This Simple Business Makes $54K/Month?!

Most businesses fail. Nearly half don't even make it past five years. But it doesn't have to be that way. This couple bought a business that succeeds 96% of the time. And with no construction background, Kevin and Kathy went from office jobs they hated to having a rapidly expanding roofing business. In this video, I'm going to show you exactly how they pulled it off so you can too. And if you stick around till the end, I'm going to show you my exact three moves I'd make to start this business if I didn't have a ton of cash, then how I'd scale it to seven, then eight figures. We'll steal their homework. What, like, also interested you in the category of roofing? Without roofing, you know, roofing's always been good. But much more than that, right, it's the roofing, it's the gutter, it's the windows. So, you know, a $15,000 roofing job can end up being, you know, $20,000, $25,000, maybe even $30,000 and beyond. This is what's called a picks and shovels business, not a gold treasure hunting business, which I love. No hype, consistent cash flow. Other people have done this before. This is a business that you can count on. Kevin didn't randomly pick roofing. He was searching for the right service business for years. He wanted high margin, big dollar cost in the sales that he could get, and also he wanted an ability to have something so easy grandma could understand it. Okay, so how do you copy their homework? I call this the perfect fit filter. It's how you avoid starting or buying a business that turns into a nightmare, and you find one that fits you like a glove. One is that in a boring, high margin industry with consistent demand. Roofing, check, check. It's not sexy, it's not trendy, but people are always going to need roof. This is what I call a Lindy business. The longer it's been around, the longer it'll survive, like this graph shows you. Then you've got to ask yourself, do you understand it, or can you learn it fast? Kevin didn't know roofing, but he knew how to leave, sell, and follow a proven playbook. That's key. You don't need to be a technician, aka a roofer, that's hard, but instead you need a smart operator. If the business requires a PhD, buy. No thank you, we're not going to do that. If it runs on relationships, systems, and hustles, yep, I'm in. Can it run without you doing everything? He didn't want another job, he wanted a business. So he looked for something he could scale with a team, not something he'd be stuck on a roof doing himself. Let me break this down. In a market craze with low barriers to entry and lots of participants, aka competitors, you have a hard time picking winners. So instead you want to be an arms dealer, which means you sell pickaxes in a gold rush, you sell wine barrels instead of wine. We don't want to go after the sexy part of the business. We want to be the person that's selling the thing that everybody needs no matter who wins. If you want to start a highly profitable company, you need to build highly differentiated products in markets without a lot of competition. Let me tell you what I'm talking about. Right here, it's called the death zone. What is this? Low differentiation, that means everything's kind of the same. High competition. Cups on Amazon. Red Solo cups, there's not a lot of differentiation, and there's a ton of them. Okay, not great, we don't want to go there. Then we've got low differentiation, low competition. Okay, this is kind of sexy in some ways. That means maybe it's red Solo cups, but nobody's selling them yet. The problem is in this area, at some point, you'll have more competition, your opportunity will get arbitraged away. Then we've got high differentiation, high competition. This would be things like Amazon. There's not a lot of them, but man, would that be really tough to compete against. I don't want to go head to head with Bezos. And then finally, we've got high differentiation, low competition. This is the sweet spot, baby. It's where you've got your little roofing companies in an area where you don't have a ton, especially because they're not focused on this insurance component. So when you are starting a business, ask yourself, where am I? Am I in the death zone or am I in the sweet spot? Let's talk about startup costs. This business cost $186,000 to start, but they got creative. They used what's called ROBS, which is basically your retirement account, and used that retirement account to fund a big percentage of the purchase. And then they could just put a little bit money down. All right, let's talk first about all the costs. So we know that you used financing from a third party, which is super normal. I don't think most people realize most businesses are bought with creative financing, but you had some startup costs. So let's see if these are right. Training, 5K. Uniforms, because we gotta look sharp, 3K. I like the shirts. Bunch of techs, phones, tablets, laptops, 6K. Now you financed a portion of that. How does that work? So financing the equipment, we just used our cell phone carrier and just financed whatever we could. Trucks, $40,000 for two, but you also financed these. Yes. So what are you paying, a couple hundred bucks a month? We pay about $800 a month per truck, but the cash is, because we are a new business, we had to do a personal guarantee on it. Yeah, they gotta make sure you're not gonna run. Then as the business grows, you'll be able to use the assets of the business, the line of credit of the business, to do it on a go-for-it basis. Amazing. Let's talk about insurance. Not cheap when it comes to roofing. No. So what do you think that is, $3,500 a month? So there's two different types of insurances we had to do. So one, we had to pay up front for the year, which is about $3,500. And then the other insurance, we pay monthly about $900 a month. Copy. Then you got some merch, because you did a grand opening. What was that all about? Just a lot of our swag. So koozies, keychains, our tent that we're gonna use. Just like swag that we can give out to the community, just to get our name out there. I love that. I think people really underestimate what a 5K in merch can do for your growth. Especially if you have a cool branding, like Action has cool. It's clean. It doesn't look like an old-school roofer. It's kind of like vintage-looking, which I like. All right, let's talk about financing this bad boy, because I think people hear, oh my God, Kathy, how rich are you? Did you just have $186,000 you wanted to throw at it immediately? But you were like a little bit creative with this. How'd you guys finance this bad boy? So initially, we were looking at SBA loans, but we quickly learned that SBA loans are pretty high in interest rates. We were totally unaware of that. And then just getting an SBA loan with Action Easters being a new franchise was already gonna be hard enough, because they wanted numbers. They wanted your projections. And obviously, there was nothing like that. So we learned about ROBS, which is Rollover for Business Startups. So basically, I used— we used our pre-tax retirement funds to fund the business, which was something we were unaware of. So I was like, huh, cool. So all of our hard work from our previous careers just kind of combined together to start this new business. And we were just willing to put our retirement because we just knew that failures wasn't an option for us. The real truth? You need $0 to start. 95% of startups today don't need a dollar, a deck, a VC, a boardroom. They can start as a group chat, a wait list. That's how I started, contrarian thinking. That's it. Costs maybe $10 in a weekend. You do pre-sales to fund your development. You give away a percentage of equity to your investors. Your profit share with your team could potentially be part of the funding. This is how you build a startup in 2025. Fast, scrappy, and free. So stop begging for capital. Start creating customers. Now, if you want to buy your business and you see it costs $186K, your brain might go, no way can I afford that. But here's the truth. You don't have to have all the cash up front. You just need to know how to structure the deal. I call it the three levers of creative financing. These are the tools smart buyers use. Let's break it down. Lever one, SBA lending. Use the bank's money. The Small Business Administration will finance up to 80 to 90% of a business if it's profitable or sometimes part of a franchise. That means for a $200K business, you might only need $20 to $40K. And the payments are usually covered by the business's cash flow itself. So instead of building something from scratch, you're stepping into a machine that's already running. Lever two, seller financing. Ask if the business owner might help you buy the business using future cash flow. A lot of sellers or even franchises will help finance part of the deal. You don't get what you don't ask for. So make sure you ask. Level three, partner or capital stack. You don't have to go solo. If you're starting a business or you're a strong operator but light on cash, this is where you ask for investors, just like they do in VC land, except we're doing it in profitable businesses. You get to run the day-to-day, they get the return, everybody wins. Some buyers use lines of credit, retirement funds, HELOCs. It's not about one funding source, it's about creating a stack. So the next time you see a business that you think is too expensive to start and you start to say, I can't afford that, ask instead, how many levers would I need to pull to make this happen? Because ownership isn't reserved for rich people, but it is reserved for people who know how to get rich people to do something for you. So here's where most people get stuck. You found the business, run the numbers, even negotiated a great price, but then get hit with the big question, how the hell do I actually pay for this? Most of you watching don't have 500K in cash sitting around, and that's okay. Because you don't need to start from scratch, you can buy something that's already making money. What you need to do is stop thinking like a scrappy bootstrapped owner and start thinking like a CFO. CFOs aren't scared of capital, they're strategic with it. They create funding plans, plans for growth, and use tools that give them leverage and options. A tool I like for that is SoFi's Small Business Marketplace. It's a centralized platform where you can explore funding options for multiple lenders in one place with no impact to your credit score just for checking. Whether you're looking for SBA loans to buy that first business or 100K working capital line of credit to finance operations, you can compare your choices in minutes and in some cases get funding as soon as the same day you're approved. The goal isn't to take every option, the goal is to give yourself options. That's the bridge between ambition and action, and it's exactly how you go from surviving to scaling. So are you climbing on roofs? I am. But you don't know how to roof. I was just up there. It's hard. This ----'s hard. Dude, mad respect for roofers, huh? But do you have to know how to do roofing to do this business? It's really just learning from our suppliers and just experience, you know, identifying damages on the flashings, damages on the soft metals, the gutters, right? So once you learn some of these things, you just see them over and over again and it just becomes repetition and normal after that. So half the job is the owner, I imagine then, right? It's like you actually looking at a house like this, like you said, and you're coming out here and doing like an RFP. So you're like, all right, I see here we've got some damage. This looks like normal wear and tear. Wow, your gutter is torn off completely. And then you're assessing like that's a $30,000 job. Is that the biggest part of ownership is like kind of the RFP and then building the team? Or what's the difference between how most people think about a roofing business is like I'm up there as opposed to I'm doing mostly this. Yeah, so I think it's a little bit of both, right? Like as the initial contact with the customer, we're doing all the inspection, getting all the details, and then explain to the homeowner what we can do, right? Either a retail roof or insurance gig. Then after that, you kind of just, you know, plan it out with your subs, right? Like in scheduling and ordering materials and all that, but that's why a good CRM system is very important. When you have integration with the CRM, with the supplier as well, it makes life a lot easier and just following the process and you just have to trust it. Little secret hack for you guys. I don't know if you can see it, but from this roof here, you can see over to the neighbor's roof. And what do we find out? Well, we saw that their roof looked a little messed up too. So what do our guys do? They go out, drive over, knock on the other guy's roof and say, hey, we noticed we're doing your neighbor's. We're fixing it. And insurance, by the way, approved them to have this new roof. Your house is probably around the same age. Do you want us to take a quote and see if we can get the same approval for you for insurance? And lo and behold, it looks like they might get the deal. Learning sales isn't an option. If you want to scale, you got to do this. I use the trust framework on how to sell everything without feeling salesy. For me, this is how we've built our tiniest companies all the way up to the companies that are worth $100 million plus. I call it trust. Okay, trust starts with tuning in. So you're going to start by really listening. You're asking clarifying questions like what made you reach out? What's your number one goal? What's broken in your world? Your only job here is to shut up and take notes. Remember, people don't buy the best product. They buy from the person who understands them best. Step number two, reflect. This is where you are the mirror. You're mirroring back. So it sounds like you're struggling with X and Y. Is that right? Yes, they've admitted their own pain in their own words. Now uncover. This is where you dig deeper. Most people have already tried to fix their problem. Am I the first person you've spoken to? Have you already tried something? Why didn't it work out? Your goal is to help them realize they can't solve this alone. You're surfacing why past solutions failed. Then you're going to share. This is where you tell a story, not a sales pitch. You use the pain points that they just admitted to craft a story about someone like them who got results. Ah, you know what? That's like Sally, who actually lives seven blocks over. And she also had a roof that she couldn't afford and tell us. Then we've got trade. Now you make the offer. Frame it as an exchange. Your goal is X. The problem is Y. Why don't we do this? This is where you ask, does this sound like this might be the solution to your problems? Because you've listened more than you've talked, you've made them feel heard. And you've made the tone sound empathetic, not salesy. Then when you follow up to trade, it feels good to people. And I think this is one of the most overlooked portions of doing sales, is it all comes down to trust to get dollars. Why do you think you've been as successful as you have in three months? So Kathy and I have a really nice balance. She is very detailed and really good with numbers. I feel like I'm really good with casting vision and team building, because your business is only as good as your team. So if you build a good team, your team will help you get to where you want to go. So one of the big things that you did was hire a couple people. Who are your most key hires in the beginning of this business? So our first hire actually was not a roofer, but he was in the flooring business. But we were able to bring him in, train him up. Now he's just a rock star. He's crushing it. And is he like a sales manager? He is a sales manager. OK, so the first thing you did in the business was basically say, I know I need cash flow, otherwise my business dies. So I'm going to hire a sales manager. What was the next hire? Well, it was two sales manager, or territory manager, as they call it. And they're in charge of sales. They're in charge of production, ordering materials, and just running the jobs. So usually you have a project manager here managing this project. Yeah, he's an animal, by the way. Let's talk about one of the most important and often overlooked parts of scaling a business, hiring. I know we talked about the sexy thing, selling, but it always comes back to people over product. Because in boring businesses, your people are actually the product. You can have the best franchise, the best CRM. But if your team sucks, well, your business will probably suck. Here's my framework for building a team that actually helps you grow. Step one, we're going to hire for hunger, not just a resume. Most small businesses hire wrong. They go for experience, polish, perfect LinkedIn. What you really need is what we call alley cats instead of house cats. We need people who are hungry, coachable, gritty. They've got that sense of urgency. They're going to learn fast. And there's an easy way to tell is ask them if they're a 9 to 5-er or not. You don't want 9 to 5-ers. Step two, get clear on your zone of genius. Before you hire, ask yourself, what are the top three things only you can do in this business or that make all the money in this business? Keep those. Then get rid of the things that don't make money and you hate. So this is how you don't hire reactively. You hire intentionally based on what frees you up the most to make the most quant. Step three, use the magnet test. Here's the question I ask myself all the time. Knowing what I know now, would I enthusiastically rehire this person today? If the answer is no, don't ignore it. Small teams cannot afford bad fits. A players attract more A players. So one great hire sets the tone for the whole company. If you're wondering how to grow faster, don't just look at marketing or sales. Look at your people. Hire for hunger and delegate what drains you. The one thing I can tell you for sure about businesses, at some point, you are going to lose money. You're going to have people lie to you, steal from you, cheat you. This is just part of the game of business. You are not in business if you haven't failed somehow. So I kind of already know the answer to this, but there has to have been a big, huge, kind of annoying fail that happened to you thus far. One of the sales that we did about a week later, he calls. He's like, hey, my roof is leaking. So that was really tough to navigate just because Kathy and I are, we were very private people in general. So we never had to deal with people like that. Didn't know how to feel, didn't know how to deal with it. That was really tough for us to kind of just accept that this is what happens in real life and just kind of say, hey, this is normal, this is business, and it happens. Kevin and Kathy had to learn fast. And they knew that not everything was going to go right the first time. But there's a few things that I obsess about in business. And the first one is called the 70-20-10 rule. What's interesting about the 70-20-10 rule is that in each business, if you know you're going to fail at some point, sometimes it's helpful to know what the expectations are on how much failing. Most people say 70% to 80% failure rate of business happens. Well, maybe that's because they're trying to scale too fast. I think if you're willing to spend 10 years to build a sustainable business that matters, your odds actually go way up. Here's the 70% failure rate, I believe. 70% of your work will suck. 20% will be average. 10% will be amazing. 70-20-10. If you're avoiding failure, you're avoiding success. Just expect the right percentages. OK, so how much money does the roofing business actually make? Let's talk about, first, the average size of a job for them. Well, you can have a gutter job that costs $1,000, or a full roofing job at about $30,000 is what theirs is on average. At this company, they aim for 10% to 15% profit margin. That means they take home $0.10 to $0.15 of every dollar. They know that there are some months of the year that will be slow months, like October through November, due to not having as many storms. They also know that they want to make sure that they have more commercial than residential homes. They don't have that right here. OK, now for them, I'm going to break down their revenue real time for you in just a moment. But the average roofing company actually is pretty big, about a million bucks to $710,000 in gross revenue per contractor. So that's per business. What's also interesting about these businesses, most small businesses do not have a payment cycle that is as large as they do. But also, it takes a while for them to get paid, sometimes 30 to 90 days. So we're going to see how much money they've actually collected versus how much they have actually serviced. Or contracted out. All right, so how much revenue are these guys doing inside of 90 days in business? There's a couple ways we're going to track this down. First, we're going to look at total revenue. So this is the amount of money that they have actually completed in their jobs. So they've gone out there, they've done the job as requested, which means that they put their money in their bank account. And then we've got total sales, which is how much they have outstanding, and they haven't actually gotten the money or done the job yet. So we are somewhere between $163,000 collected to $228,000 in total sales. Now, they've given us some new numbers that show their first month, they kind of killed it. They had all this pent up demand. And now coming into August, which we're not even counting in these numbers for them because we always want to try to be more conservative for you guys. We're looking at not only a business that's doing $200K, but probably a business that's going to do $300K to $500K inside of its first six months if they keep trending this exact same way. Now, the more important part to remember, you guys, is that just because you've made the money doesn't mean that you've got it in your bank account yet. So remember, these jobs take anywhere from 30 to 90 days to be paid. That's why they have something called float on them, which is the amount of cash that they have to fund the business with until the money comes in their pocket. But this is looking like a really sexy business, even with the amount of money they've collected inside of 90 days. What happened with you guys is you had a ton of leads, right? Like you turned on that lead machine and it started coming, but it was for like gutters and windows and this and that. And you're like, hold, please. We know how to do roofing right now, not everything else. So you did a smart thing and you pulled back, right? You're like, we're roofers. That's it for the moment. And then you could add these add-on things, which are like way cheaper, but potentially help you even out your cash flow over time, right? Is that part of the plan? Yeah, it definitely was, right? Like we came out just doing roofing first and then naturally roof and gutter kind of goes together. So if you look at a lot of insurance claim, if the roof is damaged, the gutters will be damaged too. So insurance would usually approve the roof plus the gutters. Yeah. Then you could do both. Would you also, going forward, do like gutter cleaning service? Would you subcontract out so like you could get an affiliate link on any of that? Do you have plans to do anything that's not actual repair but maintenance? Yeah, absolutely. It's just another opportunity to get on the roof, right? If we're going to clean your gutters, you're going to be on a ladder. You'll be able to spot damage on the ladder really quick. That's a good point. It's kind of like pool cleaning business. The real business isn't the pool cleaning. It's being there and seeing that a bunch of stuff is broken or needs upgrading and then bidding for the big job. So let's say you've done it. You built the business. You bought the business. You made it profitable. You got momentum. How do you turn it into a monster eight figures and above? Three-part playbook that I use called Multiply Moves. Move one. I want you to multiply the territory. The goal here is simple. Expand before somebody else does. You want to lock down new zip codes fast. Roofing is local but franchising, well, that allows you to keep growing like Monopoly. The more squares you own, the more money you make. All right, next we're going to multiply ticket size. Now that you've got customers, we want to increase what each one spends. That's called increase LTV. So we don't stop at the roof. We also add siding. We clean the gutters. We add windows. All of this is under the same pain point, which is something is broken or my house needs to be updated. You can use the same crew most of the time. But what you don't realize is if you add, let's say, gutter cleaning, repair, and installation, well, that's not only money, that's recurring money. That happens continuously, let's say, once a season. If you do windows and doors and installation, that's new money that you might not even need to fulfill because you might just do an affiliate agreement with another company. If you add vinyl, this is what's called a very big ticket item. This might be a wrap around an entire house that could cost you maybe 2 to 3x what the roofing does. And then finally, solar panels. This is super interesting because it has recurring revenue components for you and potentially some government grants for you too as you keep up the maintenance of all of those. This is how I would start multiplying. All right, this is what I call the ladder method, which is how you multiply your business every single time. And I think about it as steps up a ladder to getting more customers. The first one, leverage building. So pick complimentary products and services. Instead of just selling a haircut, cut, wash, style, product, customers perceive more value, you can earn more per sale. Number two, we're going to have add upsells cross-sells. This is where you offer premium versions of related items at checkout. For instance, for an upsell, I might add something that smells really nice to my car. That's my car wheel. I don't know. The third one, I want to add differentiated tiers. Bronze, silver, gold, pricing creates natural self-selection. It's something called anchoring, which is basically when you have a high-ticket item. That's also an anchor. When you have a high-ticket item, some people just want to give you more money because they are at the top of the pyramid. It's called value stacking. Then D is deepen relationships. This is often recurring revenue. How do we convert one-time buyers to subscriptions memberships? We help the lawn care company move from a single mow to a seasonal plan. That's how you resell without having to resell every time. E, elevate perceived value. Ticket size follows positioning. When you improve brand presentation guarantees or exclusivity, that means you have what's called a premium charge on your services and you don't have to compete on price, which I always prefer. And then finally, you want to reinvest in customer success. Happy customer, they spend more, they upgrade, they tell their friends. Chick-fil-A's hospitality or Apple's Genius Bar, those things cost them a lot of money, but that means that they have a cycle where their customers keep coming back to them again and again and again. All right, why does this work? Let's start here. Marginal cost versus marginal revenue. Adding upsells and bundles costs very little but really increases margins. So example would be Google adding a pro tier, incremental features cost, but you get to charge 200 bucks more. That's why they are such a big company. Psychological anchoring. Customers rarely choose the cheapest option if there's three, which is wild, and also why we all choose the gold medal when we go through the car wash. Lifetime value flywheel. Retention, like memberships, is a strong multiplier instead of always selling once, which is why we keep our Netflix memberships rolling. And brand equals a reason why you can charge more. Why does Starbucks charge seven bucks for coffee instead of two? Is it because the coffee's better? No, it's because they have a great brand and everybody knows it, so they can sell us overpriced, terrible coffee and take away our chairs. Not that I'm tracking that or anything, but this is why it works to move your customers up the ladder. Move number three, multiply referrals. This is where we turn the machine into its own continuous way for you to get new customers. And I wanna show you it live, actually. You wanna know why we do this? Because this is like free advertising. So in this area, it's a little bit more rural. You know what the guys do? They stick these in neighborhoods. People walk by, walk in their dog, whatever, and they grab a card. And then, instead of just having one person in one neighborhood, you get a bunch of people on the same block. Real little secret hack is when you're in a neighborhood with a bunch of those mailboxes all in one spot, stick them in front of those. This is why you wanna steal somebody else's 10,000 hours. Because unless you had already played the game for a few years, you'd probably never think that you just slice and dice one of these signs, stick some cards in there, and better advertising than Zuckerberg, you know? See what we did there? We're turning customers into more of them. This is how you own the map, stack the revenue, and build a referral machine that prints leads. You don't need to reinvent the wheel. You just need to own one that already rolls. That's how Main Street millionaires are made.