PODCAST TRANSCRIPT:

Ian Robertson
Hey, Ian Robertson here from Inspector Toolbelt Talk, Hey, I just wanted to talk today about going multi inspector. You know, it’s funny, when I started my first inspection company, I never thought about going multi Inspector, I just thought it was a really cool job. I’m like, this is the best job that ever existed. And so I never really thought, hey, let me build this big company. And let me build a couple more and see where we go. For some of us though, we start off our business thinking, Man, I would love to have a multi inspector firm, I’d love to maybe do a couple of inspections, but more or less organize things and just kind of run the company. For a lot of us That’s the dream. And some of us, we just kind of hit a wall where we had too many inspections. And now we need to hire someone. And we evolved into it that way. However, it happens, the term multi inspector firm has probably been on our mind in one form or another.

So I kind of know how this goes to a certain extent, we work with inspectors all over the US and Canada. And I’ve seen multi inspector firms thrive. And I’ve seen multi inspector firms fail. And there’s a couple things that line up with why they survive and why they fail. A lot of times afterwards, you know, post mortem, we’ll be helping an inspector. And you know, we don’t want to be too hard on ourselves. So sometimes we might think to ourselves, Well it was the market, it was this, I couldn’t find the right inspector. And some of that may be true. But for the most part, there’s actually a little bit of a formulas when we see that one guy at the home inspection convention, you know, has 15 guys, and he’s just kicking back a beer talking about how much money he made and how he went on three vacations last month, or whatever it happens to be. That’s because that guy is either blowing smoke, or let’s be more realistic about it, he’s probably working a lot to make things function. And he’s given a lot of thought.

So two things that I have seen that have made multi inspector firms fail. And then on top of that, a mindset that we need to kind of rid ourselves of. So first of all the two reasons. First one is no structure/running around like a chicken with your head cut off. We’ll talk about what causes this. But I’ve seen this more often than not, guy running a business, has two, three inspectors under him trying to grow. And he can’t, because he’s working 16 hour days, seven days a week, trying to make things run, and he never gets ahead of his business. And if you’re living this life right now, trust me, the reason we’re doing this podcast right now, is I usually get asked this question a couple times a month, in the past week and a half, I think I’ve had four phone calls, long conversations. And they all ended up in the same position. And they laughed, because I asked him very specific questions. What about this? What about this? What about this, and they were all in the same spot. So running around, because you don’t have the structure. We’ve talked about that many times on this podcast, one of the things that can help is process mapping, go back and listen to our interview with one of the people over there from Rocket Station. You don’t have to use a VA. But just the process mapping part of that is important. If we can’t map our process, we’re going to always be running around. And there’s another reason for that. But let’s talk about the second reason. So first one, no structure running around like a crazy person.

And number two, not able to get any good help. That’s a big one, right? Where do I get the inspectors from? There’s an inherent problem with that. So my father in law, runs a large hardware store down in Florida does a fantastic job. And he’s always talking about how they can’t good get good help. So when I asked him, How much do they get paid, he doesn’t own the store, he runs it. He smiles and said not enough. Because he knows that good help cost money. So paying someone a low wage, well, maybe we consider not a low wage, but maybe what they consider a low wage, and then wondering why we can’t get good help is a problem. So whatever the reason, we can’t get good help. Those are the two issues that I almost invariably see as the two key elements of why a multi inspector firm just falls apart. So what leads to that, it comes down to a mentality that we’re going to talk about.

Oftentimes, we see being a multi inspector firm as a stepping stone. It’s a badge of honor that we wear. I own a multi inspector firm. I know what’s going on. I was that good, that I could have multiple inspectors. When in reality, we need to pull ourselves out of that thinking Because yes, it is it is a measure of a badge of honor, so to speak. But you know, it’s a better badge of honor being highly profitable. I know multi inspector firms that are barely getting by, I know multi inspector firms that have such tight margins, that one bad week, they’ve had to lay somebody off, that is not being profitable, that is losing sleep, that is hurting the people that work with you. That is not fun. That’s not a badge of honor. Badge of honor is maybe being a little bit smaller of a company, but being more profitable.

So hear me out a little bit, because a lot of guys are thinking, well, this goes against what I’ve learned. And you may actually be thinking back to some courses that you’ve taken. And there are a lot of courses out there, say, Okay, give your inspectors a 30% split or 20% split, keep your prices low. And the worst term that I can hear, grab more market share. I hate that term. And we’re going to tell you why market share denotes that you’re competing with everybody else on their level. So I pick on McDonald’s a lot. So let’s let’s go ahead and do that. If you owned a gourmet burger shop, and you had 10 people there for lunch, and you made a hefty profit. Would you sit there in your burger shop and look at McDonald’s? And say, You know what, why are they getting so many more customers than me? That doesn’t make sense, right? If you get 10 customers at your gourmet burger shop, and you pay, they pay $50 for a burger. And McDonald’s gets 100 McDonald’s profit margin might be $1 A burger. So they made $100 your profit margin might be $40 A burger, you made a lot more than McDonald’s. So why are we worried about market share? Its pride. So kind of have to strip ourselves of that, you know, not thinking well, I have to have more market share. When people look at me, they know I’m the boss of this market. I have 15% market share, I have 50% market share, whatever it happens to be. All that really does is now you’re the gourmet burger shop that has to lower their price point to compete with McDonald’s. That’s what market share comes down to, less market share and more profit way better. And we’re going to talk in a moment about why that will help you retain good help and stop you from running around like a crazy person.

The second mindset that kind of goes along with that is number of inspections. You ever hear guys talk about that? I love to hear, you know, when you hear inspectors talking, they’re like, how many inspections did you do last year? And I’m like, why does that matter? I think we should be asking what was your bottom line? What was your net? How much did you net. So I know a multi inspector firm, they have somewhere between five to 10 guys, and I don’t use names on this show. If they’re listening, you know who you are. And we’ve had this conversation. But between five to 10 Guys, and their profitability at that range is lower than what the average single inspector makes. So think about that all you single inspectors out there. That sounds like the beginning of a bad Beyonce song. All these single inspectors think about this, I’m cracking myself up on my own show. Think about that for a moment. Is it worth having five or 10 guys to worry about the liability, the stress, getting work enough for those 10 guys, all that stuff to make up the same as you would as a single inspector, and I’m gonna say a busy single inspector, you know, if you do 200 inspections a year, that’s 100 grand. So let’s say you do 300 inspections a year, I consider that a good amount. $500 per inspection, that’s 150 grand gross, not net, but gross. That’s a good living. But that’s in my opinion not worth having that many guys, there’s a lot of work, let me tell you, there’s a lot of work in having people work for you. Half of your day is spent keeping things going, answering phone calls, okay, there was a billing issue, there was a payment issue. Okay, now I need to figure out this issue with the taxes for this person. There’s a lot that goes into it. It’s not bad, but it’s time. So think about those two things. I consider them dirty expressions, market share and number of inspections. Why? It’s just a matter of pride. I’ve known multi inspector firms that have gone out of business, doing more inspections than any of my companies ever did gone out of business.

So let’s think about this for a moment. And again, not going into the details of who called me or why they called me. But interestingly enough, all four guys that called had about the same price point, some were higher, somewhere a little lower. So I’m going to use a price point that we’ve used on the show before national average for a home inspection is actually closer to 400 now, which I’m happy about, but in some areas of the country, it’s still around 300 So I’m going to pick 350 As the inspection number. So let’s say we do 500 inspections a year, at $350, I actually have a guy who’s left a comment on our YouTube channel saying 500, or 500 inspections a year, that’s impossible never happened, it’s made up. It’s not that hard to be honest with you, that’s two inspections a day, five days a week. 500 inspections a year is not only totally doable by one person, it’s the reality for a lot of us. So let’s say though, we’re doing 500 inspections a year, as a single inspector, that’s still quite a bit, we’re gonna feel it, we’re gonna get burned out, we get two weeks off a year at that math. Okay, we’re gonna feel it. So, around that number’s when guys start to call me say, Oh, I’m doing five 600 inspections a year, I’m burnt, I need to hire a guy. Let’s think about this math. 500 inspections a year $350 is $175,000. If you hire a guy, you’re gonna have to split that with him.

So let’s say for instance, your overhead is $125. We’ve used that number on here, it’s higher now. So but let’s say 125. So that brings us down to $225 of profit, hypothetically, gross profit on that $350. If you’re splitting with an inspector. So let’s say you’re doing a 30% split, like some of these courses will tell you, what kind of guy are you going to hire for that? I mean, that’s a little over $100. If you split the gross amount, even if you split it at half, that is $175. Are you going to get a really fantastic inspector for that. So I have contractor friends that are charging $90 to $150 an hour. Why would they leave that and make less, guys who are worth their salt are not going to work for $175 an inspection. Let’s be frank. That’s why a lot of times we get a low grade inspector, or guys that leave us and start their own company. That’s the first problem with that fee.

The second is, if we hire an inspector at that, we now need to keep that inspector busy. All week long, all year long. We don’t have the volume for that at that point. Now if we’re turning down 500 inspections, and we’re doing 500 inspections. Okay, now you have the volume, but you’re still not making a whole lot. I have always calculated that for every inspector that you have on count on losing almost a full day of work a week. Because you have to train him, you have to keep an eye on him, you have to schedule him, if he has questions, does he need a new tool, does his vehicle breakdown, you need to order new shirts, you need to market, all that stuff. There’s a lot that goes into it. If that’s if you can do without that and you only lose a half a day a week or whatever fine. That is what it is. Or maybe you had the most amazing inspector out there. And you don’t have to worry about that. But we’re not talking about just hiring one guy, we’re talking about hiring multiple guys, multiple inspectors. So think about that number. Now think about this. If you raised your prices to $450, to get that same $175,000 gross, you now only have to do 389 inspections. Now, there’s $100 extra meat on the bones. So you can even give that to your inspector now you’re hiring them at 275 a lot easier to say hey, will you come work for me for $275 per inspection, and then you know, they’re looking at the the average fee, they could get it, you know, 325, 350 like it’s not worth it to leave him. I’m good here. This is a good fee. Now we’ve paid them better. But think about it, even if we’re just working ourselves 389 inspections is 111 less inspections per year. That is nearly three months, it’s 11 weeks off at this math. Would you want to take 11 weeks off? Sure, go for it, take three months off, or hire somebody use that time for marketing or increase your inspections because every time we’ve raised our prices, I don’t know if we’ve ever actually lost work. And I think this where we we worry about it. Like if I raise my prices $100 I’m going to lose you know 20% of my work. Awesome. By this math 20% gets you more money and less time. Why wouldn’t we want to increase our fees? So raising our fees to a number that one, will sustain the business. That’s really what it comes down to. We cannot work week to week as an inspection company. It just won’t work out seeing too many companies fail. Number two, allows us to get a better split, now guys who are worth their salt can say, You know what? Yeah I’ll come work for you. We can negotiate a little bit. Yeah, there’s some meat on the bone. Let’s talk.

Now 450 still isn’t the great price, I’m going to be honest with you, we should be charging a lot more than that. But that’s just to give us some basic math examples. Imagine if we increased our price, you know, even $100 More over that, then we’re at 550. Wow. Okay, cool. Now we can now we can do even less inspections. Or now we have more meat on the bones. And we can give more to our inspectors. Because I see too many companies. So think about this. We have a guy who’s working, and he hires another inspector doing 500 inspections a year. Now he has to keep that inspector busy. His overhead is $125 per inspection over the course of the week, he has to lose an inspection day. And he’s only making you know, 75 to $100 on an inspection. And now let’s talk about taxes and business expense and all that stuff. And all of a sudden, you’re making $50 off of an inspection, taken on all that liability, and what are you gonna do, that $50 inspection you’re gonna, that’s the McDonald’s model. That’s where we’re making money at McDonald’s just to keep our price low to quote, unquote, grab market share, or to have the number of inspections. Raise our prices, our prices need to be somewhere first.

So if we’re in the mentality right now, of well, I’m doing five 600 inspections a year, I need to hire somebody, take ourselves out of that, there’s two ways to curb that issue. It’s not an issue, it’s a good thing, so two ways to curb that, hire someone or raise our prices, decrease demand. The second one, decreasing demand by raising our prices has always been the best in my opinion, because we have never really lost work. And every time you do it, let’s say you lose 10%. Cool. Awesome. If you raised your prices 20% And you lose 10%. That’s great math. Now you’re you’re working less and making more. And when you do hire somebody, you have meat on the bones.

So that also fixes the issue of no structure and running around. We’re oftentimes running around because we’re inspecting while our guys are inspecting. We’re trying to do 10 inspections a week while they’re doing 10 inspections a week and we have to quote unquote, keep them busy. If there’s enough meat on the bones, as we hire inspectors, okay, I hired a new Inspector, I work four days a week in the field, I hired three inspectors now I work two and a half days in the field. And you see where I’m going with that. Eventually, we get to the part where we are running the business. And now we’re spot checking guys’ inspections. Okay, let me take a look at this report. Oh, Dave is sick, so I’m gonna go cover for Dave. Jamie’s out. So, you know, Dave can cover for Jamie, and cool. That’s what we want, right? Running around like a crazy person is not what we want.

So the second part of raising our prices, and something that I see a lot of guys afraid to do is ancillary inspections, and ones that could potentially have recurring income. So think about it like this, that $125 already burned off. And we’ve talked about this before. It’s already burned off by being on site. So if we’re there, what other inspections do these people typically get? That we’re not a part of? Oh, well, they have to get a pest inspection. But I don’t do those too much liability. Really. I mean, we’re already in the house, we already kinda have the liability for the house, why not become qualified to become a pest inspector. Septic inspections. Well, you know, there’s only a few houses in the area that have septic, cool. That means it’s even more niche. So you’ll get those septic inspections, and you’ll get the home inspector. So you’ll be increasing not only your workload, but your profitability at the same time. Well, you know, I, you know, getting the equipment and the training. Do you see kind of where I’m going with it, because almost everybody that asked about becoming a multi inspector firm hasn’t gotten their ancillary set yet. I would say better than well, better than half if not 70, 80%. And say, Well, I guess I could add that on. I guess I could add this on. If we’re not increasing both our base fee and our overall fee by adding ancillaries that we’re qualified to do, make sure that we’re qualified, we work hard and we become the best at it. We’re missing out.

So now here’s the other option. This is what I’ve done really well with, not hiring a full home inspector. So if we’re doing radon tests, hire a guy to pick up and set up your radon tests. Cool. Now you don’t have to see the seller after the inspection. You have somebody setting them up and picking them up. You pay them a really great amount and you make a little off the top, perfect. Sewer scopes. If you’re not doing, I talked to a guy the other, well I need to hire somebody, I don’t want to do sewer scopes, it’s just too much of a pain in the butt. You know, what’s a pain in the butt is the home inspection at that rate. If you can’t open the hub, you can open the hub. Let people know, make a part of your agreement, the vast majority you can open, do sewer scopes make an extra $300, 400. Same thing with septic inspection, making another three to $500.

Oftentimes, it comes down to fear of doing these things. And I felt that too. When I started a new service, I always got scared, but that fear drove me to be extra good at it. In our state in New York, we have mold assessments, when that first came out, I am actually the 31st mold assessor in all of New York State, my license number is 31. I was the first one to get out there and do it because one of the first ones I was in the first class of the mold remediators in New York, because this is where we’re going. Is it a pain? Yeah. Is a part of doing business? Yeah. Does it increase our fees? Oh, totally. And think about things that can call that can create recurring income, that are outside the scope of the inspection. Now I’m going to probably get some flack for saying this. Because there’s some I don’t know, the purist and I respect that. Like, you should never touch that house again after your inspection. My thing has always been like why not? So I’m not going to inspect the roof and then be their roofer. I’m talking about the things that are outside the scope of a home inspection. So a level two chimney inspection is outside the scope of the home inspection. Can we offer those? Okay, cool. Now we offer level two chimney inspections. But now, every so often, they’re going to need their chimney swept? Can we start a secondary company so we send them a reminder every couple of years, hey do you need your chimney swept. I’m not saying that we do that. We can, we don’t have to. And if you hate me for saying this, that that’s perfectly fine. I’m just throwing out ideas at the moment. And these are ideas are to get us out of our thinking of market share. Let me grab market share, let me grab more inspections. Instead, how can we make our business more profitable while adding value to our clients?

So imagine me the average home buyer, buying a house with a fireplace and not getting a level two chimney inspection? Well, the home inspector has a disclaimer in there that didn’t start stop my chimney from catching on fire. You don’t think that would add value to the buyer to say we can offer we can offer you the level two chimney inspection. Oh, I didn’t even think about that, cool. Or maybe I have a septic system and I have to arrange with a septic company I’m going to be perfectly frank, we call them pump and runs. They are the worst inspections ever. Septic company comes looks in sucks everything and says you’re fine and drives away. That is nothing like a hydraulic low test and measuring, you know measuring the scum layer and the sludge layer and checking the leach field and D-boxes. That’s a much better inspection. I’m adding value. And now they can just do that all with one phone call. And they also have now that inspection connected with the home inspection. So I mean, the septic guys looking at the septic, we’re looking at the house. And there’s kind of a disconnect there. One company looking at both and oh, okay, you know, what’s interesting is there’s another pipe going out the sidewall in the crawlspace that goes off to that crick to the right. I wonder if that’s where the gray water is going. Making connections that add more value to our clients. What about water treatment systems? Well, you have to be certified by that particular company. Cool. There’s like a few companies out there, there’s not a ton, in my area, there’s like three different companies that provide the equipment itself. Go get certified. People are all the time, how do I do this? How do I do that? Okay, let me take a look at your water treatment system. Well testing, radon, wood destroying insect, there’s so many more that I can’t even name here, add ancillary inspections on and add things that could potentially in the future, add value to your company and to your clients by creating a service that’s useful to them that’s outside the scope of the home inspection. Again, let’s reiterate that, we’re not going to fail a foundation and then be their foundation contractor. Things that are outside the scope of the inspection. And in pretty much every state and all national SOPs. You can check me on this, mold, I don’t know one that has mold in it. I don’t no one that has pest in it. Like wood destroying insect. I don’t know any that have water treatment systems in it. I don’t, maybe TREC might have some of these. I know TREC has Jacuzzis I believe but other than that, which is in Texas if you don’t know. Other than that there’s a lot of these inspections that people need pools that could turn into a service later on. Okay, do you need your pool closed and opened? Can we start a company for that if that’s or do that on the side or whatever it happens to be and just be transparent with your clients let them know.

I know I’m gonna get some hate mail about this, but I’m just throwing out ideas, because before we can start hiring other inspectors, we need to make our business profitable. And how we do that is base inspection fee and ancillaries. Again, always become amazing at every ancillary inspection that you provide. If we take a little online course, that takes a couple of hours, and we start going out and inspecting people’s septic systems, step back for a minute and look at ourselves, that’s not going to add value to them. That’s not gonna add value to us or business, become awesome. If you’re a good home inspector, it’s not that hard to become good at these other services.

So some of what I said may be a little controversial, but I hate the words market share, I hate when somebody asked how many inspections have you done? Don’t think about that. Think about what the net was. You’re looking at the guy who has two inspectors, and he did 1000 inspections last year. And you’re like, oh, man, I only did 300. If you were to take their net and your net probably be about equal or yours might be better at those single inspector level. Because a lot of companies are burning themselves up from the inside. So profitability first. Once you have that down, then you can think about hiring another inspector. There we go. That’s what I have. And if you disagree or agree, shoot us an email [email protected]. Leave a comment on this. If you’re viewing this on YouTube or on a podcast format, leave a comment and we’d love to hear from you. Thanks.

Outro: On behalf of myself, Ian, and the entire ITB team, thank you for listening to this episode of inspector toolbelt talk. We also love hearing your feedback, so please drop us a line at [email protected].

If you’re enjoying the conversation, don’t forget to hit the subscribe button. Our podcast is available on all major podcast platforms. For more information on our services and our brand-new inspection app, please visit our website at Inspectortoolbelt.com.

*The views and opinions expressed in this podcast, and the guests on it, do not necessarily reflect the views and opinions of Inspector Toolbelt and its associates.