Intro: Broadcasting live from the Business RadioX Studios in Atlanta, Georgia. It’s time for High Velocity Radio.

Lee Kantor: Lee Kantor here. Another episode of High Velocity Radio, and this is gonna be a good one. Today on the show, we have the founder of Scale My Profits, Juan Carlos Velasco. Welcome.

Juan Carlos Velasco: Thanks, Lee. I’m excited to be here.

Lee Kantor: Well, I’m excited to learn what you’re up to. Tell us about scale, my profits. How are you serving folks?

Juan Carlos Velasco: Well, you know, scale more profits comes at a very personal backing on it. I originally built a company with my brother back in Colorado, and we learned the hard way after he passed away, that a company isn’t worth what someone that starts the company thinks it’s worth, right? So after he passed away, he. I tried to sell it about a year later and someone offered me a dollar for the company. It was a mechanical company that we built. And, um, when they offered me for that dollar, um, that’s when scale my profits was um, you know, started. Um, and that’s really what the major reason is for it to really allow people that build businesses specifically in the trades to build something that is sellable and that has value essentially.

Lee Kantor: So let’s, let’s go through that a little bit. So you had a business with your brother and what was that business like? What were you doing every day?

Juan Carlos Velasco: Yeah. So we it was a plumbing heating company. It was Breckenridge Mechanical up in Colorado.

Lee Kantor: So your people with plumbing or heating issues, they would contact you. You had customers, but when you tried to sell it, they said it essentially has no value. Even though you had a book of business.

Juan Carlos Velasco: 100%. Yeah, we had over 20 employees. So when after he passed away, you know, I decided, you know, it was time to move on. And then when that CFO called me, that was one of the buyers. He said, you know, it’s going to be an asset sale. We’re going to buy it for a dollar. And I was like, I had no idea at the time, Lee, what an asset sale was. Right.

Lee Kantor: So what is an asset sale for folks who aren’t familiar?

Juan Carlos Velasco: 100%. So an asset sale is essentially, uh, the value of a business when is running negative, when the value is zero or it’s negative. So someone will buy a business as, as an asset sale, and they’ll give you a dollar for the company because they’re essentially inheriting all that debt, all that liability, right? So it’s a way to wash all that out. And then they’ll give you a dollar for the business. So they’ll take over the they’re essentially taking the burden over that company when it’s negative value.

Lee Kantor: So then was it because you didn’t have kind of recurring revenue that your business was built on? If somebody needs you, you come and, and then you, you know, do the work and then you leave. But there isn’t any promise of tomorrow that they would come again.

Juan Carlos Velasco: Correct. Well, actually, we did have some of that. Um, what I learned is these two words that we educate business owners on is owner dependency, right? If you remove the owner out of it, the business cannot function. Right. So we did have recurring revenue, but we were just it wasn’t structured with systems. It was more dependent on the owners us being there. Right. So when my brother passed away, that was 50% of the, you know, kind of pulling the strings, right? Like on the relationships and all that.

Lee Kantor: Were you the ones doing the work though, or you were the ones selling the work?

Juan Carlos Velasco: Uh, we were the ones selling the work. Uh, so my brother was sales and then I was operations and finance. Um, and we, we had employees doing the work. Um, so that’s one thing that’s kind of misleading, right? Like you can have employees doing the work, but if it’s, you know, like on paper, if you owe more, right. Um, then you’re actually bringing in. Then it’s a wash or it’s, it can even be a negative, right? And that’s what happened to us.

Lee Kantor: So when they offered you the dollar, did you say you took it and then you were done? Or did you say, okay, let me figure some stuff out and maybe I can get a higher amount of money down the road.

Juan Carlos Velasco: Yeah, that’s a really great question. So, um, when they offer me $1, um, I said no thank you. Right. Um, but that was an education for me. So, um, I, it took me about two years after rebuilding. I, I actually, that forced me to go back to school to get my MBA in finance because I said like, it’s impossible that we spent, you know, five, six years building the business that I can’t turn this around. Um, so I eventually sold it to a comfort systems USA, uh, the right way right after I built it up. And I essentially just turned the keys over to them, right? I removed myself, I had people in place, I had value in the business. Um, and that’s essentially, you know, what I help businesses with now.

Lee Kantor: Now, did you ever consider let me sell it to my employees.

Juan Carlos Velasco: Um, I did, I did. Um, and there was a lot of emotional, um, you know, so it was my brother and he was my business partner. Right. So, um, there was a lot of emotion involved. Um, and within that time, um, we lost some employees, you know, there too. So that wasn’t an option. Um, after about a year or so, so I had to restructured. So we had lost, um, a lot of people that were originally there.

Lee Kantor: So then this kind of gave you a chance to do a clean slate and reboot it with your new knowledge and new systems.

Juan Carlos Velasco: Yeah. Correct. Correct. Um, and then you, you know, because, you know, you kind of think, you know, when you work in the business so much and you’re building that, you don’t see it from the outside. Right. Um, and for me, that was a huge lesson. Um, but what I eventually did with, with the people inside, I actually did take, you know, the, you know, the employees that we had left and I groomed them right. And I built them. So they were part of the business when it was acquired. So, you know, they were actually at a really good position when I left.

Lee Kantor: And then they become kind of assets for the new owner.

Juan Carlos Velasco: That is 100%. Lee. So, um, and that’s what you want, right? Because when that owner or that CFO, when they’re run by my business, they didn’t see assets, right? Like we had trucks, but, you know, the employees were dependent on us and, you know, you know, you know, us answering those questions. But they were assets when I left, right? They were dependent on themselves. We had a hierarchy. Um, you know, we can go on vacation, right? You know, one of the tests that I tell our business owners, like if you, you know, if you go on vacation for 60 days, right. Um, and if you can honestly answer the question that when you come back, the business will be in the same spot or even better. Um, then there’s owner dependency, right? And there’s things that we don’t know that rely on us. If we could just walk away right.

Lee Kantor: Now when you’re defining owner dependency, um, you mentioned being able to leave and at least maintaining the status quo, but how much better is it if when you leave, then the business grows or you sell something new or you know, somebody you know, joined or you know, where it’s not just the status quo, it’s actually able to grow without you physically being there. Is that kind of the gold standard?

Juan Carlos Velasco: Yeah, yeah, absolutely. 100%. Because I mean, if you think about it, you know, and you know, when I realized this happened, it’s essentially for you to be able to, you know, have a life outside of your business, right? Um, so you should be able to leave and continue to grow because, you know, like even within those 60 or 90 days, I mean, you still want growth, right? And it’s not just for the owner, right? Like we, like, we definitely have to think about like the employees and the lives within the company itself. So you want that business to be self-sufficient, to be feeding all those families that are working within the company. So absolutely, you want it to grow. And, you know, here, um, in Florida is like ground zero for this. So at every level, so we have one of the largest Hvac and trades workforces in the country. It’s 492,300 to be exact. Right. So and we’re also adding 3 to 400,000 new residents a year who, you know, eventually need, you know, these services, right. Uh, but nationally, there’s about $5 trillion in small businesses that are going to change hands as baby boomers retire. Right? Um, it’s happening now. It’s, you know, it’s going to continue to happen. Most of them don’t even have a plan now. And there’s the Florida specific risk. No one talks about early 40% of small businesses never reopen after a major disaster. Right. And like, and, and that’s just astounding, right? So, and this is just like a natural disaster. So even if you have like a personal or like a business life event, um, you know, that just adds to it, you know, like I did like losing my brother. But, um, yeah, so essentially, I mean, you want the business to be running and start, you know, reducing the owner dependency.

Lee Kantor: Now, like you mentioned that a lot of businesses, especially in the trades, they got started because maybe something happened, they got fired. They’re like, I want to be my own boss. I want to do this. They’re the ones doing either the work or the selling of the work. And then it, like you said, it kind of dies with them. If something bad happens, they don’t have a sellable asset. What are you specifically doing to help those owners? Kind of, number one, understand that they don’t have a sellable asset, so they’re not kind of blindsided by it at the last minute where they can’t do anything about it, but maybe get ahead of it a bit. Can you talk a little bit about the service you’re providing for those owners? Like what’s kind of the the first move they should be thinking about?

Juan Carlos Velasco: Yeah, 100%. That’s a really great question because it can be overwhelming, right? Um, so the very first, um, I identify, uh, and I help them identify it’s what’s the biggest revenue leak? Meaning what is the biggest, um, attachment that the owner has in the business? Um, that is leaking revenue. If they stepped away a lot of the times, like a lot of businesses that I talk to is, you know, it’s revenue of course, right? They want to keep that revenue consistent, but between the revenue and the profit, if the owner steps away, um, what is being lost? You know, you know, are they the ones that are just quoting the jobs, you know, or are they the ones that make the final decisions? Or are they the ones just, you know, you know, kind of coordinating all those jobs, right? So we identify the biggest revenue leak tied to that owner, right. Um, and then so we identify it and then we start building systems around it. Usually, um, most businesses have the people and the capabilities internally, but it’s very hard to see when you’re in it. Right. So that’s the very first step. We identify the biggest revenue leak that’s tied to that business owner.

Lee Kantor: So is that something you and your team can tell kind of at a glance at this point, since you’ve been doing this for a minute, or is it something that requires kind of a deep dive into all their processes and systems, books, things like that?

Juan Carlos Velasco: Yeah, that’s a really great question. So we’ve been so I learned this the hard way. And then ever since then, I, I kind of reverse engineered it, right? So I call it like the seven pillar system. Um, there’s really seven things inside a service, a home service businesses that we can identify pretty quick. Um, one is going to be leadership, right? The other one is revenue, right? The other one is marketing, right. And one is sales and follow up. The other one is operations. And then you have finance and then institutional knowledge, which is a knowledge that’s only in the owner’s head. So we can speak to a business owner, look at the business, identify which of these seven pillars are the ones that that has the highest attachment to the owner. And then fix that one first.

Lee Kantor: And that’s how you do it. You just kind of pick the, the one that’s in worse shape and then just kind of work from there and just keep building it up one by one, one.

Juan Carlos Velasco: One, one. Yes, one 100%. So, um, so with when it happened to me, it was operations and it was leadership, right? And, and sales. So sometimes there’s multiple, but we take the very first one, um, and then work our way down.

Lee Kantor: Now what does it look like from the, because in these businesses, I would imagine, especially in the size that you kind of serve, the multi-million dollar home service business. On the outside, it might look like everything’s fine, like there could be cash flow, there could be employees getting paid every week. They’re not stressing about things like that. So from the outside, they may not see a sense of urgency to fix this. Um, how do you kind of elevate that information to the owner so they realize, hey, this is something that you have to fix if you want to exit successfully down the road.

Juan Carlos Velasco: 100%. Um, so I essentially, I mean, I, I share my story, right? And like the most important thing is, you know, they have to see themselves, what are you going to do ten, 15, 20 years from now? And they don’t even have to exit. You know, one of the things is when. So I just had this business owner tell me this other day, um, that is one of my clients. It says, Juan, I realized I have a high paying job, not a company. And I’m like, that’s it, right? Like, so I try to identify with them. It’s like, and, and you said something really, really importantly, like that was my brother when he started this company. And like most tradesmen, it’s because, you know, they, they’re working it at a company and they’re like, you know what? I can do this myself, right? Which is great. They, they have the talent 100%. But then you, you, you get locked in is where it’s like you’ve built, you know, like the business owner told me, um, you know, you’ve built the business, you’ve built a job, not a business. Right? And so that’s the first thing that I helped him identify is, you know, what is it that you want to do with your family? Right? Like going forward, like, can you be attached to this company for, you know, until you’re 60, 70? One of the hardest things that I have, the conversations that I have to have sometimes with business owners, there was, um, a business owner that just closed their business up in Ocala, Florida, just because of that, right? Because they were just hemorrhaging money and he was so attached to it. And it’s that control as well. So I really try to educate them as like, you know, there is life outside of the company that you can actually still keep it still generate revenue, or if you want to sell it, that’s fine. You don’t have to. But I try to paint the picture. What do they want to do? You know, um, with their lives, with their family, you know, ten, 15, 20 years from now.

Lee Kantor: And then is there something, is there a story you can share that maybe, um, illustrates exactly the impact that you can have in an organization? Don’t name the organization, but maybe share the challenge they came to you with specifically and how you were able to help them get to this new level.

Juan Carlos Velasco: Yeah, 100%. So, so one story that, um, uh, is, is a perfect example of this. So, um, is a two person operation up in California. Um, you know, he started for a national company, you know, um, bought a truck, started, you know, started running about this was about 4 or 4 years ago. Um, you know, he found me, you know, we connected. Um, he was doing everything right. You know, him and his, um, other guy, it it wasn’t his partner. And then I started slowly kind of educating them where he could be. So he started with himself and his helper with two trucks. Then eventually, um, he did all the installs in the service. He, he hired a couple install crews. Right. All of a sudden he said, hey, I don’t have to do all the installations. I’m like, no. So then he started doing estimates. And then after the estimates, we trained someone else, one of his leads to do the estimate. And then he pulled back. Right. Um, he, he doubled in revenue. Right. And he’s actually working less. So now he’s just supervising in. Our next step is to build another division within the company itself. So now he’s about six people. Um, now a huge life event just happened with him is his mother died and he’s like, Juan, I need to figure this out. You know, he has like four kids and their life event for him is like, now how can I step back and spend more time with my family? Right. Um, and the profit continues to increase by him removing himself, but his mind, his mindset changed a little bit. And then just it was forced now because of his life event. Right? So, um, but that’s a perfect example of, you know, you can start where you are and then, you know, it is a progressive growth, but it can happen quicker than most people think.

Lee Kantor: Now, how do you deliver your services? Is it kind of one on one coaching? Is this kind of a cohort? Is this a group coaching? How um or is it kind of self-serve? They just kind of learn a, you give them a playbook? Like how do you deliver the services at scale? My profits.

Juan Carlos Velasco: Yeah. So that’s really a great question. I always try to tailor to the business owner. Um, there is self-serve businesses, right? I have a lot of education on, on my website. I have free tools on my website. People can go in and, you know, identify all this stuff. Um, for those business owners that really want to be able to scale, right? Um, I do provide that one on one service, uh, to them. And then within, you know, the first 30 days, we identify everything. And then within 90 days we start seeing that movement. So it happens pretty quick just because we’ve done it so many times. Right? Um.

Lee Kantor: So it’s kind of choose your own adventure.

Juan Carlos Velasco: Yeah. Yeah, absolutely. Because like, you know, like, for instance, like that example that I gave you with the gentleman in California, you know, it was he started more self-serve, right? Because he wasn’t ready. Like it was timing. And then he saw, you know, we made some changes. He saw the opportunity and then he started, you know, you know, scaling, growing. And then I started to work. We started working with them one on one. And then that’s when he really saw it started growing. Um, and, and it is timing for the business owner, you know, not everyone’s ready, um, to start growing, um, you know, or to start, you know, kind of changing, but so we do have some plenty of education out there for people. But then obviously, you know, we do have the one on one and that’s when we can really make a huge impact.

Lee Kantor: Now, um, is there kind of an ideal client profile? You mentioned that you, you started out in the trades, but is this something that that’s your sweet spot? And this is what we’re kind of doubling down on what I know and what I do well? Or is this something that kind of can impact other types of businesses?

Juan Carlos Velasco: Oh, that’s a really good question. The fundamentals of businesses is the same, right. Um, we mentioned that statistic of, you know, like of like natural disasters, 40%, you know, we saw this in the, in the pandemic when they were forced to close for, you know, 60, 90 days or whatever that was. A lot of businesses closed. Uh, again, that was because of the owner dependency side of it, you know? Uh, or at least tied to it. So no, so this does my, my specialty is a, is the trades. Um, but you can apply these, um, seven pillars to any business, you know, really, um, we do try to focus on the trades just because it is our specialty. Um, but we obviously try to assist as many as we can just because, you know, like with the statistic that we said, you know, it doesn’t matter what business it is. I mean, eventually, you know, you do want to retire or maybe sell the business or just have it run without you. And you can apply the same tools to all of them. But we do specialize in, in, in the trades.

Lee Kantor: Now, is there something that happens in an organization, maybe somebody who’s running a business now that’s listening right now that maybe they’re not clocking as, hey, maybe he’s talking about me that I should, you know, kind of have a better, better systems. Is there any clues or signals that maybe you aren’t? Um, kind of as ready to, um, pass the baton as you think you are or that there might be trouble if one of those kind of, um, you know, either big events happen that forces your hand a bit and, and you it’s much better to be proactive, I would imagine, than just kind of trying to triage something while you’re in a crisis. And now you got to deal with this on top of it. So are there some clues or signals that a business owner, you know, might not be noticing now, because it isn’t kind of, you know, it’s not bleeding in front of them, but it could be slowly bleeding out without them knowing.

Juan Carlos Velasco: Yeah. No, so the 100%. So, um, there’s really two of them. So, so one is obviously, you know, I said, you know, if you can, you know, go on vacation.

Lee Kantor: Right? So vacation if you haven’t had a vacation in a while. That’s probably a clue that maybe something might not be optimized in your business.

Juan Carlos Velasco: One one 100%. Um, and then, you know, the other side of it too is, you know, if you never even kind of thought of like outside of the business, right? You know, like you, you know, you, you seen yourself outside of the business. Um, and if any of this sounds familiar, like, you know, if you go to our website scale my profits, you know, we do, we did build, uh, a free owner dependency score, uh, tool, um, it’s 100% free. Um, it takes a few minutes and it’ll show you exactly where you stand. So, so even if any of this sounds familiar, you just score yourself. Um, and it’ll give you in those seven areas where that dependency is, right? Um, 100%.

Lee Kantor: So if somebody goes through that, they go to the website, they take the assessment and it gives them, you know, I would imagine, you know, one through seven, it says, hey, you better work on number four. Um, what is kind of the low hanging fruit? Is there some kind of just general advice you could share with the listener? That’s if you’re going to do one thing, you know, this is a good thing to start thinking about or doing today.

Juan Carlos Velasco: Yeah, one 100%. Um, I would say look internally, um, at your operation step number one. And if you’re relying too much on two things. One, we, we spoke about the owner dependency, right? And the other one is if you’re relying on, let’s say, marketing to give you sufficient sales to keep the business going, then there’s an issue. And what I mean by that is if a lot of the times we want to find solutions outside of us. Right. Um, hey, you know, um, I’m going to leave for a week or whatnot, you know, let’s turn up the marketing, right? But you have revenue leaks internally. So that’s, that’s the number one thing. If you feel like you’re dependent too much on anything and it could be yourself, you know? It could be one customer that’s providing all the revenue. Um, it’s a dependency on something external. Um, that’s really a red flag, right? And that’s what, you know, I didn’t realize that, you know, kind of going through it. So if there’s 1 or 2 things that are very dependent on your business staying open, that’s the very first focus.

Lee Kantor: Right? And so most people think outward, their first move is bring in more leads and that’ll solve all the problems where a lot of times, you know, that could just exacerbate an existing problem. If you have too much leakage internally, you’re not really solving the problem, you’re making it worse.

Juan Carlos Velasco: 100%. So the analogy that, you know, um, that it’s like, if you’re, if you have a boat and you have leaks in it, right? Um, the faster you go, you might get less water, but as soon as you stop, right, that water just goes take over the boat.

Lee Kantor: So right, you got to pay the price at some point you, If you’re going, you’re going to have to fix the holes at some point, right? And today is a better day than tomorrow.

Juan Carlos Velasco: Yeah, 100%. And you know, and those, those, those seven pillars, if you take that owner dependency score, it’ll identify it for you. Um, but, but yeah, so if there’s dependency on anything external and we’re not looking at internal, that’s step number one. Yeah.

Lee Kantor: And what do you need more of? How can we help you?

Juan Carlos Velasco: Well, you know, just kind of spread the word more. Um, I think with the change of hands, uh, one of the things that really, um, hits my heart is when a business closes, right? Because of those internal leakage or, you know, of, you know, natural disaster, you know, it just really spreading the word before a, a, a life event happens. Um, hey, you know, we do have a plan going forward, right? Because there are options and there’s another thing that people need to realize too, that private equity, you know, there’s companies out there that are paying up to 18 times earnings for a well-run company. Right? If and this is nationwide, I got offered a dollar because I learned that lesson. Just educate yourself on where the business is standing. What could it be worth? Or can it run without you? Um, and there’s still an opportunity to, you know, turn what you work so hard into an asset.

Lee Kantor: Well, one, um, amazing story and a great example of how to turn tragedy into something positive. I mean, kudos to you. You should be so proud. And your brother would be so proud of what you were able to accomplish in taking something that could have broken a lot of people, and you transformed it into something really miraculous. Well, thank you for doing that. We really appreciate the work that you’re doing in this area to help other people. Um, not suffer the way that you suffered in that moment of crisis.

Juan Carlos Velasco: Thank you dear. I really appreciate it.

Lee Kantor: So if somebody wants to learn more and get on your calendar and take that assessment, what’s the website? What’s the best way to connect?

Juan Carlos Velasco: Yeah, just go to our website. Um, scalemyprofits.com. Um, you’ll find plenty of tools, plenty of information there. And then, you know, if you want to have a chat, uh, we also provide like a free diagnostic call, um, like on your business as well. You could just jump on the calendar there.

Lee Kantor: Good stuff. Well, once again, thank you so much for sharing your story. You’re doing such important work and we appreciate you.

Juan Carlos Velasco: Thank you. Lee.

Lee Kantor: All right. This is Lee Kantor. We’ll see you all next time on High Velocity Radio.