Stop Losing Money in 2026: The Profit Plan for Higher EBITDA

We’re heading into 2026 with one goal: stop losing money.
Not “grow at all costs.” Not “try harder.” Just: build a healthy business that actually cash flows.

In this episode, John Wilson and Jack Carr break down what they’re cutting, tightening, and renegotiating in 2026 to go from ~13% EBITDA to 20% EBITDA—and why they’re also targeting 10% net profit after realizing how big the gap can be between EBITDA and real take-home profit.

They walk through the exact planning process they used this year (operational inputs → revenue → profit plan), then share the unsexy truth: most of the gains don’t come from some magic tactic… they come from relentless efficiency—marketing discipline, killing bloated software, renegotiating vendor terms, tightening material spend, and finding hidden leaks everywhere.

If you run a home service business (at any size), this is your 2026 playbook for getting healthy first—then scaling from strength.

In this episode, we cover:

• “Just Don’t Lose Money” Mindset: Why refusing to lose changes everything
• Profit Planning for 2026: Planning off the P&L (not vibes)
• EBITDA Isn’t a Light Switch: Why profitability is an on-ramp (and takes time)
• Marketing Discipline: Cutting inconsistent channels + tracking cancellation rate
• Software Bloat: The hidden $10K–$50K/month leak almost everyone has

🚀 What You’ll Learn:

• Why “growth” doesn’t matter if you aren’t net profitable
• The fastest way to find 5–10% savings without cutting core staff
• How to audit marketing beyond ROI (book rate, cancels, demo rate, ticket)
• What to renegotiate with vendors (and how early to start)
• How to tighten materials spend from 25% → 23% without heroics
• Why consistent wins beat “one big lucky month” every time

🎙️ Hosts:
John Wilson: https://x.com/WilsonCompanies
Jack Carr: https://x.com/theHVACJack 

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

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Chapters

• 0:00 Introduction and Banter
• 3:42 Operational Efficiency and Profit Planning
• 15:01 Marketing Strategies and Adjustments
• 27:35 Building Custom Solutions with AI

Transcript

 Welcome, back, 

back, 

back, back. Welcome, back to Owned and Operated. I'm your host, John Wilson. Today I am rejoined with my host, co-host, Jack Carr. Welcome back. 

That is one of the weakest introductions with the, do you want to 

be here today, John? Dude, I'm so ready to be here. It's ridiculous. It's Christmas Eve.

I can't think of anything. I would actually rather be doing. 

I don't know if that's sarcasm or not, but I actually, ski skiing was very excited for this today. No, no, it wasn't 

Sarcasm. Skiing is the only thing I'd rather be doing. 

That's true. We, again, we just need to mix our two passions, skiing and scuba, talking about business and then call it a day.

Yeah. Skiing, scuba, and talking about business. I agree with you. Uh, cool. Today we're talking about, uh, what we're stopping in 2026. New year, new us 

This, this is a really easy one. I think we should just shut this podcast down after I give this answer and we're good to go. Yep. Just stop, stop losing. Just don't lose money in 2026.

Wrap. And you are good to go. Continue wrap. 45. Second podcast. Only make money our 

best message that we've ever had. 

The nuance there. Figure it out. But the rest just, yeah, yeah, yeah. Don't, don't lose money. 

Just don't lose money. 

Just don't lose money. 

Hey guys, just don't, yeah, just don't. Um, I mean, that's a good answer.

Uh. I don't, yeah, I don't have much more than that. 

You know, it feels silly, but there, there, it, it is a mindset that, you know, I, I joke about it as kind of like the singular answer, but you see it in a lot of business owners. As we, as we kind of talk to them through the podcast and through the network, a lot of 'em actually do just refuse to lose money.

Like, it's a mindset like, I am not going to lose. Yeah. I'm going to figure out any way possible to cut. And it's, you know, I never, I didn't always have that mindset. It takes money to make business and to make growth. And sometimes you lose and sometimes you win. But also like it's the change in mindset.

Like, I'm going to produce all my vendor pricing. I'm going to not lose on this, or no longer lose on that and just figure it out. Um, so I was sticking by that answer. Um, that being said, I'm sure there's some more, uh, in the weeds things we can help people out with today. Mm-hmm. 

Yeah, I mean, I think, well, we talked about this last year or, or last week.

We talked about this last week, but, um. I always thought that EBITDA was like a light switch and it turns out it's an on-ramp and take taken a long time. Yeah. Uh, like to be good, not great, like just to be good. I, I don't think we're great. I think great is next year. I think this year was good and uh, but yeah, it definitely takes a lot of time and you have to be really intentional and yeah.

Not lose money like that is like primary goal. 

So where are you starting in 2026 to kill? Things that are potentially Yeah. Going to cost you money. 

Yeah. So did, did we talk about our, how we approached planning for 26? 

We did, we talked about profit, uh, planning, on profit, planning on ebitda, planning off the p and l versus planning from a revenue perspective.

Okay. 

I mean, we could do a real quick recap. I'll do, yeah, I'll 

do a, a quick recap. So we, we went through this process, um, w. And normally the way that we've set plans are we started setting like good operational budgets last year of like, Hey, this is the revenue we think we can get to based on our number of calls, conversion rate and average ticket.

Like, here's our data, where, what can we actually do? Uh, so that felt really good and like data-driven budgeting, which was helpful. Whereas we used to just be, here's our vibe, like, ah, I'm pretty sure we can do. 40 million next year, you know, who knows, but like, how do we get there? We'll figure it out. Um, but data-driven budgeting was really helpful.

Uh, obviously the thing that we really worked on this year, uh, that we did not do a good job of last year is we really focused on the inputs last year. How many calls, what's our conversion rate? What's our average ticket turns into X amount of revenue. But our, our profit targets and our gross profit targets, were a vibe.

Hey, I think we can get to 6 million of ebitda. Uh, but like didn't really have like a path or plan to get there. So the way we approached this year was we did all of the operational inputs. We got to our revenue, we felt comfortable with it by trade. Uh, we went even a, like a layer deeper, which I feel pretty good about.

Uh, but we took a, we really picked apart our profit targets. Hey, this is our profit target. It's ambitious. We want to double our EBITDA next year. Awesome. Outside of a vibe, how exactly are we going to get there? Um, so a lot of what we're gonna talk about today is stuff that like we've uncovered during that planning exercise.

Mm-hmm. Um, and okay, so how are we gonna go from, you know. Three and a half to 7 million of ebitda. What acquisitions, how are we gonna manage our opex? How are we going to invest new opex? How are we thinking about CapEx? Um, and how do we think about like general efficiency? So yeah, that's, that's my like roundup on how we planned for 26.

It started with like a good revenue goal and then this year we really honed in on profit. 

So as you start to go through this, where, where do you find the biggest, like, where'd you guys start? You, you obviously knew your revenue, you obviously have a goal for next year based on those revenue numbers. But from, from the OPEX side and, um, I guess the, the EBITDA side, like where are you starting, where, where, what buckets are you starting and how did you pick those buckets to start digging into and saying, Hey, we're gonna cut X from here and y from here, and we're gonna optimize this.

Mm-hmm. 

Part of it did start with the vibe, like what is the goal for the year? Mm-hmm. And the goal on revenue is X. Right? So like if our goal revenue is $35 million, then what can happen next? Well, based off this year's performance, gross profits 49.9%. Can we improve that one or 2%? Okay. How will we do it?

So yes, I think we can, because best in class companies run at 55, so can we get to 51 or 52? Yes. No. And then you start unpacking exactly what you have to do to get that one or 2% gain. So that's how we did it. So it was like, here's the revenue target we can hit based off our average ticket, number of calls, conversion rate.

Here's our run rate gross profit. Like here's just what we're probably gonna do based off what we've been doing. Here's the facts. Yeah. And then here's what we could change to improve. And, um, it, it was, yeah, it was, it was helpful. So it started off with like a little bit of vibe, but trying to base it on facts.

What I liked a lot this year as going through this was, Hey, if, if EBITDA was 3.5 and like if we change nothing else, let's just assume. Revenue, gross profit and EBITDA is the same next year. I really liked the incremental EBITDA or incremental gross profit, like whichever way you wanna attack it. The way we constructed that.

Yeah, like I just liked it a lot. So it turned into like seven attack points where, hey, we're gonna get $2 million of EBITDA from acquisitions. Awesome. We're gonna get a million from OPEX efficiency. We're gonna get half a million from marketing efficiency and just like unpacking each of these layers. Um, and it gave our leadership team like crystal clear guidelines of like, Hey, here's what's expected from you for the next 12 months.

Like, here's how you can win. Let's make sure our rocks align with like what you can do in this plan. 

Sweet. Yeah. I mean, there's some more to dig into, but I think we'll hit it as we start to go through those Yeah. Specific buckets. 

Yeah. 

So where did you guys, I mean, what, what was the biggest bucket outside of probably acquisitions?

Yeah, acquisitions was really big. So if we're at three and a half of ebitda, which I actually think we're gonna be a little bit more, which is cool. Uh, but if we're at three and a half of ebitda, we, let's say seven is target, 2 million is gonna come from acquisitions is like our rough goal. So we have a million and a half that we have to get from other sources.

Um, and it's, it's a lot of the stuff we're about to go through. It's like, Hey, are we operationally efficient? Are we, do we have excess softwares we don't need? Do we, are we inefficient in marketing? Like. Are we really tracking ROI or like, are we experimenting with 10 different things at the same time? Um, are we dispatching, like effectively mm-hmm.

Are we running effective meetings? Uh, yeah. So we're finishing up EBITDA this year at 13% and we wanna finish EBITDA at 20 next year. And like 20 is a big goal. So being able to actually deliver, that's a lot. So you just have to run a tight ship. So, um, how do we get from where we are to a tight ship is.

The conversation. 

Yeah, no, I'm, I'm, I'm down. So, so did you, um, and I mean, now is the time too, like, based on, you know, it. Uh, what I always keep coming back to is the why, why now, John, why does it matter now? Like mm-hmm. Continue running at 13%, running experiments and shooting, um, long shots to try and get massive growth potential.

But I think that now going into 2026 is the year where this is actually the most pertinent, and it's for a few reasons. Um. I think that it matters in 2026 more than it has in any other year that I've been running the last four years, uh, is because a, we have massive amounts of ai. The industry has changed whether we like it or not.

The industry has had a complete flip from CSRs to dispatch, to accounting, to just across the, the backend of, uh, all of your, um, all of your ops side. That's not. I mean even, even tech driven, like all of the sillas and all the kind of listening applications and Yeah, and training applications. So like, it is not silla.

What, what's the one? Um, I'm thinking of. Craft is who we use craft. So yeah, craft is a great example. Um, but yeah, like it has changed the, the industry and it is ramped so much faster than anybody thought. The beginning of this year we were like, ah, you know, chat GBT kind of helps us re rewrite emails better.

And now it's like, no, this is industry changer. That's number one. And then number two is the industry has gotten significantly harder. 2025 was a harder year for HVAC than it has been. For the last eight to 10 years. I'm saying that not based on my, I mean, based on my specific, um, 

there's like public data shipping.

Public data licensees. Yeah. It is eight, six show. Yeah. I mean, they're even, I think they're about to roll back the four 10 ban because like, hey, it didn't go well. People have a lot of inventory still sitting, so like they have to extend it. 

And so on the whole, it has been a hard year. So what do you do in the hard year as you pivot a little bit away from maybe growth specific metrics into, Hey, let's make sure this is a healthy business.

Yeah, let's focus a little bit less on massive growth and focus a little bit more on making sure that we are actually cash flowing, we're we're filling the coffers and that the business is going to be healthy. So I think it's super applicable going into 2026 more so than any time in the last four years for me.

No, I think so too. Um, yeah, I think so too. And I think it just gives you runway. I think it gives you the chance to experiment. I think it gives you, uh, optionality and I don't know if I said this on, on the show or not, but something that was kind of funny was, uh, I will, I'll know my EBITDA percentage, like down to the like 10th decimal point.

Mm-hmm. And, but, but this year I had absolutely no idea what my net profit was. 'cause it's kind of in my mind almost irrelevant. Um, like. I don't really draw cash from the business. Yeah. And, uh, so it just doesn't matter. Uh, so I've never really thought about it, uh, honestly, which probably sounds like ridiculous to a lot of people.

But, um, yeah, I've only cared about ebitda. So next year, one of our big targets is like, okay, 20% ebitda, 10% net. Um, 'cause it turns out my, my net was only like 3%, but the gap between my EBITDA net is 10% and that's gonna be depreciation, amortization interest for debt. Um, so there's a lot going on in that bucket.

But, uh, so yeah, we want to hit 10% net, 20% ebitda. Um, so that was part of it too was just like us learning like, oh, okay, 13% EBITDA is actually not that good because if 13% EBITDA means 3% net. Well, 3% net doesn't sound that inspiring to me. Uh, so some of this is just like us continuing to mature as an organization and 

mm-hmm.

Figure out what good looks like. 

Yeah. For, for me, I'm just trying to draw parallels to why this is, why this matters for somebody who isn't. You know, 40,000 or $40 million business. Right? So like if you're, if you're, I'm not 40 

million business either, but, you know, or 

on, on budget for $40 million. I'm talking about though, if you're like a one to 2 million, I think this is, this is equally as important.

Yeah. Um, again, yeah, you're still trying to grow. I do think that 2026 is a, not necessarily a year of reset, but a year that there is or should be focus not only on giant growth numbers to try and double or triple your business, but also to slow down and make sure that your business is healthy because the market is changing.

That's all I was getting at. 

Yeah, I think that makes sense. When we first started really acquiring, um, we did it from a position of strength. Uh, we had almost no debt on the business and it was a $3 million a year business. Like revenue net net was probably like two, 300,000. And, um, that gave us a lot of room.

Yeah. 

Uh, to do whatever. So I think that's one of the benefits of a strong business. Like, you know, if, if people have been following the journey, like yeah, we've acquired a lot, we've grown a lot, a lot of stuff has happened in 10 years. But it started with, we built a healthy debt-free business first. We then indebted the hell out of it.

Um, but now we're like back to healthy. We're under one times, uh, debt, which is like really good. Mm-hmm. So, but you know, a couple years there we were like four times. Yeah. So that was less good. Um, but yeah, I think my point is it's, this is important at any size. Like yes, it's important right now because 25, end of 25 was tough.

Early 26 doesn't look much better. Um, but I think at any point it's, it's important to like take a moment and get healthy and then invest from a position of strength. 

Sweet. So moving into 2026, where are your main's? Do it main focuses? Um, I mean, if we wanna start the obvious one or one of the more easy ones, I think is, uh, marketing.

What are you, how are you looking at marketing going into 2026 and yeah, mark 

Marketing was interesting. We've experimented a lot over. Mm-hmm. And like on, on one hand that's really good. We've been, and we've been tracking like crazy something that we started tracking. Um, so we've been tracking ROI. So, hey, here's how much we spent on this lead source.

Here's how much money it produced. A new thing that we started tracking was cancellation rate. Which we just hadn't really been looking at that previously. We were using ROI to drive the bus. Mm-hmm. And R oi is good. Like that tells you most of the story. Uh, but cancellation rate added a little bit more flavor.

Um, so if we have like something that has like a five times ROI five times is like a, like work is acceptable. I 

was just say acceptable. 

Yeah. Yeah. It's acceptable. Great. Like amazing. Never turn it off as a 10 times. Uh, so then anywhere in that, you know, five to 10 times is where most of our stuff lands.

Obviously now we have a bunch of marketing efforts that have generated like a three times, one month and an eight times the other month. And, you know, we're just like, man, what, what's going on? Like, what's, what's the difference here? And the difference has been cancellation rate. 

Yep. 

Um, so that has been really interesting.

So as we've started shaving off, uh, like. We've started just like shaving off things that aren't as productive or don't feel as productive. I have not taken this to the extreme that some others have. Like I have a friend that shut down $80,000 a month of Google ads a month ago. Had zero impact on leads.

It wasn't, I mean, I think that that's public. It was on Twitter. Rich didn't Rich do that? Yeah, it was Rich. Yeah, it was rich. Shut it off. It was crazy. 'cause the, the theory was that Google isn't sending you as much as you think they're sending you, uh, through paid, they're, yeah. They're sending Organic was where he was getting that, that value from.

Yeah. 

Yeah, a hundred percent. I mean, I'm not, 

do, don't get me wrong, I never run PPC, so it, I've tried like four times. It just doesn't work. We, we don't get ROI, et cetera, et cetera, but we always leave LSA on just because mm-hmm. It's pay as it comes through, so it's not, is it's very obvious. I mean, even PC 

aside, I, 'cause I think that's market dependent.

Yeah. 

But like lead aggregators, like we shut down like four lead aggregators. 

Yeah. 

And it's like, okay, like one month it was amazing. Like. Some of the swings were wild. Like one month we'd have a 12 times and one month we'd have a two times, and then you start unpacking a little bit more. It's like, okay, well the average ticket that one month we sold a huge shop.

Okay. That's how it got to 12 times. But it really like yo-yo back and forth. Mm-hmm. Um, so that's really the big thing we did is we just shut down stuff that was inconsistently performing. Okay. It was a for helpful context for us that was like a 30 to $40,000 month savings. 

And. Are you, are you, are you quantifying the labor on the backend it takes to manage those as well?

So for example, right, if you had three people who ran your L-S-A-P-P-C and you're like, Hey, we're shutting down PPC, 'cause it's on that margin. It's three to four, maybe five x, but it also takes two headcount to run. Like that's again, not your situation. That's extreme. Example to prove a point, but is that what you're looking at or are you just looking solely at the, um, the actual ROI and cancellation rate?

Uh, we've been, look, we've basically just added more stuff to it. So what's our book rate? What's our cancel rate, what's our demo rate? Like, how many times do we actually go? What's ROI? What's number of sold jobs, which average ticket by lead source? So we've just been getting more and more and more data.

And it's just given us better perspective. 

So even if something is money balling, I'm calling it money balling, correct? Mm-hmm. You're still pulling it because of the, uh, swing nature. So a great example that I have is Facebook ads, right? So like you run Facebook ads, you might get three months of nothing followed by one month, where.

You hit a $70,000 home run slam dunk. Yeah. So on the year right, you, that plays out consistently on the year. You might ROI at that six x, but it is like nothing, nothing, nothing. Boom. Nothing. Nothing, nothing. Boom. Does that mean that that's not worth it? We would 

probably pull that scenario because the idea is like, I can fill it with something more consistent.

Yeah. So can I pull this and then where can I put it? It's like, not, not, it's not always like pure savings every time. It's like gonna be reinvested somewhere else. Mm-hmm. Okay. Yeah. Yeah. That scenario we would probably pull. 

Yeah, that's interesting because I, I struggle with that one, right? It, uh, we don't run Facebook ads anymore because of we pulled it, it was very inconsistent.

But that being said, um. Like it is from, again, I, I think it comes back to, for me it's, yes, it worked this year, but it was inconsistently worked, so that means that it doesn't work like we got, that's a lucky scenario, not a consistent scenario. That's how I would see that scenario. Yeah, that's 

how I would see that is we lucked out.

We didn't like do great. 

Yeah. Okay. So you're going through moving, removing ROI or non ROI, uh, non-consistent issue channels of marketing. Um, make sense Anywhere else in the marketing channels, because I know you guys run different channels, right? Access 

softwares. Mm-hmm. Um, yeah. Excess software is like, we don't, yeah, like, yeah.

Basically that's it. 

But, uh, how are you, how are you looking at, uh, branded versus not branded? Like that's a great example. Oh yeah. So we 

did that earlier this year. So that was a, um, yeah, I guess that, that was like four or five months ago. So we missed budget in over the late summer, like basically driven by hvac, uh.

I think I explained this last time, but if you, this is the first one you've listened to. Hvac, uh, was, we're basically flat year to date. We didn't lose, but we didn't really win, but we did invest a ton of resources into it, and branded marketing was a really big part of that. Uh, so we paused that in August or September and, um, so yeah, what, so I'm not really thinking about that for 2026, that was like.

You pause, brand branded marketing, and you're still a business that's running. That's such a surprise. 

Well, we paused most of it, but, yeah. Yeah, 

yeah. Interesting. I mean, 'cause you, you know, we hear the, uh, anecdote, I can never say this word. Anecdote, evidence, 

anecdote. Anecdote. I mean, there's good and bad.

Like there's good and good and bad. Like yes, it was a short term win. Um. You know, long term is there gonna be damage? I don't think so, because we didn't have it on for very long. Um, but uh, yeah, I think yeah, you know, this year, um, like again, the, the back half was challenging. The industry had challenges.

One thing that I am proud of is how we pivoted. Yeah. Like there, we set a plan at the beginning of the year and when the facts changed, we changed with them. And I don't think that everybody does that, and I don't think everybody did that. And I thought that we, our team did a really good job being flexible and sort of rising to the occasion.

Mm-hmm. Well, okay, so you cut branded. 

Yep. 

Um, any other specific channels? Because I know you run 

that's, that's, those are the big ones, but like marketing spend from, the whole budget went from 200,000 a month to like 130 over the course of this year. 

Mm-hmm. It 

was a pretty big, pretty big change 

while still keeping.

Revenue. Relatively typical. 

Yeah. Every day call board is full and Yep. 

Amazing. Yep. Sweet. So that's, that's your plan to get, uh, couple hundred thousand in marketing or a hundred thousand in marketing mm-hmm. Back this year to the bottom line? Yep. Uh, just 

efficient, basically just being, just being efficient marketing, making 

sure that you are on ROI, making sure that you, you're not going off of, off of the vibes in the fields that you're actually going off of, that you're auditing every single channel that you're producing and that it is producing.

Um. I mean, opex is another big one, right? So like you are going to be running a certain amount of operations on your backend that in the office around, um, around the office that, yeah. Are potentially inefficient. Where, where'd you start on that one? I, um,

I think this is, uh. We pro we might have different problems than like other companies. So like, fair warning, if you listen to this and you're like, oh, that's, that sounds stupid. It is first off. But, um, a pain point that a lot of companies have, uh, that, like, I, I texted one of these group chats I'm in and I was like, Hey, what are you guys doing about this?

And everyone was like, oh yeah, we remember that. And I was like, fuck. Like everybody goes through it. Yeah. But software licenses. Is a ridiculous pain point where like you wanna be able to delegate everything out and like make stuff frictionless and onboard employees and all this stuff. And then what'll happen is like, oh, that guy we fired a year ago still has a per month license on a software we use, whether it's ServiceTitan or our phone system or like, pick a thing.

We have like 40 softwares. Yeah. 

Adobe. Yeah, 

Adobe was an actual use case. Um, over, over the years we've had like Loom beyond five different people's credit cards. Yeah. Like it, it's just absolutely crazy. So software licenses is like a, a very real and obnoxious pain point. That pain point alone is 10 to $12,000 a month.

Of just burning money in a pile. Um, 

I was just talking to another owner, uh, two days ago and he said, yeah, he canceled every single subscription he had outside of his CRM. Yep. And I, I texted you right before this, there was a big update on lovable and he. Physically built out three or four of his subscription softwares.

He built them out on, on an AI system and he is like, I've been using 'em now for three weeks. And they work, it's fine. Yeah, 

it's fine. They work, they 

fi they're, they're perfectly applicable. And then so I went back in and I started messing around with it and I was like, oh, I can shave off 20 hours a week in what my AR AP person is doing by this lovable app I built in 15 seconds.

Yeah. 

Wild. Um, oh, 

it is wild. I mean, we built fleet apps, we've built internal tools. We, we've done a lot with that. Now, granted, we slowed over the last couple months. Um, another easy one was like price book. We were on the Price book Pro product with ServiceTitan, and we built our own. That's $7,000 a month.

Like it for a spreadsheet, right? Like, granted it took a lot of work from us, but um, that was humongous. So all in all, I think it was 40 or 50 grand a month of just like, Hey, do we act now? Our, our granted, our overhead budget is like, it was 800,000 a month in peak. So, you know, 40 to 50 grand a month. It's a lot of money, but like, it's also only 5% of our total overhead budget.

So it, it is surprisingly not hard to find. Yeah. Uh, that savings. So I'm not trying to be unrelatable, but it's not hard to find 5% savings. Um. Yeah. And a lot of it's very low hanging fruit or like, Hey, if I do this one time project of a price book, I don't have to pay 80 grand for a price book next year.

Yeah, 

yeah. We should probably do that. 

And then, but I mean, uh, the haters will say, how are you managing that price book? 'cause price book is an actively managed thing. So do you have somebody on the back end that is actively managing said price book? 

Yeah. But you know, pricebook Pro, their whole pitch used to be like, Hey, pay us a ton of money and we'll actively manage your price book and like.

Big shock. It didn't do that. Like it was a, it was a, yeah. Non-functional product. So someone's been managing the price book internally for 

allegedly two years, allegedly. For anybody who's listening? Allegedly, yeah. Allegedly. Yeah. 

Well, I've given my feedback to them directly, but, um, yeah, it, it's just annoying.

It's an annoying problem. But, 

so go through software. Hopefully they go through credit cards. Cut the things you're no longer using. Mm-hmm. Uh, because everybody's do, everybody has it. And I think that's a great advice for your personal life as well. Yeah. For the, the audible, uh, the audible subscription that sneaks through every month on mine still, and I have like 14 credits 'cause I just never use it.

Um, so that's always a good one. Um, do it for business and then. For us. I mean, you'd be 

amazed what you can find. Like that's big one for us, those two things was like five to 10%. 

Yeah. 

Of overhead budget, which that one's been. That's a lot huge for us. That's a million dollars a year for us. 

The other big one for us has been, and we've, I mean, I'll harp on this because I created a second business that only does this is like overseas as as internal office staff has left.

We've had turnover in our office. It's no surprise everybody has turnover at some point. We have not replaced with US citizens like it's just overseas. Mm-hmm. Hires for dispatch, for CSR, for outbounding, for the a RA person is in the Philippines. Our accounting reconciliation persons in the Philippines, like just going overseas for the hiring has been huge to keep our, like we run a sub, I think it's sub 6%.

Yeah. And it's all like managers. That's it. It's managers, managers, managers. So yeah. And our warehouse person. 'cause you can't, you can't sub that out. But that one's been big for us. 

Yeah, that is huge. 

Yeah. Is that your only opex? Like that was your, that was your 5% was like, hey, we got rid of some subscriptions.

Well, yeah, I mean there's a, um. Yeah, like most of it, like we've tightened up it, it's a lot of like tightening up, like as an example, um, ninety.io for EOS. Like why are we paying $8,000 a year for this spreadsheet? Like, like really? Like why are we actually paying $8,000 a year? Um, and it could be a spreadsheet.

You could make it unlovable. Like regardless, it doesn't need to be 700 bucks a month. So it's been a bunch of just like random bullshit like that. But I mean, 10 to 12,000 of it was tightening up users. And what we did is we intentionally made it very, very hard to onboard new users into softwares. We just like, we made it as frictionless as we could so we could have a smoother onboarding experience.

And all that turned into was burning a hundred grand a year. Now we're making it as hard as possible and I'm sure we'll land somewhere in the middle. 

Sweet. I'm trying to think of other buckets that you'd pull from. Where, where, where else did you pull to earn back ebitda? So we have acquisitions, which is not really Yep.

Um, that's not this episode. Uh, we have marketing spend, we have opex. Where else are you looking to, 

uh, there was like efficiencies. So, okay. What's one, Hey, what's our, what's our drive time for the field? Are we, like, how do you blend a dispatching for profits? Plus number of calls per day, uh, like how much windshield time are we putting on?

Uh, so that was really big one. Like, we think that that's 250,000 of EBITDA next year. Um, sorry. In inside opex, uh, like the conversations get interesting. So I'm going back one, but our credit card, we're negotiating our merchant fees. That's 11 or 12,000 a month. Like that alone is 11 or 12,000 a month. And on top of that, we're considering charging for credit cards.

Mm-hmm. Uh, so that would be 30 grand a month of like EBITDA change, which is obviously very significant. 

Um. Yeah, I think there's a bunch in that realm. And then we've talked about it before, so I don't wanna beat the dead horse. Yeah. But I always think a good one is, uh, going back to all your vendors, every single one.

Yeah. We were just talking to one of our breaking 5 million. I mean, we, we renegotiated 

ServiceTitan a year early. 

Yeah, 

we've negotiated our phone system a year early. Like a hundred percent. 

Yeah. Shout out. I'm not gonna shout him out 'cause I don't know if he wants to be shouted out in this subject, but one of our recent breaking five grads took that home and he's like, Jack, I just did it.

I just did it. I was this kind of dealer and I was a do or die, this kind of dealer forever. Yeah. And we started running a BOGO deals and da da da da da. And he's like. And they wouldn't help us. We switched vendors and boom, not only were they going to help us with our BOGO deals and giving us a temporary discount to work with us on these deals.

Yeah, 

they've cut spending or they've cut the cost across all of our HVAC lines. Yeah. And then I was like, oh, I gotta do this for everyone. Then I went to Verizon and I talked to Verizon. They gave us a discount and he said he just kept going. He's like, oh, that. 

That was another major thing we did. We switched from Verizon to T-Mobile.

10,000 a month. Like I know everything's 10,000 a month, but like that's actually what it was. We went from 14 to four. 

Yep. 

Like it was insane. 

And so he is like, I'm going into the new year with like 160,000 or 140,000 

Yeah. 

Of bottom line that I'm expected into next year from just this, these like three or four vendors.

Well, so something that was really interesting for 2025. Was we did a big like HVAC negotiation and software negotiation at the end of 24. Mm-hmm. In early 26, we'll get our first rebate check, so like that's a 18 month time period from, we did the work in August of 24, and our first rebate check is February of 26.

That's a really long time. Yeah. So we have a few decisions like that. T-Mobile was a great example. Because we started working on that over the summer, but it kicked in in October. So like most of the year, like that's an action that we've already taken. But most of our year doesn't show that action. It's just, it's gonna reflect on next year.

So it, I think, uh, sooner the better. I, I guess is my point. 'cause a lot of this stuff takes a really long time to like work its way through the system. And this is back to my EBITDA's, not a light switch. It's an on-ramp. 

Yeah. 

The moment you start focus, like we did T-Mobile, that took us three months to switch.

It's gonna take us a whole year to realize this actual like booked savings for that. 

Plus all these vendors have contracts, right? Yep. They make you sign T-Mobile or Verizon's, they make you sign a contract for a year. Service time makes you sign contracts. Yep. They all make you sign contracts so it's non-renewal.

And then go ahead and start. Start the process. So like it's not going to be an overnight, Hey, call Tmobile. Yeah. It takes a long time. Hey, it's like you have three more months in your contract, sir. Whether you cancel or not, you're gonna have to pay. So, but in three months you need to be having that conversation and be ready.

Yeah. So yeah. 

I think start, start soon. But yeah, there's a bunch of like credit card merchant fees, software users, um, type of 

financing. 

Verizon. Yeah. All that stuff together was, yeah, 30, 40 grand a month. It was a lot of money. 

Yeah. That's huge. I mean, I'd love 30, 40 grand a month that it's crazy Spend on other things.

Yeah. So, yeah, so that's how we thought about opex. It was a bunch of these, like little wins. Mm-hmm. Uh, but they ended up being pretty big. And it also forced us to have some conversations like, should we charge for credit cards? Like I had someone come out and fix my dryer the other day. They, and it was Mr.

Appliance, right? It was a franchise. They charged me for a credit card. And I was like, when did you start doing this? Two months ago? What's the pushback then? Almost none. And I'm like, all right, well fuck 

yeah. Maybe we should be doing this. I mean, again, it's changing market, right? Yeah. And, and also Mr.

Dryer is probably a lower ticket, so I, my wonder is like, I, I know you different markets, but, well, I 

pitched a couple friends on this that are in PE and they said they only do it for service and not for install. Okay, there you go. 

That's what I was thinking. Like, 'cause on a $18,000 two unit, like 3% makes a difference versus Yes.

Yeah. Yeah. But 

I mean, even that would save another 10 grand a month. Yeah. So, yeah, pretty significant. 

I get it. 

Yep. Um, another big one, uh, like our, I always remember this from that one book. I love that one book, uh, double Your Profit. Yeah. In Six Months or Less by Bob Pfeiffer. It's like a favorite book of mine.

And, um, the, the question is, hey, if you had to go get 10% savings today in your business, where is the easiest place to find it? Like the easiest? You could just go do it in an hour. It all starts with your materials. Like that is where you find it. How are we sourcing it? Are we negotiating those pricing?

And even if you do negotiate it, like a fun surprise for us and we run kind of like a tight ship these days, is we've been overbuild for water heaters for six months by a hundred dollars a unit for 40 gallon shorts, which was very annoying. And, uh. So, yeah, so I mean, even just like, what are, are you negotiating then?

Like, what's your follow up process? 'cause now you know, it's a $20,000 like cash outta my pocket that we're gonna go get it. But it, it's annoying. I would've liked that two months ago. Yeah. Um, so yeah, I think that's the, that's the easiest way to find it. Can you centralize vendors? Can you negotiate pricing?

Can you negotiate rebates? You know, our rebates now for HVAC are in the low teams. And it used to be 3% and that's a massive difference on millions of dollars of purchases a year. 

Yep. 

It's crazy. Yeah. But rebates alone was a 200 plus thousand dollars add back, like this year. It like that's, that's like wild to me.

No, it's awesome. 'cause in 2024 it was 30 grand. Yeah. 

Yeah, we just pushed up into this, this, and, and, I mean, and negotiating those rebates too. 'cause those rebates aren't solid. Again, if you're not a great negotiator, you need to to learn how, because we ended up negotiating I think. John, you were pretty blown away.

I mean, I'm fine saying it. We just moved into the double digit rebates. Yeah. And it back they back. Back, apply it to everything you spent this year. So even though we, yeah, maybe, maybe started off at 7%, now we are getting double digit rebates that include that beginning spend and they're, yeah. Making that 7% move up.

Yeah. It's a huge difference.

Did it mess with it? Sorry, cut this part. Okay, good. No, last time hits messed before. Before. It's a huge, 

it's a huge difference. So like, that's an example. Um, are we running a tight process on bidding materials? Are we, do we have a software to find? When you've been overbuild, which, like, now it's all, it's almost becoming like the hot thing.

If you're a vendor and you're listening to this fair warning, all, all of our, all of our group chats are like. Everyone's actively finding or building tools to catch the, like, frequency of overbilling. Um, I think Ferguson gets picked out. Yeah. It's over 

build monthly. Yeah. Regularly. I have double. Yeah. It it's crazy.

It's crazy. Lack of, lack of credits that have of actively returned items. 

Yeah. 

Double charges. Uh, and over, over billings on Yeah. Equipment and or parts or pieces. We found one the other day, which was a full price equipment. I was like, how does that even happen? Like everything else was our normal pricing, but one piece of a specific equipment was full price.

I'm going, that's an extra thousand dollars that we're spent. Like That's wild. It's, it's a lot. 

Yeah. I mean, so, you know, you know, when, one of the ways, you know, for, uh, our material next year we, we went from, in 2024 we had 27% material. In 2025 we're at 25. Next year, we think we can be at, uh, 23 and, um, blended.

The blended. Yeah. Yeah. And the path to get there is consolidate vendors, negotiate track, like that's it. I mean, even this water heater specific case, $20,000 essentially vanished into absolute nothingness. 

Yeah. 

For some mistake that they made in their computer. And if we hadn't caught it, we'd be out 20 grand.

Yep. I, I, and to be clear, I love my distributor. I love my sales person. I know it's not intentional. But th there, well, it depends your job, because 

Ferguson, it is intentional. Like the way their software works is like, if you go to the, like, I'll say this if you won't, but 

I, I'm like, nice vendor. Nice vendor.

Give me more. You're like, I, well, the way Ferguson, 

which if I was Ferguson, I would too. So like, I'm not throwing any like rocks here. But the way it works is like they get like a touch charge or something if you go to their counter. So if you buy frequently from specifically Ferguson, you just wanna like double check.

Like, hey, if, if you order it and it's shipped or delivered, it might be a dollar. If you go in and they have to touch it, it might be $4. So just like fair warning. 

Yeah. Nope. I, I, I'm still being nice to the vendor. You could say whatever you want, John. You have much more ING power, I think. Me, I'm just 

like, I think, uh, hey, there's a lot of softwares out there that catch this now, so like Yeah.

Don't be surprised when you get caught, I guess. Yeah. That's funny. Um, yeah, so like that's how we're approaching vendor purchases. Mm-hmm. And we think that the difference is, you know, hundreds of thousands of dollars. Re rebates alone was, so if you can maximize your rebates, that's a few hundred grand. Um, 

do you find here, here's a good question.

Do you find that vendors are more willing to, right, so you go to them, the process is you go to your vendor, you say, Hey, yeah, I get better pricing from this person. Would you be interested? Or whatever the, the spiel may be like, yeah, we can match the pricing. And they say, well, can you do a rebate? Do you think that the rebate negotiation is easier than the pricing negotiation?

What, how do you view that? Or how 

do you I think it's all part of the puzzle. 

Okay. 

Yeah. Like what's, what's the rebate? What's the price lock? Like, if, if we're signing up with a new vendor and you gave us pricing, how, how long is the pricing good for it? If it's good for a week, like, okay, we're gonna establish this new relationship and you'll just jack my pricing in a week.

Um, that's not really helpful. Uh. 

So he was trying to negotiate terms. That's a big one for us. I want Net 60. Yeah. Terms 

is a big one. Like, we basically don't work, I, I don't think I've signed on with a new vendor for under 60 day terms, uh, in like five or six years now. 

Um, and they always push back. That's the funny part is they've always, I actually don't get 

any pushback at any point.

Well, you're a lot bigger, but like for our size, like we, we are on that border where like they, they see the growth. They want us as a, as their client. Yeah. But they're also like, yeah, we've never done that 60 with any of our people before. I'm like, uh, I know that's not true. Like, come on, don't, don't mess with me.

And then they, you know, being part of the podcast is nice 'cause I can name drop and be like, I know this person who has Net 16 or this person who has net. And they're like, okay, fine Jack shut, shut up. We'll work with you. But I always find it funny. I enjoy. I enjoyed the negotiation, so I always put Push for Nest to see.

I'm like, I know, I, I don't want your vacation. Gimme better pricing. I don't want your 

Yes. Yeah, yeah. 

Extra truck wraps. Gimme better pricing. And, um, they all, they all know my spiel now, so it's not fun anymore. Yeah. 

Like, yeah. But yeah, we're, we're the same. Yeah. Um, that's funny. Um, yeah, but I think it's all part of the package.

Like how long is the price lock? What are the terms? I, I think there's some things that are just non-negotiable. So, uh, you know, we're finishing up a process right now on a part of our purchasing and, uh, there were some things that weren't even like a conversation. And for example, 60 day terms weren't even a conver like Yeah.

They weren't even a, it was like, this is what it is. If we're, we just won't talk to you if that's not the case and everyone still came to play, um. God jealous. Yeah, I think if you run a deliberate process, I mean, you know, we're talking about millions of dollars, so, you 

know, 

yeah. 

We're talking $8 million.

You gotta be flexible a little bit here. Yeah. 

Awesome. Um, well were there any other big items that you Trying to think? I mean, those were probably the big ones. 

I mean, acquisitions, Howard thinking about materials and purchasing. Um. Opex efficiency, uh, I mean, those, those were, and marketing efficiency, those were our big ones.

Sweet. But, you know, 2 million of our gains is gonna come from acquisitions and a million and a half is gonna come from operational efficiency, which is not that much money really, you know, uh, it is just not, which is crazy. Like, can you get a 5% discount on equipment and like, you're there. 

Yeah, exactly.

Yeah. Sweet man. Well, awesome. I, I'm, I'm all for it. Good luck for a solid 2026. Yeah. Um, for everyone listening, have a Merry Christmas. Happy holidays. I don't think we have a Merry Christmas. We're shooting back until the new year. Yep. Possibly true. Also, I just show up when I'm told so. 

Nice. 

Nice. Yeah.

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