Speaker 1: I'm going to talk to Joe right now in Boston. Hey, Joe, what's up? Hi, Dave. You're all fired up today. I'm glad I called in. It's pretty much every day, man. I'm over-caffeinated. What's up? I like it. Dave, a little background. I am a sole proprietor. I am one man in a van doing electrical work.

Speaker 2: My question is regarding paying myself. I currently pay myself a monthly salary. I pay myself a bare minimum to cover my expenses, my personal expenses. And then what's left over from that, I throw into a savings account and I pay my taxes, my quarterly estimated taxes and things like that. And then I'm not sure what to do with the rest of the money that's left over. It just sits in the savings account. So I thought I'd give you a call and see what you had to say about that.

Speaker 1: How much is in there? Right now, I have about $60,000. Wow. Okay. Do you have aspirations of growing the business from a one-man shop?

Speaker 2: I do. I'd like to grow it and actually run the business and not just work in it.

Speaker 1: Yeah. Yeah, that's a good plan. Well, I think that's what I would use the money towards. Let's talk about how that can work. Number one, I want you to keep your quarterly estimates separate. I want you to calculate them each month. Calculate your profits and calculate your taxes as a result of that profit that month. Set that money aside. Withhold on yourself, in other words, which is what you're doing, but you're slopping it into that other account. You're slopping it together. I want to keep it separate because I don't want the tax money mixed in with my retained earnings. This is money that you're saving is called retained earnings in business. Okay? Retained earnings can be used for buying things to increase the business, tools, trucks, whatever. Retained earnings can be used to invest in people, adding payroll, and retained earnings can be used for emergencies. That's what we use ours for, is those three things. When we've got excess profits like that, of course, you could take them home. That's another option, but in your case, you're thinking about, I need to get another man in another truck, or I need to get another man first on my truck until I get him trained, and then I can put him on his own truck. The next step might be to hire a third one, train him on your truck, and put him out in his own truck, or however the model works. I don't know if you're putting two guys in a truck or one, but you see what I'm doing. Something like that. You could bring them into your truck and mentor them for a little while, and then buy a truck and add it. You got the money to do both right now. You do not have to buy brand new trucks. You know that. Right. If you want to bring on an apprentice, so to speak, maybe not technically an apprentice, I'm not talking like a union apprentice, I'm just saying you bring on someone that says they know how to do this stuff, and then you teach them how you do your business, and you ride with them for six months, and they can finish your sentences, and they know how you interact with customers, and they know how you do the work, technical parts of the work. Then they're set up to, you can release them into a truck by themselves and trust them, because you've been watching them do it for six months or a year, right? Right. You can say, I'm going to pay you X while you're in the first six months in my truck, but when I put you in your own, I'm going to pay you a little more, but you're also going to have to produce more, because that ought to raise your income substantially when you put that second worker out there. Probably won't quite double it, but it ought to raise it way up, right? Right. Definitely. Minus the cost of the operations of the truck, the supplies on the truck, and the person driving the truck, right? That kind of thing. You start to run those calculations out a little bit. If you want to get real technical, we just call that a pro forma on your expansion, but it's just your business model. I mean, okay, what have I got to pay a guy, and what's he going to be doing, and what can he produce, and what's his material cost on the truck? What's your top line now as a single guy?

Speaker 2: I did about $175,000 worth of work, and out of that, I paid myself $70,000.

Speaker 1: What can you hire somebody to do what you do for? $70,000 or $80,000? Probably about $70,000, $60,000 or $70,000. I'd start them at $60,000 in your truck, bump them to $70,000 when you put them out, and then give them a small percentage of whatever they produce out in that other truck, so they kind of have their own little business within your business, a little bit, just an incentive plan is all, right? Where they might make $80,000 if they went crazy, but we're going to have a $70,000 base, or something like that. I mean, you can change it. It can be $65,000, $75,000. I don't care what it is, but something like that. And then if they can produce $150,000, $160,000, maybe they're not as good as you. Maybe they're not going to do $175,000, right? If they can add $150,000 to $160,000 to the top line, they cost you $75,000 or $80,000. You've got truck costs, operational costs, insurance, taxes, tags, fuel. You got to put, I assume that top line, it didn't include your materials expenses, did it?

Speaker 2: That's the money I brought in, and after I pay my taxes, my material, all my expenses, what's left over, I gave to myself, which was $70,000.

Speaker 1: Yeah. Okay. So that's the thing. I mean, can you make a profit on that person running that separate truck? That's what I'm trying to figure out, and you just got to run that out, Joe. And I think you know what I'm talking about. I think you can do this. Yeah. But I think that's how I'm going to use that money. I'm going to use that money as the water to prime the pump to get this pump going, which is this second truck, and then you go from there. And then you get three, four of these things running out there, then maybe you step back in the office and you run the call center, so to speak. You run the customer interface. You run some of the operational side from the office and let those guys do the actual hands-on work, but you're not going to do that at two trucks. You're probably not going to do that at three trucks, but you might do it at three, but it's probably going to be four before you get economies of scale to make that happen. You start thinking through how I'm going to get there, how I'm going to get there, how I'm going to get there. You've done a great job. You're not afraid of hard work. You're managing the business well. You're profitable. Man, you're impressive. How long have you been doing this? I've been on my own about eight, nine years. Okay. So you're ready to take the next step.

Speaker 2: Right. I just don't know what that first step is, and I know you say to eat an elephant and you do it one bite at a time. Yeah, that's what I was doing.

Speaker 1: I was just breaking it down. First step's hire a guy, put him in your truck. When you can see he can do the work and be profitable, and you can make a profit on the second truck, then you invest in that truck and you write a check for it, because you're going to have the money to do that. Right. But you're not going to make money on this guy for six months. Okay. Because he's not bringing in the extra revenue because he's hanging around. Well, he could, because you could do more work with two of you. You could increase your revenues a little, but you're not in two different locations. You're just doing the work faster because there's two of you, right? Right.

Speaker 2: And I do a lot of small jobs, a lot of service calls, and so I do a lot of small stuff. I get paid that day type of work.

Speaker 1: I'm not doing large construction jobs, so residential work. That's the best kind of work, because it gets paid, you know, cash on the barrel head. You don't have to... Every time the economy turns upside down, you make more. Yeah. A guy getting paid by the contractor doesn't get paid. Right. So you got a good gig here. You just got to figure out a way to work it up. How can I scale this up using this money to prime the pump and do it gradually? And as you said, a bite at a time on the elephant, and that'll actually make this work. That's a good plan. Very, very, very well done, sir. Proud of you. You're what makes America great out there. Man, guy in his truck. I love it. Love it, love it, love it. This is where it is. Thank you.