#251 He Built a $40M Home Service Business (Here’s How)

John sits down with Christian Rattin, CEO of Five Star Home Services, to unpack how he helped transform a single-family HVAC shop into a $40M+ multi-market powerhouse across Columbus, Dayton, and Cincinnati.

From growing through chaos to professionalizing with purpose, Christian shares Five Star’s evolution — blending faith, strategy, and servant leadership to build a home service company that gives back millions. They go deep on: the “profit on purpose” philosophy, scaling across markets without losing culture, leadership development for second-chance employees, and using systems like Scaling Up to sustain growth.

If you’re serious about building a multi-location business, leading through values, or turning revenue into real impact, this episode is a masterclass in intentional scaling.

💡 What You’ll Learn

• Profit on Purpose: How Five Star gives away 10% of revenue while driving sustainable profit.
• Scaling with Faith and Focus: Why doing business “on purpose” beats chasing fast exits.
• From $10M to $40M: Lessons from chaotic growth, leadership resets, and professionalizing ops.
• Leadership at Scale: Creating A-player development pipelines, manager roundtables, and clear career ladders.
• Multi-Market Playbook: The hard truths about central vs. localized leadership and GM accountability.
• Systems Thinking: Why Scaling Up won over EOS — and how to choose the right coach.

🎙️ Host

John Wilson 

🎙️ Guest

Christian Rattin – CEO, Five Star Home Services (Columbus, Dayton, Cincinnati)

📞 Sponsored by Quo — The Modern Business Phone for Service Pros

Missed calls mean missed business. Quo (formerly OpenPhone) is the AI-powered phone system that logs calls, creates summaries, and automates follow-ups — keeping your team connected and customers happy.?

🎁 Start your 7-day free trial and get 20% off your first six months


💼 Special Thanks to AppleTree Business Services!

One of the most common and expensive mistakes in acquisitions is not getting serious about accounting. Whether you’re buying a business or running one, you need the right financial partner. That’s why we’ve partnered with AppleTree Business Services — a one-stop shop fluent in tools like ServiceTitan and Housecall Pro.

👉 Listeners get a free tax & financial review, plus 10% off quality of earnings when buying a business.

💼 Shoutout to Avoca AI!

Looking to train your call center and improve technician performance? Avoca AI helps teams identify issues, improve call quality, and drive results from start to finish.

 🔗 Schedule a demo

🔗 More from Us

More Ways To Connect with O&O

• John's YouTube Channel
• Weekly Newsletter
• Owned and Operated

Leave a Review

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

📌 Disclaimer: Some links may include UTM parameters or affiliate relationships, meaning we may earn a commission if you make a purchase. Episodes may feature sponsors, but all opinions expressed are our own.

Chapters

• 0:00 Introduction and Key Business Insights
• 0:40 The Journey of Five Star Home Services
• 4:09 Growth Strategies and Leadership Development
• 36:33 The Power of Clarity in Leadership
• 41:56 Challenges and Strategies in Multi-Location Management

Transcript

OAO 251 Transcript

Christian Rattin: [00:00:00] What I believe is, is revenue is vanity, profit is sanity, and cash is king. It is a 

John Wilson: good 

Christian Rattin: thing. So yeah, I would love to say that we got to 40 million because like we did it on purpose, but like the reality is we got to 40 million because like a bunch of things aligned and we took advantage of opportunities that were presented to us.

What were the big moments that helped get you to where you are now? You have to be adaptable to work in this business. 'cause one day we're gonna go this way and the next day we might shift and go a completely different way. It's also like sometimes you have to do things on faith. 

John Wilson: Can you walk me through, uh, profit 

Christian Rattin: On 

John Wilson: purpose?

Christian Rattin: We would like to give away $15 million of our profit. Mm-hmm. For us to do that, we probably have to be like a six or $700 million company.

John Wilson: Welcome back to Owned and Operated. I'm your host, John Wilson. During the day I run a $30 million home service company in Akron, Cleveland. And for fun, I run a podcast talking about how to do the same thing. Today on the show, I have Christian Ratton from Five Star Home Services. Welcome to the show. Hey, what's up man?

This is great to have you here, dude. I've, I've been admiring your [00:01:00] LinkedIn content for, uh, years, so I'm like, yeah. I'm like, let's, let's do this. I'm excited to talk to the man himself. 

Christian Rattin: I feel like unless you're like a big guru in LinkedIn, it's like, feels like a little bit like throwing something into an empty cave, and you're not sure if anybody actually heard what you said, 

John Wilson: you know?

Yeah, I heard it. I heard it. Well, appreciate that. This is, uh, this is gonna be fun. Uh, you guys have had a heck of a story. Um, you now run a multi-market business with 200 or over 200 employees and plumbing, HVAC, and electrical, and I, I'm excited to unpack sort of the story there. So could you give us sort of like, how did Five Star start, when did it start?

And let's start unpacking this. 

Christian Rattin: Sure. So, you know, five Star started in 1972 actually as Eastland Heating and Cooling, um, on the east side of Columbus. It was quickly rebranded to Pickerington Heating and Cooling, which is a suburb Yeah. On the east side of Columbus. Uh, just a little better area. Um, and it was, it was ran just like that for about 45 years.

Uh, most [00:02:00] prototypical like. Mom and pop. It raised a family, it supported a community. Yeah. Um, and, uh, and, and, and did exactly what these businesses did through the eighties and the nineties. Um, and then in the, in the kind of 2000 tens, um, you know, through a crazy set of circumstances, two of the boys had left the business and gone off and done other things.

And then they both came back into the business as their dad was kind of getting ready to maybe start to think about retiring, but also at a time when the business was, was maybe kind of going through some struggles coming out of 2008, 2009 era. Um, and, uh, you know, again, a business that was built on.

Didn't have, uh, uh, any sort of credit lines, just used their suppliers as their, as their credit line really? And, and got to a point where it was like, you know, it got to September and there wasn't that much money in the bank, which is not a great place to be when you're just an HVAC business, right? And so that's when you're supposed to have the most money in the bank.

And so, um, and so the boys came in and started to kind of work on it and they kind of caught, um, around 2015, 2016, they kind of caught lightning in a bottle, um, with just a very aggressive growth strategy. And at the same time that they [00:03:00] were moving their marketing efforts and dollars away from the Yellow Pages and into digital, I think aligned with the time when the homeowner was switching that same time, right?

Yeah. And so they were able to capture, um, and they really became students of the Google algorithm. And really leveraged digital, um, ads and, and, and, uh, and being found locally here, um, as, as a, as a strategy. Uh, built that off of, uh, acquisitions, very small acquisitions as well as green Fielding, um, and took it to, you know, about a $10 million business with, you know, 50 ish employees or so.

Um, and that's when I met them. Um, and, uh, and, and then we, uh, we started to kind of scale and professionalize at the same time. So, um, uh, we, we had a crazy big year, uh, right around 22 into 23, where we added ServiceTitan. Um, bought two big companies, a plumbing electrical business, added about a hundred.

Well, I like to joke, we added 200 employees. We kept about a hundred [00:04:00] of them. And, uh, yeah, 

John Wilson: I've had, I've had years like that too, 

Christian Rattin: right? So you sometimes you just gotta hire a bunch of people and see what happens. Um. 

John Wilson: One of the tools I've personally seen make a huge difference for service business owners is Quo, formerly open phone.

'cause when you miss a call, you're not just missing a conversation, you're losing business quo is the modern business phone solution powered by AI that helps you stay responsive and connected it logs, calls, creates summaries, and automates next steps from drag and drop setup to AI powered call tags.

Every detail is designed to make your phone systems smarter, your customers happier, and your team more in sync. It's one of those tools that makes you wonder why you didn't already switch 90,000 businesses already have. Start your seven day free trial at the link below and get 20% off your first six months just for being a part of the owned and operated crew.

Whoa, no missed calls, no missed customers. 

Christian Rattin: And we went from about 20 million in sales to about 40 million in sales, um, and just had the most [00:05:00] chaotic 18 months where the business was doing great. My marriage, maybe not so much. Mm-hmm. Uh, but, uh, but we all survived it. And, um, and, and then really the last couple years has been a real focus on professionalizing the business and, and, and getting it to a place where we can really scale it to a, you know, to a national level even.

John Wilson: Can you, can you give me some, um, a little bit more of the years? I think I caught a few of 'em, but 

Christian Rattin: Yeah. I think 

John Wilson: 2015 is when the brothers came back in, right? Uh, 

Christian Rattin: yeah. So 2012 they really caught, they really started driving the business in 2015. Um, 2015 to 2018 was kind of them growing from like a million up to that 10 million mark.

Yeah. Um, uh, right around 2020, we were doing about 17 million in sales. Mm-hmm. Um, and then I joined the organization, um, and, uh. Between like right around 17 million and then that's when we scaled, um, up to the, and you know, these, I'm sure you can relate to this, like it all kind of blends together. Yeah. So, you know, you kind [00:06:00] of forget the years, but yeah, 21, 22, 23 were our big, big growth years.

Um, and, uh, we're, we expanded into new markets, um, and added, uh, different vertical offerings. 

John Wilson: Yeah. How has 24, 25 felt like those were the big growth years? 24, 20 five's been your words professionalizing, right? So, mm-hmm. I assume cleaning up after the big growth years, uh, probably focusing on like earnings or sort of, what's that been like?

Christian Rattin: So I think, I think for me personally, as I took the leadership role, I was looking at the landscape and, you know, that's, I believe my job is to like kinda look ahead and, and what I was seeing is we were, we were coming out of a COVID boom time. Yeah. Customers were treating their cash a little bit differently.

Um, banks were treating their money very differently. Mm-hmm. Um, and then also we had this political landscape that was very kind of in influx and I think people were really kind of waiting to see what was gonna happen in the election year. And so we really took that as a sign of, Hey, maybe this would be a great time for us to shore up, kind of make sure.

And what we figured out too is like we scaled up to, um, and we're on our way to 50 million [00:07:00] and we got on, I, I like to think of our business as like $10 million floors. Mm-hmm. And so like we got to the fifth floor and we looked down and we were like, oh no. Like we forgot to actually tie anything together in the fourth floor.

And so we actually felt like maybe the best thing to do was to kind of like. Go backwards a little bit. Mm-hmm. And kind of look at, hey, what's happening on the foundational levels of this business? And make sure that they're dialed in. And so less focused on the home service element of the business, and more focused on just the business element of the business.

We brought in a EOS type coach. Yep. Um, and, uh, and instead of focusing on going the, you know, the, the kind of, um, I don't wanna use a specific term or, or, or company name, but like, instead of going the, the route of consulting for home services, we went for business consulting. Mm. Um, and, uh, and, and just tried to find, you know, we just got, we just, you were just sharing like one of your rocks for this quarter, right?

Mm-hmm. So just kind of getting to that quarterly priorities, we call 'em 13 week races. Um, same kind of concept. Um, and, and really just 24 and [00:08:00] 25 has been about. A player development targeting, um, professional development within the organization. So finding those leaders that are sitting currently, maybe not in a leadership role or how do we bring leadership development to the folks?

'cause the majority of our, I'm sure you can appreciate this, the majority of our management team did not go to college. Right. I didn't go to college. Right. Um, you know, they, they, they were great at doing something in a van or they were great at being good on the phone or they were great at whatever they were great at.

And so they, we handed them more and they took more and more and they were that kind of driver, but maybe they had never learned how to properly sort their email, how to properly manage their day, how to make sure that they focused just as much time on fire preventing as they do on firefighting. Um, and so just trying to bring some of those leadership development opportunities into the organization.

John Wilson: Yeah, I think that's great. We, uh, I was, I was talking with my director of sales. It's a, it's a conversation that like sticks with me and I feel like this will resonate after what you just said. But we were, um, we were talking about exactly this [00:09:00] concept of like slowing down to speed up. And uh, like our big, our big, uh, hairy goal is a hundred million by 2030.

And he's like, look, John, we can do two things here. Like we can go get a hundred, like I can get you to a hundred million. Like we can go do that. I don't know what condition we would be in when we get there. Like, we might go to a hundred million and back down to 50 and like the industry has seen some of those stories just in the past 18 months of just like, yeah, they got there.

But then what, like, was it sustainable? Was the platform good? Was the training good? Was this repeatable? Uh, no. Like turns out, no. And then, uh, yeah. Uh, and, and that really stuck with me. So it really, like, it did change how we thought a lot about the last year for us has been, um. Deemphasizing growth. I think we're up like 20%, but deemphasizing growth and really like, Hey, can we even onboard people successfully?

Like really, like can we [00:10:00] like, and the answer was no. Yeah. Yeah. It's, it's kind of funny. 

Christian Rattin: So I would, I would say like, you know, there was a. There was a period of time where people were really focused on this idea of building a great organization. Mm-hmm. That could last. And I think our, the types of businesses we build are traditionally community based.

Um, I liken them to like community pharmacies. Mm. Um, and, um, there's this kind of new drive in our industry right now. It's build it fast, sell it fast. Um, I, I'm not saying that's right or wrong. I, I'm just asking the question as like, why is that the answer to all of our problems other than one single person getting super wealthy or the promise of getting super wealthy?

Um, you know. Whatever happened to like build a great company and then let it continue to serve a community for years to come. And I personally believe that there are two numbers that people in our industry love to talk about more than anything top line revenue and the number of customers I have in my database.

Mm-hmm. I like to challenge both of those numbers because what I believe is, is revenue is vanity. Uh, profit is sanity and cash [00:11:00] is king. Um, and then on the other side it's like, okay, tell me how many customers you have in your database. Now tell me how many of those customers could I send a text message to today where you wouldn't be freaked out that they were gonna hit that unsubscribe button.

And so I like to believe like we had a hundred thousand customers in our database and I told our marketing team, keep sending them text messages until you get to the point where you have the right number of customers in the database. And if we lose 50,000 of them, at least we know those 50,000 are engaged.

Mm-hmm. And they're the fanatics that we're looking for who are gonna stick with us. Mm-hmm. You know, and so we try to challenge our data all the time to say, is it real or are we just making ourselves feel better? 

John Wilson: Yeah. Yeah. Yeah. I, I, I think that, I think that tracks we were, were you guys focusing on earnings during those high growth years or just in the past, like 18 months we've honed in 'cause that's been our story.

Christian Rattin: So yeah. I'd say, I'd say when I, before I got here, um, I'm the first person, non-family member to run the business. Okay. Um, and the owners previ or the [00:12:00] owners, uh, we still, some of them are still a part of the business. Um. They, you know, they'll tell you like they only looked at two numbers, um, top line revenue and how much money was in the bank.

Mm-hmm. That was, and that was it. Like there was, they had, what else do you need to know? No sense as to Exactly. Yeah. Just run it like that. Yeah. Don't worry about it. So, um, so no. And so, yes, in the last 18 to 24 months, our focus has been on how do we get to a p and l? How do we get to a p and l? We can share to the management team, how do we get to a gross margin number that we can share in a short amount of time to where the managers can actually make effective decisions around that.

And also educating them around. How gross margin works and how, what are the levers they can pull to impact it? And then how do we pay them accordingly so that they're impacting it? And how do we align pay across the organization so that everybody is walking or rowing in the same direction? Um, and, uh, and, and we try as best we can to be hyper transparent.

And, you know, there's times when it feels like maybe we share too much, and there's times when people would tell you, we don't share enough. And it's [00:13:00] just, you're never gonna find that right balance. But we, you know, we, we just try to overshare as much as possible and, and see, you know, what, what, uh, what the team thinks.

And then we keep moving. 

John Wilson: Yeah, I mean, we, I would say, uh, we're identical. The, the area that, like, I'm trying to imagine like yours is more challenging. So like we take the same philosophy, that's how we run it as well. You have more locations and like that sounds more complicated because there's just more going on.

So how do you think about that level of transparency and leadership training across like three market, three locations? Mm-hmm. Or how many locations, physical locations? 

Christian Rattin: Three. Three. Three primary locations. Okay. We have some satellite locations for like part pickup, but primarily three locations. You know what it is, um, is, uh.

We, we were partnered with a consulting group, um, for about a year that was an industry based consulting group. And they were great. Um, they brought some incredible insights into the business. But after the third quarter of, [00:14:00] of working with them, what, what stuck out to me was less about the value they were bringing and the suggestions they were making.

And it was more about that when they got on site for their one or two day visit, everybody stopped working in or working in the business because we knew we were paying them to be there. So we maximized the time that we had with them because we were paying real money for that. Yeah. And so what I figured out was it's more about giving us permission to stop working in the business and actually work on the business than it is about necessarily the consultant or the person.

'cause really most of the ideas were coming from our team. It was just we needed that permission to, to stop and go away from the business for a day or two or whatever. So the way we try to do it is, um. Is we, we force ourselves to have a monthly manager meeting as inconvenience as it is to pull 30 people out of the business.

Mm-hmm. Eight hours every single month. And we focus on learning in the morning. We try to pass, it's all about passing wisdom to the [00:15:00] leadership team, to the management team from the executive level down. And then we solve a problem in the afternoon as a group. And what has been incredible through that process is that.

There have been times where I've been sitting in this room with these 30 people and I've watched 30 people all have a light bulb moment mm-hmm. At the exact same time. And everybody goes, oh my gosh, there's the solution right there. And because it, they were all a part of the solution, they were all bought into the solution and were able to get traction with it that much better.

And so it was, it was difficult the first three or four months, it, it was, should we keep doing this, the, the next three or four months? And now it's like everybody looks forward to it. It's energetic people. We're getting new engagement from different levels of the organization. Um, and typically what ends up happening is we can't solve every problem in that month.

So what ends up happening is we create like a group of people who are passionate about that. They go away for that next month and then they come back and usually make a presentation on their [00:16:00] suggestions for the solution. And we usually kind of close the loop. So it's been a really impactful thing.

We're we're, um, coming up on our full first year of staying consistent every single month. 

John Wilson: Yeah. That's amazing. Uh, I'm just gonna ask some tactical stuff about that. 'cause I'm gonna basically rip and do that immediately. Are you also reviewing, like, you know, you talked about the monthly financial trend, like is that on that day as well?

Like, Hey, here's what happened, type. 

Christian Rattin: We just added that in actually last month. Okay. Where each department now reports out on a few specific KPIs mm-hmm. That we're looking for. And they're either reporting on. Um, why, how it went and they beat it, or if they didn't beat it, everybody's allowed to ask like, why, and maybe poke some holes in it a little bit.

Yeah. And if you're kind of, if you get up and your team's like, Hey, my average ticket is here. My, you know, my conversion rate is here and my net billable efficiency is here, and you're hitting every metric. It's like a, okay, let's move the needle a little bit and see if we can't make this a little more challenging for you.

B cool, [00:17:00] good enough. Sit down. Let's get somebody up there who's maybe not hitting their targets, and let's put the smartest people in the room on that problem and see if we can't help. 

John Wilson: Yeah. Yeah. I was, uh, challenged by this recently. Uh, Matt PDA from Call Dad. Did you get, have you talked with him before?

Yeah. Mm-hmm. He's, he's awesome. Um, but I, I was in Charleston and we were spending some time together and he does, I don't know if he does this, but he, he does a, um. He intentionally does leadership retreats at the, at the worst times like it, and it's very like intentional. Like, okay, it's the middle of July, the entire leadership team's gonna leave for a week.

And it's like, it's on purpose. And the idea is you should be running your department in such a way that you could leave during peak season and your team thrive, which is good. Like, right, like I can't even argue with that. Like that's a good mindset and, uh, I, it was the first time I'd really like, thought about like, [00:18:00] be sort of being intentionally like terrible, uh, but.

This reminds me a little bit of this. 'cause I think, you know, the first thing that crossed my mind, which is probably all the more reason we should be doing this, is, man, that sounds really hard to pull those like managers out. So like, immediately I was like, hold on, that means I should be doing this.

Because if it's that hard to do it, then we probably need it more than, uh, than I think we do. 

Christian Rattin: Well, and what you see too is like, um, they're allowed to have their laptops out in the morning, like before we get started. But at some point I get up and I say, all right, put your laptops away. And now listen, we say, listen, if you got something you gotta take care of, just quietly step out and take the call.

But what I've noticed is, is that if we see one person consistently stepping out throughout the day, it's like I can go to their GM and I can say, Hey, you might wanna circle up. 'cause why is that one guy having, or that person having to step out so frequently, what's broken in their department? Do we not have the right field supervisors in place?

Do those field [00:19:00] supervisors not feel like they have the right ability to make decisions without this person? Mm-hmm. Um, and uh, you know, that's been one of the challenges as we've grown is. You, you get a leadership pers you get a person in a leadership role and you, you know, you, they're doing a good job and so you kind of leave them there.

And then, and then it's only after they've left that you figure out how much of a dumpster fire mm-hmm. Actually was being hidden on that side of the world or what we've had not, I wouldn't say a lot of it, it's happened a few times, is you have that manager who will tell you everything you want to hear in the room, and as soon as they step outta the room and get in front of their team, it's a completely different message that's being shared.

And so then you get this, this thing between the leadership and the frontline staff where the, the frontline staff's going, well, my manager doesn't agree with anything you guys are doing and but behind the scenes I'm being told they love everything we're doing. Yeah. And that has caused some, some stripes.

Yeah. And we've had some challenges over that. Um, but when, when, so. Often that type of behavior can actually demonstrate what that [00:20:00] is. You know, is that, is that cult of personality person building a little department that's subset mm-hmm. From Five Star and takes on its own, um, set of core values separate from ours, you know, and we want, we want our leadership team to be so bought into our core values that their team automatically picks all that up.

John Wilson: Yeah. Yeah. That, that makes sense. When you think about, um, well you got to 40 without this, 'cause like, my question was gonna be, do you think this is the difference maker? Uh, 'cause I think this is the long-term difference maker, right? That we're, we'll hit 30 this year, and the biggest difference from 20 to 30 to me has been.

The investment into leadership, like hands down. Mm-hmm. It's been a wild difference how, how much more intentional we have to be about it, but also how much our leaders move the needle versus when we were a smaller organization. 

Christian Rattin: So yeah, I would love to say that we got to 40 million because like we did it on purpose, but like the reality is we got to 40 million because like a bunch of things aligned and, and we took [00:21:00] advantage of opportunities that were presented to us.

I think the next jump for us though has to be a little bit more intentional. Yeah, of course. The economy has to stay on our side. It always helps when the weather gets on our side. It does help. We, um, you know, we're weather enhanced. We try not to be weather dependent. Um, but I do think that from a growth standpoint.

What, what matters in my opinion, is alignment from the top down, buy-in, hiring, and onboarding. So we have a really, um, intense onboarding process. It's a five day onboarding process and the goal of it, we stand up in front of the room every time we do it, um, which is usually about every two weeks. And we say the goal of this onboarding process is to either weed you out or create a fanatic.

Speaker 3: Mm-hmm. 

Christian Rattin: And the first time we did it, um, we had a guy come to us, 'cause we have a graduation ceremony at the end. And he came and he said, I can't do the graduation. And we thought like, oh, is, are you, is it like an anxiety thing is you get up in front of a room full of people? He's like, no, I, I don't fit here.

And I was like, it [00:22:00] worked. Hell yeah, it worked. Yeah. Because if, if we hadn't done that, that guy would've worked here for 90. Yeah. He was gonna be an installer. Yeah. He'd been here 90 days before he even figured out who our culture was. Mm-hmm. Then he would've poisoned it for 90 days until we figured it out.

Mm-hmm. If we were lucky, we might've got him out in six months. He could've been here for a year before we even realized how toxic he c he was to this organization. And so, um, hiring and then every quarter we review and rate every single employee on a scale. Um, and it's to target a player, um, development.

We have a goal of having 37% of all staff be a players. Um, we aren't there. We're at 20, well, we just finished it yesterday actually, for, um, last quarter we had a, a manager who was out on paternity leave, so we couldn't do his until yesterday. And so, um, he, uh, we ended up at 26 point a 5% A players. Um, but what was really encouraging is our C player count went down and we're almost to zero.

Yeah. And our a potential grew. So, so we're [00:23:00] moving people in the right direction. Um, and you don't want, you actually can't have a, a, a company full of a players be a nightmare because a players are annoying to a lot of people. So you have to have that right balance of like, you need those core employees who just show up, punch a clock, and go home.

Those are great employees. I actually think you need about 60 to 65% of your business to just be core. Yeah. Um, but you still need those drivers who, who push the business forward. Yeah. 

John Wilson: Yeah. That's interesting. What, what do you think growth looks like next for you guys? Like you're at three locations? Uh.

What, what was the size per location? Or do you guys think about it like that? 'cause it's kind of transient. Mm-hmm. 

Christian Rattin: Yeah. So Columbus is a little bigger than Dayton. Um, and then Cincinnati is the new emerging market. Okay. We, we think, we think, excuse me. Yeah. So Cincinnati we think is to be the, could be as big as Columbus.

Um, Columbus owns about 65% of the total market share inside of our organization, but then HVAC install still owns a, a large portion. So our next growth [00:24:00] strategy is not really developing HVAC much more than it is today. Um, small, you know, three to 5% year over year growth. Um, we feel like we have a pretty decent amount of market share.

We also compete in one of the hardest markets. Yeah. Uh, Columbus, Ohio is a, is a fantastic market. We have incredible competitors in this market. Yeah. We have three or four massive companies and very little pe um, money here yet. So it's like this really kind of like grindy. You know, willing to do the hard things, kind of group of people that compete against us every single day, which I, I love, it makes us better.

Dayton is, is just an interesting area. Um, I just don't know how much you can squeeze outta that market. It's a, it's, it's. It's kind of not growing like Columbus is. Yeah. And then Cincinnati again has a huge opportunity. The big opportunity we see is on the plumbing side. Um, we bought a $3 million plumbing company two and a half years ago this year, our plumbing division will do about 15 million in sales.

Um, and so we think that plumbing can be as big as HVAC, so, um. We really aren't looking to [00:25:00] expand beyond Columbus State, north Cincinnati, right This second, 2026 is about establishing Cincinnati and really driving a lot of our effort towards the plumbing division. So you can go to any single person in this organization and ask them what's the best call on the dispatch board for hvac?

And everybody will tell you, right? It's a 15-year-old down system on a hot or cold day. We don't have that same buy-in from the plumbing side yet. We don't know. We don't have that thing of like, what's the best call on the plumbing board? Everybody's like some people, oh, water heater or. Leaky water.

Mm-hmm. Or whatever, you know what I mean? Like, oh, a drain. That's two drains that are clogged with poop coming outta one of 'em. It's like we just don't have alignment yet. And I think it's partly because plumbing is a little bit of a different animal, but I also think it's partly we just haven't fully established what that is for us yet, um, and what we're gonna chase.

And so that is a huge opportunity for us. Um, and then after that, like, um, we actually are looking at, um, some partnership models. Um, I'm a big believer that I would like five star to. To, um, [00:26:00] to offer everything, uh, to the homeowner inside of the fence and be the co the company that installed the fence. Um, and so why can't a group of people go and do the mulching and drop the ac tune up, coupon off mm-hmm At the same time, like, why can't we offer a landscaping and pest control?

And once we have this customer and they trust us, why wouldn't they call us for their other services? And so, but I don't necessarily want us to own or buy all those companies. And I also love the idea of helping other small home service companies to scale. And so what if there was just a partnership opportunity with Five Star, where you could join the Five Star group and, you know, get all the shared services, but retain ownership or a large percentage of ownership?

So. This is still something we're talking about internally, and I, my team would probably be mad at me for even sharing it, but I'm a big believer that like knowing what we do and doing what we do are two very different things. Mm-hmm. Um, and so, uh, I don't mind talking about what I Yeah, I think that would be 

John Wilson: complicated to pull off.

So I don't think there's much risk in talking about it. Uh, and [00:27:00] I think, um, there's, I can think of a couple examples of people that milestone maybe, um, what's the place down in Nashville? They, they basically do this. It's the governor's company. I don't, it's not Hiller, maybe does Hiller, but yeah, they, I think, does Hiller do that?

Who knows? I 

Christian Rattin: don't think they do the, I'm so bad at knowing our industry. Like, so I don't go to any of the events. Yeah. I like don't really leave five star. And that's why like you asked me like, do you know this person? I don't usually know anybody. And like I just, we, I just stay so focused on us. Yeah. Um, and, uh, I love, like, I read and listen to all the podcasts and I, you know, I try to stay up on the industry.

Um, but when at the end of the day, like I just, I get kind of obsessive about five stars. 

John Wilson: Yeah. No, I think that's great. That sounds like you're doing the right thing. So most of your growth over the next couple years, or at least year sounds like it's gonna be really like driving. Density into your existing locations?

Uh, adding plumbing, do you guys are doing electric, so that's already a big part of, okay. 

Christian Rattin: It's not, I wouldn't say [00:28:00] it's a big part. We finally found the right person to run that business unit. We had the wrong person in the seat for a while, and that really just hampered growth. Um, this guy's a driver.

Mm-hmm. And what I loved about him was when we announced him in front of the leadership team and the management team and I said what percentage each vertical was gonna own over the next couple years. He was like, nah, screw that. We're gonna be the number one. And I was like, that's what I'm looking for.

Mm-hmm. Like, um, you know, and so he's excited to, to develop it. I think electrical has a huge, really interesting opportunity. I just don't think anybody's quite captured it. And it's like. We think of HVAC as like that one call close, right? You go in the home. Yeah. The customer has a demand need and you can solve that demand need.

So it's a bit of a shift for some of my people. Like when you go and talk about a generator, it's, yeah, maybe you, you get lucky, but like that's something like the homeowner's probably thinking about. Yeah. They gotta talk about it. It's more of like a long term. You got put people in your pipeline and let 'em work their way down through.

And so, um, but I see generators and car chargers mm-hmm. And all these other things as such a [00:29:00] massive opportunity. Um, we just didn't have the right person driving it. So I'm really excited to see where electrical gets to in the next couple of years. 

John Wilson: Yeah. Electrical, uh, it's a, it is a good thing. Um. Mm-hmm.

So we're, yeah, we're three trade and, uh, electrical. I think we'll do six and a half or something this year. Nice. And it really, like, it was 0 24 months ago so it can become something pretty quick. And yeah, it, it's been a great, it's a great. Business. So I'm, I'm sure you'll find a bunch of success with it.

And I think the, the, you do have a lot of com competition in, um, well, both Columbus and Cincinnati. But Cincinnati seems more like private equity, like of pe a lot of pe whereas Columbus is like just some really great operators. Uh, yeah. You you have some really great operators down there. Yeah. I compete with them every single day.

Yeah, yeah, yeah. Both for talent and customers. Yes. Yeah. Yeah. No, there's, Columbus is a, is a funny market. I would love to talk a little bit about, like, we, we've been sort of [00:30:00] talking about people, we've been talking a lot about leadership. Uh, I wanna talk about, you know, building this team to scale. And this is gonna be coming from like me.

Uh, I'm, you're a couple steps ahead of me, like, how do I do this? So that's gonna be the mm-hmm. The framework that I'm coming from here, you were able to reference pretty quickly. Uh, and I think it's a good, like, uh, canary in the coal mine of, hey, 37, we want 37% of our staff to be a players. So I don't know how many, how, what percentage of my staff I wanna be a players.

And even if I did, I don't know that I would have, uh, like top of mind access to the data. So like canary in the coal mine, you are running a good people business. Right. Like that one little insight. Great. We're we're, uh, more than a few steps ahead of John. So how, like, how did you begin the process of really professionalizing your employee retention, your onboarding?

I know this is like years of work, I'm gonna ask you to distill into like five minutes. Mm-hmm. But could you give us the where it began and, and like [00:31:00] what were the big moments that helped get you to where you are now? 

Christian Rattin: Yeah. I'd say, um, again, we brought in a outside consulting group at one point, that's an industry based consulting group.

Um, I, you know, it's BDR R is who we work with. Yeah. And, um, and they were incredible at helping us really professionalize on the home services side of the business. Mm-hmm. Um, and then after that, um, it was bringing in a scaling up coach. Yeah. And so we actually interviewed, um, EOS coaches on both sides of eeo.

So EOS was an, um, is a, is an idea that was formed by two gentlemen. One went off and started, uh, traction and the other started scaling up. Yeah. And so we looked at both and the only reason we went with a scaling up. Over traction was because of the relationship we had with the coach. And we felt like that relationship was critical to our business.

Scaling up also for me is just, it, it, it allows for a little bit more freedom. Uh, traction. You fit inside their box, you will do it their way. Yeah. Scaling up is a little, it's a box, but the box has stretch. Has some stretch to it. Yeah. [00:32:00] And that worked better for us 'cause that's how I operate and I need that kind of flexibility.

Um, we joke everything at Five Star is five, so we have five core values. It's like we have five levels of technician, everything is five. And so, um, you know, but we joke that our sixth core value is adaptability. You have to be adaptable to work in this business. 'cause one day we're gonna go this way, and the next day we might shift and go a completely different way.

Um, I would say scaling up has really been a huge boon to our business in that. A, it forced us to stop for a minute. The leadership team gets together quarterly and we do what's called an OPSP one page. Mm-hmm. Strategic plan where you write down for the quarter for the, well, it starts with annually, what's the goal?

Revenue, cash, profit, uh, how much debt do you willing to carry? You have to reestablish all your core values. You have to reestablish your mission statement. You have to have, um, one thing that we have is called a catalytic mechanism. Um, a catalytic mechanism is like the Domino's 30 minutes, or it's free.

You have to have, so what's your promise to the customer? And then what [00:33:00] holds you accountable to the promise? So for us, it's um, if you call us by 7:00 PM today with a demand service call, we guarantee that we'll be there today. If we're not there today, it's free tomorrow. Um, and so that's our catalytic mess mechanism.

Now, we expect a failure rate. We have a percentage failure rate that we're willing to live with, but when it gets beyond that, it starts to ask. We start to ask the question, are we putting marketing dollars behind leads? We can't run. Are we not booking the right call? Is the dispatcher not moving the calls off the board fast enough to make room for the demand calls that we should have?

Do we not anticipate the weather inflection or whatever point we knew was gonna happen that was gonna tip the scales in our favor, you know, from a, uh, from a calls perspective? And so all of that work that we did over the last two years, um, has led us to really having, uh, a singular focus. I'm a big believer in a North star.

You have to have a North star. Everybody has one. Whether they define it or not, you have it. And what that North star is defines how you walk the path, right? So, um, you are [00:34:00] being informed by the goal. And so for us, the goal is, uh, so you have A-B-H-A-G of getting to a hundred million by 2030. We have a b, a G of, um, both giving away but also inspiring the giving through our, our profit on purpose model of $25 million.

And we estimate now BHAs don't necessarily have to have a time limit to them. Um, our BAG, we haven't put a time limit to it, but we would like to give away $15 million of our profit. Mm-hmm. For us to do that, we probably have to be like a six or $700 million company. Mm-hmm. So when will that happen? I don't know.

We didn't put a time to it, but that's what we walk towards is that goal of both making as much money as we can so we can give it back, but also inspiring other businesses to give back money as well. 

Speaker 4: 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 [00:35:00] AppleTree Business Services. They are a one stop shop that'll help you get through the due diligence process, but 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. 

John Wilson: Okay. I think as, as I'm transitioning from, I wanna dive into the scaling up a little bit deeper. Yeah. We did choose e os, uh, first. Uh, I don't, mm-hmm. I'm sure I knew scaling up was an option, but it seemed like it was an option for larger organizations.

Mm-hmm. Uh, maybe yes, maybe no. Uh, we're, [00:36:00] they're remarkably similar to me. It's all about the coaches to me. They're not sim like they're similar in that they're a business process, but as I am, I, I think the rigidity of EOS, like you're absolutely right. It's rigid and in all the wrong ways. And we're, we're, yeah.

And so we're like, you know, we're, we're sort of coming up against it here. And, um, I, I sit down with a friend of mine, uh, three months ago, and, and I, I think I asked him like what his plan was next year. You know, I, I don't even remember what the, what the catalyst question was. And he just like sends over this PowerPoint and this PowerPoint in like a total of 6 cent.

And I've been on EOS for like five years, right? So like, we're adherence to all the stuff. And, uh, in a total of six sentence, he was, he was more able to, I like lay out his plan. For the next couple years than I could with like pages and like a day or two of meetings, right? Like it was just so concise and so clear.

And I looked [00:37:00] at that and my response was, uh, this has to be so amazing for your leadership team that they have this level of clarity into what you're doing over the next 24 months. Like, I cannot give my leadership team the level of clarity that you just gave me in 10 seconds. Like, I just, I can't do that.

And, uh, I was like, wait, walk me through this. And he is like, oh yeah, I was scaling up. So, so I was like, okay, got it. So, so we start looking a little bit deeper into it. Um, it, it does seem like the right, it does seem just like the right answer, but the, the coaching quality Yeah. Probably matters a lot. So we're getting ready to interview coaches.

What do you, how do you think I should go about this? 

Christian Rattin: So, I think one, it's, it's gotta be kind of like I. Okay. It's two. It's a twofold thing for me. So one, you gotta get along with them, obviously. That's, you have to have that. Like, it's like dating you. You gotta have some spark there a little bit, you know?

Mm-hmm. But what I actually look for in a scaling up coach is somebody who's actually not like me. So [00:38:00] I'm, I'm a visionary, like, if that doesn't come through, um, I love talking about this business. I love thinking about this business. I love creating ideas for this business. So a scaling up coach who's a visionary is probably not gonna do great for us because that's, that's too much, that's too much vision.

Mm-hmm. You know, I like scaling up co. My scaling up coach is like a, he's so quiet and like practical and like, when we start getting off track, he's the kind of guy who'll be like, Hey guys, uh, I love this conversation, but like, let's bring it back to the topic. Mm-hmm. And that's what we need. 'cause my mind fires off in fireworks, you know, it's just like, shoots off any which direction.

And, um, and so for me it was about finding a person who, um. Who, who kind of matched my energy. But on the opposite side, if you've ever read Rocket Fuel, right? Mm-hmm. It's like visionary and integrator. It's that same concept. And then, um, the other thing that I loved about, that I love about our scaling up coach, he's extremely humble.

Um, he aligns with us from a, from a core values perspective, and [00:39:00] we interviewed some other coaches and they came in with like this like, um, not humble attitude. This kind of like, I wrote three books and look how great I am. And I was like, yeah, that, that's not gonna fit with who we are. Mm-hmm. Like, that's not who we're a one team, one goal.

Everybody matters kind of company. Nobody's, you know, like I intentionally want my team out in front. Um, we took the stance when we kind of did like a soft rebrand last year. Um, we, we did a bunch of market research. We figured out that what companies in our space love talking about more than anything is themselves.

Yeah. And so how do we flip that on its head? And so we always make sure that there's a homeowner in every photo. You know, it's a little thing, but it's like, we wanna make sure people know we're customer first. And so we needed, we needed somebody who fit our core values. I would say we went through four or five interviews, um, of coaches, and it was a willingness to say, I'm not gonna finish this process until I find the right person.

Mm-hmm. I'm not just gonna sign up with somebody just because, like, it's more important that we find the right fit. [00:40:00] 

John Wilson: I don't think we've talked, uh, not you and I, but on this show very often about like, external coaching. So I'm just gonna ask a couple tactical questions about that relationship. Uh, how often do you meet?

What do the meetings look like? Are they sitting in the quarterlies? Uh, like can you walk me through that? 

Christian Rattin: Yeah, so I'm a big believer that, um, consultants and any type of coaching it has always is gonna have diminishing return because they're gonna become too familiar with the business at some point and they're too much like an employee at some point.

So at the front end of this, I met with him personally by myself once a week. Um, we do a, so we do an annual two day offsite. We do a quarterly, one day offsite, and we do a monthly manager meeting. He's in every single one of those meetings. For the first six months, he and I met by ourselves, and then after six for every week.

Then after six months, it went to every two weeks, and then it went to every month. And now like I might see him, I might catch up with him for 15 minutes before or after a meeting, but we don't, he and I no longer have formal meetings anymore. And [00:41:00] then next year we will diminish his interaction even more within the organization where, and he knows, like, this was a two year deal and we're, we won't continue with him after the second year.

Not a personal thing. Just I, I know at some point he's gonna become too familiar with us mm-hmm. And that we are gonna need new life, new blood, new people looking at our problems with a new, uh, set of eyes. Um, but he is involved in every single, uh, and so the, the weekly meeting we do is probably similar to what you guys do with your, um, L tens.

Um, it's the same concept. Yeah. It's a 90 minute meeting. We're looking at where's everybody on their 13 week race? And if you're good, you don't have to do anything. You just let us know you're good. And then there's some other things that we've added into the agenda that are important to us. Like we review a scorecard and a dashboard that we look at for our own internal, you know, KPIs that we've decided are, are what are gonna drive our business, both on a leading and lagging indicator.

Speaker 3: Mm-hmm. 

John Wilson: That's great. That's really helpful. Can you, uh, we're about to go multi-location. Uh, in [00:42:00] like 30 days, 40 days. We're excited. We're nervous. We ran, uh, we ran multi-location in 2021. So our, our growth story sounded a little bit like what Five Stars was. We acquired a bunch of companies. Um, we grew organically, but in 2021 we bought three companies and we basically tripled that year.

And we ran four locations for, um, like two years. It was a very messy four locations. 'cause it was like mm-hmm. Bought businesses, so like bought cultures, bought customers, right. Bought managers, bought techs. It was messy. It was very messy. Yep. Uh, so I think we have like these sort of war wounds from something that probably won't be as messy again this time just because Sure.

Most of the problems that we had back then running multi-location were like from the fact that they were acquired small businesses, uh. Yeah. When you, you have three now. Can you walk me through like [00:43:00] early stages of launching that second or third? Like bought mm-hmm. Or, or green fielded, like what were the challenges?

How'd you overcome them? 

Christian Rattin: Yeah. I'd say the number one challenge that we faced was the decision back and forth of how do, do you centralize leadership or do you That's a complicated decision. It's, it's a lot. We have tried it both ways. Where, where did you land? Um, complete mar in market leadership only.

John Wilson: Yeah. That, that feels like the correct but harder answer 

Christian Rattin: and to the point where I'm like, I'm like, uh, we're probably. One year away from, I would love to pull the corporate functionality away from all of the actual in-market locations. Yeah. And the example I always give is like, so Wendy's corporate is in Columbus, Ohio.

No. Wendy's corporate employee shows up at a restaurant ever unless they're doing a visit. You know what I mean? Mm-hmm. It's like the CFO doesn't have an office in the back of the Wendy's off [00:44:00] of, you know, whatever boulevard, you know? And so just by my leadership team having a presence in the Columbus market, it changes the dynamic of the Columbus market.

And it also changes the annexed now Dayton market and how they feel about Columbus because, and, and, and so I'm a big believer that everybody needs to have something to fight against. It's hu Okay, let me back up a step. I'm a big believer in you can't fight human nature. Yeah. And so you might as well lean into human nature.

And one of my, um, favorite books is, um, I. Art of War by Sun, Sue. Mm-hmm. And so I'm like, okay, we gotta give these people an enemy. I want their enemy to be the C to be corporate, not to be the markets. I want them to compete against the market as a team, against corporate. And so I want to actually even take corporate away, but that's getting a little further down the line than you asked.

I'm a, so we made the mistake of trying to have one install manager over both markets, one service manager over both. Mm-hmm. And then put like a field supervisor in the other market. It just never works. It's just like what you talked about. So you buy a business [00:45:00] and um, and you think, oh, well our culture's really good.

I figured out after we bought a business, it's not the better culture. It's the stronger culture. Even if the stronger culture is worse Yeah. That will eat the other culture, right. Every single time. And so, um, what we found is whichever leader was stronger and whichever market they resided in, that was where the, the market succeeded.

And then the other market would fail. And so we have gone to a GM model. The GM is held accountable to their market fully. They have co total control over their market, but they, and they have an ability to make a lot of money based off of that or not. Um, and then each of their managers also is held accountable to the gross margin of their department, um, which they have the ability to make a lot of money off that.

Or not if they're not good at managing overtime or, um, labor, or making sure their guys don't leave sheets faster and use the app to order their breakfast sandwich or whatever little thing you have to do to keep these guys moving. Mm-hmm. Um, and so I would highly encourage, uh, you know, uh, [00:46:00] um, a centralized each individual market.

And then it also now kind of forms the leadership team to where you can bring the GMs together. And when one GM is thriving in one area, maybe their retention rate is 97% over the course of a 12 month period where the other one is at 60%. We can start to share some information and if they have a healthy respect for each other, it can be a really beautiful thing to watch.

John Wilson: Who, who do the GMs report to? Like, do they report direct to you? Do they report to a, like a COO or how, how does that work? 

Christian Rattin: Yeah, so in a perfect world, they report to the COO. Um, right now we're in a transitionary period where my COO is acting as a gm. Mm-hmm. But, um, but so he reports to me. But, um, but generally, yes.

John Wilson: When you had the g like the GM in the largest, uh, Columbus, is that where he's currently GM ing? 

Christian Rattin: Mm-hmm. Oh, no, no. We have a GM in Columbus and he's in our Dayton market. 

John Wilson: Okay. So the GM for Columbus, were they promoted or hired? [00:47:00] 

Christian Rattin: Kind of both. Um, he was hired at a lower position knowing that he was gonna have that position.

But yeah, I needed to bring him in and let him earn a little bit of respect. 'cause he's not from the industry. 

John Wilson: Okay. Yeah. 'cause that feels like, uh, that's one of the challenges that I see with our upcoming, like multi-location is, uh, my COO Brandon, um, like if we launched a second market, he's, he's basically GM ing and just like thinking through like, well how do you bring in a GM into that seat?

And, uh. It's a little complicated. 

Christian Rattin: Generally we have, um, a person targeted as the assistant GM so that anytime the GM is out of the market, that person is stepping into the role anytime. So these people are responsible to run, uh, standups every single day, and literally they stand up every single day with their team.

They're reporting back on KPIs and metrics. Mm-hmm. Um, and so anytime the GM is outta the market, whether it be [00:48:00] for a meeting or you know, they're on PTO or whatever, that assistant is taking that responsibility. I also push the GMs to again, um, you know, uh, we're looking at human nature, so you always, yeah.

Sometimes it's helpful to have a good cop, bad cop relationship, so, mm-hmm. Hey, don't always be the one to deliver the message. Let you, or you go in and be the guy to kind of shake the cake. We, I call it kicking buckets, but, um, yeah, you go in and kick the buckets, let him come back and soothe everybody after.

So he starts to establish that rapport. Um, but you know, we actually, so this morning I was having a multi-hour meeting with my leadership team and one of the things we talked about was bench strength and, um, and hiring for bench strength specifically. Um, and that's gonna be a big focus for us through the end of the year.

Um, you know, as we've started to get into this kind of cyclical nature of seeing how the business works over the course of a 12 month period of time, we're coming into that time period where a lot of companies are laying people off. We're trying to hire to get ready for the uptick in business. You know, that's gonna happen, you know, [00:49:00] as we leave QQ one into Q2 of next year.

And so how do we start building that bench strength across the service teams? How do we start targeting people? And so we have, uh, something called the shooting star. So the managers get together every month, uh, for one whole day. We've then got a targeted group of people that managers can, uh, nominate.

These are people who are either in a current like supervisory type role, field supervisor or CSR supervisor or warehouse supervisor who aren't in a traditional management. Track just yet, but are getting there. Or people who have either raised their hand to say they're interested in management or people we just think have leadership capability.

They get together once a month for four hours, for a half day, um, no leader. So there is no C level executives in that meeting except to stop by to give a presentation. And we do it on a rotation basis. So the CFO will come and talk about what is A CFO, what does that person do, you know, what does their team look like, et cetera.

But it's like [00:50:00] a 30 minute thing. The rest of the time is actually driven by managers and they're doing the same thing. They're passing wisdom down to that next level below. And we're trying to target people in that room to say, who's the next person in this room who's ready to take this step up? And it's also just an engagement.

These are traditionally a or a potential people. You have to keep these people engaged so that when the LinkedIn recruiter comes. Knocking. Mm-hmm. They are like, well, my company's investing in me in leadership development. I don't wanna just like, leave. So it's a, it's kind of a multi-pronged, uh, reason that we do it.

But one of the reasons is to target people that can take spots. 'cause people leave, right? It's that, yeah. They used to call it the hit by the bus thing. That's a little morbid. So now we call it the Powerball, right? If 10 people in your company joined together and won the Powerball next week, what would you do?

Right? Mm-hmm. And so we just want to have a group of people ready to take those spots 

John Wilson: on a tactical level with localized leadership. And you're close, right? So for people listening, Columbus Dayton is what, an [00:51:00] hour? 45 minutes? Something like that? Hour 15, yeah. Dayton Cincinnati's 45 minutes. Usually when I see businesses that are multi-location and close, one of the biggest benefits is like a shared pool of capacity.

Are you able to do that with localized leadership or do you have to like, keep it tight so that that local GM can get his bonus? 

Christian Rattin: So. Yes and no. Um, of course, if one market is popping off, we are not gonna restrict the ability to send our best, our, our most important assets, our people to that market.

Speaker 3: Mm-hmm. 

Christian Rattin: But the challenge that I would put back to the leadership team, if it's happening on a regular basis, is why aren't you staffed correctly to take on the additional calls that you're getting? And why? What, why weren't you prepared for that? Mm-hmm. Um, unless it's like some. Because again, we're not, we're not a restoration company.

We don't have a hurricane come through and I gotta get 30 guys working tomorrow. You know what I mean? Like, these are pretty common cyclical things. Like the rain is coming, our plumbers are getting busy, it's hot, the HVAC guys are [00:52:00] busy. Like, this isn't like rocket science. This is just why, why, why didn't you predict that?

Um, why weren't you looking ahead? You know, the GM shouldn't be thinking, I mean, they should be thinking about today, but they should be thinking about a week, 10 days from now. Um, and so why weren't you out 10 days and why didn't you predict that? And then work with your other co GM to say, Hey, let me do that.

And now we could do some, and then let accounting know that, hey, we're gonna divert some resources so that we're accounting that properly for everybody's, you know, um, uh, uh, you know, g mm-hmm. Um, p and l statements. But again, what I would come back to is like, why weren't you built for that and why weren't you planning for it?

John Wilson: Alright, so you'll do it, but it's not like a part of the core operating model. Like there's some businesses it, up until 

Christian Rattin: recently, but when we split the markets. It became that thing of like, when you have people getting paid on gross margin, you better be damn well sure. You can track where that stuff is going.

And so I, as much as humanly possible, would like to stay away from intercompany billing because it is just another level of [00:53:00] complexity that I don't think is necessarily that needed for us. Mm-hmm. Um, I think it could be depending on what your goals are in the next two to three years. And, um, and so for us it was just, that's, that's a decision we made, you know, internally, but, um, historically we would drive people any which way.

And it wasn't until we got our hands around the numbers and we got our hands around the p and l statement, and we could obviously see that when we sent a Columbus install crew to Dayton, we lost money every single time. Like we ne it was very rare that we would win because it's not their market. So when, when even as little as when they need to get gas, they don't know where to go.

Yeah. When they need to go to a supply house, they're not familiar. That's, it's, it's foreign territory. They don't move as fast, and now you gotta pay 'em to drive home. 

Speaker 3: Mm-hmm. 

Christian Rattin: And so it just, it was just, we saw that it wasn't benefiting us as much as you, it's like, oh, we got the revenue. It's like, yeah, but did you, was that even worth it?

John Wilson: We've had a few people on the show and their whole philosophy is like hour away, hour away, hour away. That's [00:54:00] how I define it anyways, where, hey, I'm gonna launch my next branch an hour away. I'm gonna feed capacity off that, you know, branch A to branch B. Branch B will build up. And then I'm gonna launch a branch an hour away from branch B and that will feed branch C.

And just sort of on and on and on. Hmm. It sounds like that's how you guys got from one to three, but now you're, you're, you're here to be efficient. 

Christian Rattin: Yeah, I'd say we got to, we got to Dayton because one of my owners moved to Dayton. Like, yeah, that's fine. It wasn't like, it wasn't like we thought, oh, let's go to Dayton.

Like, yeah. If we were thinking we would've gone to Cincinnati first, not Dayton. Um, it just worked out. Yeah. Cincinnati was the, me was the most logical place and for us. Mm-hmm. Um, I would actually argue that the next place we would consider to go would be, um, one of, you know, throw a dart, but you know, Nashville, Indianapolis, or Pittsburgh, you know?

Mm-hmm. Because I, I, well, yeah, that was my 

John Wilson: next question, like, if you're running these localized things, then there's no benefit to being an hour apart other than [00:55:00] like, you can visit 'em if you want to, but like, you probably shouldn't need to. 

Christian Rattin: I would, Dr I would pick my location based on population density and the ability Yeah.

And my ability to capture market share, not just because it's one hour for me. Right. If what if one hour for me is an area, I don't want to sell anything. Like we have, we have a partnership with, uh, with a big box store, and they ask me all the time to go to such, such a place. And I'm like, yeah, but there's no business there.

Why would I do that? It doesn't make any sense. Mm-hmm. Like, it's a depressed area of people who, you know, like, and there's already three people who've been doing business there for 40 years. Like, why would anybody have a reason to call me? As opposed to moving to like a metro market where customers are a little less loyal and you can capture it simply by being available when they need you.

John Wilson: Can you walk me through, uh, profit on purpose? You've said it a few times here, and I, I just wanna understand, uh, what, what you mean by that. 

Christian Rattin: Yeah, so Profit On Purpose is a really simple idea. It's something that the business has been doing for a long, long time, even from our founder, Howard Morris, all the way back, 1972.

Um, but Profit on Purpose was a way that we actually were able to kind of [00:56:00] trademark and, and, uh, and explain what it means. So Profit on Purpose is, um, we seek profit with a purpose where a profitable company, uh, profit's not a dirty word at Five Star. We talk about it all the time. Um, I think what separates us and what separates Profit on Purpose is what we do with that profit once we have it.

And so for us, what that looks like is. We are gonna talk about the same things that any other home service business in this country are talking about today, we're gonna talk about be more efficient, offer those accessories, get to your next job faster, less drive time to maximize that profitability so that we can give more money away.

So we're a Christian based company. We always say you don't have to be a Christian to work here, but we're not gonna shy away from it. Um, and we're also a company that believes in tithing. And so we give away 10% of every dollar that comes into five Star. So, um, in the last four years, that has equated to somewhere around like four to four and a half million dollars, um, which sounds great.

Um, and is, unless you're the guy responsible for the p and l, and then you're like, maybe we [00:57:00] could give away just like a little less money. Mm-hmm. But what we've found is, is that. It's the universal law, the more you give, the more you receive. And we've seen that like as we give money away, even at a time when it's inconvenient or even better said, like mostly when it's inconvenient for us, when cash is maybe not as strong as we would like it to be.

And we still say yes every time We are blessed with gifts back in ways that we can't explain. Mm-hmm. Um, and so, uh, profit on purpose is something we talk about. It's something we seek. Um, and, uh, and, and, and the majority of the giving for us is, uh, in the recovery community. Um, myself and a few of the key leaders here are all come from, um, that life.

And so it's important to us that we give back to that life, um, to, to the recovery community. Um, and then also a lot of our employees, because of our relationship to that community. Are what we would call Second Chance or Fair Chance employees, people who didn't necessarily have, [00:58:00] um, the classic path of, you know, go to trade school and, and, and get in the trades.

These people maybe went to prison or, or were homeless drug addicts, uh, like myself and, um, you know, found their way to Five Star and we taught them the trade and now they're living incredible lives, um, able to to, to serve their communities. 

John Wilson: I think you just sort of did, but could you define recovery community a little bit?

That's, uh, I've never heard that term before. So yeah. Just people who are 

Christian Rattin: struggling with drug and alcohol addiction primarily. Okay. Um, yeah, so people who, um, you know, or what we think of as second Chance employees could also be people who emancipated out of foster care, maybe had prison time or just, you know, never had a, never had a fair shot to begin with.

You know, maybe their parents were drug addicts and they just never really had a chance. Um, and, uh, and as a result of that, our team bonds together, um, on this idea that the more we can do, uh, the more we can give away. Now, here's one. You know, one thing that I, uh, you know, that I've, I loved about your podcast is also when [00:59:00] you ask what's the mistakes you made.

Mm-hmm. So here's a big mistake we made when we talked about giving a ton of money away. We got, I got up in front of the entire organization like three years ago, and I told 'em how much money we gave away, and I looked around the room. There were some people who were not happy about that. There. And I realized it was because they didn't feel well taken care of.

Speaker 3: Yeah. 

Christian Rattin: And so we had to go with that airplane methodology of you gotta put your mask on first before you put the mask onto the person next to you. Right. And so we shifted our focus a little bit and we said, okay, the first thing we have to do is we have to build equitable wealth inside a five star. So what's that look like?

Not everybody's getting rich off this company, but also not one person is getting rich off this company. And so. We don't have this single point owner, you know, three houses and two boats and seven cars and everybody else just trying to live barely above the poverty line. What we try to talk about is how do we help each employee find that next place, whatever is important to them.

Some of the employees, it might be moving outta their parents' house, other employees buying their first house, um, you know, whatever that looks like. Once every single employee is well taken care of, uh, [01:00:00] caveat, they also have to do their job well. You don't get to just come in and ask for more money. You have to, it's a performance based business.

Mm-hmm. But if you come in, I get up in front of every, all employees every quarter, and I say, if there's a single person in here who doesn't feel well taken care of, come to my office right now and we'll talk about it. And I've had people come in and I've said, cool, let's look at your numbers. Alright, well first you're you.

Let's help. Let's figure out how we get you to the place where you can make more money. And then I'll happily pay you more money, right? Mm-hmm. Once we had everybody feeling like they were well taken care of, then we can go out and serve in the community, and then we give away the money. And so that money is given away in a couple different buckets.

We like to think of it in two buckets, primarily nonprofit giving. We partner with nonprofits that align with us, but there is a second, uh, secondary bucket. We call that the hardship bucket. Every manager has a budget all year long, um, and they can just give services away as they deem fit. So their service technician walks into a home.

It's a foster family [01:01:00] fostering six children, doing the right things for the community, need a furnace, don't have the funds, we just give it to 'em. Now here's the trick. We'll never, you'll never hear about that. It will never be put on Facebook. We will never shout it from the rooftops. We'll never talk about it.

The only people who know about it are people who work here. And the people we did that service for. The nonprofit giving, we will shout that from the rooftops. Mm-hmm. And that's our way of respecting kind of the biblical principle of giving in a way that the right hand doesn't know what the left hand is doing.

John Wilson: You know, I, one thing I like about this industry, and I've always liked about this industry is that, uh, it, it is community focused. Like, you know, people have, like, they built their families, they put their kids through school. And it's a very, like, I work for my neighbors type thing, and most owners that I've talked to or bought their businesses have wanted to do something like this.

Right. They've wanted to do it. Now you guys are doing it. And I think I want to ask about the difference because people listening to [01:02:00] this are probably gonna listen to this and be like, hell, well, hell yeah. Like, sign me up. Like, how, how do I give away $1 for every 10 that walks in? And like, so financially, how do you do that?

How do you drive the margin in order to be able to do that? 

Christian Rattin: The first thing you have to know is what are your, how much money are you making? And so, yeah, the, this is where financial literacy and accurate accounting is so critical. You know, closing your monthly books quickly is so critical. Yeah. Because I agree with you.

I think the majority of people running these businesses are great people and they're community focused people. They would all love to do this, and they want to give back to the community, but they're having 

John Wilson: 7% margins. So like, you know, how do they, how would they do that? 

Christian Rattin: So first you have to figure out where's the money going?

Yeah. And then you have to shore that up a little bit. And that's operational. That's operational excellence. Right. And that might mean, it also might mean doing the hardest thing that I think is for people running these businesses, which is to occasionally be like, oh no, I don't know the answer to that question.[01:03:00] 

And then maybe bring in somebody who can help you. And so, um, just always tie your consulting relationships to improvement in your business. Never just hand somebody $50,000 with the promise of improving your business. Tell them when the business improves, you can get paid. Right? I mean, like, that's, that's how we build our consulting relationships.

'cause I'm unwilling to pay somebody for mediocrity. I'm unwilling to pay somebody just simply so they can continue to try to get more money from us. You know? And so when a consultant becomes a person who only wants to, whose only job is to prove their worth, they're no longer valuable. You know? Mm-hmm.

How do we align their pay with my business's improvement when we have that? Now you got something? Okay. So bring the people in who can help you do it. I'd also say maybe stay away from like the internet gurus. They don't, I don't know that. Mm-hmm. That's just my opinion. Um, and then, uh, figure out where the money's going, and then just build it into your margin.

I mean, it's built into ours. It's just there, you know, and so, um, it's also like [01:04:00] sometimes you have to do things on faith. You know, sometimes you have to do things that don't make sense, but will work in the end and trust that it's going to work. And that's what's happened for us. Like, I'm not saying we didn't, I don't know anybody who built a business that like went straight like this, you know what I mean?

Like business, business growth is a lot like the stock market, right? If you zoom in on any. Perspective, you could see a massive decline and be like, oh my gosh. That's why I tell my team, like, never bring me a single data point. Single data points are worthless to me. You could tell me, oh, John runs a 50 million or a $30 million business.

I'm like, wow, that's amazing. Hey, great job. You go, yeah, last year they did 40 million. Oh, not so great. Well, yeah, but last year they made no money, and this year they had 20% net. Oh, okay. Great. It's like, what's the, gimme some context around it, you know, a little bit. Yeah. And so, um, I think understanding your numbers, understanding, um, and becoming a student of your p and l and then leveraging that.

To grow it and, and be intentional about giving back. It's, it's possible it's [01:05:00] there. 

John Wilson: Are you still missing calls after hours, or losing leads while your team sleeps? That's why we work with Avoca, AI owned and operated exclusive call center partner. They answer twenty four seven, sound like a real human and plug straight into your CRM to book jobs, send quotes, and even revive old leads.

There are plenty of AI call centers out there, but we trust Avoca because we've seen the results firsthand. More book jobs, less wasted spend and no more missed revenue. See it in action at the link below. Start winning more jobs today with Avoca. Uh, thank you for sharing that. That, I mean, that sounds cool.

I, I know we've bought nine or 10 businesses now and a number of them have had somewhat established giving. Uh, and I, it's something that comes up a lot, but I think the actual ability, there's wanting it and there's the ability to cut the check and I think that, I think that's pretty cool on knowing your numbers and like getting that level of analysis.

At what point did you bring on A CFO? This is tactical. So the CF 

Christian Rattin: Yeah, so the CFO, [01:06:00] the CFO, um, was actually hired just a few months before I was here and it was probably late. Um, and we've had to go through like CFO 

John Wilson: or controller? 

Christian Rattin: No, we had both. Okay. 

John Wilson: Do you still have both? 

Christian Rattin: Um, so not those two. Uh, those two were let go on the same day, 

John Wilson: but, but those two like roles, 

Christian Rattin: yeah, 

John Wilson: that 

Christian Rattin: does give you some hints.

John Wilson: But those, you still have those two titles in inside the organization? We have the best 

Christian Rattin: two right now. Yeah. Mm-hmm. 

John Wilson: Yeah. Okay. 

Christian Rattin: Yeah. Yeah, 

John Wilson: that sounds like a tough day. Sounds like was my worst day. Yes. That sounds like a tough day. Oh my god, I It's a whole nother 

Christian Rattin: podcast. 

John Wilson: Yeah. I've, um, you know, there was a couple years there 'cause, and, and I think Five Star had like a similar growth, uh, trajectory, but we, we just kept growing and.

Uh, I think there were three instances. I'm gonna have to check my, like, memory at some point, but it was either two or three, but I had to fire the entire accounting team. Like [01:07:00] it was ridiculous. For all the reasons you think, hey, we misplaced $700,000, what happened? 

Christian Rattin: Yeah, just absolutely crazy. We, I took over as CEO in, in January of 2023 and the outside accounting firm that we used for like taxes kept reaching out to me and being like, yeah, but I thought they just wanted to make sure I didn't fire them and hire a different accounting firm.

So I just kept kicking the meeting. Yeah. Until finally they were like, no, we have to meet with him. And so then it got put on my calendar. I went and met them, was a Friday and they, we did like at 45 minutes of, you know, whatever, just chit chat and then they finally were like, no, we have something actually we wanna talk to you about.

We're actually really concerned about your CFO and controller. So I came back and I went to my business intelligence guy and I said, get into NetSuite and just look around, see if you see anything. He called me two hours later and he is like, there's some, I don't know what it is, but something's wrong.

And um, we had, uh, I met with my COO until about 10 o'clock that night. I met with the ownership in the [01:08:00] morning, uh, on Saturday. Spent the rest of the weekend working through it and came in Monday morning and fired 'em both. 

John Wilson: Yeah, it um, I'm sure it'll happen again to me. Probably not to you. You probably run a tighter process now, but it, it's something that's seemingly everybody has to deal with at least, at least once.

Unfortunately, it was a 

Christian Rattin: learning experience. I'm bla I'm in, in hindsight. I would never say I'm glad it happened, but I mean, good can come from everything. Like yeah, I was forced to that. Well, it's gonna happen no 

John Wilson: matter what. So like, might as well happen when you're smaller and you're dialed in on it and, right.

Christian Rattin: Yeah. I mean, we, we, you, you will not know your numbers better than if you have to if you're the one. Literally. I mean, I literally, no dollar left this company unless I signed the check personally. Yeah. You know? Yeah. And so it did force us to look at every single thing we were spending money on and ask why, which was a great, uh, exercise.

John Wilson: This was an awesome conversation. I feel like I got a ton from it. I learned a lot. I hopefully brought some good questions, uh, to the table. Absolutely. [01:09:00] If you were going to sort of share any closing thoughts on entrepreneurs and how to survive and home service and how to build a business that lasts, like what, what would you do?

What would you say? 

Christian Rattin: You know, there, there's that, there's that idea of like, hire the, if you fi if you're the smartest person in the room, like you're in the wrong room or whatever. I dunno exactly how that works. 'cause, um, but I, I will say. W So our five core values are relentless, passionate experts, integrity, generosity.

We put it in a sentence 'cause it's easier to remember. So we're a relentless group of passionate experts who always do it right and give more than is expected. Mm-hmm. When we started to align our hiring process with our core values. Yeah. Um, something changed. Yeah. And, um, when, when we started to give those people the freedom to make decisions inside this business and not hold them accountable every single time to making the wrong decision, but let them learn from it, something changed.

Um, I would say [01:10:00] find, you know, people who match your energy, um, but ha cover up your blind spots and have honest, you know, I personally think that the, the difference between being at a management level and a director, CEO vp, whatever, like C-suite level is. Twofold. It's the people who I see rising have an incredible ability, um, to self-reflect and an incredible ability to admit when they make mistakes and own it.

Combined with, um, a kind of, uh, voracious learning and a willingness to live in the gray. 

Speaker 3: Mm-hmm. 

Christian Rattin: Um, everybody wants to make black and white decisions, but when you get to a certain level, very rare do you get to make black and white decisions. Mm-hmm. Because every decision has so many impacts on so many different people.

Um, I'm, I'm, I've become extremely comfortable living in the gray area. I don't know how you do that. I just think, you know, when I find myself. With yes or no, black and white, red or green. [01:11:00] You know, I, uh, I try to challenge myself to find seven other possible solutions to this problem before I just am willing to just rubber stamp it, you know?

Um, that's a long way. That's a lot of answering. Um, I, I would also just say like, I have two, three books that really changed my life. Mm-hmm. Um, art of War by Sun Tsu, I read it every single quarter. It's a super short, um, book. Um, the Almanac of Naval Aviant is like one of the most incredible books I've ever read.

Um, and then only because of the position that we're in our industry right now, because of the amount of noise around acquisition and targeting and all these different things. Barbarians at the gate. That's a good one. Yeah. Is an incredible book for a business owner to really understand. Why these guys want to own your business, how they make their money and why they might be coming after you so hard.

Um, 'cause there's a lot of money in a deal, you know? Mm-hmm. And, uh, and [01:12:00] they want to make those deals as many times as they can. So, um, so yeah. 

John Wilson: Good shares too. I don't think I've had anybody bring up, uh, Almanac. I have you met Eric before the author? I have not. Yeah. He's, he's awesome. Uh, he's a friend of mine and we met like five years ago at a conference We met a few times since.

And Nice. I I don't know if he finished his Elon book or not, but yeah, it, it Naval, it's a great book. It's an incredible book. Strong, strong recommend. I recommend everybody 

Christian Rattin: at Five Star. Many of them have read it, so yeah. Strong recommend. 

John Wilson: Well, thank you very much for coming on today. This was a ton of fun.

I'm glad I got to learn more about you and the five star story. This was really cool. 

Christian Rattin: Yeah, man, thank you.