From Stuck to Sold: The $18M Turnaround Story Every Business Owner Should Hear
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
Elaine and Todd built a successful HVAC, electrical, and plumbing company over 21 years, growing from $3 million to nearly $20 million in annual revenue with exceptional margins before selling to private equity. The first 15 years saw steady but stagnant growth until they made crucial mindset shifts around 2015. (02:12) They realized that "a business can only grow as much as an owner's mental limitations" and decided to expand beyond their electrical roots by adding HVAC and plumbing services. By focusing on profit over revenue, maintaining 65% gross margins and 15-17% net margins, and joining industry networks like Nexstar, they transformed their business into a highly profitable operation that attracted private equity interest.
- Core themes: Overcoming ego limitations, focusing on profit metrics over vanity metrics like truck count, strategic business expansion, and building value for successful exit
Speakers
Elaine
Elaine is an Amerasian entrepreneur who co-owned and operated a successful HVAC, electrical, and plumbing company for 21 years before selling to private equity. She pursued an MBA during the business growth phase to expand her leadership capabilities and has since written a memoir titled "Made in Vietnam" about her life story and parents' journey from Vietnam to America.
Todd
Todd is an electrician by trade who co-founded and operated the trades company with Elaine for over two decades. He started as a hands-on electrician and evolved into a business owner, eventually overcoming the ego-driven desire to prove that electrical work alone could scale to massive revenue, ultimately embracing HVAC and plumbing to achieve explosive growth.
Key Takeaways
Focus on Profit Margins Over Revenue Vanity Metrics
Elaine and Todd learned to ask themselves a critical question: "Do we want to do a $5 million company at 20% profit or a $10 million company at 10% profit?" (08:48) This mindset shift helped them prioritize profitability over the ego-driven desire to brag about fleet size or revenue numbers. They maintained 65% gross margins and 15-17% net margins by focusing on value delivery rather than competing on price. The key insight is that revenue without profit is just busy work that creates stress without building wealth. Many contractors get trapped trying to impress others with their truck count or revenue figures while barely breaking even, which leads to burnout and financial instability.
Overcome Ego to Expand Beyond Your Comfort Zone
Despite being successful electricians, Todd and Elaine had to "put their ego aside" and admit they were wrong about staying purely in electrical work. (05:50) Todd initially wanted to prove the electrical industry could generate $20 million in their small market, but after 15 years of stagnation, they realized HVAC and plumbing offered better demand patterns and higher margins. This required swallowing their pride and acknowledging they didn't know everything. The breakthrough came when they stopped trying to prove others wrong and started copying what successful contractors in their network were already doing.
Leverage Existing Customer Relationships for New Service Lines
When expanding into HVAC and plumbing, rather than cold calling strangers, they strategically leveraged their existing electrical customer database. (20:21) They offered free tune-ups and system checks to existing clients, positioning these as entitlements for having done previous electrical work. This approach generated immediate demand for their new services without expensive marketing campaigns. The strategy worked because they had already established trust and credibility with these customers, making the transition to additional services much smoother than starting from scratch.
Join Industry Networks to Accelerate Learning and Success
Rather than trying to figure everything out themselves, they joined Nexstar Network, which connected them with over 300 successful contractors. (03:03) Their philosophy became "let's just copy and do what other successful businesses are going to do, and we can't help but be successful." This network provided them with proven pricing strategies, operational best practices, and mentorship that compressed their learning curve. They also engaged in personal development through Tony Robbins programs to "get out of their own way" as leaders.
Maintain Strong Financial Reserves and Conservative Debt Approach
The couple maintained approximately six months of operating expenses in liquid reserves and followed a philosophy of keeping half their vehicle fleet paid off at any time. (12:00) This conservative approach provided stability and peace of mind, allowing them to weather any storms without bank pressure. They had an operational line of credit but rarely used it, preferring to operate with their own capital. This financial discipline made their business more attractive to private equity buyers and reduced day-to-day stress about cash flow fluctuations.
Statistics & Facts
- The company grew from $3 million to nearly $20 million in annual revenue, with the major acceleration happening after 2015 when they expanded beyond electrical work. (01:24)
- They maintained 65% gross margins and 15-17% net profit margins throughout their growth phase, significantly higher than typical contractor margins. (07:21)
- When they went to market for sale, they received interest from 20-25 companies and ultimately had 5 legitimate letters of intent, demonstrating the attractiveness of their well-run operation. (26:12)
