have to do this thing, I like to reframe it as I get to do it because I get to go to work, I get to work, I get to go to a, to a recovery meeting probably not just right, I get to do with fonties, I get to go to a recovery meeting. I get to do these things. And by getting to do those things, I also get to do a lot of other things that are awesome in my life and when you get to do them, you're counting your blessings.
Speaker 2:I have the opportunity to do this. I'm lucky. I feel, blessed, have the opportunity to do this. I feel lucky, I feel blessed, so you're happy to do this stuff and you're just thankful that you get to do it. So that's a good place to be.
Speaker 1:Yeah, absolutely. I know we're running out of time when you tell your kid he has to do something.
Speaker 2:It's just like you're never going to get it done and he's never going to do it again. But if he gets to and wants to, he's going to do a really good job. He's going to be happy about it, he's going to want to do it again and he's going to be proud of what he did. And that's how you teach good habits with team members as well as your kids.
Speaker 1:Totally agree. So, lou, this has been a great conversation. Man, you have just really talked about a lot of things that sometimes we don't get to talk about on here and breaking down numbers, and I think you've really given somewhat of a masterclass on how business owners should look at how they run their business, and I appreciate that. So where can people find you.
Speaker 2:You're very welcome. Yeah, I'm happy to.
Speaker 1:Yeah, where can people find you if they'd like to reach out to you?
Speaker 2:So Facebook, lou Hobica on Facebook, okay, you can find me on Instagram, lou Hobica. My email is lhobica61 at gmailcom. Yes, I was born in 1961. Yeah, a number of ways you can get ahold of me. Perfect, lou, I got to thank you so much, especially on born in 1961.
Speaker 1:Yeah, a number of ways you can get a hold of me. Perfect Lou, I got to thank you so much, especially on this Brown Friday. I appreciate you spending some time with me, my friend.
Speaker 2:You're very welcome. And Brown Friday? That's interesting, you brought that up. So plumbers, grain sewer guys love Brown Friday. Do you know why it's Brown Friday?
Speaker 1:Of course I know A lot of people don't. Absolutely, absolutely.
Speaker 2:Oh, the Brown stuff backs up.
Speaker 1:That's right, it's payday, it's payday.
Speaker 2:All right, Lou.
Speaker 1:Thank you so much, brother.
Speaker 2:All right, nice meeting with you. Thanks, corey. Bye you too, brother, bye.
