Tommy Mello is a busy guy.
He owns A1 Garage Door Service, a home services business that started with $50,000 in debt and grew to over $30 million in seven years.
He hosts his own weekly podcast, The Home Service Expert, to share knowledge with other highly ambitious home service entrepreneurs.
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He wrote a book, Home Service Millionaire, to share tips and tricks with other home services business owners so they might become one, too.
He’s an owner, partner or investor in 14 other businesses, including a Christmas-light installation service called stayofftheroof.com.
“Yeah, it’s just a fun ride lately,” the successful home services entrepreneur says.
It began 14 years ago, when a friend asked Mello if he knew how to paint garage doors.
Key TakeawaysPainting garage doors leads to fixing and installing garage doorsMastering the learning curve as a business ownerKnow when to outsource, and when not to.Change your mindset to the business you want to becomeFocus is everythingKnow the difference between company profit and your ownSet up systems for everything, along with checks and balancesOther tips, tricks and bits of wisdom
Painting garage doors leads to fixing and installing garage doors
As a kid, Mello mowed yards and shoveled snow for extra money. Then, he moved to Arizona to work for a successful landscaping company. That’s when a roommate asked him about painting garage doors.
“At the time I didn’t know how, but he said, ‘It pays really well. I’ll pay you $100 per garage door.’ I said, ‘$100? I guess I could learn.’
“I got to the point where I was painting 10 to 12 garage doors a day on the weekends, so I was making an extra grand after you take out the paint costs,” explains Mello, who was 23 at the time.
With a bachelor’s degree in business, Mello continued working for the landscaping company and as a bartender, too.
“I never really had a hard time making money,” he says.
In his new role as an industrious garage-door painter, Mello started wondering how much money he could earn by fixing or installing garage doors, instead of just painting them.
“That’s how I got started,” he says. “I had a partner and in 2010 I bought him out, and I took on a lot of the debt.”
Mello admits he didn’t know the first thing about CSRs, dispatchers and technicians, nor did he understand what “KPI” (key performance indicators) meant, or how important conversion rates and average tickets are to the home services industry.
“It took me quite a few years to really understand and put it all together,” Mello says. “Someone asked me the other day, ‘If you went into another industry in the home services, do you feel like you’d be successful?’
“I said, ‘Yeah, absolutely, because it’s all the same things.’ There are minor changes...but all the same universal rules apply to most home service companies,” he says.
Mastering the learning curve as a business owner
Mello knew the basics of how to hire employees, but recruiting, training and retaining his employees required a different skill set.
“People talk about building culture, but when you’re a small business, you are the business,” Mello says. “We didn’t have manuals or standard operating procedures, so everything was chaos. I was the dispatcher, I’d pull over to answer the phone...there were no systems in place.”
Luckily, Mello’s CPA took him under his wing, encouraging the young business owner to read a new book every couple of weeks—such as The E-Myth by Michael Gerber or The Ultimate Sales Machine by Chet Holmes—to learn how to hire the right people for the right positions.
To be successful, he learned, a good business must create a well-defined operating system with checks and balances for every aspect.
“Instead of being a jack-of-all-trades, you want to be a master of one category within the business,” he says, “and you need a really nice, in-depth org. chart, and just manuals and standard operating procedures for everything.”
The one piece of advice Mello wishes he knew back when he first started running a business? You’ve got to find the right mentors to show you how to act like the business you want to become.
“Find a role model who’s doing what you want to do,” Mello says. “Tell them how amazing they are, tell them you want to become just like them, tell them you want to shadow them for two days, ask them questions, and then go find 10 more and visit them once a month.
“You might think it’s an expense, but it’s really not. It’s going to supercharge your business, and it’s going to save you a decade that I wasted.”
Tommy Mello’s guiding principles for success in the trades
Know when to outsource, and when not to.
“When you’re small, you want to outsource everything,” he says. “I tried to outsource my call center, and that was a big mistake. They were very good as a secondary call center, if we couldn’t get to the call. But they didn’t have the same culture, they didn’t understand the business as much.”
Mello’s advice? Don’t try to become good at something you’re just not good at—such as serving dual roles as the company’s technician and CPA, or trying to be a sales pro when you’ve never sold a thing in your life. That’s the time to hire a specialist to join your team or outsource the work to another professional.
“Marketing, for instance, has to really pay attention to the CSR role, because you want to know if this marketing source is booking good calls, and you want to know if it’s a huge average ticket and could we be spending more on this marketing source?” Mello explains. “Each hand needs to talk to the other hand.”
Change your mindset to the business you want to become
One of the first things Mello’s CPA mentor told him to do was take down the bikini calendar hanging in his office.
“It was kind of funny, because I grew up in a transmission shop my dad owned, and I was just like, ‘This is normal, who cares?’ He mentored me as far as he could for not being in the service industry,” Mello says.
The garage door business owner then met Al Levi, who authored The 7-Power Contractor.
“He was a huge role model and a big consultant for us,” Mello says. “He opened our eyes to a lot of stuff.”
Changing his business mindset was a huge thing.
“Understanding the fact that I own a business, and I should be operating in the business and on the business,” Mello says. “My biggest challenge, and it’s not everybody’s, but I know how to make a lot of revenue. I just didn’t know how to keep a lot of it.”
Focus is everything
Mello thought he could do a little bit of everything, from operating his warehouse and controlling inventory to buying all of his own trucks and fixing them on-site when they broke down.
However, with few inventory controls in place, along with incidents of theft and spoilage, Mello finally decided enough was enough.
“We were spending more than we were making doing all this stuff, and I just realized focus is everything,” Mello says.
For contractors who think they can do everything, he recommends they read two books by Gary Keller, Essentialism and The One Thing.
“I see these small guys who are like, ‘Yeah, I do a little bit of commercial, a little bit of residential, I do Home Depots, I do home warranties, I also get involved with new builders.’ Those are all different business types,” Mello says.
“Focus on one, get so big at one, then you can take on a new branch. I think you could do both and be successful, but you’re only going to grow so big. ‘Nail it and scale it,’ is what I say.”
Know the difference between company profit and your own
When starting a business, the biggest mistake most contractors make is not understanding the difference between how much money they earned vs. how much profit the company earned, Mello says.
As a successful home services company, Mello believes an owner should be able to pay themself a six-figure salary, in addition to earning 10 percent to 15 percent in profit for the company. Depending on the industry, he says a company profit of 20 to 25 percent means you’re really good.
“It’s important to understand how that works,” Mello says.
And to understand that company’s profit is not the same amount you paid yourself. “They are two different things,” he says, “and you’ve got to separate the two.”
Set up systems for everything, along with checks and balances
Setting up manuals and standard operating procedures at A1 Garage Door Service, with Levi’s help, proved invaluable in establishing a strong foundation to grow the company.
“Buttoning those up is important, and the numbers should dictate the decisions,” Mello advises.
“You shouldn’t say, ‘Well, I think we’re doing good.’ You should say, ‘Based on the black-and-white key performance indicators we’ve set up for this department, we’re killing it!’”
Automate as much as possible, so you don’t need 10 people to do payroll. Mello says he relies on ServiceTitan’s home services software to run his payroll, dispatching, scheduling, reporting, and many other things that keep his garage door business rolling.
“Now, payroll takes a half an hour every other week, and our payroll is half a million dollars,” Mello says. “That half hour is how long my COO just spends looking at it … but it used to take 20 hours a week.”
Create a clearly defined organizational chart with no more than five direct reports for any one manager.
“What I’ve learned is people go through peaks and valleys,” he says. “The peaks are when you’re doing your best; the valleys are usually because you get too many direct reports, and stuff starts slipping through that shouldn’t have and a lot of mistakes happen.”
Other tips, tricks and bits of wisdom
Tommy Mello shared advice on multiple topics during his Toolbox for the Trades podcast appearance. Among them:
On training new recruits …
Invest heavily in training: New A1 apprentices train for three or four weeks in their own market, then spend six more weeks in Phoenix at a full-time training center using the company’s own learning management system (LMS).
“I feel very unique in the team that we’ve built, the software which we’re a part of with ServiceTitan, the LMS, and other things,” Mello says. “I feel like I’m just getting started...like I’m at the fetal stages of what we’re becoming.”
Market your apprentices to their family and friends: During training, Mello asks the new recruits to contact family and friends to offer a free service call or tune-up. It not only helps the new recruits become comfortable with using the company’s tools, but also helps to build positive reviews for the company’s brand.
Check your applicants’ review history: Mello says he always checks to see if an applicant is a “Yelper,” someone who leaves good or bad reviews for companies on Yelp, because it gives him insight into who he’s hiring.
“If it’s all one-stars, every other week, I’m thinking this gal is hard to please,” he explains. “We look at your social media, we check your credit score (because if you’re in the 400s, you’re probably not responsible), and we check to see if you filed taxes.”
On building a positive company culture …
Become a leader who cares: Stop thinking about “What’s in it for me?” or “How do I make a lot of money this year?” Change your mindset and start looking at building a team to win the game.
“When I started saying ‘How does everybody kind of get what they want, how do we win as a team?’ (that) is basically when things started changing on my behalf,” Mello says. “Don’t be afraid of change. Embrace change.”
Build a fun work atmosphere: A1 built a game room for his employees, outfitted with massage chairs, foosball, a ping-pong table, air hockey and pinball machines. Mello wanted to create an atmosphere where employees didn’t hate coming to work on Monday mornings.
“How do we create a relationship with our employees, to where we go out and do fun things together? That’s probably the best way to build something that not a lot of people have, and it’s very special when you can,” he says.
On gaining financial control …
Keep your balance sheet clean: “Learn the financial aspect of the business, because a lot of us who start in the home services, we don’t know enough about the finance side. We don’t know enough about the key performance indicators, and we don’t know where we should be spending our day,” Mello says.
Keep track of spending: Mello says he didn’t always like logging into the bank account or looking at credit card statements, because he thought he was doing OK. That is, until he reached $800,000 in credit card debt. “It was bad,” he says.
Build your business to sell it: Some people don’t think in terms of selling the business, but you should.
“You should be building it to where it’s a commodity,” Mello says. “You have shareholder responsibility, you are the shareholder if you’re a single-owned LLC, and you have to create shareholder value.”
You do that by selling more service agreements, doing more follow-ups, automating your business operations for better efficiency, and offering better training for your employees.
“This is your job, and if you don’t like it, then don’t go into business,” Mello says. “I always say, ‘Better Your Best.’ You’ve got to set big goals.