John Wilson·March 14, 2024

How to Grow a Small Plumbing Business to $26m | John Wilson Interview

John Wilson took over his family's third-generation plumbing and HVAC company (Wilson Companies, founded 1958 by his grandfather in Akron, Ohio) around age 25 in 2016, when it was doing about $1 million in revenue with eight employees, and grew it to a budgeted $26 million with roughly 140 employees by early 2024. The turning point was a distressed $110,000 acquisition in February 2018, financed with a seller note, that doubled the company overnight but nearly bankrupted it within a year due to unfamiliar new-construction cash flow problems, forcing mass layoffs; that pain taught him to professionalize using ServiceTitan and a franchise-like playbook program (SGI/Certain Path). After a digestion period, he expanded geographically into the much larger Cleveland market, then in 2021 used newly-discovered SBA financing to make three acquisitions in five months, quadrupling revenue and tripling headcount, followed by two and a half more years of organizational digestion. Wilson is candid about both the power of ETA (turning a $1m business into a $26m one, on a path to $100m) and its brutal difficulty, citing hiring mistakes, mass layoffs, and roughly ten searcher friends who went bankrupt in the past year, and he advocates buying small, favoring service-plus-install 'value ladder' business models, and being wary that the home services window he benefited from (2016-2019, pre-heavy-PE-consolidation) has largely closed for new small buyers.

Deal facts

purchase price: $110,000 (second acquisition, Feb 2018); business inherited/bought into from family (no price stated for the original family business)
revenue: $1m revenue with ~8 employees when John took over in 2016; $26m budgeted for 2024 with ~140-142 employees
financing structure: Six-year seller note for the $110k 2018 acquisition (20-30k down, ~80% of his cash on hand); final payment due the day of recording. Earlier deals were cash plus seller notes; first learned about SBA loans in 2021, which enabled larger acquisitions. Three acquisitions in 2021 (July, Sept, Dec) took revenue from ~$4m to a ~$13m run rate and headcount from 32 to 105 in about 150 days.
notes: Took over as service/ops manager at 23 (~2014), officially bought into family's third-generation plumbing/HVAC company (founded 1958 by grandfather Ralph, run 1985-2016 by father Paul) around age 25 (2016). Company was $1.7m revenue in 2017 (his first full year), grew to $2.9m in 2018 after the acquisition, $3.8-3.9m in 2020, run-rate ~$13m+ after the 2021 acquisition spree, and $26m budgeted for 2024. Bought a small Cleveland-market company for ~$500k/year in revenue as a geographic expansion move.

Why this business

John grew up working in his family's plumbing/HVAC company (started by his grandfather in 1958, run by his father from 1985) starting around age 10 doing odd jobs, and became a capable field technician by his late teens. He initially resisted joining the family business, tried college for graphic design, HVAC, and then accounting, but felt trapped as a technician with no upward mobility. Around age 23, feeling desperate for a challenge and intellectual stimulation, he began seriously discussing buying into the business with his father, who needed an exit. He describes it as a series of circumstances he didn't fully control rather than deliberate genius, but once in, he was deliberate about wanting to build the largest licensed home services company in Northeast Ohio.

What's working

Acquisition as a growth lever: buying a distressed, cheap competitor in 2018 for $110k doubled revenue and taught him how to scale, and three acquisitions in 2021 quadrupled revenue and tripled headcount in about 150 days
Adopting professionalization systems early: ServiceTitan software and a franchise-like 'business in a box' program (SGI/Certain Path) gave org charts, pricing frameworks, and handbooks that let a small team stop reinventing the wheel
The service-to-install 'value ladder' business model (e.g., a $98 HVAC tune-up funneling into upsells and eventually large system replacements) creates cheap, steady lead flow and smooths out seasonality
Doubling/tripling ad spend during downturns (including during COVID) rather than cutting it, on the logic that cutting marketing starves the lead pipeline and loses talent
Promoting acquired companies' own employees into leadership roles rather than parachuting in outside operators, which preserved culture and customer relationships
Buying small at the start: a small business is easier to get your arms around, builds a strong debt-free balance sheet, and unsolicited inbound deal flow increases once you're an active, visible market participant
Timing/tailwinds: entering home services in 2016-2019 when internet-driven lead generation and tools like ServiceTitan were disrupting sleepy legacy incumbents, before PE consolidation intensified competition

What's hard

The first acquisition (2018) nearly went bankrupt a year in due to an unfamiliar, cash-flow-punishing new-construction plumbing business line, forcing mass layoffs of 20-30% of the team in early 2019
Hiring 'out of industry' operators/managers on the theory that culture fit could be trained into trade competence was a repeated, costly mistake; hiring for direct trade experience worked far better
Rapid 2021 growth (quadrupling revenue, tripling headcount in ~150 days) broke every process that worked at 30 people, requiring roughly two and a half years of painful 'digestion' before growth resumed
Geographic expansion into Cleveland was executed with many mistakes (leased space too early, poor location strategy) even though the larger addressable market ultimately paid off
Every organizational tier added (they just moved from a 3-tier to a 4-tier org chart, and expect to need a 5th/6th) breaks communication and requires large reinvestment (e.g., $2.2m in new payroll, 10% of revenue, to break through one recent plateau)
The home services buying window has closed somewhat: PE roll-ups and consolidators with thousands of Google reviews now make it much harder for a new small buyer to take share in plumbing/HVAC/electric the way he did in 2016-2019
He has watched roughly 10 searcher friends go bankrupt or lose their homes in the past year, generally from buying businesses too large to manage, not understanding the labor pool (including physical threats/theft from employees, common in trades like roofing), or cutting marketing/mistreating top performers during downturns

Notable quotes

So I changed my life for $110,000.

I don't think that I'm brilliant and I don't think that I'm impressive... it was a series of circumstances that I had nothing to do with that gave me an opportunity that I probably didn't deserve.

Anytime the economy looks like it's taking a break... we have always doubled or tripled down on advertising... if you're trying to run a marathon and you chop a leg off under the knee, I really can't understand how people do that.

A smaller business is a more fragile business and in fact the risk goes up... it is a safer bet to me despite the tangible risk. You can replace a staff member. It's hard to move your family out of your house.