Podcast #32

“Company Aquisition”

Featuring John Laplant

Intro: Welcome to Profiles In Prosperity with your host, David Heimer.

David Heimer: Hi, I’m David Heimer. Welcome to Profiles In Prosperity where you hear from the top contractors, consultants, and thought leaders in our industry. It’s sponsored by the Service Roundtable. Today, our guest is John Laplant who’s going to tell us about three financial ratios that are sometimes a little bit overlooked. They’re a little bit off the beaten track, I guess. But I think you’ll enjoy this a lot because John does a great job of explaining these.

John has a long history in HVAC, here are a few of the highlights. He worked at Lennox as a territory manager. At Lennox, he also helped create and grow the quality assurance department. Then he left Lennox and created vVtal Learning Experiences with his wife Vicki Laplant where they provided consulting, training, coaching, and mentoring. John was awarded the very prestigious Service Roundtable “Servant Leader” Award.

Most recently, John and Vicki, joined Service Nation Alliance’s business coaches and are part of that. John teaches the Service Nation Financial section in our boot camp and he also teaches the Advanced Financial Workshop as well. On top of that, I would add that John is just such a great guy, he really cares about contractors. He’s developed a tremendous knowledge of the residential service business and he’s incredibly generous about sharing his knowledge and ideas. So welcome to Profiles In Prosperity, John. Let’s just get started right away. Tell us about these three financial ratios, start us off with the first one.

John Laplant: Okay, David. Well, number one, a new ratio that a lot of people are focusing on is not a traditional financial ratio, it is sales to installation sales; service sales to installation sales. Management of a company, an HVAC, a plumbing company, an electrical company has to be mindful of the labor it takes to generate sales in service and installation. And we think one of the best ratios is to have somewhere in the order of 3:4:5 times the installation revenue compared to the service revenue and that comes in the context of the shortage of labor in the industry. You want to make sure that they are not doing too many high labor jobs that burn the most precious resource you have, and we really find that companies – the sweet spot – if they can have a 4:1 ratio in relation to installation revenue compared to service ratio, that’s a pretty good place to be.