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Josh & Katie Smith | PHC Restoration | For Better or For Worse

The story of one couple’s decision to either restore a damaged business or walk away from the industry.

With so many husband and wife teams in the restoration industry, we began to wonder, “How do you raise a family and run a restoration company together?” We reached out to Josh and Katie Smith of PHC Restoration in Lillington, NC for the highs and lows of running a company with your spouse.

They gave us their authentic and “unfiltered” story of second-generation family business ownership and revealed the struggles, the failures, the lessons learned, and the path they took to restoring their faith and their business.

 

Mr. and Mrs. Smith

Josh and Katie Smith

Katie Smith: I’m Katie Smith, CEO and second generation owner of PHC Restoration in Lillington, NC.

Never heard of Lillington? I’m not surprised. It’s a rural town between Raleigh and Fayetteville with a population of 3,500 people.

PHC is a full-service restoration company and we provide standalone Contents services as well. We’re celebrating our 50th anniversary this year!

I grew up around this business, but as a child I never fully comprehended the type of work being done. In school when people asked what my parents did, I would just say my dad was a contractor. I can assure you that as I cleaned fire damaged contents during the summers as a teenager I never thought I would own this restoration company one day!

I studied broadcasting and worked for a radio morning show after I graduated from Campbell University. I did lots of fun things that some days embarrassed my family and other days made them proud, all for the sake of entertainment and being #1 in the market. You might wonder how this equipped me to work in the restoration industry.

Well, when you report to work at 5AM and have to plan and execute ideas on air by 6am, you have no choice but to operate with a sense of urgency to make things happen, and that mindset has served me well in our field.

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Josh Smith:  I’m Josh Smith, COO of PHC Restoration. When Katie and I first met, I was a career firefighter and I owned a landscaping business. I studied horticulture at NC State and found a way to do two things I really enjoyed at the same time.

I had been volunteering as a firefighter since I was 19. I may not have known it at the time, but serving others and helping them in their time of need is my purpose. Plus, my training as a firefighter exposed me to a unique perspective on building science, and it taught me how to be flexible and learn on the fly.

I sold my landscaping business and began working at PHC part-time around the same time Katie joined the business, right before we got married in 2005. I started as a laborer, learning the restoration trade.

Eventually, as Katie and I planned to get married, and we began thinking about a succession plan for the company, I was faced with the task of earning my General Contractor’s License for the company, and the test was definitely harder than I thought it would be! After more than one test attempt, I earned an Unlimited Building Contractor License.

Technically, in North Carolina, we could build hospitals….but should we? No.

PRO TIP: Depending on your state requirements, I would suggest you read the code books and get additional training. Do ride alongs with other licensed contractors. You need to know what you’re doing and WHY you’re doing it. And, take classes at a community college to learn building fundamentals and building code before taking the test.

In 2010, My part-time job began to feel like another full-time job, and Katie and I were ready to start a family. I didn’t want to work 24 hour shifts and miss any important moments for our family.

So, I took a leap of faith, left the fire service, and dedicated myself to growing at PHC.

#NOFILTER

KS: It’s easy to find restorers who want to show off their large loss projects, trucks and industry knowledge. We’ve been interviewed enough times to know how to tell the polished story. But for Reets, I wanted to show our struggles. Chances are, if you’re reading this, you’ve had a similar problem and we don’t want you to think it only happens to you!

There’s a lack of vulnerability in this industry, and that needs to change.

JS: We’ll be real with you instead of giving you the social media highlight reel where everything looks great all the time.

We also wanted to tell you what we did to overcome our challenges. We have had some massive failures, but we were humbled and learned from them.

If At First You Don't Succeed

KS: There’s a reason why 70% of family businesses fail. I’m now learning from my friends who have kids coming into their companies that parents will assume because a kid “grew up in the biz” they should know all the ins and outs of the company. Therefore, onboarding doesn’t usually take place. Heck, we didn’t really start onboarding with a process until a few years ago!

So, as I got my start in marketing and moved toward learning to manage projects, I could have saved myself some embarrassment had I been introduced to the basics.

Sometimes the owner’s kid gets a bad reputation – maybe it’s just because they were never given clear guidance or responsibilities! Let’s just say I’m skilled at learning the hard way.

PRO TIP: We recommend working with a business coach when a second generation employee joins the team with the intention of succession. This will help with setting expectations and responsibilities, and gives you a neutral third party who can be the “referee” when needed. Josh and I have often wondered if it would have been easier to start from scratch. We were entering a 35 year old cleaning and restoration company that didn’t have processes, Project Managers, a website, company email, job titles and descriptions, or industry certifications! What ultimately led to our biggest challenges was our lack of a mission, vision, strategic plan, and core values.

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JS: Since the company hadn’t evolved with the times, we began working on some basic changes.

We started polishing it up and seeing quick gains. Fortunately, we had a great reputation to build on and a community that supported us. Call it beginner’s luck, but those small changes resulted in fast growth!

From there, we found ourselves hiring quickly. Now, if we didn’t have job titles or descriptions, you can believe there weren’t interviewing processes or any systems or skilled managers in place. Yet here we were, bringing all new people onto the bus.

And we drove it off a cliff.

PRO TIP: We get approached by people who want to join our team in roles we aren’t hiring for at the time. In the past, we’d interview them, fall for their flattery and hire them. We learned there’s usually a reason they’re leaving their current job, but it’s not the story they’re giving you. This rarely works out, so keep your guard up, check references, and remember that person/position was not part of your plan!

KS: We found ourselves in a situation where we were trying to implement changes with a mix of employees who had “always done it that way” and a new group we hired into a company without a clearly defined mission, vision, values or culture.

Naturally, the most toxic personalities defined our culture for us. This led to a lower quality of work, fires to put out every day, and high turnover.

On top of the daily issues we had with employees, customer satisfaction began to decrease. From the production staff, it was always the same story: the customer was “crazy” or impossible to please. Turns out, we were driving the customer crazy! Our internal culture was spilling into their property, and it was not a positive experience.

PRO TIP: As the company changes and grows, your staff has to level up with you. It’s helpful to periodically ask yourself if you would rehire each of your team members.

JS: We felt like we were on a roller coaster. Some years we’d have some minor failures, make a few band-aid fixes, and then recover.

In 2015, we had our best year ever, and then we felt like we had it all figured out.

Imagine our surprise when just a few months into 2016 we were already in financial turmoil from a decline in mitigation sales, mismanagement of the business, dishonest employees, failure to properly budget and manage projects, and the cost of excessive turnover.

Meeting payroll and AP was challenging. Each week we had to choose which vendor or sub to push back, which just fueled the problems on our job sites.

Then, to add insult to injury in 2016, Hurricane Matthew came to visit in our backyard, bringing 16” of rain, week-long power outages at home and at work, and an influx of calls to PHC.

This was our first catastrophe, and we had not yet learned how to say “NO” to jobs that weren’t a good fit. So what did we do? We said, “YES!”

KS: This was our first experience with NFIP claims, and it was an eye-opening experience.

Also, the customers we were serving before the hurricane were tired of waiting for us to complete their project, we were struggling to collect on large hurricane claims, and at year-end there was no money for bonuses, holiday parties or anything else for that matter.

We were facing a massive loss for the year – a first for us. And, this is where I just broke down.

It was a few days before Christmas and I was picking up my son from my parent’s house.

I lost it. I couldn’t stop crying and I remember my parents asking me, “What’s wrong?” I could not form the words to answer.

Looking back, I now know what was wrong. I hadn’t failed like this before – not on this level and not with this much financial responsibility.

After some time of reflection, I realized how all of this was my responsibility as a leader. I failed to be the kind of person I’d want to work for.

All the changes we were going through during this generational transition were stressful, and it was wearing me down. I found myself drinking more – which had just started as a drink at the end of the day to unwind, because it seemed like every day at work was a bad day!

I didn’t like who I had become or the situation we were in, and it was time for a change.

PRO TIP: When you are a leader, your personal life spills into your professional life. If you aren’t getting the results you want at work, the first place to look for answers is in the mirror.

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JS: We’ve felt like giving all of this up and walking away many times over the years, and this is the closest we’d ever come to actually doing it. But, we couldn’t. We had put too much into it to walk away. We fix broken things for a living, and we knew we could fix this company.

We knew the first thing we had to do was scale down, work on the basics, learn how to say “no” if something’s not a good fit, and create processes and tools that would help our team profitably perform the jobs we hired them to do.

Try, Try Again

KS: When planning for 2015, we did an off-site meeting and followed Patrick Lencioni’s “Playbook” format from the book, The Advantage.

While our Playbook produced an awesome year for us, it wasn’t enough to create sustainable success.

Again, Josh and I take responsibility for this, but as a company, we still had people on the bus who didn’t need to take up a seat, and we hadn’t yet changed our hiring practices to recruit based on values.

PRO TIP: Don’t tolerate anyone in your business who makes you, your employees, or your customers miserable. They’re drilling holes in your boat while the rest of you are rowing. BUT, take responsibility. You hired them and you failed to manage them.

After the smoke cleared from the end of 2016, we finally had the right people on our bus and we recommitted ourselves to our mission (We exist to make a positive impact on our team, our customers, and our community), our values (Thankful, Enthusiastic, Compassionate, Humble) and our culture. Now, everything revolves around these elements and they are communicated consistently to our team.

Next, we knew we had to improve our company culture. For too many years, PHC was a place that even I didn’t want to get out of bed and go to. Why should I expect anyone else to do the same? We spend the majority of our waking hours at work and we have an obligation to make it a place where people want to be.

We perform annual anonymous employee satisfaction surveys and those answers give us insight on what we need to improve.

Also, we spend time identifying the passions and talents of our team and we create development opportunities that tie their role to our company’s goals. We want everyone to see the bigger picture of how their work makes an impact and serves a higher purpose.

But what’s most important to me is that everyone leaves at the end of the day feeling respected, loved, and appreciated. You never know what kind of battle your people may be fighting when they go home.

We strive to create a safe environment where people feel comfortable. PHC is like our home away from home –somewhere we want to be.

PRO TIP: High employee satisfaction scores create high customer satisfaction goals.

JS: To get back on track, we looked at our leadership style and our blind spots that we needed to be aware of and improve.

Katie and I read books together and put in the work to develop ourselves into next-level leaders. Major changes in our personal and spiritual lives have impacted our professional lives.

We both stopped drinking altogether and we have a newfound sense of clarity and energy. We’ve embraced the principles of servant leadership because we know if you serve your team with everything you’ve got, they’ll do the same for your customers.

We’ve enjoyed watching our company evolve from a “go do this” style where there was more telling than teaching, to a “let’s go do this” mindset where we spent considerable time training together in the field to improve our processes.

Now we hear our team say, “We’ve got this!”

Letting go of the need to control every detail has been difficult yet beneficial for both of us, and we love watching our team grow.

I Now Pronounce You.... Co-Workers?

Josh and Katie Smith Restoration Company

KS: Reets originally contacted us to hear a story about spouses working together.

Once they heard our story, they thought you’d benefit more from hearing about our challenges. So, this is where we add our “Top 5 Tips For Working With Your Spouse.”

  1. It takes more than love…you’ve got to like each other! It takes communication, teamwork and a genuine desire to spend time with each other. If you aren’t 100 percent committed to your relationship it will negatively impact your business.
  1. Stay in your lane. To effectively share the load of managing a business, only do what you’re good at doing. Getting out of your lane can cause confusion with your staff.
  1. Your business is important, but your kids are more important. Leave work at work, don’t bring it home. Also, one of you needs to be able to work remotely in case of unforeseen things like sickness or pandemics. Be flexible and put family first.
  1. Be on the same page about finances, especially when it comes to how company funds will be used. If one of you wants clean financials and to reinvest profit in the company, and the other wants to buy toys disguised as business expenses, you’re setting yourself up for disappointment. We’ve learned that owning things doesn’t bring us joy.
  1. Make time to get away from work regularly. This is a demanding industry, and you need to take breaks to keep yourself healthy. Your team will always exceed your expectations while you’re away. And no, working together does not count as quality time together. Take time for just the two of you every once in a while!
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Thanks for letting us share our story with you! If you’re going through a generational change in your company, be patient and give yourself some grace. This process takes YEARS! In our case it took 5 years to get to the point where we could really enjoy where we are and see how far we’ve come.

If you haven’t already, build relationships with the restorers in your area and be focused on collaboration instead of competition. The best relationships we have with our industry friends grew from our time volunteering with industry organizations. There are volunteer opportunities within the Restoration Industry Association (RIA), the IICRC, and regional groups, like MidSouth Professional Cleaners Association for us.

So, get involved, leave our industry better than you found it, and make some new friends along the way. A rising tide lifts all boats.

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