Carpet Cleaning Business Financial Management with Chris Papin, CPA

You need to track monthly revenue, labor costs as a % of revenue, average job size, cash flow, customer acquisition cost, and customer lifetime value. Side by side, these metrics help you understand both operational efficiency and long-term profitability.

JOHN CLENDENNING
1:49

Hey, welcome back for another exciting episode of the Carpet Cleaner Success Podcast. So today I’ve got a really special guest for you. It’s Chris Pappan, and Chris is a CPA and attorney and helps small businesses with that whole thought around tax planning and running your business properly, you know, putting the right hat on and stuff like that. Some of us get to our 40s and 50s and go, dang, I wish I’d done stuff differently, you know, 10, 20 years ago, set things up differently, all of that kind of stuff. So I get asked these questions a lot in our coaching sessions and, you know, when I’m dealing, talking with the industry on a regular basis. And I just thought Chris would be a great guy to bring on the show and let’s unpack some of this and try not to get too nerdy, but let’s get into the weeds a little bit and see, you know, what you need to do to think like the CEO of your cleaning business, your home service business, and not just the, as Michael Gerber would say in The E-Myth, not just the technician, but you’re actually running the business so you can maybe be on the golf course and the business still runs on its own at some point in your life. So anyways, if that makes sense, uh, welcome, Chris. Thanks for, uh, showing up on the show today.

CHRIS PAPIN
2:58

John, it’s a pleasure. I appreciate the opportunity. And this is our small little world. So, hopefully, we got something to share that’s meaningful to folks.

JOHN CLENDENNING
3:08

Hey, so talk a little bit about you. Let’s introduce you to the crowd. Who’s Chris? Um, what got you into this line of work? And, you know, all that kind of stuff? What keeps you ticking? What makes you happy?

CHRIS PAPIN
3:20

Well, that, that may take up the whole episode, but I’ll try to do an elevator speech version.

JOHN CLENDENNING
3:26

Fair enough.

CHRIS PAPIN
3:26

So, Chris Pappin, attorney and CPA. I’ve got a CPA firm and a law firm. We represent small businesses and small business owners. Kind of our tagline is, you know, this is who we are and who we represent. So, we really don’t know any other way, right? But I think this resonates with folks because they forget that sometimes their service providers can be a wealth of knowledge in a lot of different ways. You know, a new startup, we predominantly focus on service-based businesses. So carpet cleaners, you know, I’m gonna say trades is probably a better way to frame around that, you know.

JOHN CLENDENNING
4:07

Yeah, the blue-collar side of things, right? Yeah.

CHRIS PAPIN
4:09

That are doing things. Um, even if it’s just clicking buttons, you know, advertising, insurance, technology, software. But in this bubble, most people have both roles, kind of like you illustrated. They are both the technician and the entrepreneur. You’re the owner and the operator.

JOHN CLENDENNING
4:27

Yeah.

CHRIS PAPIN
4:28

So that, because we represent several hundreds of businesses any given year and have several thousands of experiences over this time, I might see something 6 or 7 times this month that you’ve never experienced before. So we try to position ourselves in, in this board of directors type role where we’re sitting shoulder to shoulder with business owners to help them reason through and decide on what’s best or how to grow or whatever those things might be. Now, they might jettison a few things off to us, like CPA firm will do tax and accounting filings, law firm can do entity formations, buy-sell. exit planning type stuff. But really, it’s the decision-making. And I think that’s where a lot of people get stuck because they don’t know where to begin. They don’t know where they’re going to end. And it’s hard to kind of figure out that quicksand in between.

JOHN CLENDENNING
5:19

And it really is. And just as a little caveat of mine, like, I’ve owned everything under— well, eventually under a corporate. I think it was 2002, 2003 we incorporated. So, it wasn’t a sole proprietorship as we grew and we’re heading towards that 7-figure mark and buying other businesses. Um, and even when we went to sell the businesses off, we sold them off as entities under the corp and eventually sold the corp off to the person who bought the final group of things. Um, so without that liability, they took— like, I, I was able to offshoot the liability and learned that from my accountant, um, and, and lawyer, both of those. We were able to funnel off some cash into a holding co in the, you know, the year before and prep with all that. I wouldn’t have known any of this.

JOHN CLENDENNING
5:58

I need to literally— I didn’t know you at the time, but I needed to talk to, to one of you to figure all that out. So, What are some of those mistakes that you see sort of these average, like, because you’ve worked with a bunch of them, what are some of the big common mistakes that you see come up time and time again that, um, could really be nipped in the bud if they, they planned early, met with somebody like you early, something like that?

CHRIS PAPIN
6:20

Yeah, I see 2 things that happen the most, the most common. The first is, is kind of the reality of life. Uh, I didn’t know that I was going to end up in this business. I thought I might try it, and then 18 months later, here it all comes. Like, I, you know, I got job 1 and then I got job 15, and I’m overwhelmed and I’m trying to keep up with myself. So we didn’t really go in with an intentionality, and I get that, and I’m not saying you don’t. Like, if you have an opportunity to earn, go earn. But you do have to pause and remember, once a business, you get to play by business standards regardless of whether you know them or not.

CHRIS PAPIN
6:57

Ignorance is not an excuse. So one that we use as an example that I, that I think people can relate to is, you know, hey, I got a few jobs, then I hired somebody and I just started paying them. Cool. What about workers’ comp laws? Because the insurances or these government regulations lay over the top. You can get fined $1,000 a day for not properly complying. That can bury people.

JOHN CLENDENNING
7:22

Yeah.

CHRIS PAPIN
7:23

Now, I get that that one’s an easy one and a lot of people know it, but it’s, it’s a good example of sometimes you got to stop, dot the i’s and cross the t’s because you don’t want to miss something. Yeah.

JOHN CLENDENNING
7:33

Second, I mean, I’m in Canada here just so I just put a little— the, the other— like on that workers’ comp. Um, so what do you guys call it in the States? I’m just trying to remember the numbers from every— the 1080 or like your employee. Like in Canada, you can’t subcontract. Um, and you got to know your laws. We got clients in UK and New Zealand and Australia, and I get to ask these questions and throughout the entire United States, most of our clients. And, um, We get asked that question a lot. Can I have employees as subcontractors? Is that okay, John? And I’m going, well, around here it isn’t, because unless they own their own van, their own equipment, and you’re just one of their many jobs, it doesn’t apply. So they have to be on payroll.

JOHN CLENDENNING
8:08

And then you’ve got to deal with all your federal and state laws around that.

CHRIS PAPIN
8:12

So I tease people on this because in the US, independent contractor and employee have 2 different meanings. And it’s similar in most jurisdictions that kind of follow like a, like an English or French-based rule of law. But if somebody says to me, can I have an employee as an independent contractor, I immediately say no. You defined them in the first statement. They are an employee. Move on. You know you’re trying to get away with something, whether it’s intentional or unintentional.

JOHN CLENDENNING
8:41

Yeah.

CHRIS PAPIN
8:42

And just because you call it that does not mean that your Department of Labor functional equivalent is going to agree with you. And all of these different tick boxes. Yeah, either they’re a business or they’re not. It’s pretty simple. If you’re the only person they’re working with, they’re an employee. Live with it and move on. Yeah, yeah.

JOHN CLENDENNING
9:01

And then, and deal with what that means exactly— the, the WSIBs, everything else like that. Yeah, it’s like sometimes— I think it was my granny told me this one years ago, but my— from Ireland. But, you know, um, when I was just a wee boy, she was like, John, if you live life, uh, try and live life the easy way, it’s going to be really hard. If you live it the hard way, you’re going to have an easier time. And, uh, I think Granny had some good advice, like just do it right from day one and stop trying to pull the wool over Uncle Sam’s eyes, because pretty good chance that’s not going to happen for the whole long term of a business.

CHRIS PAPIN
9:31

Well, the struggle is, is by the time you figure it out, sometimes it’s too late, plus penalty, plus interest, and you can’t overcome those things. If it’s good faith, I made a mistake last week and we’re trying to correct it, you can overcome that. But to get everything reclassified, plus, you know, whatever your payroll taxes are that you didn’t pay, penalty interest and everything else, that’s where people get in trouble. It really is.

JOHN CLENDENNING
9:55

So, yeah, and I say— Yeah, and we’ll get to your second point in a sec because you mentioned there was 2. But the other one is that— so from my world, we do— we help businesses market.

CHRIS PAPIN
10:04

We’re growth partners.

JOHN CLENDENNING
10:05

We help them grow. We help them market. We consult them on things that work really, really well to grow. 7-figure home service businesses, which is rare. Less than 1% of home service businesses make it to 7 figures according to national stats that we’ve come across in many places. Um, and most stay as solopreneurs, just like the solopreneur stat, like 85, 86% of solopreneurs never go beyond solopreneur, right? So all of these kind of stats fit in. And how do you get out of that? Well, you do things differently. One of those things I always talk about is marketing is not an expense.

JOHN CLENDENNING
10:33

Marketing generates a sales conversation. Sales conversations generate revenue, and then you keep retention on the back end and build the machine.

CHRIS PAPIN
10:40

Yeah.

JOHN CLENDENNING
10:40

The other one is that knowing your numbers and like, you know, legal and financial planning is not a someday or an unnecessary, you know, a necessary evil or an expense either. It is a critical function like marketing of business that needs its own line item, needs its own planned budget. It’s part of day one. And again, I get it, a lot of people don’t think that way, and you and I both know that, but start thinking that way from this moment forward. If you’re hearing this conversation, you know, and you— it isn’t that primary focus where if it’s the once a year that you talk to your tax provider, um, probably not enough to be in business if you’re planning this to be an actual thing that you exit from someday, sell, have organized well enough to sell for multiples of EBITDA and all of the fun stuff that you can get to versus just a hobby that, you know, you’ll discard the truck on Kijiji someday and start again, right? So, or do something else. If that’s the plan, that’s a hobby. But if you’re actually running this as a business, You can grow it to where, you know, you are golfing a couple days a week and the business runs with staff and teams, but you have to be intentional from day one, including this part of it, the legal and financial. So, yeah.

CHRIS PAPIN
11:49

Yeah, you’re spot on. Number 2 dovetails with this in the sense of misunderstanding financials.

CHRIS PAPIN
11:56

Because the folks I work with have a pure intent to be in it and kind of know what’s going on, but they think in the terms of bank statement ins and outs. They don’t think in profit and loss and balance sheet. They don’t think in terms of tax. So, you know, the, the common faux pas that plays out in all of this stuff is debt service distorts the way cash flow plays. I’m saying words and people are going, what’s debt service? What’s the thing? Like, did you buy a truck? Did you get a loan on your truck?

JOHN CLENDENNING
12:25

Yeah.

CHRIS PAPIN
12:27

Those are the things that— it’s completely normal, but Your bank account can have $0 and you can have money owed and nobody gives a rip what your bank balance is. So, if it’s taxes, if it’s debt, if it’s all these other things, this is, you know, I’ll set this up, we’ll talk about it later. But all of these different things and I’ve got a book, 168 Hours, that outlines all of the different business functions, all of the things that are in a business plan. But what it really boils down to is you got to focus on the 5 or 6 that matter to you. One of which better be numbers. And I’m not saying you have to do it on your own. You can hire a guy like me to translate it for you, but you better damn well have an understanding because we assume that the bank balance has a certain amount in it. And that means I get a certain dollars that come home.

CHRIS PAPIN
13:14

And that assumption is 85% of the time what burns people. Yeah.

JOHN CLENDENNING
13:19

Yeah. No, I’d agree with that because, I mean, cash flow is like Cash flow is king to keep the business alive, but it’s not like, oh look, my bank’s balance is this, I can go buy that, which is a really common thing in not just, not just businesses, but just the average consumer’s life. Oh, look at it, honey, our bank balance says this, we can go do that without any thought of, you know, again, what, what debt is against that, what’s coming up, you know, and then the emergencies of life in business. The technician can literally drive the van without oil in it. Not saying that anybody did that. Carl, he bought my business so I can mention him now. But, and have the rods blow through the front hood of the truck about 45 minutes away from the shop on a Tuesday morning while I was heading away camping. Right.

JOHN CLENDENNING
14:07

So that can happen in a real business where you need to buy a new van and, you know, like the unexpected. And you better make sure that your, your whole entire financial plan isn’t, let me look at my bank account today and see what balance it is and make decisions off of that. So.

CHRIS PAPIN
14:22

And I would add to this, if you’re looking at your bank account, you’re looking at what happened Yesterday. It’s just a history of what you already know because you swiped the card.

JOHN CLENDENNING
14:32

Yep.

CHRIS PAPIN
14:33

Or tapped or whatever your version is.

CHRIS PAPIN
14:36

What most are worried about is what is about to happen, where the dollar is going to come from. And that’s a little bit of an art. I mean, I know as well as John does how much money you’re going to make tomorrow. We don’t. It’s a guess.

JOHN CLENDENNING
14:50

We don’t.

CHRIS PAPIN
14:50

Educated guess. Yeah. But with certain metrics in place, Hey, I made 10 phone calls today. I’m probably going to close 1 job. 1 job on average is $1,000. That means I’ve got $1,000 coming in in the next week. You can use those reasonable estimates to start to figure out how you should behave. What are the next steps that you should do? The technician, the minute you show up to a house, you immediately know 4 things that the homeowner does not know.

JOHN CLENDENNING
15:19

Okay.

CHRIS PAPIN
15:20

And sometimes you choose to say them, sometimes you don’t. But it’s the same thing in financial land. And that’s where we want to be. We want to see those blind spots. We want to help people overcome or at least try to anticipate through— I super dumb it down. I want rules of thumb as simple as, you know, 10% of your revenue is going to go in your pocket. I know that’s oversimplified, but I want it that way so people can have a predictability around it.

JOHN CLENDENNING
15:46

Yeah, that’s like I read the book Profit First and one of the mastermind groups I’m in, one of the guys is a Profit First coach or whatever. She brought it to us for 90 minutes, then we read the book. And it’s just the idea behind it is like, um, having, you know, I think there was one, I don’t know if it’s, um, what’s his name, um, Dave Ramsey or somebody else, but jars, you know, like have, have take your paycheck and, and put it into, or your different accounts and stuff like that. Same idea. Make sure that you allocate well and know what that means, um, becomes part of your you know, financial plan instead of just sort of bootstrapping it, uh, so that you do have that intentionality that so much of every dollar goes back to marketing to get the next customer, so much goes towards, you know, um, an emergency fund, so much goes towards, you know, servicing a debt and things like that. Uh, and then somebody like you can help out where, um, or somebody looking at the numbers or understanding the numbers, you don’t run into the situation like we ran into with a couple of clients where everything’s growing From leads and bookings and organic reputation and pay-per-click is generating thousands of dollars a month. And then, you know, I still get a call that say, hey, John, we’re down. Like, we’ve been with you for 5 years and we’re down in the last 6 months or whatever revenue-wise.

JOHN CLENDENNING
17:03

Like, we’re off 10%, 15% off of the same month last year. And I’m like looking at all our numbers and we meet on a call and I’m going, well, So everything on our side is up. So either you’re not— your booking percentage has dropped, or what’s your current average job now? Oh, I don’t know. Okay, well, when I last asked you that last time, like 3 years ago, we were able to look it up on your CRM or whatever, your QuickBooks or whatever, and your average job at that time was sitting about $450. Well, let me look that up now. Oh my gosh, John, it’s down at $308. $308 is my average job. And I said, okay, so you’re off by 33%.

JOHN CLENDENNING
17:35

So We’re working our butts off for you. You’re working your butt off and your technicians have slipped and nobody caught it. And it was hiding in the numbers, right? And unless you watch your numbers, you wouldn’t have known.

CHRIS PAPIN
17:48

This accountability scares people too, because now I have to discipline somebody that outside of my family I see the most, or I have to change my behavior to do the extra thing or You know, the, the one we see the most is people, you know, they start kind of slacking on Fridays and all of a sudden, you know, maybe it turns from a full Friday to a half Friday and then not a Friday and then revenue’s at 80%. We’re like, hmm, wonder why. I wonder why. I’m working 80% of the days, so I have 80% of the revenue.

JOHN CLENDENNING
18:22

Yeah, yeah. We’re not all, we’re not all doctors or whatever. We can’t take Wednesday off and go golfing, right? So So we don’t charge doctors’ wages either, right? So, um, so when should an owner start doing this proactive tax planning, um, and, you know, and things like that? Like, if, if we’re gonna say, okay, they’ve bought into what John and Chris are talking about now, we, we do have to think this thing through a little bit more. Things like tax planning and legal planning and stuff like that. But tax planning is the sort of the annual, at least it cycles, right? Um, legal planning should be, you know, decided, brought up every so often to see if it still aligns with what your plans are. Is that— are you handing it off to the family and need to do that? Oh no, your kids don’t want it anymore. Okay, now what is your plan? And we have to adjust. But that’s more multi-year.

JOHN CLENDENNING
19:11

But tax planning is sort of like aim at it, see how close you hit, right? Ready, fire, you know, aim, fire, aim, see how close you hit. But every, you know, you can plan through the year and then see how it turned out at the end of the year and make adjustments for next year. So, when should somebody start proactively tax planning? How does that work in your world?

CHRIS PAPIN
19:34

So, the simple answer is yesterday. I mean, the best day is yesterday, right? What a lot of people, I think, default into is, oh, it’s year-end, so I should start making phone calls because we’re doing year-end planning. And in my world, that’s too late because we’ve got 60, 90-day runways where you may not even get admitted into the roster if you called me in December because, you know, setup may take us 30 or 45 days. So the way I’ve always tried to approach this with folks, and I’m going to answer this from a startup’s perspective because I think a lot of people are conscious of dollars, you may not need somebody monthly. You know, you may not need the highest level of engagement, but if you DIY’d your startup, maybe used an online platform or something like that, didn’t really put structure to it, you better be talking to somebody at least 6 or 8 months in advance so that you know what’s coming at you.

JOHN CLENDENNING
20:32

Yeah.

CHRIS PAPIN
20:32

Now, if you talk to somebody and structured your startup, you might have some expectation about best practices. So maybe you can cut that timeline down and say, Hey, maybe I can check in, into Q3 or something along those lines. But I’ve always looked through this, a little bit of a sarcastic tone here, but, you know, the running joke is always we get a phone call the last week of the year every year.

JOHN CLENDENNING
21:00

Yep.

CHRIS PAPIN
21:00

Oh my God, it’s an emergency. I’m thinking about buying a Range Rover SUV. Who thinks about spending $120,000 in with 2 days’ notice. That impulsive, especially in family-owned businesses. So you’ve been thinking about it for a while. When you start thinking about it, if you are serious, make the call then. That’s the reality when the space should be, so that you’ve got time to digest properly, not based on AI or your neighbor or, oh, I saw some other guy write off his G-Wagon on TikTok. You might be able to, but is that really a wise financial investment based on all the factors you got going on? That’s what matters for you.

JOHN CLENDENNING
21:42

And I think that that prudent conversation, whether, whether I am considered thrifty is a very polite way of wording me because I’ve always been self-employed. So I’ve always been worried about the next shoe that’s going to drop. So planning, you know, like being the squirrel planning and in the cleaning industry in the Northeast, you’re also used to January, February, March, sometimes April, depending on the year. The odd year, May, you know, is just absolute crap because the weather’s terrible. And more than half of your lead flow and even your existing customer repeat and retain and all that, they just, they’re not interested in the sloppy season, right?

CHRIS PAPIN
22:17

Sure.

JOHN CLENDENNING
22:17

So, um, so you’ve got to be, you still got to pay the bills, you still got to pay the mortgage, you still want to keep the employees. You don’t want to start having brand new employees every spring and, and, and those kinds of things. So you’ve got to be like a squirrel and hoard your nuts and, and all of that stuff. And that always was our analogy around here is like, you know, we talked about, you know, You know, how much did we get buffered in the bank account before the offseason that we could still market through the offseason? And when was that bounce, as we always talked about, before the year took back off again? Because it’s like it’s a delayed bank account bounce, right? So the season might have kicked off in April, May, but the bank account will bottom out in like late May, June on some bad years and stuff like that. So knowing all of that, you’re not making your G-Wagon decision, as we called it, without like, you know, that G-Wagon decision. I don’t care if you, if you like Rich Dad Poor Dad, Robert Kurosaki or not, but in my world, that G-Wag decision is bought by an asset. That ain’t bought by a bank account. I want to build asset structure and have the dividends and whatever pay it off.

JOHN CLENDENNING
23:16

And if I lose the asset, I decide that the thing tied to that asset, the toy tied to that asset as part of it also has to go out the door as well. But again, I’m a far more financially prudently disciplined person than most, and I get that. I agree with you. The fellow that’s thinking of keeping up with the neighbors and the Joneses and his buddy that’s, you know, an HVAC business owner who just bought the big, you know, king cab truck with duallys or whatever, the 350 and stuff like that, and decides he needs that for his carpet cleaning business for some reason, you know, just to keep up with his neighbor, better be doing that on a decision that isn’t going to come back and bite him and bankrupt him, you know. 6, 12, 18 months down the road because it was sitting on the books and you could have seen it. So yeah.

CHRIS PAPIN
24:04

Well, something you said inside of here, I mean, all cyclical businesses— all— let me rephrase that. All businesses have cyclical tendencies. Some are truly seasonal. But for carpet cleaners, if you’re in the Northeast and your slow time is, I don’t know, March, April, May, June, like, as is, that’s when you do your financial planning. You’re not doing client service work.

JOHN CLENDENNING
24:26

Yeah, not as much. You have more free time.

CHRIS PAPIN
24:28

In a different way. Yeah, exactly.

JOHN CLENDENNING
24:30

Yeah. Nope, that’s all. That’s always it. So what financial metrics should, do you think, the average owner at least monitor monthly, like on their own, check in with their, their accountant, whatever? Like what, what are those, those for the service businesses you deal with that you think are sort of like, you know, the core 4, core 6, whatever that is?

CHRIS PAPIN
24:52

Sure. So revenue is always number one for me because it is the purest, easiest measure. Even if you don’t know how to do math, you can do math because the bank statement does it for you. It shows you deposits.

JOHN CLENDENNING
25:03

Yeah, exactly.

CHRIS PAPIN
25:04

I like revenue in that sense because it gives you an indication. It’s a trailing indicator because you did the work yesterday and typically you get paid after the fact, but it’s a pure indicator. Another one, if you have employees, are labor costs. Kind of keeping an eye in, in relation labor to revenue. Uh, that by far is the one that gets abused the most. And I put that in air quotes for the listeners.

JOHN CLENDENNING
25:33

Right.

CHRIS PAPIN
25:34

That gets abused, kind of like we were teasing about earlier about the, the average job. If we’re not upselling or if we’re not doing the proper job and we have to come back and do like a courtesy service clean efficiencies get eaten away. And people are people. We have good days and we have bad days. So, you’ve got to stay on those things to make sure that revenue and those labor costs are mirroring what they should.

CHRIS PAPIN
25:59

Yeah.

JOHN CLENDENNING
25:59

And I guess in retail, we talk about like, you know, cost of goods sold. I sold a bunch of products on Amazon for years. It was one of the many things I dabbled in. So, I was up to $50,000 a month at one point selling bamboo utensils to, you know, from out of China, you know, in in little kits or across Amazon and stuff like that. It was a neat marketing experiment, right? $50,000 sounds— ooh, no, you take home maybe $5,000, right? So the rest of it is all eaten up by, you know, the longshoremen you have to pay and the shipping. It’s insane. It was a crazy business anyway. But cost of goods sold became a big thing.

JOHN CLENDENNING
26:30

And in our cleaning world, that, you know, those direct tied to the job, the gas, the solution, and the labor, whether you’re the guy doing it, make sure you run the math. Because how are you ever going to replace yourself if you don’t know if you’re earning enough to cover, you know, Tommy the technician that should take over your seat and that kind of stuff? So, you know, yes, no, no, those— and know that, yeah, if you’re drifting beyond— we found that it was roughly about 50%. If you could, you know, cost, cost of any job, roughly depending on the price you sell it, but roughly about 50% should go to labor all in. That includes employee taxes and everything else that— but the labor eat plus the solution and the ability to get to that job, right? So, and then the other 50% is all the rest of it, the marketing and the office expenses and, you know, employee or employer wages, the owner wages, and hopefully a profit at the end of the day that still accumulates beyond your wage. You don’t take everything home, leave some of it behind for growth and reinvestment and all that stuff. So, yeah.

CHRIS PAPIN
27:29

So you said 2 things that are key. I obviously didn’t go to them first because they’re harder measures. But if you are someone engaging in marketing or online ads or whatever it is that you do, it doesn’t necessarily need to be an elaborate marketing plan. Are you measuring results on that? How? I don’t really care because I’m not a guy that wants to get overly elaborate. Sometimes it is literally, did I go to my centers of influence and ask them, do you have any Did I go to my realtors and say, hey, do you have any new listings I can go buy and clean up? It could be that simple.

JOHN CLENDENNING
28:07

Yep.

CHRIS PAPIN
28:07

Because that’s low-hanging fruit, and you’ve got to track those. You’ve got to know who to call. You’ve got to know good times. What I have found is when times are tight, those centers of influence, you can ask and say, hey, I’m slow, I’m willing to give you a 10% discount. It’s better than zero revenue in the door, so it allows you to manipulate the other numbers.

CHRIS PAPIN
28:27

Yeah.

CHRIS PAPIN
28:28

Then you get to that owner profit. Like, we all need to know what we can take home. And that’s what changes over the years, like what your expectation is. If I’m funding retirement or if I’m not, or if I own a building or if I’m not, like all of these other long-term decision points are driven by how much money do I have to take home that I can freely spend without sacrificing all of the other pieces of the puzzle?

JOHN CLENDENNING
28:53

Yeah. And without being the guy that decides to work 16 hours a day and burn the candle on both ends because you don’t want to hire Nancy in the office. To answer the phone so you can go out and make those sales calls. I call it the core forever engine that a lot of guys forget because there was sort of like an easy money train for a little while. You could stand in front of Groupon early, you know, 2010s, whatever. Then you could stand in front of other like Facebook ads and things like that. And everybody got quantitative easing, they got money, and then we had COVID, then they all got their PIPs. And like, it’s just there’s money, money, money, money.

JOHN CLENDENNING
29:22

And we’re now back to the real world where I started 30 years ago, Grandpa started 50 years ago, all that kind of stuff where Well, no, there isn’t just this money train that to start a business, you just put your name, you know, on a, on a plaque, show up and, you know, the world will beat a path to your door because everybody’s paying for it. We’re back to where middle class are tight, tighter, like it’s right. So you’ve, you know, people are more wise with their dollar. It doesn’t mean you have to be a discount provider. You can still be a premium provider, but premium provider to the right people by marketing the right way. And that isn’t just always running ads. That ads complement a really well-known brand. So exactly what you said, if you are the one that you know all the real estate agents, all the interior designers, all the, all the carpet stores and furniture stores, and you stop in regularly and they go, hey, how’s it going, Chris? You’re going, hey, how’s it going, buddy? Right? And you walk in with coffees and all that kind of stuff.

JOHN CLENDENNING
30:13

Then yeah, when times get tight, which right now we’re in a period of time where there’s a, a weird transition, feels like 2008, ’09, there’s a weird transition, or at least a buzz of, is AI going to take my job? What’s going to happen? Is, you know, robotics— are we, are we going up? Are we going down? Are we investing in infrastructure is, you know, we don’t know. Like, the world is doing a whole bunch of this right now, and that mixed feeling creates discretionary income pause in some people. So the market softens a little bit because people just go, I don’t know what my job’s going to be like in 6 months. Maybe we don’t need the couch cleaned again this time this year, again this year, right? Maybe, maybe we can just spot clean it. The kids can go spill pop and popcorn on the couch, you know, on movie night again, and we don’t need to call the cleaner every time, right? That those decisions get made differently when the market feels different, like when just the whole, the news cycle feels different, the price of gas feels different, right? So, um, yeah. And in that world, business owners better know their numbers and know when they need to double down on the grassroots stuff that doesn’t cost them a fortune. If you knew that you had a 3-to-1 ROI on your Google Ads and you’re investing $3,000, $4,000, $5,000 a month and it’s generating $15,000 in first-time revenue, $5,000 goes back to Google, $5,000 goes to the technician, or $5,000, $6,000, $7,000 goes to the technician and gas and solution, you’re 50%, you got a little bit left over. That’s That’s a good front end, maybe, but your lifetime value of that client is where the big money, the 15, 20 to 1 ROI comes from because you send mailings, stay in touch with them, and boom, for the cost of a stamp once a month, $12 a year, you retained a client, right? For $12, not bought them for $200 or $150 on pay-per-click.

JOHN CLENDENNING
31:47

So again, knowing your numbers well enough to be able to say what John just said actually makes sense is a good point to be. And not knowing your numbers and saying what John just said and what Chris and John are talking about is over my head. is probably not a good place to be, right? You know, trying to figure this all out, especially during tighter times. A little bit easier when everything’s running freewheeling and up and to the right, but a little harder when there’s those dips in the scale, right? So in the, in the chart. So, um, so I guess we get like, we talked about cash flow a little bit, cash flow and risk. I wanted to come back to why some companies stay broke despite revenue, right? The warning signs they’re missing, right? Because there’s a lot of people that go, I make a lot of money and there’s still nothing left in the bank account at the end of the month. And I’m in it 5 years and it still looks the same, even though everything seems to be— revenue’s going up. I ain’t got anything left.

JOHN CLENDENNING
32:39

Like, what do you notice is sort of some of the big drivers of warning signs that they’re maybe ignoring in that world where they are sort of myopic, only looking at the bank account at the end of the year? They see, oh, last year we made $200,000, this year maybe $280,000. Hey honey, where’d all that money go? Because it ain’t in our household. Right.

CHRIS PAPIN
32:59

So we, we literally had this conversation the other day and we’re staring at the numbers. Client’s up $100 grand and we went through all the stuff. They didn’t understand the tax calcs, didn’t understand the conversation. And at the end of the day, the response was, well, it didn’t feel like it.

CHRIS PAPIN
33:16

Hmm.

CHRIS PAPIN
33:16

Guess what? Feelings have no place. They have no place. Data matters here. I recognize that, that was a frustrating spot for the client to be in. And then there’s other pieces of that conversation at play that are relevant. But answering your question directly, it’s one of two things in my world. It’s either we overcommitted on the— on debt or buildings or growth. You know, there’s, there’s a pull of cash away from core operations.

JOHN CLENDENNING
33:44

Hmm.

CHRIS PAPIN
33:44

Or our business is our piggy bank. We just take money as we need it and then, oh, well, I’ll put it back when. Or I’ll just leave the next deposit in. But then you’re, you’re chasing because you took your operational capital out.

CHRIS PAPIN
33:58

Yeah.

CHRIS PAPIN
33:59

And that’s where you’re not behaving like a business owner. You are not operating as the owner, the CEO. You’re doing what’s in your best interest to the detriment of the business.

JOHN CLENDENNING
34:09

And then— And treating your bank account like a payday loan, like a payday loan company, really. Like, that becomes that method, that mindset where you’ll never catch up because you’re always sort chasing good money after bad.

CHRIS PAPIN
34:21

So, well, the, the percentages change. So we’re teasing about like, hey, you’re going to keep 50%, but if you’re payday loaning this, all of a sudden it’s 60% or 70%. Well, the rest of that’s probably going to go to tax. So you just did all the work to retain none of it. Is that really where you want to be?

JOHN CLENDENNING
34:36

Yeah.

CHRIS PAPIN
34:37

And I didn’t mean to get there. I’ve got to play catch-up. I get it. But this is where strategic partnerships with banks, lending, getting capital stretched to where you can chip away at a different way. But there’s a cost. to every single one of those decisions as you go. Yeah, the one we see in this industry the most is, I want insert brand here, but the fancy van.

JOHN CLENDENNING
34:58

Yes.

CHRIS PAPIN
34:59

Yep, it does just the same as the 1996 Ford Ecoline.

JOHN CLENDENNING
35:04

Yeah, with a good— oh my God, you know what I mean? Like, no, you’re preaching to the choir. I’ve never bought a brand new— like, listen to this, guys. Anybody listen to the podcast here? I had never bought a brand new Cleaning van in my life. I love them 2 to 3 years off lease with the shelves already put in by some plumber or whatever who bought them brand new. I got them white, labeled the— like, logoed the whole thing up, full wrap, so you couldn’t tell. Like, as long as it didn’t have rust on it, mechanically sound, took it to my mechanic. I’m like, I get to make the same amount of money every single day that the van’s going to make. I just get to pay 1/3 the cost versus leasing or trying to buy out the—

CHRIS PAPIN
35:39

Yeah.

JOHN CLENDENNING
35:40

the van and the whatever, right? So yeah, I, yeah, that’s a big one that I see a lot of people become focused on. Oh, I own a business, I get to buy all this new stuff, never running the math to say, hey, what if I could find something just as reliable that saves me $300, $400, $500 per van on the road per month? What does that mean in the long term? Right? So—

CHRIS PAPIN
36:03

And this is that forward-looking, longer, longer-term conversation again. And it doesn’t matter whether it’s a car, or a cleaning solution or a tool or a software. It’s, it’s about how can I be more efficient? Where is a true value proposition? I want is generally not a value proposition.

JOHN CLENDENNING
36:21

Yeah.

CHRIS PAPIN
36:21

It’s, it’s a need and an efficiency base for your business. Then it can spill over into the I want. And what I see is the emotional creeps in. I want the sexy thing or I want the status symbol. Yeah. Makes me feel good. Okay. At what cost? Oh, well, but I’m going to save on taxes by doing that so I can justify what is a bad decision because I’m going to save on taxes.

JOHN CLENDENNING
36:44

Yeah. Yeah.

CHRIS PAPIN
36:45

No, I mean, once the money’s gone, it’s gone. You don’t get— you’ve got to earn it again and it’s too hard to earn.

JOHN CLENDENNING
36:51

Save it. Yeah, I agree. I agree with that so much because the other one becomes debt service, as we talked about. As you buy these things, if you don’t qualify for a low-interest loan, you can’t get it from like your, your bank or tap into some sort of like, you know, really low-interest line, which is what We actually, with ours, it was our insurance company. Every time I went to buy a van, I had to, you know, pre-get, you know, get insurance to be able to drive it off the lot kind of idea. And so as I’m looking around and saying, hey, I’m about to go look at some vans for the company and all that kind of stuff, so I want to make sure we just have trip insurance on it. And they come back in like eventually our insurance company said, oh, we started becoming a lender as well. Would you like us to compete against whatever rate you’ve got from your bank? And they would always beat it by like a percent or a percent and a half.

JOHN CLENDENNING
37:37

So we would negotiate the very best rate we could with our bank and then go back to these guys and go, cool, we get to save another $80, $100, whatever, $120 a month in interest. Pure profit, pure cash back in the pocket, right? For every piece of equipment we bought, it was just like, let’s find our lowest. And other people go, oh, I need it. Well, I guess if you know you’ve got jobs lined up and you can earn it, and you don’t qualify for low interest, maybe that becomes that decision. But that would be a great call for your, you know, for your CPA is to say, hey, I’ve got the opportunity to add this whole new service wing on. I want to start doing pressure washing. I want to start doing duct cleaning. It’s going to cost me $30,000, $40,000, $50,000 to buy a trailer-mounted duct cleaning unit that we can tow behind our van based because my interest, the interest I’m going to be able to get on it is consumer rate.

JOHN CLENDENNING
38:24

It’s terrible. It’s 15%, whatever, 12%. Is that still a good decision? Here’s what I do know I’ve got lined up in work. Beyond that, I’d have to build the business from there. And that’d be a great conversation to have with your, you know, your CPA.

CHRIS PAPIN
38:39

I 100% agree. And paying attention to vendor financing versus bank financing versus alternatives. We watch this in medicine a lot because the vendors will show up, oh yeah, don’t pay us down. But they are by far the most expensive financing. It’s not in financing. They phrase it as a lease payment and all this other stuff. Just the cost of equipment gets really expensive. And then my cynicism lays over the top.

CHRIS PAPIN
39:05

All this so your guys can go out and drop it and wreck it.

CHRIS PAPIN
39:09

Yeah.

JOHN CLENDENNING
39:11

You have worked with home service, haven’t you, Chris? Oh my gosh. Yeah. Well done. No, and that becomes part of it because I think we’re in a subscription mentality, whether, you know, we don’t need to go around conspiracy theory rabbit holes and you’ll own nothing and you’ll like it. there is a point where we rent everything, we lease everything, we subscription everything. So, it’s become easier for these vendor finances just to say, oh yeah, this is the same as your Netflix and your Spotify and your hot tub and your whatever. Just add that on like that, right? And so, we make all these bad decisions at home, right? We’re not watching, you know, next thing, death by 1,000 subscriptions and that way.

CHRIS PAPIN
39:52

Yeah.

JOHN CLENDENNING
39:52

And now, we’re making those same decisions because We take that same person and put them— we’re running a business, right? And it feels, it feels the same. But to be prudent, you probably shouldn’t have been doing it at home either. But in the business, let’s be a lot more strict because businesses will ebb and flow. It is not—

CHRIS PAPIN
40:10

Yes.

JOHN CLENDENNING
40:11

Again, heyday and rosy and green grasses for the next 20, 30 years. And then you sell to somebody who wants to pay you 5 times more than you even asked for it, and off you go into the sunset. It is going to be crap hit the fan years and you better be able to, you know, white-knuckle it through and come out the other side and maybe double your market penetration because you’re the only one that was able to market and make it through while your competitors backed off on their promotions because they didn’t have the wherewithal and the money and you had a little bit of seed capital saved up to market through a slow time or to make a transition as the marketplace changes. So which kind of leads us to sort of that That logical point, if we’re kind of saying, okay, set up right. If you didn’t do it day one, you know, the best time was yesterday. The next best time is today, right? At least get it started. Think it through. Have somebody smart in your corner helping you know what numbers to look at and plan.

JOHN CLENDENNING
41:04

Make decisions based on data, not emotions. All great stuff, right? Then we’re going to say, okay, well, how do we, you know, if you’re 10, 15 years into this thing, You at least have an eye towards what does exit look like? You don’t just want to wind it down to nothing, right? It’s got to be building something. Solopreneur, maybe as we talked about before we jumped on, buy the property that, you know, so you own— a good friend of mine, Pierre, owned his building. He actually renovated the whole upstairs and turned it into their retirement suite, but owned the building. Right beside was the yoga studio that he rented to. Right beside was the other guy, whatever. Over the 20 years, That he, he owned the, the building, it appreciated in value like crazy, right? So good on him. So he, he created that equity value of something that was paid for that he would’ve had to rent anyways.

JOHN CLENDENNING
41:53

He needed a shop to, for the vans and to do the area rugs and have the team show up and stuff like that. Well, now he’s, he was able to, to buy something instead of, and now it’s the asset that he can, he can even turn into apartment as he did, retire in it, sell things off and stuff like that. So how do we start thinking of exit planning? How early do we start thinking about exit planning and how do we put that into our brain as we’re sort of trying to just keep the business going?

CHRIS PAPIN
42:18

Yeah, the exit plan. I mean, here’s the clickbait of all clickbait, right? Everybody will exit their business. The question is, will you choose your path or is the path gonna be dictated to you? And that one hits hard for some people. The best time to plan it is in the beginning, because if you are going to be in aggressive growth, maybe go multi-company and then sell to some sort of acquisition group, we need to structure the business straight out of the gate with that in mind so we can get some tax benefits that way.

JOHN CLENDENNING
42:51

Yeah.

CHRIS PAPIN
42:51

There’s a clock, and if we can meet that clock, then there’s benefits. Now, if you are going to extract cash, own and operate, kind of, kind of, it’s going to be your family business, it’s going to be your cash cow, we might take a different approach. Or let’s say this is a second career deal. I’m going to own it and operate it for 10 years. How do I extract the most value out of that? You know, again, different paradigm. So, yeah, there’s 2 or 3 different fundamental ways to think about your exit. But there is nothing wrong with operate, extract all the value, close the doors, and not sell it. That is a permissible way to do it.

CHRIS PAPIN
43:30

And tons of people have over the years that bought buildings They funded their retirement account and they just closed. But yeah, if you want something different than that, then you need to build towards something different than that, which means you need systems, you need all the infrastructure to be able to sell.

JOHN CLENDENNING
43:47

And I think, I think that, that moment is that part you want to, you want to think about is if you are an employee, right, you can make $70,000, $80,000, $90,000, $100,000 a year. In the cleaning industry as an employee at a great company, as a, you know, maintenance manager at a— at an office. But like, there’s a whole bunch of ways that you can, you know, sort of earn that income that would be sort of like a baseline tier 1 you’re trying to aim at as a own the business, right? But the own the business, you’ve got all the sleepless nights. You wake up at 4 a.m. worrying about this and that at the quarter results spike. You got like, you had all of that, that stuff that as an employee you just go home. Like, you just go home and watch Netflix, right? And stuff like that. So if you’re going to take on all of that extra pressure and risk and stress and workload and, and, and upleveling your skills, you better have a plan that if you are going to extract all the cash and just close the doors, it’s because that went to an asset that creates equity of some sort.

JOHN CLENDENNING
44:43

You didn’t extract it all and go to Disney, right? Every year, right? And stuff like that. You still have to think of, I don’t have a 401, what do I do? Right. Kind of idea, right? So that’s got to be the— so whether it’s the business becomes the asset and you can exit for multiples, whether it becomes the property, whether it becomes investments, because, you know, you just extract all the cash and, and pay yourself in investment funds or whatever, you still have to have a plan with that, that money. It’s still got to go somewhere that builds something over time, or you’d probably be farther ahead. being an employee somewhere and just make the cash and be on payroll.

CHRIS PAPIN
45:22

We’ve, we’ve teased about this, but it’ll land in the right way. But there’s lots and lots and lots of people that are a landlord. They just pay their rent by cleaning carpets. Yeah, yeah, you are your own landlord in that scenario. And, and I know I’m kind of playing on the words, but that is the reality of it. Yeah. One is the ends to the mean, or one’s the means to the end of the other objective. So, this all starts with clarity of what’s your goals, what’s your objectives, what’s your ambitions.

CHRIS PAPIN
45:53

Because if you can’t enunciate those, others, they can try and help you. But John, I can’t pick what your goals are and you can’t pick what my goals are. It’s just not the way it works.

JOHN CLENDENNING
46:03

No, but clarity of them and having them. So, I just did every June. So, every January, I do a Get your, you know, preloaded year, get your year ready. Think of what last year looked like. Look at your numbers. We do a masterclass on that. It’s on YouTube if anyone goes follow it. It’s in history of this podcast as well.

JOHN CLENDENNING
46:20

And then we do a mid-year check-in in June. So just like last month’s training. And the very first part of it is all about, you know, goals. Like, and I guarantee you it’s the part that people roll their eyes at the most when we get there. It’s like, no, John, just tell me how to make more money and do all this. And It really does come down to like your why. You have to put your goals in. If you don’t have a why, nothing will stick.

JOHN CLENDENNING
46:45

It’s the same reason why, you know, gym memberships, you know, gyms make all of their money January of the year, you know, in gym memberships. Nobody ever shows up. They have dead equipment by, you know, February, right? And all of that kind of stuff. And they know it because it’s like if you don’t have a goal and an intent and a big enough why, it’s, it’s just good for the moment, right?

CHRIS PAPIN
47:05

Yep.

JOHN CLENDENNING
47:06

So, if you’ve got that goal planned, and you know what that is, or, you know, as, as detailed as you can. Harvard did a study on graduates, and anybody who had a goal written down— it was only 3% of the graduating class, um, can’t remember, I think it was 1977 or ’87, one of these years— and they, 3% of them had the goal written down. Uh, a huge chunk had the idea of what they wanted to do with, with their degree, um, but they had never written it down. It was just their thought. And then the rest of them had no clue what they’re going to do. And the 3% out-earned by 10 times— check back 20 years— out-earned by 10 times the, the entire 97% combined, right? So that 3% was 10x more because they left with an intent of what they’re going to do and how they’re going to get there. So if we— it doesn’t mean you get it right in planning. That’s always that mistake.

JOHN CLENDENNING
47:58

Um, you get it right for now, and as things adjust professionals help you go, does that still apply? Oh my gosh, I haven’t thought of that. Let me, let me go do some deep thinking. I’ll get back to you. Right. And you got to make those decisions. So, so if a carpet cleaner was listening today, wanted to improve their financial health, what are some, like, say, 3 things that you would suggest they do right out of the gate? Like, where do they start getting their education? What should, you know, who should they reach out to? Like, what are, what are some of the things that they should look at, do consider that would sort of help their financial health, especially in this time that things are just kind of creaking or feeling a little off? Yeah.

CHRIS PAPIN
48:40

So I’m going to give you 4 because one’s self-serving. I do, I do have a book that kind of helps along these ways, The 168 Hours. If you search for 168 and Chris Pappan, you’ll find it. But it’s a small business owner guide that respects—

JOHN CLENDENNING
48:52

We’ll put in the show notes as well. Send me the link and we’ll put it in the show notes as well.

CHRIS PAPIN
48:55

Yeah, it’s designed to help this thought process. But the 3 things to actually answer your question that is not self-serving. First and foremost, I am a big fan of relationships and networking. You need to be in front of people. You need to be talking to people because that word of mouth and the power of that referral relationship, especially for what you’re going to go do, because your boots on the ground, you’re not going to drive halfway across the world. You can’t clean anything virtually. Or if you have, let me know how.

JOHN CLENDENNING
49:23

I’ll sell it. Elon’s got some robots we’re going to get someday. Give him 5 years then maybe. But until then, yes, we’re good.

CHRIS PAPIN
49:30

But that power of community and network is number one. It’s always gonna be number one. If you lean into it, you’ve got something. Number 2 is whatever the clarity and the goals are, I always kind of use sports analogies here. You need to be accountable to it. Like flip over to football/soccer. We just came outta World Cup season. All the teams know the objective is score more goals than the other team.

CHRIS PAPIN
49:53

Well, in business, what’s the objective? Yeah.

CHRIS PAPIN
49:55

Yeah.

CHRIS PAPIN
49:57

That’s a toughie. You’ve got to define it. Yes, it’s to make money, but how much? And how many hours a day are you going to do that? And then number 3 would be, are you accountable to whatever those goals you just set are? Because you can say it all day long, but if you don’t do it, it isn’t going to happen.

JOHN CLENDENNING
50:14

Oh, those are great. Because I mean, just— I’m just rattling through the hundreds of conversations I have a month with cleaners, thousands, tens of thousands by this point over the last 20 years. Consulting and doing this and working in the industry and all that stuff. And we run into a lot where, for example, if you don’t understand who your ideal customer could be, what the fringe— like that, what the top 5% or 10% in our industry do differently than the other 90%, you never even heard it. They’re not on the forums. They’re not. So, you know, Dan Kennedy had coined the term marketing incest. We look around and go, oh, these guys are all 3 rooms in a hall for $99.

JOHN CLENDENNING
50:50

I guess I should be $89, I’ll get more jobs. And then they come across people like me and they like— I say, well, our average client that we coach and work with, their residential average is sitting north of $600, sometimes north of $800 residential customer. Well, how do they get that? Well, they start off by not advertising their price. The right people don’t respond to $99 carpet cleaning. They treat it as a scam. They don’t even look at the same places. They don’t— they, like, again, they network more than they— like, if you’re in a gated community And, you know, I’d rather know the maid service and the lock service and the gardening service that’s in there and have that relationship on my BNI groups and stuff like that. And, you know, become good buds and good friends.

JOHN CLENDENNING
51:35

And they know we do a great job and they’ve had us to their house and, oh no, don’t worry about paying for us. You know, you’re one of my buddies. I’ll clean your house for free. All this kind of stuff. And then next thing you know, hey, we’ve got a client that needs cleaning. Could you guys go give them a quote? And then all of a sudden you’re in that neighborhood too, and you a little bit more because you networked properly. You did what grandpa did to run a business. Ads still work.

JOHN CLENDENNING
51:54

Direct every door mail still works. Google still works. Websites still work. AI recommendations nowadays still work. Social media still works. But it all works inside an ecosphere that still run the business the way grandpa did. Be a real person in the real community, right? So—

CHRIS PAPIN
52:10

What’s, what’s interesting in what you’re saying is there’s, there’s a value proposition with face-to-face and dealings. Most people do business with people they like.

JOHN CLENDENNING
52:19

Yeah.

CHRIS PAPIN
52:20

And, and that’s part of this recipe of being in front of and being there. I have had service techs to my house that I have never met because a dear friend of mine’s a realtor, and I said, hey, who does this? And he was like, this is the best. Cool. Where do I send them money? And will you let them in for me?

JOHN CLENDENNING
52:36

Yeah, yeah.

CHRIS PAPIN
52:37

I mean, that’s a little aggressive, but I trust that much in him. And it’s the same thing we’re trying to illustrate to folks. You want to be that trusted provider. Show up, get the deal done, get the money, move on.

JOHN CLENDENNING
52:49

Yeah. Yeah. And again, dovetail it back together. When you have a goal and you know your ideal clientele, then you’ll know which real estate agents you should reach out to and which ones aren’t collecting the same people. Right. There are real estate agents that work with, you know, Golf Course Road people. Right. So if you build that trusted friendship and relationship well, properly, you know, if you have to read Dale Carnegie’s, you know, Win Friends and Influence People, I don’t I don’t know what skill you need to upgrade, right? You know, I’m a, I’m a painfully shy, introverted person.

JOHN CLENDENNING
53:23

Didn’t present anything in, in, in, in school. Stood on stage and, you know, in the band because I could only see the hot chicks in the front row and everything else was dark. Like, I mean, literally, I mean, so if I can figure out a way around this with some Tony Robbins and Napoleon Hills and, and just figuring out what I don’t know, I’m pretty sure anybody with even a slightly better, you know, vocabulary and skill set in, in and being friendly could, could blow me out of the water. But I mean, the amount of relationships that we had that were $10,000, $20,000, $30,000 a year worth of work coming from a real estate agent or an office or a, you know, a flooring store and a furniture store that you walk in the door and they’re just happy to see you because you built that, right? So yeah, there’s a lot there. There’s a lot there that, you know, totally, totally side tangent on finances and taxes and legal and stuff like that. But It’s all part of the same nut. You’re trying to crack that same nut. How do we build a business, stay in business, aim at the right goals, and have our CPA and our legal team actually understand our vision and help us align that way? Because that’s the worst-case scenario is walking into, you know, an accountant or get a new accountant, get a new lawyer, and they just take you, well, this is it.

JOHN CLENDENNING
54:35

If they don’t do any good onboarding, any good triage, they didn’t go do the deep dive to ask you, okay, where are we at with everything? What are you actually planning to do? What do you know? Without that information, you know, you could probably get a pretty smart ChatGPT to do the work in today’s day and age, but it’s not going to have the human nuance in it that you need from a professional.

CHRIS PAPIN
54:56

So, yeah, you can get the work done.

JOHN CLENDENNING
54:58

We—

CHRIS PAPIN
54:58

the way we like to say that is you’re not going to get the judgment and the wisdom that you actually want, and people have a hard time verbalizing that.

JOHN CLENDENNING
55:05

So, yeah, and no, and again, we are in a world where Same like in marketing. You can get AI to do your marketing. There’s a million people that have gone out and said, oh, I just— I gotta do blog posts. I’ve got ChatGPT writing me 30 blog posts a month. I’m going, cool, for how long? Well, at least a year now. That’s amazing. You haven’t ranked a single iota higher than you did a year ago. Why do you think that is? Maybe you don’t know the strategy behind blog posts run right as part of an ecosystem with 87 other touchpoints that then teaches AI and SEO to pick you up, right? So you can doesn’t mean you should.

JOHN CLENDENNING
55:38

So, and I’m sure the exact same feeling you guys deal with it in your world as well is, oh, my Xero, my QuickBooks, it has all of this, you know, you know, AI built into it. Yeah, well, it might be able to find fraud in your credit card a little bit faster than calling us up to do it, but that’s not the strategy. That’s not a tax planning and life planning full strategy. So cool. So I think we helped the listeners out a lot. I think we’ve got a really good understanding of, you know, either you’re already on this path, we’ve just had people nodding their heads going, cool, you followed along, you’ve been doing this, you’ve got it. Or you went, oh crap, oh crap.

CHRIS PAPIN
56:15

Wow.

JOHN CLENDENNING
56:16

I’ve heard this, little bits of this before. And yeah, I really need to start attacking this. So again, we’re going to put in the show notes your book. Where else can people connect to you? What should they do to follow, learn a little bit more? If anybody wants to reach out to you, all that kind of stuff, where do you work? it like, you know, is it anywhere in the states? Are you local to your area? Give me a little bit more info.

CHRIS PAPIN
56:34

Yeah, so CPA side, I can go 50 US states. Uh, that’s pretty easy. Uh, law side, or I guess pappincpa.com is, is the CPA side.

JOHN CLENDENNING
56:44

Okay.

CHRIS PAPIN
56:44

Uh, law side, I’m in Oklahoma, Texas, Colorado, and New York. So perfect. I will go to states that justify me, but pappinlaw.com. Um, push a bunch of free material that is designed to be advice for small businesses, small business owners, to my LinkedIn. If you search for my name, Chris Pappin, on LinkedIn, um, you don’t have to know all the answers. Sometimes you, you need some help with those, but the idea is to generate thought and give people a path so that, oh, I, I’ve heard of that before, let me do a little research. But all of this does not matter if you don’t do something about So, my challenge always back to the audience is pick one thing. I don’t care what the one thing is.

CHRIS PAPIN
57:26

If you need me to tell you the one thing, the one thing would be go get your financial statements and see if you know what they actually mean. But start there and then it’s a compounding effect, no different than the way you started your business or the way you’re about to start your business if you’re not there yet. Over time, it starts to— all of a sudden, I got a thing. You got to do the same thing with those financial disciplines, too. Yep.

JOHN CLENDENNING
57:50

And I just noticed here, so 168 Hours is obviously anybody can get it on Amazon. We’ll put a link in the bottom wherever you want to send them for that. But I think that’s the next obvious step too, is, you know, start learning what you don’t know. I’m one of these people that, again, I have a million books. Do I read nowadays? I probably in the last 15 years read maybe cover to cover less than 20 books, right? But have I listened to hundreds and hundreds of books, buy the physical copy to dog-ear and highlight and put notes in and sort of, you know, I used to reserve books to be pristine on the shelf. Now I realize, nope, that’s my study guide because I’m going to listen to the info and I want to be able to come back to it and go to the really good section. So that would be, again, one of these, one of these upgrade your skills moments is, you know, 168 Hours would be a great book to sort of start diving into what you don’t know, follow you on LinkedIn, things like that, and just really get open up those questions that, you know, you need to get answers for. Yeah, having good questions is 90% of the, of getting there anyways.

JOHN CLENDENNING
58:55

The right questions get you to the right answers. So cool. Any famous last words, Chris? Yeah, go ahead.

CHRIS PAPIN
59:01

Oh yeah, yeah, yeah. Sorry, I’m kind of dovetailing there anyway, but I always tell folks, I, I may or may not be able to help, but I’m looking for good people to have conversations like this. I mean, John and I love doing exactly what we’re doing and giving back as a whole. So Reach out, contact, even if it’s just a, hey, high five, virtual coffee or something like that.

JOHN CLENDENNING
59:19

I’m in. I mean, that’s how you develop the network and get with people.

CHRIS PAPIN
59:22

So I appreciate the opportunity.

JOHN CLENDENNING
59:25

No, I love that. And again, my big motto this year, Jeff Cross from Clean Facts Magazine will preach this to the choir as well as I— he just loves it. As I keep saying, it’s what’s old is new again. As our world is changing around us, the human connection, the networking, You know, again, do what grandpa used to do to run the business is the other, the other little catchphrase I use a lot now. It’s like we kind of got away from what centered us. A lot of people did in running a business. You know, you’d go down to the barbershop and, you know, there’d be the butcher and there’d be the other and you’d sit around and chat or whatever and know all of the, the other folks in town that did all the other work and, and stuff like that. And we kind of drifted away to this, you know, Google, Google Ads and Google Business Profile will cover it for me and we don’t really need to know anybody.

JOHN CLENDENNING
1:00:10

And There’s a lot more still to who you know versus what you know, um, and tap into the right, the right worlds and the right resources and stuff like that. So, well, I appreciate your time. I will put all the show notes in. Anybody has any questions for Chris, anything, any comments, and they share it in any of our show notes, we’ll share it on to him as we always say as well. So definitely reach out. And, um, yeah, thanks so much, Chris, for jumping on. I think this was really informative and helpful to this audience in, in, in a big way.

CHRIS PAPIN
1:00:35

Yeah, great conversation.

JOHN CLENDENNING
1:00:36

Thank you.