Entrepreneur Interview: Matt Michele of Service Roundtable

Business Name:
Service Roundtable

Website URL:
www.ServiceRoundtable.com

Year Founded:
2002

Business Partners:
We have a couple of dozen investors.  While these include a few of the “Three Fs,” which are family, friends, and fools, the vast majority are angel investors from within the markets we serve, coupled with a few professional angel investors.  Roughly 40% of the stock owned by investors has been repurchased (at a nice profit for the investors).

Number of Employees:
9

What does your company do?
For a small monthly fee, the Service Roundtable provides business services (sales, marketing, management, and operations tools) to plumbing, air conditioning, electrical, and solar contractors.  New sales support collateral, brochures, direct marketing material, spreadsheets, invoices, business forms, training pieces, and more are served up over the Internet weekly and added to a vast archive of past content.  Contractors login, download the material, drop in their name and logo, and are good to go.

The Service Roundtable also provides moderated peer-to-peer discussion forums where contractors share ideas and solve each other’s business problems.

Finally, the Service Roundtable’s Roundtable Rewards buying program provides cash rebates for contractors based on their purchases of parts, equipment, software, books, and other business services.  Rebates easily exceed the cost of membership, making the Service Roundtable a profit center for many contractors.

Our Retail Contractor Coalition is a turnkey branding program for air conditioning contractors.  We help contractors source, brand, and sell their own line of custom heating and air conditioning products as part of a total company branding program.  The branding program is designed for contractors who want to differentiate their companies and avoid the commoditization of the industry.

Our recently launched Service Nation Alliance is a best practices program where contractors follow standard procedures and processes to make their businesses easier to manage and more likely for outsiders to acquire.  This “exit strategy” focus is creating a marketplace for contracting companies, allowing for the formation of geographic expansion by acquisition, successful regional roll-ups and consolidation efforts, and greater support for inter-generational hand offs.

Our Service Nation Press is a trade specific, small business press.  We offer one to two titles per year, focused on the service trades.

Was there a specific turning point when you realized your business was moving to the next level?

There were several turning points.  I remember working in a run-down, rented 100 square foot office with little more than a laptop and phone line, burning through my limited cash.  Reaching 100 customers was huge.  Positive cash flow was bigger.  Renting a building was big.  Buying a building was bigger.  Reaching 1000 customers was big.  Crossing $1 million in revenue was bigger.

Each event, felt like an incremental move.  The latest was our performance in 2010.  We grew 42% and our net grew more.  It’s hard to describe, but it “feels” like we’re on the cusp of a huge breakout.  While our plans call for even  more aggressive growth this year, they seem very reasonable.  We’ve got total team buy-in.

What processes or procedures have you implemented that have helped grow your company?
Because we started as a pure Internet company, the processes we developed as part of the website and member management system development resulted in processes for every aspect of our operation, such as content management, membership management, enrollments, billing, dunning, web based communication, ecommerce, and so on.

Beyond the website, we started with a corporate board that was suitable for a much larger company.  The board provided a level of accountability that was/is a constant reminder of the need to deliver growth for the shareholders.

From the start, we’ve created financial controls and checks and balances to protect assets and shareholder interests.  These range from expense report approvals, to bank statement reconciliations, to check authorization, to mail pickup, and so on.

Our hiring processes have improved and become more streamlined over time, which has improved hiring results.  We have interview procedures, employment applications, background checks, and so on.

Internally, we’ve created incentive systems to align everybody’s compensation with company goals, resulting in self-managed individuals.

Because a large part of our deliverables to our customers involves business processes, we are very process intensive ourselves.  For example, we use the same annual planning system we teach to contractors.

What is most rewarding about running your business?
1. Watching a team of people develop and work together towards a unified purpose.
2. Receiving credit from our customers for helping their companies achieve new levels of success and even, saving their businesses.  While I think the true credit goes to the business owner, not us, it is still rewarding to hear.
3. Seeing a tangible business spring from my imagination.

What challenges have you faced and how have you overcome them?
Almost all challenges involve people.  There are employee challenges, shareholder challenges, and customer challenges.  Ultimately, the way to overcome challenges is to strive to act with integrity, to remain calm, to take a long-term and big picture view, to focus on what’s truly important, and to try to do the right thing.  Sometimes the right thing is to sever a relationship, which may create hard feelings and become emotionally taxing.

Beyond people issues, we have the normal issues an Internet based business encounters, such as overcoming email deliverability issues (we’ve used white hat services, third party mail services,  made lots of phone calls, and do everything we can to keep our lists clean and pure), keeping software up-to-date (mostly takes money), and staying abreast of all of the changes (lots of time).

And, we’ve faced the number one challenge for any business, which is cash (or the lack thereof).  Initially, we sold stock to raise the funds to launch the company.  While burning through the start-up money, I watched every dollar.  I paid myself little, rented cheap space, traveled as little as I could, stayed in hotels that made Motel 6 seem luxurious, bought used furniture from charity stores, and so on.  As cash flow turned positive, company investments increased, but the money was still managed conservatively.

I guard cash.  I’ve structured incentives around the growth of cash.  I’ve kept debt to a minimum.  Today the cash position is good, but it’s still the first number I check.  Cash is and always will be king.

If you were starting over today, what would you do differently?
1. I probably would have established a higher price point for our service.  In hindsight, I realize we could have charged more.
2. I would have raised more money, hired more people sooner, and ramped up faster.
3. I would have required firm non-disclosure agreements from anyone we discussed plans with.
4. I would have established a member rebate/buying program at the outset.

What advice do you have for other business owners?
Write clear personal goals.

Watch your cash.  Most businesses fail for lack of cash, not lack of profits.

Collect on delivery.  Do not finance your customers, invoice, or bill.  Accept credit cards.  It’s better to pay the merchant services fee and get cash now.

Pick your business partners and investors with care.  Going into business with people tends to magnify good and bad aspects.  For example, if someone is a jerk before you go into business, he will be worse after you go into business together.

Strong sales won’t fix your business problems, but they will buy you time to address them.

Conduct credit and background checks on everyone you hire, before hiring.

Pay more for better people.  Treat them well.  It will come back.

Surround yourself with positive people.

Remember, whether you expect good things or bad, you’re probably right.  Why not focus on success?

Make sure you have trusted friends and advisors with sound business acumen who will provide you with advice or simply serve as a sounding board.

Exercise.  You need the endorphins.

While everyone else is cutting benefits, offer better ones.  We pay 100% medical and dental.  It buys us more than an equivalent amount of pay.

Don’t be greedy.  When others help you become successful, reward them.

Take time to feed your own mind.  Attend seminars, conferences, and webinars.  Read books, blogs, and magazines.  Listen to podcasts.  Keep learning.

Read some fiction, totally unrelated to your business.  It stirs the creative juices.

Work “on” your business, not “in” your business.

Unless you own a business that can operate without you, you don’t own a business.  You own a job.

Try to maintain some balance in your life.  Don’t neglect your family for the business.

Jim Collins says good is the enemy of great.  However, great is the enemy of good enough.  Don’t let the pursuit of perfection prevent you from getting started.

Pursue your passions.  It takes a lot of time to build a business.  Do something you love, get good at it, and you’ll never have to work again.

Please list any favorite books, tools or resources (software, website, etc.) you would recommend for others:
My blog (of course)… ComancheMarketing.com
The E-Myth by Michael Gerber
The Winner’s Edge, The Psychology of Winning, and Seeds of Greatness by Denis Waitley
With Winning in Mind by Lanny Bassham
Mashable.com
The Wall Street Journal For Small Business Podcast
Anything by Zig Ziglar, Brian Tracy, Jim Rohn, and Earl Nightingale
Jay Conrad Levinson’s Guerilla Marketing series
Socialnomics by Eric Qualman
BrandChannel.com
Of course, the number one resource for plumbing, HVAC, electric, and solar contractors is www.ServiceRoundtable.com.

What is something that people might be surprised to learn about you?
I’m the three time 1st place winner of the State Fair of Texas fruit salsa category:  Smoked Raspberry Salsa, Apple Verde Salsa, and Blackberry Salsa.

Is there anything else you would like to add?
It’s never too late to start or to start over.