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This week's episode of Automation Unplugged our guest is Matt Bernath, President of VITAL and a powerful voice in the luxury home services industry.

About this episode:

Matt brings a unique blend of financial expertise, entrepreneurial grit, and bold leadership to the integrator community. As a dynamic speaker and strategic coach, he’s helped hundreds of businesses clarify their goals, optimize their systems, and build companies that support both profit and personal freedom.

Through VITAL, Matt and his team work with integrators across the country to diagnose operational constraints, implement scalable systems, and build trusted teams that can thrive without the owner in the weeds. His mission? To help entrepreneurs move from “good enough” to exceptional, and from burnout to balance.

n this episode, Matt and I discussed:

• How integrators can break through growth plateaus and build a business they love.
• The three biggest constraints holding most businesses back — and how to solve them.
• Why personal development and community are essential to long-term business success.

SEE ALSO: #313: The Soul of Content - Deby Rubi on Writing That Connects

Transcript

Ron:

Hello. Hello there. Ron Callis with another episode of Automation Unplugged. Today's show, as, , as is true with all of our shows, is brought to you by one Firefly, my day job over at one Firefly. And that affords me the opportunity to, , step aside and do these interviews and, and do all the prep work and of course, the post-production with my awesome team. So we, we have another fantastic guest, , this particular individual I've known for many years actually in his current role and, and some of the things that he was doing before. We'll, we'll dive into some of that. And, , many of you, particularly if you attend Cedia or you attend buying group events, you know him, you know him as well. And that is Matt Bernath. He is the president of Vital. I'm super excited that he's here. , we're gonna have a fun conversation. We're gonna talk about business and growth and opportunities and trials and tribulations of, of running a small business and everything in between. Let's go ahead and jump in. Let's say hi to Matt and, , let's get the conversation started. Matt, how are you

Matt:

doing? Well, Ron, how are you doing?

Ron:

Man? It's another day in Paradise. , I'm happy to be here with you. , I'm, I'm also going to admit that you and I, , you're on my show Automation Unplugged. You recently had me on your show. It's gonna come out, , in a few months or come out on your, um, your, your schedule there. And, , I'm just honored that we both freed up our calendar to make this happen.

Matt:

Yeah. Yeah. It's amazing how much effort that took.

Ron:

Well, you're, you're a busy guy. I'm usually sitting over here free. My calendar's usually wide open, but you run a very, , planned out schedule many months in advance, so I'm glad we made that happen.

Matt:

Yeah, no, I appreciate that. And I think, you know, that speaks to probably one of the topics we're gonna cover today, which is where you are in your business journey. Right. , that's, that's been intentional. And, , you know, you're, you're, you're picking fruit off the tree where some of us are still watering and, , tending to our seedlings.

Ron:

Well, Matt, where are you coming to us from? Where are you physically located? Right now

Matt:

I'm currently in Tustin, California. So many people might know Irvine or Anaheim, which is Disneyland. So basically about 20 minutes away from Disneyland and, , about 20 minutes away from the beach.

Ron:

Okay. Many of us around, , north America and around the world. Heard of all the fires that took place in Southern California. Were you near some of that?

Matt:

, it depends on which fire. So we are essentially surrounded by lots of stuff that can burn. The most recent fires in la thankfully didn't affect me, but it did affect a lot of the people that I know pretty well. And you know, of course, integrators out there who service those, , those areas were affected. But, , our, the most recent fire that that affected us was 2017. So it's been a while. , but yeah, we've had, , you know, several of them come through and it's just, I think it's just part of living in California.

Ron:

It, , it is beautiful. It's beautiful weather. It's a little expensive, but it is pretty stunning to, I love visiting California, but yeah, between the what? The earthquakes and the fires, it's, . It can be dangerous. It's, it certainly is not without its challenges.

Matt:

Yeah. Well, and then, you know, you guys have in Florida hurricanes, I mean, I think no matter, no matter where you choose to live, there's going to be something, , even in the parts of the country that don't have natural disasters, I think they get giant bugs and humidity instead. So, I mean, I think you just, you kind of pick your poison. Um, and, and no matter what, we all take whatever we have for granted anyway, because as I travel the country, when I, you know, speak at different events or whatever, I, I find something that I fall in love with at about every location and people are like, oh yeah, I kind of forgot about that. You know? Um, yes. You know, when you speak, when you speak to our weather, and this is just what we live in. , so no matter what we, you know, we take it for granted, but it's good to have visitors to remind us how good we have it.

Ron:

Amen. It is, it, it just is. It is what it is, right?

Matt:

Yeah.

Ron:

In terms of vital for those that don't know if they've been living under a rock, no offense anybody, but if you've been living under a rock, you don't know Vital. Matt, give, , the, the down low on Vital, what is the business and who do you serve and how do you help folks?

Matt:

Yeah, so, um, vital is a group of, um, tenured business experts and we help currently custom integrators and other luxury home service businesses to build businesses that they love, that help them create freedom of time and money. Um, and so we do that through, , a lot of efforts in coaching and, um, benchmarking, working directly with people to improve their businesses.

Ron:

Now I think of, , I, I, I've been around long enough to where I, I remember the origin of Vital and I, and in the beginning, way back when, right when dinosaurs roamed the land. , vital was exclusively doing financial management or consulting and counsel for integrators. And that's when, , Steve Paul were still in the picture. And, , we, we here at one Firefly, even engaged vital actually to help with some of our, um, , giving us some coaching on our finances and financials in the business. And today, I know there's a lot more to vital, right? So I'm not, this is not a sales pitch for you or me, but just your business is far more comprehensive today. And so how, how do you think about, how do you and your team, 'cause I know you have a, a large team, how do you guys ultimately look at. Assisting integrators that are, are, they have an ambition for growth or prosperity or for scaling, or they have some pain in their life or their business, and they're, they're hoping someone can give them counsel. I'm personally a big fan of coaches and consultants. I've engaged with many of them through my whole, , business career. I still engage. We're probably here at one Firefly in a different engagement with three or four different coaches or consultants at different forms or fashions right now. Um, but how do you ultimately determine the best way to help the, the business or the business leader that you guys might engage?

Matt:

Yeah, a couple of questions in there that I'll answer. , the, the financials of any business. Is a scorecard of what's happening in the company. And so when you think about from a financial perspective, we will always consider financials to be incredibly important. What we recognized is when we focus so heavily on financials and having super clean data, that's really, really important. It's important to a certain subset of our customer base or our potential customer base who are ready for that. , what we've recognized over the last four years of working with really over 400 integrators is that depending on where they are in the growth curve, we have to have a right-sized solution for them. And the one solution that had been built for so many years is fantastic for 20% maybe of the integrators out there. And we had this huge, um, gap of service where we wanted to help other folks, but they weren't there quite yet in their journey. Eventually they will get to that point where they want to have perfect data, perfect financials. They weren't there yet, right? We needed to solve some other constraints before we got there, but no matter what, we're still, and we will always be, um, advocates for using data to drive decisions in the organization. Um, and so ultimately what we have done is we've evolved to the point where we recognize different data points throughout the organization to tell us what are the constraints that we need to attack first. And we, you know, we really look at it from three different perspectives. We have, you know, sales people or team and operations, and there's a bunch of other stuff that goes inside of that we can talk about later. Um, but what we'll do is we, we will diagnose much like, you know, when you, when you go to the doctor, the doctor asks a bunch of questions. , we have systems and tools that help us to diagnose. What we call the biggest constraint or the greatest constraint, and then we determine what the right next thing is for that organization. Sometimes it's gonna be sales, sometimes it's gonna be team, and there's a bunch of different components around that.

Ron:

I got it. And then it, it, what, what's if I could lift the hood a little bit. So you run, , someone through you or your team, run people through that assessment. Is it presented into a set of advice or, or recommendations into the, the categories of the business that your team believes are the constraint or the, where the, the largest constraints lie that are maybe holding a business back? Is it led by your team or is it the customer saying this, I have the most, most pain over here, help me here.

Matt:

Yeah, so great question. , oftentimes the pain is the symptom. It's not actually the cause or the problem. , same as in our body, right? , so true. So what what we do is we have a process of peeling back the layers. We actually help them and we teach them how to do that. We have some tools. We, we have the CI focus finder tool, for example, that actually allows us to drill down through a process to say, okay, if these things are true, then this is probably your biggest constraint and let's go attack that. Then we have systems that we've built that help us to attack those constraints. So it's really all process oriented and it's done in the fashion of our team working with the client, but also I. In a peer group setting, right? Okay. So we've built this incredible community where it's not just one-on-one. You know, me and Ron talking about Ron's business, it's our entire team and all of their peers helping them to identify what's the biggest constraint and how do we solve for that constraint? And we're not picking solutions out of the cloud. All of these solutions exist. These are all solutions that we've built and implemented over the years.

Ron:

All right, A Allison on my team here at One Firefly, she did some research and, and dug up a graphic. I'm gonna put this graphic onto the screen. And I, and for my listeners that are, are on their morning walk or their morning drive to the job site, you're gonna have to just, , use your imagination because I'm gonna ask Matt to use illustrative words to help us understand what's on the screen. But this is a graphic, , I actually saw you speak this spring, and I saw a version of this graphic in one of your talks. So if, if you could maybe speak to it and how this fits into the way that you and your team think about working with integrators. I'm gonna give it a shot here. Um, so maybe describe what we're seeing and then describe what this, what this means.

Matt:

Yeah, so this is our success model. , this has been built on really the last, you know, let's call it 15 years of vital working with integrators, but heavily in, you know, heavily evolved over the last three or four years in identifying how do we reach our target of affecting a million people. Um, and what we identified there is that, well, most integrators have this version of their perfect business, , whether that's a business that runs without them, whether that's a business they could hand off to their kids, maybe it's a business that just provides them, , an adequate living where they can invest in other things. I mean, they, everybody, they don't necessarily have the perfect business. Envisioned in that moment. But as we start to unpack it through questions, they get clear about what their perfect business is. And that's the goal. And if you think about our experience with integrators, it, it revolves around them calling us for help, right? Or, you know, in, in one way or another coming to us and saying, Hey, you know, we, we want something to be different than it's today. So through those conversations we've identified, and again, we've met with over 400 integrators asking 'em a ton of questions. We figured out that what prevents them from getting to that perfect business are three things that are identified in red on this model. The first one is inconsistent sales. So what this looks like is, I don't know where my next lead is coming from. I'm relying on referral only, which is great when it's great. It's not when it's not. Um, you know, some of my projects partners come and go. If, god forbid I lost a project partner, I'd be really in, you know, dire straits. It's this inconsistent sales piece that is, you know, one of the main drivers. And then there's people problems. So that shows up as, I can't find or retain, or gosh, I'm the only one who's thinking like an owner. , why are none of my employees bringing it every day? Or, man, I'm growing so fast, I don't know who to hire next. You know, things of that nature. Those show up as people problems. Then lastly, the third thing that keeps most business owners from getting to that perfect business is just inefficient operations. Mm-hmm. So this shows up as, you know, not being totally profitable, not even knowing where the, you know, where the money's going, how much of it is mine, , of course the bottleneck, whether that's the owner or other people in the, you know, in the business. And, you know, just not having repeatable processes that manage themselves.

Ron:

That, that one, , Matt was my breakthrough. I, I founded my business in oh seven and in 2013, that was my epiphany. I remember it was like spring April of 2013. I, I had a light bulb moment. I was actually in a peer group similar to maybe your facilitated group discussions, but I was in a facilitated group discussion and I realized it, and I actually then went on a journey to, in my case, bring in, , operations and finance expert. That person gave me such clarity on my business that it, again, I could preach for hours about the benefit of, of what that did for me personally and for the business. So, yeah, I It's gotta be a big one, I would imagine for many businesses out there. Yeah.

Matt:

Yeah. I mean, honestly, these three things affect nearly every business, not just integrators, right? Well, what we really want and need in order to get to that perfect business, what we need is sales certainty. We need to know what's coming, how to make sure that on a regular basis we have leads coming in. Those leads are closing, where they're closing in a healthy way. Um, we of course, need to build a trusted team. So many of the integrators, when they talk about their perfect business, it's one that doesn't require them to show up every day. Or if they do show up, they get to do just the stuff that they love. And of course, you need a trusted team to do that. And then lastly, the profitable production piece. We need to make sure that we're not just producing, but we're producing in the most profitable way. , which, you know, takes a, a bunch of different components. So the way that we solve for these things, the way that we provide those three key elements, the sales certainty, the trusted team and the profitable production is through installing nine systems in the business. And those nine systems are things that vital does really well, but also that we have recognized our peer, you know, the, the other integrators in the community, um, are bringing some solutions to the table as well. We know for a fact that when we install all of these systems, and by the way, this takes a while, as you just described, your epiphany was 11 years ago, right? Yeah. Um, in our experience, it takes about three to five years to fully transform one of these businesses, and that's when everybody's bought in and doing the work. Most integration companies and most small businesses just never get to that point, right? Um, there's a stat from the small business Association that 80% of small businesses just end up closing the doors. They don't actually get to selling, they just go away, right? Um, so recognizing that 20% of the businesses out there roughly are able to achieve some, you know, some level of exit or, or perfect business. Um, but anyway, there's, you know, there's a bunch of different things that we do in, in helping, , our members to install these systems.

Ron:

No, I, I love that. I, I would, I would challenge that, , so many business owners, I, I, I can say this because I remember at different stages of my entrepreneurial journey, I at least pondered this, which is, you know, maybe it's just good enough. Yeah. Yes, I have stress and this is not great, but it's gonna be so hard to go figure that out. And as an entrepreneur. It's very lonely. You can feel like that hard obstacle in front of you almost feels impossible. In my, what I, my council, you know, would be that you don't have to be alone. There are other entrepreneurs you can fellowship with. There are coaches and counselors that can help you point you in the right direction. And when you find the right ones, they are worth their weight in gold. 'cause they can save you so much anguish, so much stress. I mean, I, and imagine for your customer base, Matt, you and your team, that's what you guys are for them.

Matt:

Yeah, absolutely. Well, and you bring up community, right? The community piece is so important. Having that community of people who are going through it with you, and of course everybody is a different stage. But it reminds me of conversation. You and I had recently, I think maybe even been on a podcast, um, where you talked about how lonely it is as an entrepreneur and, um, you know, the, the, the component of being able to have people to talk to is, is so important. But beyond that, what you discovered in some of the peer group work that you've been doing is you've discovered what's possible. Because I remember what you told me and that sticks in my mind because it's absolute truth. It's, it's even what we share with our members. Once you know something's possible mm-hmm. Then

Matt:

you go for it. Right? And if you look at the technology side of our industry, it happens every moment of every day. You go to the CD expo and you watch the integrators walk around and they learn about what's possible, and then what do they do? They go back into their business and they start designing systems around what they just learned. Mm-hmm.

Matt:

The same can be true in the business side of the business, and it should be true is once we learn what's possible, once we sit next to an integrator who's making the kind of profit or living the kind of lifestyle we wanna live, we're like, we a minute, this can be done. I want that. Right. Yeah.

Matt:

Um, and so as you just brought up, you said sometimes you, you're overcome with this good enough mentality. I think it it affects all of us until you see someone else doing what you want. You know, like, wait a minute, I wanna be like that guy. And so that's the beauty of the community that we've built. We love it so much.

Ron:

Yeah. I, , again, you and I were, , have you and I talk frequently? Mm-hmm. So it was at some point in, in the recent past, you, you and I were just commenting on the power of being authentic and when you are being honest with yourself. Then you're allowing that to play out in your work life, and you're being authentic in what you're doing and your, your business, and you're representing yourself honestly to others. And your business is being presented to your community in the way that is really in your mind's eye, how you want your business to be presented. That it is less stressful. And, , what I've found to be true is that I've, my, my business has been able to reach much higher levels of performance because I wasn't shielded. Now this gets a bit meta, and we don't have to necessarily go there, but sometimes business leaders can allow other members of their team, business leaders on their team, let their mandate or their beliefs, or their willingness to accept certain levels of performance. To be good enough. And I can even admit in, in a period in my business, I did that for a, a sprint and it led to probably the period where I was the least happy professionally of my whole career. And, you know, my, my breakout was when I ended up reacquiring full control of my business. This happened back in 21. And from there it was, you know, I was gonna be authentic to myself in the marketplace or I'd go do something else because I just, I, I, I love myself too much to not do that. I was, it was causing too much unhappiness. And I said, I deserve to be happy and I want to be authentic. And the result is the business has continued to thrive. So, but it just, with vital, I mean, how do you get business owners to find themselves again? Because so many of them probably get buried under the anxiety and the stress of the day-to-day of running their business.

Matt:

Yeah. , great question. And I mean this, we're gonna stay meta I think for a little while because, , that's where I've been living since really 2018. , you know, when I sold, um, my integration company there, there was a stat that I read recently. It says 87% of humans right now are running in a constant state of fight or flight. Isn't that wild? And when you're in a constant high

Ron:

cortisol levels

Matt:

Yeah. When you're in a constant state of fight or flight, which is just that anxiety feeling, when when that happens long enough, it becomes an ingrained comfort that you seek, which is wild. And so when you think about that, if you look at business owners as a fraction of that 87%. E even if it was just 87% of people. But I think in the business, you know, in the business world, entrepreneurs is higher. I, I don't know about, about you, Ron. I think you've probably reached a level of zen that, you know, many of us hope for. But every day I have to be very intentional about re you know, reducing my stress and cortisol and fight or flight and just being aware of when that's happening and affecting me. And when you look at the integration world as a whole, we're in service to so many people. Right. Um, and I think by and large, and there's many exceptions or some exceptions to this, by and large integrators are people pleasing people. Mm-hmm. Um, you know, when, when you, when you look at the, at the, the, the swath of who we work with, most of them wake up every day. They wanna make other people happy. Right. They, they wanna see the technology working. That's why they end up giving away so much free service. They end up doing all these extra things they don't need to be doing. Like, they just wanna make people happy. Yeah. At the end of the day. To, to get a little meta. Where that usually comes from is a lack of self-worth, right? And I've learned that for myself, and I've learned that through working with some of our integrators is really asking them like, Hey, do you value what you do at the deepest level? And when we start peeling back the layers, many of them don't. They're just happy to be able to play with toys all day long and happy to have people pay them to do that. Um, and it's almost like they're begging for the business. They're begging for the opportunity to do that for more people. , and when we show up in that way, we're showing up in, in a, in a version of ourselves where there's so much lack versus saying, Hey, you know what? I have this incredible skillset. I mean, integrators, you know this, they're like some of the smartest people on every job site, period, hands down. There's so much skill in our industry that we give away for free because it's just a lack of, I guess, self-worth, right? So it goes back to your self-worth comment.

Ron:

And a demonstration of that, or maybe the, you know, a financial example of that. You, you, you'll know far more about this than I will, but I just, I've observed it, is that there are many integrators and I'm just gonna pick a random revenue number 'cause it'll be a easy, some easy math for me. Yeah. But if someone's doing $5 million in revenue, , I would imagine a lot, , and, you know, I'll call this a educated assumption, but I would, I would venture a lot of integrators are out there, running around at a 10% net profitable business or less, but let's call it 10%, 10%, $500,000. Take home maybe after you pay yourself a salary. That's a nice lifestyle. That's a, you know, you can run a very inefficient business, , very mediocre business, but be making very comfortable money and be maybe completely satisfied with that. Mm-hmm. But if you're wired. You know, like me and I know, you know, some of these folks out there, they learn, you mean there's people running 20% net profitable businesses? You mean there's people running 25% net profitable businesses? I don't know how, how high do they go, Matt? , like how 25% is,

Matt:

25% is Purdue rare air. Um, our average for, and I mean, again, this is 400 integrators worth of financial data, so it's pretty real. Um, it's about 7.5% is the average for the industry, which means of course, there's some performing above some or below. , 15% is good, 20% is great, 25% is incredibly rare, but it's doable. Like we have, we have members that are at 25%. We have members that are, you know, 15, 20. We even have members that haven't hit that 15% range for, you know, any number of reasons. We also know. There's chasms that you have to cross. And you know this, of course, in your business, you've crossed these chasms where the profitability is, is reduced because you're giving way to, you know, growth,

Ron:

right? There's like, there's plateaus or step function levels in your business. What are those big? Is it 3 million, 5 million, 8 million? Like where are the levels? And, and just for clarity in my poor man's, , version or explanation, there's just levels of revenue and operational structure that, um, there's plateaus and how much a business throughput can get done before you start to need to add layers of management or oversight. Yeah. And so if you imagine just crossing over that milestone, you might have to layer in more operational costs. They're not generating revenue, so they're gonna immediately eat into profitability until you can grow into the upper bounds of where now that new structure is maximally profitable.

Matt:

Yeah, if you get to that point. Yeah. Um, I, I love talking about this because it eases some of the stress for some integrators. It also helps them recognize why they're at a certain place. So under a million is really challenging, right? This is, this is five people, you know, five to seven people or less. It feels like a ton of work because it is, and of course, those integrators that are under a million are hearing about all the things they should be doing from the guys that are much larger and they want to do it all. And so they have, in the back of their heads, they have all the shame as to why they don't have their financials the way they should. Why do they, why aren't they not doing all the marketing that they should? These guys are well wearing a lot of hats. It is, it is an incredibly difficult business to run, can be pretty profitable. Um, you know, because, you know, at that point there's, there's not a lot of infrastructure. Um, but. If you're running a business that's under a million dollars, and let's say you're older than 35 or 40, it can feel especially like a lot of work, right? Because at that point you're just not wanting to work as hard as you as you did before. Yeah.

Matt:

Um, the, the million to $2 million chasm, , is what we see. Like really the run up to 2 million. You want to get there as fast as you can because now you have the point, you know, at the $2 million point, you're at 10 or 12 people, you have enough infrastructure to be able to, to actually delegate some things off of the owner's plate. The owner can start thinking of themselves as an owner, not, you know, the guy that wears 75 hats. , so that's where a $2 million business can be a pretty fun place for, for people to, to land and stay. And that's oftentimes where an integrator will stop growing if they're not personally growing as a leader. Because if you think about 10 people, that means, you know, there's nine direct reports. That's a lot for an integrator. And usually at that size, you don't have, you're not making enough money to have like a real leadership structure. So pretty much everybody's reporting to the owner. There might be a little bit of sub reporting in there, right? So that $2 million range is, you know, one of those, let's call 'em a plateau before you cross the next chasm. The next chasm to cross is, is between two and four. So as you're getting up to the $4 million range and that plateau between four and 5 million is probably the best place to be as an integrator. Um, because now you have a business unit, let's say you have 20 employees, 20, 25 employees. You do have some leadership structure. , the only integrators that we see making it to that point in a very healthy way are the owners who have either some leadership experience from the past or they themselves has grown, have grown as a leader along the way. Four to $5 million integration company. Those are the, the, you know, it's a great spot. 15, 20% you can be taken home, owner can step

Ron:

away, take a vacation, business still runs, revenue still comes in and is earned.

Matt:

Yep. And there's actually an argument and, and not many people have successfully done this, but at that size range, if you're running a four to $5 million business at 20% net, you can give up 5% or so, right? Um, maybe more and actually have someone run the business for you. And you don't even need to come in, , if you've built the business the right way. Now that's, that's not easy, but it's very possible to do that. But, and you can still, I mean, think about it, Ron. If you paid yourself a salary and you took home 10%, you know, so you, you're making that $500,000 and you don't have to come into work every day. That's a pretty good gig for people, right? You've somebody running good,

Ron:

good. A lot of people would sign up for that. A lot of people listening would sign up for that.

Matt:

A lot of people would sign up for that. Again, not easy to do. It's gonna take years, but it's worth it, right? If you're, if you're sitting in that spot where you're, let's say 40 to 55, you know, and you want that, it's po it's totally possible. Um, and even, you know, even older, if you've got some, some gas left in the tank, , I don't wanna sound ageist of course, but I'm just using real data from people we've met with.

Ron:

Yeah.

Matt:

Um, and then the four to $8 million chasm, or let's call it five to $8 million chasm, that is the danger zone. There are a lot of integrators who have slipped into that, , who've really struggled to make it. Because an $8 million integration company is a pretty big business around here, right? Mm-hmm. , I mean, in, in our, in our, , industry, that's a, that's a fairly large business. It takes a different level of leadership skill. , certainly takes, in order to be a very healthy $8 million plus business, it takes a different level of financial prowess. You really do need to have a CFO, you know, level person on staff. So there, you talked about the investments into management talent. That really has to happen from the five to $8 million, you know, as you, as you cross that chasm. Mm-hmm.

Matt:

Now an eight to $10 million integration company can be a very fun, profitable, integration company to run. Um, as you grow beyond that, the next chasm is 10 to 14. And then of course, you know, 14 and above there's, you know, that's fairly rare air. Um, but, , those are kind of the chasms. And again, the, the four to $5 million range I think is really the sweet spot. Um, but you know, you can be profitable at, at really any of the plateaus, but crossing the chasm, you're gonna give up a little bit. Profit.

Ron:

Yeah. What, what makes up our industry? What are the most of the sizes of the businesses in, in the residential technology? I know that resi me. I know that term might offend some, but that, that type of integrator, you know, keeping the, the aa, the commercial integrators over there. The resi, , what, what is the typical size of these businesses?

Matt:

Yeah. That's a really hard number to put our finger on because there's so many small integrators that none of us even touch or talk to. Um, you know, they're, they're buying from the distributor. They're one to five man operations that only the

Ron:

1000 integrators that are members of buying groups. Right. And go to C Dia. Those are the numbers we all know pretty well. But there's, but then you hear, you know what Snap talk about? They do business with 20,000 businesses. Right. And you and I are going, where, where are they? How do we meet them? 'cause there's like these 1000 companies that we, we all know and, and work with every day.

Matt:

Yeah. Yeah. So, and you, when you think about the thousand. Which I think we have pretty good data on. , it's about two and a half million to 3 million is the average in there. Right? So many of them are, let's say, crossing that chasm. And that's again, where we see that 7.5%, um, net operating profit of the, because that's who we're kind of exposed to. , and we are working with some smaller dealers, but for the most part, , in the history of vital, or at least the last 15 years, most of our integration clients have been two to 4 million. We've, you know, we've now opened that up to, you know, a, a much larger subset of smaller dealers as well as larger ones.

Ron:

, Matt, are there any particular metrics in a business that business owners should be obsessing over? You know, we practice EOS at one Firefly, so that means there's a dashboard and, and our leadership L 10, every week there's a standup with our, our leadership team. And we look, we review every metric on that dashboard every single week. Everybody knows what's green and what's red. Um. What are, what are metrics that business owners listening or tuning in should be obsessing over?

Matt:

Yeah, so I love this topic because what you just brought up, I think an organization hears that and says, man, I really want that. Right? Especially integrators, they want all the numbers, they want all the data. They're, they're very detailed folks. The metrics have to be right sized to the organization. You know, I mean, I I, I'm guessing here, but there was probably a point in your entrepreneurial journey where you wanted that, but there was no f and way you were gonna get it.

Ron:

Oh, dude, I, I started this in oh seven. I didn't have that until 19,

Matt:

right? Yeah. 12 years in, right, was 12

Ron:

years in, and I, 12 years in, I had no dashboard and I was, I was flying the plane at night, and I did not know what the, the instrument panel was reading.

Matt:

And if you tried to get the dashboard five years earlier, you would've added so much administrative overhead. You wouldn't have been able to focus on the things you needed to focus on, which. We're clearly sales and getting over your own chasms. Yeah,

Matt:

so when people ask me about the metrics, I have to be real careful because we have our set, you know, we have 28 metrics that the vital system has, has been working through for, you know, 15 years. Those aren't right sized for every business. And that's actually something that we've learned over the last four years is, man, if we're gonna really impact a million people, we need to open up our minds to right sizing metrics based on where they are in their journey. Because yes, we'd love to have all these 28 metrics, but if we tried to implement that in a million dollar business, it just doesn't work, right? So no matter what though, some version of these three things are important. Okay?

Matt:

Gross margin, profit, bottom line, profit always starts with gross margin. So that, that's metric one. That's the most important. I think pretty damn close to that is cash flow. And again, these are, these are. Ver versus giving you actual metrics. I'm gonna give you categories of metrics. Sure. So, you know, gross margin can be broken down in a lot of different ways, but, but some version of that that's right sized for the organization. Cashflow metrics that are right sized. I know so

Ron:

many businesses that have been killed by cashflow. They signed all these wonderful projects, but the money's not coming in and that you can't make payroll without cash or money in the bank.

Matt:

Yeah. Well and that's the funny thing is money in the bank looks sometimes better than, I mean, you know, many integrators, many business owners forget just integrators. They, they look at their bank account and say, wham, there's a lot of money in there. I'm good. , lemme go buy the bank. You know, go buy the boat or the car or whatever they wanna buy. Yeah.

Matt:

So cash flow is number two. And again, right-sized metrics around cash flow. The third one, which is very unique to service businesses is financial efficiency of their labor. And, and this is the piece that is less talked about, but super important. And this was the unlock for me. When I started to recognize that every day I was buying hours from my technicians, and my job was to sell as many of those hours as possible, and I, and I just, of course, break it down to one day, but that's not how project work works. But the analogy I use and I tell a lot, I, I keep preaching it out there because I want it to land. It was a game changer for me. If we ran a fruit stand, we bought fresh fruit every morning from the wholesaler. Whatever fruit we didn't sell, we had to throw away, affected the profit of the fruit that we did sell, right? Mm-hmm.

Matt:

Because you still bought all of that fruit. Yeah. The

Matt:

same thing is true for labor. Every single day there's, your team shows up, and of course you have overhead, you have your administrative staff, they're non-billable. But when you think about your billable staff, every day you're buying, let's call it eight or 10 hours per day. You have to sell as many of those hours you can. Any of those hours you don't sell affect the profit of the hours that you did. And that is such a critical factor when it comes down to service businesses. And that's why efficient project efficiency is one, one factor, which is probably the factor most people think about, but it's

Matt:

what happens off the job. That also is a huge factor, right? Mm-hmm. If you're efficient on the job and you're still not making the kind of money you should, or you're not as profitable as you should be, there's a whole bunch of stuff that's happening off the job that's affecting your profitability.

Ron:

How do, how do business owners normally respond when you tell them it's that simple? These are three main categories that you need to be focused on, and if you did that and you got these right size, you'd be much better.

Matt:

Yeah. They, , they want it, I think they're, they're overwhelmed by it. Yeah. By and large this industry, and, and again, it's true for most service industries, it's not, they're not, it's not made of business people, right? It's made of trade people, right? Um, who are very in sourceful by the technology, right? They're in love with the finished product. They're in love with working with their hands. Um, I've heard time and time again from business owners. Hey, I'm not a numbers guy, right? , okay, that's cool. Do you have the profit to hire a numbers guy? No. Okay. Then you need to become a numbers guy. Um,

Ron:

you have two options. You need that person on your team or that needs to be, you choose, oh, that needs to

Matt:

be you. And, and again, it can be right sized. Like I'm not saying I need to teach you how to be an accountant. Yeah. In order for you to be a business owner, but damnit you need to understand certain things. And so I think to more pointedly answer your question. The initial response is usually overwhelm. It's usually pushback. It's like, oh, you know what? I've survived without this. I think I can survive. And absolutely, I mean, our industry, it's fairly easy to survive in, honestly, but thriving is a whole different story.

Ron:

I, I've known you long enough, Matt, and you and I for the record. I mean, we've known each other, , certainly more than I would say, 10 years plus probably. And you've always been this way. But I'm gonna say you've even come more into this season as you and I have gotten to know each other better. You like to ask big, bold questions, and you, you don't, you're not intimidated by asking them, and you're not intimidated by them being asked of you. What is a, a bold question? Maybe the bold question that every business owner should be asking themselves right now.

Matt:

I think the question is, what do I want from this business? Ultimately, you know, what, what is, what does my potential exit look like? And when I say exit, I'm not talking just about selling or transitioning an exit. As we talked about earlier, it could look like a business you wholly own that somebody else operates, that you, you know, receive a financial reward from and that you're building equity in. Um, but ultimately I think the big question is, what the hell am I building, right? Mm. , am I, am I building a job that I can never escape from? , or am I building an actual business and am I capable of doing it? If, if the belief is there that if, if there's a lack of confidence that I'm the right person to build this business. We have to unpack whether we can overcome that confidence or not. And in many cases you can. In many cases, you are your own limiting factor. We know that, right? It's just having faith and realizing, breaking that belief of like, Hey, I've been a worker bee my whole life. I'm happy now making 20% more than I did as a worker bee. You know? So that's the big question. What the hell am I building?

Ron:

Just I wanna pull a thread on that, that an idea you just expressed in. And I would say this was i'll, you know, I like to teach or talk from personal experience rather than tell anybody what to do. One of the flaws from my own personal leadership journey has been learning that by being the leader or in the leadership position, it doesn't mean I have to know all the answers. In the beginning I thought I did. I. Yeah. And I was maybe even naive enough and um, full of myself enough to think that I actually had the answers. The older I get, the more answers I realize I do not actually have, and I'm more at peace with that because the, the clarifying detail or the important detail is the important to understand, well what are you trying to achieve? And it is important for you as a leader to know that yeah, what is the thing that you're trying to build, , what is the end result of whatever the project or the mission that you're on? And I, I do agree that in business, , so many business leaders fail to really define like what is success and or what is successful exit. And I appreciate you saying that doesn't mean you sell the business. 'cause I. I think that's a flaw in some of the communication in the business community to say success equals selling your business. Some people love their business and have no desire to sell their business, right?

Ron:

But at some day you're probably gonna wanna work less and some you might even not want to work, right? And so by being clear with, if that's true, when do you want that to be true? And then back solving. How would you go about achieving that? That gives clarity and focus to your work and the conversations and the counsel that you seek. And it's, it's probably puts a lot of the people around you additionally at ease knowing they're pointed in a certain direction or trying to achieve a certain outcome. And so where, I'm just curious, I mean, those are some of my beliefs or, or experiences. What, what have you found to be true as you're working with business owners? I mean, how clear are they typically on knowing what they're trying to achieve and how open are they to being, , maybe engaged in conversation that helps take them down a path to gain clarity?

Matt:

Yeah, I think it's tough. I think it's tough for a lot of us, um, especially when you look at the personality types of integrators. Many of them are not a visionary personality type, and that's totally okay. They're, they're more of the executor integrator, um, you know, from the EOS world, you know, the, the integrator versus the visionary, right? Um, and, and so sometimes it's hard for them without proof to think about what's possible. , and so in our experience, you know, that's, that's usually asking a lot of questions, giving them examples of what's possible because, you know, I've identified that once somebody knows what's possible or sees what's possible, they're willing to, to go out and do it. Right? We, we, we, we do this often. We see what's possible and we go get it. Um, and so it's, it's usually through a process. I, I would say very few people are, are incredibly clear about what they want to build. , the only time that I can remember where we've talked to an integrator or a client and they were pretty clear about what they're building, , or what their exit looks like is when they're really close to exit. Like, Hey, I'm 70 years old. I know in two years I don't wanna work anymore. Um, but there's very few people that we've talked to that are within their first like 20 years of business or 15 years of business, um, who we say, Hey, you know, what are you trying to build here? What do you want the end to look like? Or What, what's the exit look like for you? Or what, you know, what's retirement? And. Most of 'em just kind of like, oh, I don't know man. I just, I wanna make it through this year and next year.

Ron:

Wanna make it through this week?

Matt:

Yeah. Or make it through this week. Oh, yeah. Not, not keel over on a job site. Right. Um, and, and so, um, it's really powerful, like you said, to know what that is. I actually think there's some judgment that comes up when people go through this exercise because, , and I may be projecting here, but when you're standing in front of a bunch of employees and say, Hey guys, over the next 10 years, your job is to get me to retirement. You know, that, that, that can feel, you can feel like you're judging yourself a little bit. Like, how, how are these people going to want to be excited about getting me to retirement? Right? But the reality is that we talked about authenticity earlier, the more authentic you are, the, the reality is you, you end up finding people who are willing to support that journey. And so ultimately it might not be the people who are sitting in front of you when you go, I mean, nobody's gonna have a meeting saying, Hey, your job in the next 10 years to get me retirement. But finding people who are willing to take that journey with you, they're out there. Um, and the more authentic we are about what we want, the more clarity we have about what we want in our business, , yes, that might create some turnover, but it'll be turnover that will end up hopefully with people who are willing to support you in that journey. And I think you actually experienced this in your business.

Ron:

I did. , you know, when you read the book Traction, , they, they, they, there's a chapter on people and they talk about, you know, being authentic and declaring your mission, vision, values, and the, and the more clear and concise you are at doing that, it's gonna have a double, , you know, the book was talking about having an impact. You know, those that agree with that are gonna align and those that don't are gonna be repelled and they're gonna leave. And I could be misquoting it, but I wanna say traction talks about a 30% employee Churn is typical when you're, you know, rolling out the system. And I, I was terrified by that. But at the same time, I wanted people around me at one firefly that were aligned with my beliefs and more aligned with my beliefs as I became better at declaring what those beliefs were, rather than hiding behind those beliefs. And, , we did, we saw probably 30, 35% churn of our overall staff. , if, you know, if you look at between 2019 and 2021, , you know, it was a, there was a blip there with COVID. No one was leaving jobs. Even if they didn't wanna be there, they were gonna stay employed to the best of their ability. But as soon as that, , COVID threat eased a bit, we saw, you know, some accelerated churn in that little sprint. And , and on the other side of that, we've seen some of the lowest rates of employee churn in our company history. Because now the people that want to be here and they believe what I believe, and that's okay to say that. , they want to be here. They want to build a great company that, , is aligned on helping our clients and helping our people. You know, our, our vision not to be preachy is to help people feel proud, prosperous, and connected. Everyone in our company can restate that. Everyone can restate our mission. Everyone can restate all of our values, and that's awesome. I can tell you folks listening, I did not have that for most of the years of this business. I didn't even know what our values were most of our years in business until we went and worked on that. And it is, you know, it is a flywheel. I know your podcast is called the Flywheel Effect, right? Yep. And it's, as you start to do these things, and you talked about all these systems that ultimately impact building a great business is each and every one of these systems as you work on them and improve them, it injects energy into the flywheel of your business. So I, I love what you stand for, Matt, and you know how you help people, and I've just, I'm a testament of the impact that getting good coaches in your life that it can have on your personal happiness, your, your professional success, the money in your bank account, right? All of those things improve as long as, you know, you're willing to learn and be open and be humble and acknowledge, you don't have it all figured out. Yeah. And that's been my journey. The, the more I realize I don't know, and yet I seek the faster my flywheel turns.

Matt:

Yeah. Yeah. It's funny as, as you talk about that, um, it, it brings up something that was a, , an unexpected benefit to. The community, you know, that we built and the observ, you know, I observed, which is borrowing the confidence of others. Um, because as you're describing your business right now, you're, you're picking off fairly mature fruit trees, right? , you know, you, you, you kind of know when the season's coming, you know how to prepare for the season. You know, what happens if a frost is, is, , you know, predicted, like you're, you're, you're working on, or, you know, if, if you like wine, maybe you're working on a, an estate vineyard that's been around for a while, right? Like, you, you kind of, you have things well figured out, and when somebody comes and visits that vineyard or your business, or you talk about your business, they can't help but be in awe of what you've built. They weren't around when you were, you know, . Kind of figuring things out and, and getting that seedling, you know, those seedlings up and running. And man, we didn't, you know, we didn't, we didn't get to pick any fruit off the trees this season, but damn it, we're gonna try again next season. Right. Nobody saw that. And the, the community, um, there's different people at different levels, right? There are people picking off the mature fruit trees. There are people who've just planted their seeds and everybody in between. And the beauty is we're, we're, instead of listening to someone describe their business and saying, wow, I need my business to look just like that tomorrow. Mm-hmm. They're

Matt:

recognizing like, okay, I've got three or four clicks to go, right. I'm gonna get to this next click and I'm gonna borrow the confidence from the guy that's at the next click. I'm not gonna try to borrow Ron's confidence. 'cause Ron, I mean, you're showing up in a way today. I mean, I've known you long enough, you're showing up totally different today than you did back then. And, and that's amazing to think that Ron from 15 years ago would've been able to show up that way. Yeah, wouldn't, wouldn't be, wouldn't have been possible. Like the things that you've created over that time weren't possible 15 years ago for you. Um, and it's been a lot of clicks that you've, you know, a lot of, a lot of unlocks for you over the years. So my point is, no matter what community you're involved in, you have to be in some kind of a community. Otherwise, to your point, we'll bring it all full circle. This is a really freaking lonely journey as an entrepreneur and you can't help the human condition is to compare ourselves. That's the human condition, right? You can't help but compare yourself to these guys that are 10 clicks away. Like, just compare yourself to the guy that's the next click up and he'll, I guarantee you, he'll turn around and he'll pull you up and whatever community, if it's a good community, that's what's gonna happen.

Ron:

And that was one of your breakthroughs. If, I mean, that's what I'm hearing is that the vital in the beginning was one-on-one consultations, and the vital today is group settings and people of different tenures in business. Being facilitated through a, a, a plethora of business system conversations that ultimately are likely to impact, you know, the people in the circle.

Matt:

Yeah. Yep.

Ron:

And that's, , that, that was where my, some of my, many of my breakthroughs in my life and business have come in those group settings. Mm-hmm. It's, it's it's power. I mean, I still do some one-on-one things here and there, but much of what I do, I mastermind, I mastermind with you, Matt, and, and some of the other service companies in our industry, and I'm in some other masterminds is just, , so much genius. If you can surround yourself with so much genius, number one, you get to give, I believe if I give, I will receive tenfold. So I love to give and, , I don't ever need to know how it's gonna come back. I just know that's the way the universe treats me. If I give, it will come back

Matt:

a hundred percent.

Ron:

And so if you're in those group settings. Give, give, give, give. Don't ever ask for anything in return. And, , if, if that's what you believe, then just generally good things happen. And that's, that's neat. I, I think that's a really neat unlock. If I were to ask you, Matt, about the businesses that you work with that have not scaled, they've not taken the advice, they have not been able to break through, despite counsel and coaching, what differentiates those business leaders from businesses that have equally received the coaching and they're in the same soil, they're being watered, they're receiving the same sunlight, and they've thrived. What, what are some leadership characteristic differences?

Matt:

What makes you assume we don't have a hundred percent success right now? All right. I

Ron:

Maybe you do. So in this fictitious world where maybe everyone doesn't rocket to success.

Matt:

No. Hey, your, your, your question is grounded in reality because you've done so much of the work. You've seen those guys, you've been in the same room with those people who, and I hate to say those people because it's not them, it's not them as a person. It's who they're showing up as in those moments,

Ron:

they're willing to do the work or they're not. Yeah. And that's not a judgment of the coach. That's a judgment of the athlete. Either you're willing to go to practice, put in the extra hours, eat right, do get, get proper sleep, take care of your body, or you're not, and it's, it just is.

Matt:

Yep. Yep. And, and, and for us, we have those. And I would, I would tell you for sure. The main characteristic that differentiates those who, who achieve and grow and those who don't, doesn't matter what program they're on, doesn't matter where they are in life, is their ability to recognize they don't have the answers, and that they're going on a personal growth journey. And that's what life is about. Life isn't about knowing the answers and stopping. Right. The so, so those who, who can take on that philosophy of every day I need to, to just be a little bit better than I was yesterday, may not be perfect. That's totally okay. Those are the folks that succeed. Um, we actually have, and the, they may sound ridiculous, but we, we kind of categorize not in like a, you know, talking trash on our members kind of way, but we, we sort of categorize members in three ways. We have zippers, goers, and fighters. So the, the goers, these are the ones we, we literally call it drinking the Kool-Aid. They, they show up. They drink the Kool-Aid, they don't ask, you know, they, they don't second guess anything. , when somebody tells 'em, Hey, this is, you know, this is my feedback. They take it in like it's the truth. They execute quickly. Um, they see a lot of, they see huge results very quickly. Right. I mean, we've even seen some of our members turn their businesses around in a year, which is a very short amount of time.

Ron:

Wow.

Matt:

Um, you know, others, you know, other goers, it's a couple of years you have sippers, they don't really, you know, they, they're not second guessing, but they do take time to implement. So they're drinking the Kool-Aid, but they're sipping the Kool-Aid. Right. , they're, they're not sort of pushing back, but they're just slow to go and, and they're just gonna take longer, but they eventually have success. Mm-hmm.

Matt:

And then you have the fighters. And the fighters are the ones that fall through the system and they don't succeed. And what those fighters are, they're the ones that show up. They actually ask for advice, they ask for help, they take it back. They say, Nope, I know better. And they just keep doing things the way that they're going to do them. Right? And they fight and they fight inside of their minds. They fight inside of their businesses. In fact, many of them are very confrontational with their employees. They believe every day when they wake up, they have all the right answers. They fall out of our system. Um, and unfortunately, those, those are the ones who just are not on a growth journey.

Ron:

Makes sense. I'm gonna close out with this 'cause I know you have meetings, , right after this recording. , when, not when, where do you see Vital three years from now? What's, what's the business look like? What, what are you doing? How are you serving people?

Matt:

Yeah, great question. Um, for us, we are continuing to double down on the group work that we're doing. We're seeing such incredible results with our members. And now open up just a whole swath of, of folks who can come into our circle that we weren't able to serve in the past. , so we will continue. I, I believe in three years we will have this. Super robust community. , we, we envision that it being three different levels in their journey, kinda like the levels I talked about earlier. Mm-hmm. Um, and, and, and each level is turning around and helping the people are grabbing up the folks from the other level. I believe that's really important. So we'll have we, we'll continue to have this incredible journey for people to go, to go through. , and I also envision us taking our systems and serving other luxury home service business owners. So there are other luxury home services that are basically on the same job sites as our integrators. You know, your custom pool guy, your custom solar company, your custom window company cabinetry. They're dealing with the same challenges as our integrators are and our systems and processes can help them as well. And how beautiful when they're part of our community because now the integrators and these other home services can trade, you know, leads and, you know, have all these incredible conversations. So we, we believe that that's gonna be, , a wonderfully powerful solution for a bunch of different people.

Ron:

Love it. Matt, I wanna thank you for joining me on this episode of Automation Unplugged. It's been a, a very fun and enlightening conversation. How can folks that are listening or watching, how can they get in touch with you?

Matt:

Yeah, , I'm on social media. I post quite a bit on LinkedIn, so just look me up at MJ Burn, , on LinkedIn. I'm also on Instagram. Those are two most sort of common. , and then also we are on YouTube, grow With Vital, has a, a YouTube, , channel. And then my email This email address is being protected from spambots. You need JavaScript enabled to view it. is a really great way along with our website, which actually, , probably by the time this episode airs we'll, we'll have launched our new website. , so that'll be really exciting. Yeah. Grow. I didn't know

Ron:

that I would've inquired about your approach there. Yep. We'll have to bring it back on and talk about it.

Matt:

, next couple of weeks we'll have our new website out. So, , it's streamlined and, you know, very excited about it.

Ron:

Awesome. Matt, it's been a pleasure having you on the show, sir. And by just thank you for everything you and your team are doing for the industry. You are, you're trying to help, , all of these, all of the individuals that want to be helped. You guys are doing so much good out there in the world. So thank you for that.

Matt:

Yeah, thanks for having me, Ron. Always great, great chatting with you, man.

Ron:

Alright buddy. Be well.

Matt:

You too.

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Ron Callis is the CEO of One Firefly, LLC, a digital marketing agency based out of South Florida and creator of Automation Unplugged. Founded in 2007, One Firefly has quickly became the leading marketing firm specializing in the integrated technology and security space. The One Firefly team work hard to create innovative solutions to help Integrators boost their online presence, such as the elite website solution, Mercury Pro.

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Resources and links from the interview:

• Matt Bernath LinkedIn Profile


• VITAL LLC LinkedIn Company Page


• About VITAL

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