Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast

#195 The From Zero to 10 Million Cold Calling

• John Wilson • Season 1 • Episode 195

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Looking to break into the home service industry through business acquisitions? In this episode of Jackquisitions, we sit down with Elias Yusef, a 24-year-old entrepreneur who’s quickly making a name for himself by acquiring and scaling blue-collar service businesses. Based in Denver, Colorado, Elias shares how he transitioned from selling appliances to owning a fast-growing plumbing company, using creative deal structures and relentless outreach to land his first acquisition. His story offers a blueprint for aspiring entrepreneurs who want to grow through home service business acquisitions and enter the trades without large upfront capital.

Elias walks us through how he sourced deals through cold calling, built a team of experienced operators, and executed a management services agreement (MSA)—a unique acquisition model that minimizes financial risk while maximizing upside. With ambitious plans to hit a $10 million revenue run rate by the end of the year and scale to $27 million, Elias reveals his playbook for growth through acquisitions, operational excellence, and mentorship from seasoned industry professionals.

🎙️ Episode Host:
 🗣️ Jack Carr
🎙️ Guest: Elias Youssef


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👉 Book a call at appletreebusiness.com — tell Patrick Jack sent you.



💼 Special Thanks to First Internet Bank!

 Looking to buy or expand a business? First Internet Bank is a National Preferred SBA lender specializing in acquisitions for the skilled trades. Their SBA loan program offers up to 90% financing for business acquisitions, partner buyouts, and commercial real estate—plus optional lines of credit to fuel future growth. Unlike traditional lenders, they take a “how can we” approach, making deals happen for both first-time buyers and experienced operators.

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John Wilson, CEO of Wilson Companies
Jack Carr, CEO of Rapid HVAC

Ep 195 Transcript 

Jack Carr: [00:00:00] With all of our interactions with people who are doing acquisitions, there's a lot of people who talk about wanting it, but there's very few people who actually go through with it, especially in the face of rejection and rejection and rejection. 

Elias Youssef: This is not a pretty business. This is not something that you think you could passively run.

To 

Jack Carr: go from zero to to even 10 million in one year is pretty outstanding. 

Elias Youssef: If there's one thing that moves the needle for me the most, it's cold calling. I, I made over 2000 calls. The successes in the work that you're avoiding, you're just chickening out of doing the work.

Jack Carr: Welcome back to Jack Acquisitions. Today we have an awesome operator here. He just bought his own, uh, plumbing business out in Denver, Colorado. Elias, what's going on, man? 

Elias Youssef: What's happening? What's happening? Thank you for inviting me. 

Jack Carr: Eli, we have a very interesting way that we connected. Um, you know, you were cold calling [00:01:00] or actually I think it was emails.

You sent out a bunch of emails to prospect businesses you were looking to buy. Me being the person I am, I. Likes to talk to everybody. And so we got on a phone call and had a fuke phone calls actually about, um, just the space and you and me and how we would all, we could all potentially work together, but it didn't end up panning out.

And, uh, I. You ended up buying a plumbing company in Colorado, correct? 

Elias Youssef: Well, I come to find out it's more of a water heater company more than anything. Uh, 90% of their revenues are done servicing and installing tankless water heaters, but I'm trying to, I'm trying to grow up into a real plumbing company, but, um, but yeah, basically what you said.

You hit the nail on the head. We had 

Jack Carr: that conversation, by the way. Yeah, 

Elias Youssef: yeah, we did. 

Jack Carr: Not to cut you off, I just, we had that conversation before you bought me saying like, Hey, I think this is one of those tier two, like water heater only, and you're gonna run into a scale issue at some point. But, uh, super [00:02:00] interesting.

Elias Youssef: Yeah. Well now I'm here, now I gotta find a solution, so, but no, I, yeah, I mean, I, when I first contacted you, I was. Just cold calling operators throughout the country every single day from literally Long Island, New York to some place in California. Um, I mean, I was looking all over the nation and I, I think I tried calling you.

My normal default is to call and if I can't get through, I'll send an email or a text message. My answer is, I'll get a yes, I'll get a no, but I'm not gonna tolerate no answer. So until some, until somebody tells me to f off or they tell me a yes, I'll keep harassing them. So, um, but yeah, that's how we connected.

Jack Carr: One of the most common and expensive mistakes that I see in acquisitions in the home service space is not getting serious about accounting. Whether you're buying a business or you're already running one, you need the right financial partner to save you time, money. And headaches. That's why we partnered with AppleTree Business Services.

They are a one stop shop that'll help you get through the due diligence process, but [00:03:00] then they'll partner with you after to help you out with payroll and bookkeeping and taxes. They know home services. They're fluent in tools like ServiceTitan and House Call Pro. If you're tired of the surprise tax bills, or an accountant who ghosts you when you really need them, AppleTree is the upgrade you deserve.

Listeners of the show can get a free tax and financial review, and if you're buying a business, they'll give you 10% off quality of earnings. Just head on over to AppleTree business.com. Talk to Patrick. Click the link, let them know Jack sends you and they will take care of you. Yeah. One of the reasons I actually fielded your call though was, um, really interesting.

You did a, an amazing job of a, reaching out to me from a personal level, but b you also had a, a decent backing in terms of, uh, you had. Gotten in touch with, um, some amazing ex operators who are willing to be a partner in your business. Can you talk about, like, scrolling back to how that all started from your [00:04:00] exiting your previous industry and then going into, I don't wanna ruin it for the audience going into, uh, where you are 

Elias Youssef: now.

Sure. So, yeah, this is not my background. I could spell hvac. I can spell plumbing. I mean, that's about the extent of my knowledge. Um, and I'm only 24, so it's not like I'm, you know, I'm not terribly old or anything like that. I'm still pretty young. Most people look at me like I'm a child. Um, I basically, if I rewind the clock enough, when I was 21 years old, which was when maybe only three years ago, I was selling appliances, uh, at a, at an appliance store in, uh, Phoenix, Arizona.

And I was bitten by the bug to want to go out and acquire businesses. I. You know, entrepreneurship through acquisition, you know, and I used to read a ton of Warren Buffet biographies and stuff growing up, and so I was always fascinated by the subject. But when I was 21, that's when I finally. I wanted to pounce on it.

Um, so I ended up quitting my job and, you know, I had, I owned some real estate at the time, so my natural progression was, oh, I wanna upgrade [00:05:00] from residential housing to commercial. And well, hey, there's a big senior population in Phoenix, so why don't I do assisted living? So I quit my job and I very quickly realized that my alligator mouth overloaded my hummingbird ass because it took me almost two years to.

To find my first comp, uh, business. And then I ended up acquiring an assisted living facility in Phoenix. And again, same thing. I don't know anything about assisted living. It was just a mind numbing process of cold calling hundreds and hundreds and hundreds of people until somebody finally sold me their business.

I learned a lot throughout that process, but about literally I think four or five months into running that business, I realized I hate healthcare. I don't know, this just doesn't turn my crank. And so it was a. Completely disappointing buildup of two years. Um, and I also realized that I was really spinning my gears because a lot of people that would wanna sell their business, they wanna solve the real estate with it.

And people were holding on our property values from 2020 and 2021, and, and Covid decimated that, that industry, so, you know, just a [00:06:00] mortgage on the property was more than most of these businesses were making. So I just felt like I was wasting my time and I was getting really irritated. So naturally I'm start starting to think, what do I wanna do in the future?

And at the time I was actually at my property and I was calling a, uh, we had like a little orchard, uh, like a bunch of trees on the property. And so I had a, a, a gentleman come over to trim all the trees and I wanted them to do the citrus trees. And this is May of last year. I. And I said, could you do our citrus trees?

And he said, no. Well you gotta do that in January. It's not the time of year. So, you know, they have to call me out here in January. And so naturally I said, can you put me on the schedule? And he said, well, I use a paper calendar for all my bookings and the paper calendar doesn't come out until October. So call me in October to schedule you.

And in my mind I was thinking, what the, is this how the trades are run? I mean it, there's just, yeah. What, and so naturally they started thinking about the trades and it's May in Phoenix, Arizona, it was hot as hell. So it really didn't take much to figure out, I wanna do air conditioning, I wanna [00:07:00] do hvac, but I know nothing about it.

So, you know, I'm smart enough to at least know that I don't know everything. So the first thing I did is I went to surround myself with people that do know. Um, so again, I just kind of went from the top and I mean, I reached out to Tommy Meow. I was texting him. He set up a call with, uh. Again, I'm a salesman by trade, 

Jack Carr: which I mean, that's a huge first step to just be like, Hey, I got a hold of Tommy Melo.

He runs a, you know, $400 million garage door business. But I was able to, to grab his phone number and start texting him. 

Elias Youssef: Well, it's online. You just use the databases. You know, there's like us phone book.com or all instant checkmate.com. There's a lot of 'em. So. He ended up setting a call with the CEO of his portfolio company and they ultimately said no.

So I just kind of went down the line, um, got through to Chad Peterman. He scheduled a Zoom call like months out and then missed the call. And I, I kept trying to chase him down. Um, but ultimately, um, I ended up, I. Calling the owner of a company [00:08:00] called George Brazil, which is a, a household name in, uh, Phoenix, Arizona.

Lo and behold, you know, God love his soul. Uh, Jim Probes answered and he invited me to. I have a tour of his, uh, office and he has like a 40 or 45,000 square foot office in Phoenix. Mm-hmm. And with, you know, 250 or 260 employees. It's a mammoth operation. And man, I sold my heart out. I sold my heart out and the whole idea was, uh, you know, I don't know what I'm doing, but I'm young and I have piss and vinegar in my blood and I wanna kind of go out and do this.

I just, I just need somebody to show me, show me the way, and. Uh, he was willing to take me under his wing, and so I'm very grateful to him. He's taught me everything that I know about this business. Um, he's mentored me throughout the process. He also tried to scare the hell outta me to not do this. He went through a period of time, which is good.

He went through a horror story. I, I always said, that's good. A horror story after horror story, and I'm pretty sure I actually even called you. One day. Mm-hmm. And I said, Hey Jack, God, my chairman's been telling me these stories. Tell me these aren't [00:09:00] real, and I just wanted your confirmation. I was like, is this real or is he bullshitting me?

And you said, no, it's real. I mean, I know you've, you've had a tough start, uh, in the beginning. And, and I talked to a few other people, I think, is it Nathan Linley? See a guy in, uh, 

Jack Carr: yeah. Nathan's a good guy down in Texas. Talked 

Elias Youssef: to him too. And yeah, I think he told me he was like a week away from bankruptcy once and uh, until he turned everything around.

So, man, I was. Scared for a bit, you know, but ultimately I said, Hey, whatever I made my bet, I gotta lie in it. I decided to do this, so I'm gonna push forward anyway. Um, 

Jack Carr: super interesting. So that's where, I mean, in terms of people who actually want it, there's a lot of people who talk about wanting it, but there's very few people who actually go through with it and.

With all of our interactions with people who are doing acquisitions, you know, one of the greatest signs that someone is really going to complete that acquisition is actually their tenacity to be able to do cold calls and talk to people in industry. And so I know with me that that [00:10:00] blew me away in the fact that you were able to get a hold of kind of these, these.

Top guys at these top companies and then keep going. Right? Just keep pounding pavement until I 

Elias Youssef: appreciate that. 

Jack Carr: It's a huge indicator that somebody's going to be successful is their ability to just continue, especially in the face of rejection and rejection and rejection. 'cause, 'cause most. Uh, people in the industry give up.

They give up after, you know, three or four times and then they go, ah, this doesn't work. And then they go on and they go onto a website like biz Buy, sell, and try to find something. But truly, you get the best deals through that networking. And so, how did you find hot Water now? 

Elias Youssef: Cold call. Uh, he actually didn't answer a cold call, so I sent him a cold text message and then he responded, and then we got into a, yeah, I mean, every deal that I've ever had, whether it was the assisted living business, I bought the water heater company I just bought, or fall goes to plan, next week, I should be picking up a plumbing, air conditioning and electrical business.

That was a cold call. Um, everything has come off market and so [00:11:00] literally you spend a thousand bucks, you could buy a leads list of like every business you could possibly imagine in a particular industry, in your market, and you just go down the list and you just keep calling and calling. And eventually people will tell you to it.

They'll give you a no or they'll give you a yes. And so you just have to, you just keep making the calls and they're mind numbing. I mean, don't get me wrong. I'm like, they suck. I don't enjoy doing 'em. But, um, in order to be successful, you gotta do. You have to just do what's necessary. You know, I don't get to do what I'm comfortable doing.

You just have to, you have to succeed in doing what's necessary, so. I have no choice. 

Jack Carr: Well, there's also a really interesting term. Um, oh, what is it? It's, uh, market Stop. No, not Market Stop. I forget. Someone was talking about it at, at s and Bash. But the point being is that we as owners get inundated with so many emails over.

I I received seven yesterday. Hey, do you wanna sell your business from some third party? That's sole job is to acquire. Uh, or to, to set appointments for business [00:12:00] acquisitions. And so to actually stand out and to physically find phone numbers and physically call owners. If I got a voicemail that said, Hey, Jack, you know, I'm a local business owner and dah, dah, dah, dah, I'm much more inclined to respond to that or at least pay attention to that versus the 10,000 emails I'll get in a year asking to buy my business.

Like I just don't even respond to most of them. 

Elias Youssef: Yeah. Well, you have to stand up. And then 

Jack Carr: to mention now with AI garbage, like the AI garbage, they just. Blast ai and you're like, I know this is ai. Like you've not looked at my business Half of the time it's the wrong person. They're saying, Hey, John Wilson.

I'm like, I'm not John Wilson, buddy. I'm, you got the wrong, wrong business. 

Elias Youssef: I've, I've even learned, I don't even introduce myself when I make a cold call. People don't even know my name and tell 'em about halfway through the call. Um, I actually got rejected today. I called a guy in Denver and he said, first of all, I don't even know your name.

I mean, who, who are you? And no, I'm not interested in selling my business. But, you know, you just, it's simple. You just call someone, Hey Jack. Yeah, yeah. Hi. I'm in the plumbing and air business. I was just, you know, curious if you'd entertain an offer on your company. I'm [00:13:00] just looking at to grow in the market or something, and you just come up with something.

And if there're, I also realize there's a difference between a suspect and a prospect. So a suspect is somebody that will return your calls. A prospect is somebody that'll actually sell you their business. And so I also realized you could say everything wrong on the phone. If somebody's really motivated to get out of the business, you're not gonna have, it's like a, if a girl likes you.

It doesn't really matter what you say, the relationship moves forward. Right? It's like, it's kinda like when you're texting, you're trying to get the right words to say or something like that. She's not interested, right? Yeah. So it's just a volume game. I mean, you literally have to go through hundreds and hundreds and hundreds of, of, uh, of contacts with people and eventually you'll, you'll figure out, okay, this guy's desperate.

And I don't mind maybe going into the story of hot water now, but even then just to. Take a step back. I realized they needed a team first, because I don't know what I'm doing if I immediately go to start looking at businesses. I mean, I'm not even, I'm not even gonna know what to say or how to do due diligence or how to run it.

I mean, I don't know any of that stuff. So I just, I wanted to get a [00:14:00] team in place of strong operators that know what they're doing. Um, and that could really kinda gimme the clout. And expertise that I need to open up doors. Um, I actually, in hindsight, I don't know if it was necessarily important I did this, but I even, I wanted to get somebody I didn't have to explain about.

So technically the CEO of Costco owns 2% of this company. Um, and he's been, uh, he's definitely the biggest hitter I was able to get in contact with. So he ran Costco for 12 years and he was worth. Like a third of a billion or something like that. So if you Google him, there's pictures of him with like Joe Biden and Obama and all that stuff.

So, but the reason for that was like, okay, when I go to do due diligence or, or acquisitions in the future, I wanted a. When I approach a bank, I'm just not a, an idiot saying, Hey, I'd like a couple million bucks, please. It's, I'm a representative of my team. You know, we have a very deep bench of operators.

You know, we're looking to acquire and operate and scale these companies, so, and so, it gives me a lot of borrowed credibility as, as they say, I think in the marketing industry, borrowed credibility. So I needed to [00:15:00] ride the coattails of my team, which I've definitely taken advantage of that and I'm very appreciative of it.

Um, but ultimately I also realized, I dunno if you've ever read the book, good to Great. Um, but it's my favorite business book and they talk about who's on the bus. It's infinitely more important than where the bus is going. And I'm, again, I'm very glad I took the opportunity to build a team first because we've been able to morph and pivot.

'cause we looked, we even flew out to Iowa to go look at deals. We were gonna go to Long Island to look at deals and ultimately Jim stopped me. He said, you can't run these. Businesses remotely. Do you wanna live in Iowa? I said, hell no. I don't wanna live in Iowa. I said, why the hell are we going out here to look at?

So he's taught me a whole time and he's definitely set proper expectations and uh, he reminded me very frequently that this is not a pretty business. This is not something that you think you can. Passively run or that you know, it's all the Biz By Sell listing. I say turnkey operation, absentee owner all.

I mean, that's all. Just B owner. That's all Never true. All bs. [00:16:00] That's all bs. So, yep, he taught me a lot, but ultimately realized I wanted to live in Colorado. 'cause I was sick of Arizona and I wanted to move out there. So I just. I said, okay, I'm just gonna look in Colorado and that's all I'm gonna do, and I just need to turn over every rock in Colorado and eventually I'll find a deal.

So if I could mention, I just bought a leads list of every home service business, uh, in Colorado, and I just started making my way through it. And eventually after making enough cold calls, um, actually this deal that we might be closing next week was actually the very first person to say, yes, this is a deal that's just been taking a long time to work on.

Jack Carr: Mm-hmm. 

Elias Youssef: But ultimately, I got in contact with the, the seller of hot water now and had a conversation with him. 

Jack Carr: So sorry to stop you before you go on to that. I think, I think this is a really interesting topic. How many people did you call before, before you got to your first. V Uh, I'd say viable. Yes. Right.

Because there's lots of people who are like, yeah, maybe what, you know, if you gimme two, $200 million, I'll sell you anything. [00:17:00] Um, but, but realistically, how many calls did you have to make to get to a position where you had a legitimate Yes. 

Elias Youssef: Oh, hun. I mean, I've lost count. I mean, I know, I mean, I, I made over 2000 calls.

Um, in total over the last few couple years to the Denver market alone? No, not in the Denver market. Alone. In the Denver market. I've made several hundred for sure, but I, I don't know the exact details, but it, it was a lot. It was a lot. 

Jack Carr: I think that's still, like, even, even ballpark is still really important because if somebody's listening to this and wants to try this strategy, like how many calls after the first a hundred?

I just don't want them to get discouraged. It takes 200 calls, 300 calls to get there before you get a maybe or a kind of a yes. And then you have to work that deal through 

Elias Youssef: for every a hundred phone calls, uh, people actually get through to. Mm-hmm. 'cause even most of the calls I make, it's, you're not even getting it through to somebody.

But for every a hundred conversations, maybe 90 or 95 will say no. 5% might say yes, I'm interested, and maybe only one is actually. [00:18:00] Feasible, you know? Um, and then even then, it's a shot in the dark if you're actually gonna be able to, to have, make a deal. Because I, there was a deal I was looking at recently in a rural market here in Colorado.

The business wasn't even making any money and the guy wanted 2 million bucks for it. And I said, how did you substantiate that number? He said, well, all the assets that, you know, that, and, you know, it's just, yeah. And I realize this. Yeah. So, yeah, it just takes a lot of volume. It takes a lot of volume. And one thing that.

Has made this specific industry more challenging? There is a lot of unprofitable companies, I would say. Mm-hmm. The vast majority, probably 80% of all the financials I've seen, these businesses are losing money or breaking even or something, or making such a marginal profit. It's, you're either really successful and you're growing and you're scaling your business, or you're just just one of another million chuck and a truck contractors or something, and almost all of 'em have the same problems where.

Their payroll is outta whack. Their pricing is too low. It's like, it's almost comical. It's a [00:19:00] broken record. I keep seeing the same thing over and over and over again. I'm sure you guys have seen it a lot. 

Jack Carr: Yeah, it, it's very commonplace. And, and one, because it's an old, fragmented industry in the sense that, you know, 10 years ago, the trades had very little help.

They had very little, um, focus. There was no CRM systems. There was no, you know, this is all, all the growth that we've seen in some of these big companies like, uh, Peterman Brothers. They've only happened in the last 10 years. Hoffman Brothers last 10 years, John Wilson last 10 years. It, it's this last 10 year segment that it has seen the actual growth and kind of maturity of the industry itself.

Um, but yeah, we, we see that a lot or that it's, it's so small and, and it works for one owner, but there's no systems in place to make it. Viable under volume, and then they still want a million dollars for it. That's, that's generally the, the number's always 1 million. It's always seven or was it six figures?

No, seven figures. Always seven figures. No matter how big the business is. [00:20:00] Yeah, absolutely. It's a vanity thing. It feels like, 

Elias Youssef: you know, and, and basically the, the narrative that I, and I actually use this when I. Prospect. Mm-hmm. Deep in conversations with people, but it's very accurate. Most business owners in this market are people that are either a master plumber, master hvac, tech master electrician, excellent.

At the trade. One day their boss pisses 'em off. They say, you know, f you, I'm not doing this anymore. Um, you know, I'm gonna, I'm gonna be my own boss. I'm gonna go work for myself. They go start up, they buy a white van, they put so and so LLC on it, and, and now they say they're in business. And because they're great at the trades, they're naturally able to start picking up work.

I. But they're not business people. They're terrible at, at marketing or managing people. They don't know how to, you know, market a business and HR, legal, they struggle with all that stuff. And so just naturally they start building up a business, but they still have this mindset of just. Again, they're, it's like the E myth talks about it.

They're excellent at the, the actual trade, but they're not good at running a business. And so you see this whole [00:21:00] proliferation of these small contractors that are one, two, $3 million contractors. A lot of 'em don't even get to 3 million because there's, I would say, 

Jack Carr: sub 3 million. Yeah. 

Elias Youssef: Because, and Jim says it great, he says, there's only so much you could blow up the balloon.

These people don't realize the idea of scaling and delegating and building systems, because if a business is not dependent on a system, it's dependent on a person. There's only so much you could do. These people are control freaks also. They're involved in every part of the business and they're not good at everything.

So you just, you see a lot of these business and then the same people that are wanting a million bucks for the business, it's. The man doing all the work and maybe his wife does the bookkeeping and accounting and all that, and they're both wanna depart. They want to, they want all their money up front and they want to depart, and they're the ones that do 80% of the work in the company.

It's like what? It doesn't make any sense. So 

Jack Carr: probably one of the most important decisions you can make in your ETA journey. Is which SBA lender, you are gonna pick a lender who will be in your corner to get you closed on the deal, as well as set you up [00:22:00] for future expansion. That is why we partnered with Alan Peterson from First Internet Bank.

He and his team take a how can we approach as well as I personally know they specialize in home service acquisitions. Mention the show or my handsome bald head and receive a reduced good faith deposit, as well as a detailed deal review and maybe even a buy-side pre-qualification, no strings attached.

Head on over to Alan FIB. Dot com. That's A-L-A-N-F-I b.com, or click the link below to get connected. And so let's move on to, to, to Hot wa I mean, that's all, um, actually amazing information for everyone listening, um, but in, in respective time. Yeah. I really want to get to this first deal in hot water now.

So you, so you buy hot water now, was it one of these companies or was it, you know, five, $10 million? No, so 

Elias Youssef: I'll, I'll, I mean, I'll, I'll be very candid with, we were. And the words of my chairman were opportunistic and we see on an opportunity that we jumped on that, [00:23:00] I'll just explain it. Also started cold calling.

Um, got through to the honor of this company. Asked him if he was interested in selling. He said he was possibly interested. So, you know, I end up, uh, getting his financials. Uh, I have a meeting with him. I had a meeting with him, first talks a bit about the company, then he sends me his financials. I take one look at it and I'm like, what is this?

I mean, it's just a million dollar contractor that wasn't really making any money. In fact, I'm pretty sure he lost like a hundred grand or something on a million bucks. Right? It's just, what is this? So immediately, five minutes after looking at the pen Ls, I sent him an email and I said, um, sorry, but this doesn't really work for us.

You know? And we, and I. Passed on it. 

Jack Carr: Yeah. 

Elias Youssef: Then a few days later, he comes back and I get a text message and he says, well, hold on. I, you know, I think we should still talk or something. So naturally I realize this is somebody that's motivated. So I take a, maybe a little bit of a deeper look and, and I have another conversation with him, and then I call my chairman and I start kind of walking the, the deal with him and he, he told me a [00:24:00] story.

He told me a story actually when we first started working together of an acquisition he made several years ago. It was like, it's not a small company. It was like a six or $7 million contractor, but they weren't making any money. The business grew way too quickly and started like almost imploding on the seller.

And he was just so stressed out. He like almost was gonna have a croak. He, he was gonna croak, he just wanted to, to get out. And he was one of Jim's, uh, training clients. 'cause Jim runs a company called SBE, which is uh, just kind of a training platform. And so it was one of his contractors. So naturally he approached Jim and said, I can't do this anymore.

And Jim wasn't in a position at that time to wanna buy a company, but he saw the opportunity. So he. Basically proposed an idea to sign a management services agreement to basically allow him to manage the business with the right to buy it in the future. Now, Jim has experienced, he has all of the clout to be able to pull that off, but that was in my mind.

And so I just kind of threw a dart in the wall with this one and saw if it stick it stuck and it, and it actually did. So I started talking [00:25:00] to, uh, the owner of Hot Water now, and I told him, Hey, your business isn't really investible, but. I see a big opportunity. I, you know, I know you have a great team and I know we could grow it.

It's just, it needs to be cleaned up a little bit. And so I just kind of pitched him on this idea of like, well, I don't mind coming in and operating the business, um, with the right to buy it in the future. And the reason I'm saying all this is because he actually gave us access to his QuickBooks account, and I realized there's just spending problems.

It wasn't even that the business was necessarily losing all that money. When I see a $5,000 in a reach and cruise line expense and Yeah, and Amazon expenses. Personal piggy bank. Yeah. I was like, I don't know if this business is actually losing money. You know? I think it's just fiscally mismanaged and obviously the basic stuff like pricing is too low and all that type of stuff.

So to make a long story short, we ended up signing a deal where. I am effectively the owner of the business. I have sole control of the bank accounts. I have complete operational authority here. Technically, I'm not the owner. I have the [00:26:00] right to buy the assets anytime during the next three years at a price that's fixed to the outstanding liabilities on the balance sheet.

And so if I even pay down the debt in the future, that might kind of price drops. And so since we've been here, we closed February 4th. Um, by the time we finished up the month every 28th, we were in the black, because I just went through and cut every expense that was like, yeah, there, it's just no more personal piggy bank.

Yeah. So once I took away all the credit cards and shredded them, um, and mm-hmm. Increased pricing and started putting a lot of focus on how do I get the guys to sell more and incentivize them, I started paying commissions for the fir the, the first month we were there, I told everybody, I'll pay you your hourly rate.

Or commission, whichever is greater. And lo and behold, almost all of their paychecks have been better with commission. So they're starting to kind of see the the, they see the light. Now I'm helping 'em sell more. Um, and so I'm sure it could have panned out a lot worse. I'm sure people could have quit on me the [00:27:00] first day or something, but at least where we're at, the way the agreement was written, I had no liability other than.

I could have wasted my time if things didn't work out, but I could have walked away technically. But that's, I think, you know, that's not really my personality. It's like I just gotta fix this now. But, um. 

Jack Carr: Incredibly interesting that that's a really creative way. So we hear a lot about creative financing in in these deals like this and reducing risk and reducing liability, and this sounds like a wonderful way to do it.

And like you said, there's no financial risk on you personally, which I think is a big point to your first deal is Right. You most of the time people are signing pgs. They're personal guaranteeing all of their. Assets. And like you said, you had real estate, so that would have to go up. And so there's a lot of moving parts there.

Um, but I think that that's a really interesting way of looking at a deal that might not pencil from a debt to service income ratio standpoint, but from a seller financing even. This isn't even, yeah, no, there's nothing Now [00:28:00] this is just like seller, it's, it's really giving and management fees. Yeah, 

Elias Youssef: he, they, they gave up.

So then how does the seller. They gave up. He's, did 

Jack Carr: he have to pay for that? 

Elias Youssef: The seller is, or you 

Jack Carr: have to pay him for that? 

Elias Youssef: He, okay. So basically in an agreement like this, the seller becomes an employee of the company and you still wanna keep 'em 'cause they typically hold the licenses and all that stuff.

But, uh, but at, at least kind of where I sit. I have kind of the Trump card, if you will, in the organization. I can operate it as I please. I have full control over the money. I could allocate it however I want. But again, the general idea is just to get, grow the business as much as I can. Get it profitable.

Get it scalable, and then from there, at some point, get a loan and refin, you know, refinance their existing debt. Yeah, that makes sense. So he gets 

Jack Carr: paid a little bit. Down the line, but with the idea that you come and operate it better. And so he, well, should I buy it, make it sellable in two years? 

Elias Youssef: In this particular case, when I'd buy it, he wouldn't actually be walking away with anything other than having his liabilities taken out.

[00:29:00] Um, and, and just to give you an idea, so in 2024, the business only did a million bucks in revenue. We're operating at like a million and a half dollar company at the moment. And if all goes to plan, I'm leveraging the exact agreement I just did. To do another deal with the exact same structure. And so there is a $2.4 million plumbing, heating, and electrical business 15 minutes down the road from me that we're just finished up the contract with.

So we'll probably get it signed probably this week. If once we close that, we should be sitting around 4 million, no money down, no financial risk. Um. Technically all the risk is still on the seller, but I don't want to come across like I'm swindling these people or anything like that. They're lawyered up.

They know exactly what they're getting into. Yeah, they're just burnt the heck out. They're tired and they want somebody to just kind of help them. And the reality is, is if you're running a $5 million operation, making a million bucks a year, you're gonna come at a pretty nice paycheck right at closing.

Jack Carr: Which I mean, this is all why [00:30:00] John and I call the one to $3 million range is like. Owner hell, because the minute that they start hiring employees and start trying to do marketing and they sign up with all these garbage agencies, they're just throwing their money down the drain and their net, they start to see it shrinking, shrinking, shrinking, shrinking.

And then they, they get to a point where they're just going. I'm running on 60 KA year salary and like 10 K in net swings that could bring me to the point of bankruptcy and lose my house and lose all this stuff. Yeah. So I, like, I, there's, I want to be clear, like there's, there is a very large space for these kind of deals because the benefit is, hey, this has been run so poorly and, and levered up so hard that the.

The other outcome for a lot of these owners is bankruptcy. A hundred percent loss. A hundred percent. So, um, I mean, somebody coming in with an experience operator, experience team with, with a, you know, a turnaround month three of, of buying or doing a manage manager agreement with this other business, I mean, there's, there's a big [00:31:00] draw to a lot of people.

Elias Youssef: Um, I mean there's, there's benefits for both parties. I mean, if you look at it from their perspective, they're running an unprofitable business that has debt, and like you said, the, the path is typically bankruptcy at some point. You can't really sell a business like that, especially if it is poorly run to the point where you are the guy wearing all the hats, doing everything.

You're not gonna be able to sell that business. It's not. It, it's not saleable. There's no value to it, right? People, you know, a business that's independent from the owner and a business that serves the owner as opposed to the owner serving the business, that's one that's attractive and saleable, right?

And so they're just kind of stuck with this albatross around their neck where they bankrupt themselves to kind of get out of it. So from their perspective, they have a night and shining armor coming in to kind of save the day. And from a buyer's perspective, it's very attractive where, yeah, you're maybe picking up an ugly duckling, so to speak.

But all you're putting in is sweat equity as opposed to real equity. And so it becomes very attractive monetarily, uh, once you get in and you actually operate the business. And so, and to, to us, obviously with this [00:32:00] next deal, that'll really kind of get us to the critical mass that I think that we need to be able to really start to grow this.

So, I mean, the, the moment we think this will be sitting around 4 million and the goal is to get to $10 million by the end of the year, and that's gonna be done through obviously acquisitions. And then I used to say organic growth. But I'm copying my chairman. He taught me he uses growth through execution.

'cause that really what it gets down to, I mean, people to be profitable or unprofitable. It's just executing on the basics. You know? Are you, I. Are you pricing appropriately? Are you, when you go to a house, are you going straight over to the water heater and fixing the problem and getting out, or are you slowing down and building a whole ticket?

And it's just all the basics. So, um, 

Jack Carr: you know, we talk about that a lot, known and operated, um, side of the business is what you hit on is, is one of the keys, is there's, there's a difference between, um. You came in with the team with a very, very experienced individual who understood how to grow an HVAC company, but from the other side of the coin, right?

There's so many small contractors that just [00:33:00] don't know how to price. They don't know what sales is. They've never gone to a next STAR training or an SBE training or a certain path training. And so it's a very, uh, you know. Tumultuous first couple years for them as they try to grow, but very cool. I mean, so trying.

You're gonna get, with this second acquisition, you'll reach enough velocity to get through the quote unquote owner's help point. You'll be in the 5 million range, which should offset enough money to grow organically if you wanted, but your goal is to hit those phones some more. 

Elias Youssef: Yeah, so I, the goal is to end the year at a.

$10 million run rate and then the next year at 27 million, and my chairman asked, why 27? And I said, I want more millions in revenue than years on hold. So that's, that was kind of the, the whole idea behind 27 million. But yeah, I just, this is all I obsess, ambition, man. No, thank you. 

Jack Carr: I know that, that's awesome.

I mean, we have, we have the same goal, not 27, but we're 20 million, but we'll do it in seven years is our goal. So, I mean, to go, for anyone listening to go [00:34:00] from zero to to even 10 million in one year is, is pretty outstanding. So, um, I, I, that's why I had to get you on here. I knew this is. You, you're an awesome operator and you've been doing a great job so far, so I know everybody had to hear this.

Elias Youssef: No, I appreciate it, and I'm not gonna take credit for anything. If I were to take my shirt off and turn around, you'd see a footprint on my back from my chairman's boot just kind of being pressed against this. So I have a lot of pressure on me, uh, from my team, but I, that's what I enjoy. So, you know, again, I don't pretend to know anything.

I'm, I'm very grateful to my team because they've taught me everything. And so, I mean, if I could give. One piece of advice to anybody. Go out and find people. I mean, if your, if your goal in life is to be the best chef you could ever find, go find a Michelin star chef and go, you know, train and learn from them, right?

Just find somebody who's been there and done that, and has achieved the things that you want to in a very meaningful way, and copy 'em, learn from 'em, I mean. They'll mentor you and, and you gotta ask, you gotta ask. And so, 

Jack Carr: you know, I just, one is to buy a list of all [00:35:00] the Michelin star chefs. Step two is then to then just repeatedly call and text them until they either tell you yes or no.

Um, oh man, that's crazy. 

Elias Youssef: You go out, find people, you know. 

Jack Carr: Is there any point where you are going to remove yourself? Because I think this is a, an important distinction, right? Is that there's a lot of people out there doing a similar strategy, but the key difference is that they hire somebody else to do the calling.

It's somebody in the Philippines or it's, it's overseas. It doesn't work overseas, or it 

Elias Youssef: doesn't work, doesn't work. If you want the best results you gotta do yourself, it has to be you. You can't get an Indian telemarketer or someone from the Philippines to do it. You're just, your successes in the work that you're avoiding.

You just, um, you're just chickening out of doing the work. Mm-hmm. By trying to outsource it. You're not being smart. You're not. That's, if there's one thing that moves the needle for me the most, it's cold calling. Is the single, like if there was the highest and best use of my time, if I just locked myself in an office for eight hours and I said nobody's allowed to [00:36:00] disturb me, and all I'm doing is cold calling, that will be the thing that will move the needle the most in the company.

'cause that's how I could pick up another 3 million bucks in revenue with another deal or something like that. You know? So if anything, that's the only thing I should be doing. So I actually wanna pull myself outta the operations more than anything. Now, the only reason I'm involved in the operations now is first of all, obviously being.

Ugly duckling turnarounds. I have to be very, uh, I have to kind of put a lot of attention towards this. But also I, I'm just saying I have to earn my stripes, you know, so I have to kind of go through the phase where I have to cut my teeth, earn my stripes, I need to learn the business, I need to know what it's like to go out in the field and, uh, put out fires and do all that type of stuff.

'cause I'll, I'll learn throughout the process and I'll also earn the respect of my team. 'cause they know that I'm willing to actually be there with them anytime they call me, I'm there for 'em. Um, but in time. I do wanna pull myself outta the operations and focus solely on growing the business. You know, how can we find the next deal?

Where can we get capital? All that type of stuff. 

Jack Carr: [00:37:00] Yeah. I do have a, this one's an interesting one for you. A question is, at some point there's gonna be diminishing rates of return, right? So I've seen this with John's business. John bought a bunch of businesses in circa 2020 to 2024, and he's grown this, you know, $30 million monster.

A a million dollar business now doesn't move the needle for him. A $3 million business really doesn't move the needle for him, especially when you look at the debt that that would require to get. Putting that into a marketing system or something would drive significantly more value. So at what point do you see the acquisition channel that you're working on?

'cause you probably could get to 27 million doing solely acquisitions, but at some point there's going to have to be some switch to focus on organic. 

Elias Youssef: Yes. Um, this is one of those things where if, again, if you get the right partners, you'll, it will morph over time, right? And so, luckily having a blessing of, actually I have two partners.

One operated a $60 million company and one 50. [00:38:00] Um, when the time is right, they start to kind of start to drop new information showing, okay, now you've got this problem. So I know a lot of this stuff will happen over time, and I realize, let me create those problems first. Before worrying about it. So lemme get to that size and then figure out how to, how to crack through it.

But I ultimately do wanna write a check and buy a $10 million operation or a $20 million operation. So I do wanna scale that up. And so to me right now I am picking up the low hanging fruit, um, until I build something that is spitting out enough cash and is, we've kind of built our well-oiled machine where now we could just continue to scale it organically or through executing.

Um, and then from there. Yeah, I get, I mean, there's a million ways to do it. One of the things I've even been thinking about is maybe we grow to a certain scale where we get to 20, 30 million and then break into a new market. And instead of trying to take the $30 million company to a $60 million company, I would argue that that's almost probably harder to go from 30 to 60.

Um, then to maybe go up into a new market and take a $5 million contractor and [00:39:00] start blowing that up. And also the more you scale, you're actually taking on a bunch more overhead. Your margins start to shrink. You know, when you're running a $10 million operation, you could probably maintain a 20, 25% margin.

You can't really do that on 50 million. You have so much more overhead, you have so much more, um, expenses as well. And I actually saw an operator recently, they're doing $80 million from eight locations. They have. Eight different geographical locations at 10 million and they're able to maintain pretty nice margins doing that.

So again, I don't know if you agree or disagree with any of that stuff. Bottom line, I don't really know the answer. I'll figure it out in the future. But you know, just I. I don't know 

Jack Carr: you it, what will be the, the coolest thing is to go back in two years and listen, when you actually get there, you hit your 27 million, you start trying to go to second, third location.

You listen or you say, that was absolutely silly of me to even ever say that, and I'm just going for that 80. Um, and so that's the cool part about doing these things is you actually get to look back at some of the old [00:40:00] sayings and ideas that you had at the time and then. You know, rehash 'em. So, very cool.

Elias, if people wanna get ahold of you or if they want to, you know, follow your journey, how do they, they get ahold of you? 

Elias Youssef: Um, well you could, if I'm me on LinkedIn or you can go to our, our parent company's Frost and Flow, so you could look that up. I mean, we're actively buying in the Colorado market, so if anybody happens to wanna exit or something like that, but, um, look me up, Elias Yusef, I'm on LinkedIn.

I respond to all my messages. If you just send me a message or something like that, I'm happy to. Happy to have a conversation. 

Jack Carr: Perfect. That was Elias Yusef and we will link his LinkedIn in the description below. So go ahead and take a, take a look for him there. Leave us a five star review wherever you listen.

We're trying to grow this Jack Acquisitions thing out and so we'd love to hear your thoughts. Send us an email at info@ownedandoperated.com if you have any suggestions and we appreciate y'all. Thank you [00:41:00] much.