The key to success is having an exit strategy in place.
PT Barnum had a real problem with patrons who lingered in his museum a bit too long, which limited the crowds and cut into profits. He needed a way to get people to leave and replaced the exit signs with “This Way to Egress.” Thinking there was an egress display, folks instead found themselves back on the street and the door locked preventing reentry! But before you can egress (exit), you must ingress (enter), and from there you get to plot your journey (career) in the trades.
I ingressed in 1972, but did not yet have a plan because I had not set my sights on a career in the PHVAC fields. Truth be told, I viewed this as a stepping-stone to somewhere else without a clue as to what something else would be when it appeared on the horizon. About six months into what was to become my career, it dawned on me that I was beginning to really enjoy the work, and that the potential was present for eventually having my own business. Pursuing the American Dream! Well, why not? I was aware of others who jumped into the deep end and hung out their shingles, but also became aware that most egressed involuntarily by going bankrupt within the first few years.
Aside from jumping at every opportunity to improve my skills by taking courses and attending seminars related to servicing products, I knew just being good at turning wrenches wasn’t a guarantee of business success. Experience is one of the best teachers, and I had plenty of examples to learn from. Before entering the mechanical trades, I had observed both good and bad business habits of former employers.
My grandparents owned and operated a Westinghouse appliance store in Saint Claire, Pennsylvania, in the heart of the anthracite coal-mining region of the northeast. As a young lad, I loved going with Pop-Pop on service calls, and at the end of each workday, a taproom awaited where we could slake our thirst: Orange Spot soda for me and a Yuengling beer for Pop-Pop and his pals. After dinner, my grandparents retired to the home office to tackle the billing and bookkeeping chores. Folks in Saint Claire were not well-off financially, and Pop-Pop did not possess the ability to say no. As a result, lots of folks owed him a boatload of money he would never collect.
Learn when to cut off credit and say no! Check.
One boss was great to work for, and he was a very productive worker right up until lunchtime. Three martini lunches are not a good idea! Check.
Another boss seemingly took great pleasure in dressing down any employee who made a mistake and made sure to do so in front of all the employees. Everyone said my turn would come, but I decided to cut that off at the pass. In a private meeting, I told the boss if he ever did that to me, I’d be leaving before he could finish. Absolutely pull me aside and let me know if I screwed up, and I’d gladly accept the criticism, but yell/scream at me publicly and we’re done. He never did. Know when to be assertive. Check.
Many more followed, and if you’re paying attention, you can see which habits and traits are worth following and which ones never to emulate.
When I passed my Master Plumber’s exam, my bosses wanted to know if that meant I was planning to go off on my own. Not yet, I said, and I’ll give you plenty of notice if I do decide to take the plunge. Meanwhile, I needed to get some business education on how to run and manage a business. I enrolled in business courses at Penn State York Campus, which opened my eyes wider. Back then, nothing like Service Roundtable existed and, today, if you’re thinking of jumping into the deep end of the pool, you’d be crazy not to join up and take advantage of the business tools offered.
A plumber who went out of business provided tools and inventory I picked up at the auction. Lois and I talked often about the potential struggles we would encounter if I were to start up my own PHVAC business. Having your life partner on board is a must. Check.
Trouble was I was still hesitant to break away from that steady weekly paycheck and walk the plank. A family friend, who owned a large commercial flooring business, asked me to stop by his office on a Saturday. After exchanging pleasantries, Walter rolled out the blueprints for a new home they were building. It was large, with five bathrooms and multiple HVAC systems. I told Walter it looked like a very nice home and sat back in my chair.
“How much do you think the plumbing and HVAC will cost to install?” Seriously? I’d need to do a takeoff and get supply house pricing. “No, just give me your best guesstimate.” Mulling it over, I took a SWAG (Scientific Wild-Arsed Guess) and threw out a large number. Walter went back to idle chit-chat while turning around to, I assumed, write down my comments. When he turned around, he handed me a check for the full SWAG amount and said: “Tell me now. When are you going into business? And just so you know, I know your price was too low, so when that runs out, you can bill me weekly, and you’ll be paid the next business day.” Stunned? Check. I gave my notice the following Monday.
It helped that my father was a CPA (Certified Public Accountant), who helped to set up our books. Manual entry only, as computers were not yet available with digital bookkeeping systems. Truck needed! Our heads were spinning because of Walter’s over-the-top generosity and trust in us to provide them with the PHVAC for their forever home. Another family friend sold me his pickup truck with topper. We converted our two-car garage to the warehouse. Business cards, billing forms and letterhead were printed. A customer list was generated and flyers were mailed. Business number in place with a rotary rollover line and answering service plus insurance policies were secured. Word got around, and my very first customer was a York City policeman whose Speakman faucet needed to be rebuilt. They became loyal customers. Those first years were, to put it mildly, exciting. Like my grandparents, Lois and I would retire to the office after dinner to work on entries in the books, billing customers and paying bills. “Never miss a discount” my father intoned, and we “earned” more than $1,000 in discounts that first year.
In my first years after striking out on my own, my reward was a morning visit to the donut shop with a group of regulars. Why not? After all, I was now the master of my own destiny and could set my own hours: Freedom! You’d think I’d have been a wee bit smarter. My son John’s high school baseball practices were in the afternoons, and I often knocked off work to attend. By the time John graduated, I’d wised up regarding wasting valuable time each morning getting fat on donuts, and employees ensured my free time visiting baseball practices/games had gone by the wayside.
All the while, nagging at the back of my head, was formulating an egress strategy. Building up the business into an entity that would one day represent one of our nest eggs was a priority. During my five decades in the trades, many wealthy customers shared tips regarding how they managed to be successful. One thing in common: They were diversified and did not rely on just their job for their financial well-being. Stocks, bonds, real estate, etc., and one customer in particular stood out. I asked him how it was that he could simply write checks to pay for their mansion and grounds. He told me the secret was drummed into his head by his father, who insisted he invest 10% of all his earnings into stocks and bonds. He had done that throughout his lifetime and aside from Social Security and his pension, he had become a multimillionaire with money he never had held in his hands — out of sight, out of mind. Living the good life! Check.
We set up the very first 401K plan in our area for our employees. After we invested thousands into the plan, the agency asked permission to use our program to present it to other contracting firms in our area, and we gladly gave them a green light to do so. A longtime employee we inherited with the business had frittered away a veritable fortune and retired penniless. That was why we felt it necessary to set up a legitimate retirement program, and one where we, the employers, would never be able to access. We set ours up as a profit sharing plan. Assuming we did well financially, the employees got a cut even if they chose not to participate.
We did egress — intentionally. It took longer than anticipated, but it was vitally important we sell the business to folks who, like us, would respect and honor the legacy of guiding a business started in the 1800s and provide our customers with the level of service we had provided. Done. Check.
This article is also available at: https://www.pmmag.com/articles/103698-dave-yates-this-way-to-egress