205 - The $3 Million Online Trade School Model: Solving the Labor Crisis with Hector Resendez

0:00Hector, one of my favorite guests, you're back. You had a trade school, was doing$3 million a year, 30 % net margins. You blew a lot of people's minds. AI is not replacing the trades, AI is not helping the trades. We have a staffing shortage when it comes to the trades. It's actually going to get worse over time because the people who have been in the trades are retiring. There's this imbalance of demand and supply. I thought it'd be amazing to bring you back on and talk about not only the trade school, but how companies can take advantage of trade schools.

0:31All right, Hector, one of my favorite guests. You're back. Last time we spoke, you had a trade school. It's doing$3 million a year. It's like 30 % net margins, which was nuts. And you blew a lot of people's minds. A lot of people just have been reaching out to you and saying like, what? How do I do that? And so I thought it'd be amazing because a lot of stuff is happening right now in the real world to bring you back on and talk about not only the trade school, but how companies can take advantage of trade schools, supply themselves with a staffing pipeline, and make a lot more money. Thanks for having me back.

1:07It's been life-changing. Obviously, I joined Tribe, and you're an investor of Tribe, so I have to call you Boss now, but even Jefe, El Jefe. But even then, after doing your pod, man, I got a lot of DMs, and I felt like what it's like to be you and popular and prompting and all that stuff. So it's been a wild ride. I appreciate it. you're making real money. So that's the good stuff. So I'm going to set the table for people who are listening. Last time we had Hector on, Hector owned a trade school and it sounds weird, but it was an online trade school. And the government actually pays the trade school for people to come in and for him to train them.

1:44And it was an amazing episode. If you want to go back and listen to it, we'll link in the show notes. But the reason that these trade schools are becoming more popular is because we have a staffing shortage when it comes to the trades. And so I'm going to read some statistics. Right now in America, this year, we are 550 ,000 plumbers, 600 ,000 auto mechanics, 80 ,000 electricians short of where we need to be. That's nuts. Like that's how short we are. So if you're out there and you're like, well, yeah, I remember calling to get my pipes fixed or my HVAC fixed or some electrical fixed, and it took three weeks to get out there.

2:19That's why. I mean, this is just a massive, massive shortage. and not only do we have a shortage, but it's actually going to get worse over time because the people who have been in the trades are retiring and people like you and I, who, when we grew up, our parents were like, Oh, you don't want to be like that guy, an electrician. You should go to college and get a degree. And so because of that, you know, we don't have as many people in the trades and, but we have degrees and we don't really know what to do with our hands. I don't know how to change oil in a car. And so there's this imbalance of demand and supply.

2:49and you started with this online trade school and you've sort of morphed now into helping businesses figure out their staffing pipeline by taking advantage of these grants. They don't need to start their own necessarily massive school, but internally take advantage of the grants, train people up, get them trained on those trades, and then they fix their staffing problems. Is that a fair characterization? Good night. You said it all. I'm out. No, that was good. That was amazing. that's that's to me mic drop it did good don't forget to tip your waitress on the way out that's awesome yeah no you said i mean you left out this the cool part of how we do the training right but we'll get into it but yeah i mean you said it correctly one thing that stands out i'm a big mike roe friend and he's a big you know he's mr trades and he always says it for every five people that retire only one gets replaced so i think we're in trouble you know what's crazy is like Everybody's like, oh, AI is going to do X, Y, and Z.

3:48And then you look at it, you're like, yeah, but AI is not replacing the trades. AI is not helping the trades. But Chris and I were having this conversation just yesterday. I have a sprinkler head that was broken in the yard. Chris had a problem with his HVAC unit, with his air conditioner. And we were talking about how we FaceTime, chat GPT, and we're like, hey, what's going on here? And it walked Chris through what was wrong with his air conditioner. I guess it was missing some Freon. And it walked me through identifying what the problem was with my sprinkler head. So it's like there is AI that's augmenting, that's helping people in the field that I actually think is going to make it more efficient to like diagnose the problems, fix the problems, et cetera.

4:25But then there's also things like you just showed where these VR headsets, like people are training in virtual reality on how to fix these things, right? Yep, exactly. I went through that myself. I mean, two days ago, I woke up to just the fan blowing, like fan mode, and we're all kind of hot. It's 100 degrees outside. and I'm like, you know what? I've never even taken my own course. I'm like, let me just fast forward to this part. I put on the goggles. I watched it. It turns out it's just a capacitor. It looks like a little battery. I swapped that out. I didn't get electrocuted. I'm like, man, we're in trouble.

5:00We're in trouble because that would have been a$300 trip easily for somebody just to swap out a little battery. Well, the idea that Chris and I discussed yesterday, which I think is an amazing idea. I even bought the domain, handymanmentors.com. There are guys like me who just, I'm not handy, right? Like we didn't grow up handy, even though my dad tried to teach me how to do stuff. I'm a son of an immigrant. Are you son of immigrants? Oh, yeah. My parents are from Mexico and they didn't teach me to do nothing. Yeah, yeah, yeah. So like our dads are probably super capable. Like they could do anything, right?

5:33And they look at us and they're like, oh, you pansy, you don't even know how to change the oil. right right right well that's not how your dad sounds your dad's like hey hector like why can't he even change the oil i don't know that was like way off those are super racist okay a little bit racist but just a little bit like 10 10 anyways like we didn't learn how to do this stuff and like if we're just going to wait for people to come out from the hvac company or the you know or the electrician it's going to be two three weeks so why not have where we're setting up these boomers to meet guys like me and just kind of mentor them, teach them like, this is how you change a sprinkler head.

6:10This is how to change the oil in your car. This is how you redo an electrical box. That actually might be too much, but you get the point I'm making, right? Where it's like, raise the competency of normal people so that we're not necessarily just waiting two or three weeks for people to come out and fix real stuff. It's true. I mean, the guy that fixes my AC lives four houses away and he's my neighbor, but his prime son, he's like, hey man, I could get to maybe in three days and i'm like do you live across the street like just come over but he's just he's that busy i mean i couldn't knock him out like my wife looked at me she's like you know let's go stay at my dad's i'm like i'll figure it out and then i figured it out but the thing is you have to be careful i don't want to figure too much out because then she's going to figure out how to do stuff and expect things from me so i said that it's a fine line really low yeah it's a fine line ladder i'm just not that guy so video's cool but i have what scientists It's called A Face for Radio.

7:02And so what's even cooler is long-form audio via my podcast and my newsletter. Nickonomicspod.com. Go there for free. Subscribe to my newsletter. It's one email per week. It's super tactical. And then go to my audio podcast. I do three to five episodes a week, depending on how curious I am. And it's stuff like this. It's all free. No sleazy sales pitches. Nickonomicspod.com. You can't let your wife know that you know how to do things. Because then there's expectations. Take out the trash. Please choose the light bulb. Whoa. Whoa. whoa whoa whoa whoa did you not see my shirt right it says i'm sending this right but i'm also here to party correct right and my bracelet ww andy what would nick do i'm glad you bought that so that's there's merch if people want to buy it just kidding okay here's what i love is like it was already mind-blowing when you told me about trade schools online trade schools was like No, we have a trade school.

7:56We do it online. And then the government pays us to train these people. It's highly profitable. We don't have to have this massive school infrastructure that most schools have. It's online, blah, blah, blah. So that already blew my mind. Then you started telling me you've been creative and you've kind of taken that ethos and said, you know what? Why don't we help companies take advantage of these grant programs? They don't have to have a school to do it. They can take advantage of these grant programs. they now have a revenue stream coming in that gives them money to train people it fixes their pipeline for staffing and it allows them to expand their business it's like just like a win-win-win all around so your phone's been ringing off the hook and you've been helping companies do this right like what is it it's been an amazing ride i mean we almost spoke how about like a year ago so this is like our one year anniversary oh my god oh hector looks like we made it oh look at the Sorry.

8:53America's Got Talent. Here we come. Hey, yeah, let's get back to back to. Yeah. So at first, you know, I took an exit from that school and I need to figure out what we're going to do next. And it happened a lot quicker than I thought. At first, I was just doing like some, you know, contract work, project work, like helping other schools fix their funnel, like sales training, like they didn't even have sales scripts and how to text people, like just helping them audit that and get that fixed. and then January of this year, I get an email and it's from an Allstate agent dude. And at first, I ignored it because he's like, hey, I want to do a school.

9:30And I'm like, I can't really do school this year. So I kind of ignored it. He was pretty persistent. He emailed me almost once a week and I would look at it and I'm like, man, I need to stop doing it because I'm not going to respond. So I kept it unread, unread. And then the second email, he emailed me from a dog-blooming email, but the same guy. And he has an interesting, uncommon name. So I finally look into and I call him and I'm like, dude, I'm so sorry. The holidays got in the way. What's going on? How did I help you? And he goes into, he goes, listen, me and my wife own a dog grooming business right here in Princeton, Texas.

10:03So just a little falling wall, 15, actually number one sitting in the U.S. for some reason. They're growing, blowing up. But he's like, look, we have three locations and we're a month out like for bookings for dog grooming i can't find enough technicians because we specialize in doodles like golden doodles labradoodles and he's charging 250 a trim or haircut i'm just like that's crazy yo so i thought and i guess he saw a podcast or somehow some way he found me and he's like i want to do a dog grooming school and i'm like man that'd be cool i don't i don't think that would work and you know i put my thinking hat on i go to the state of texas i look up like can the grant pay for this?

10:43Lo and behold, vet tech, like a vet assistant. It qualifies because it's entry level and I guess there's a need for it. Obviously, he's a month booked out. So I'm helping him. I already did. We helped him open up a school where he could train his own technicians, pick from the cream of the crop and keep those and the rest gets certified. They go find work elsewhere pretty easily. And we're able to add about$300 ,000 in revenue by using the grant. So not only is a grant paying for students to go there, he's teaching them the curriculum. They go take a test, they get certified, but also something a little new that came to mind is OJT stands for on-the-job training.

11:24If the employer hires somebody that took this WIOA grant, they get paid 50 % of the wages up to the first 90 days or up to 90 days. That way they get to test drive each other, but really the employer gets the half off of their wages. They pick from the cream of the crop and the student, the grad gets something to put on the resume, like an externship almost. And it was just mind blowing to me. And it was a game changer for what I do now and for them. Let's go through the vet tech model. Is the grant amount the same for any of these? Or does it vary? It's like, oh, you're an electrician. Here's the amount.

11:57You're a vet tech. Here's the amount. It's whatever you could justify in value. And because he could guarantee ATM job placement, we're charging pretty much at the top. Is there a scale or are you telling the government like, nope, this is the amount we're going to charge? We get to tell them this is the amount we want to charge and why. Wow. Do they audit it? Is it like an application where you're like, okay, hey, we want to charge$8 ,000 a student and they say, nah, too high. You just have to justify it. Obviously, it's a lot of work to become a school and that's why I exist, but to apply through the school and how you apply, how you write your catalog, how you write your curriculum.

12:32them. But these businesses, they don't have to be a school. They're already a business. They just have to dedicate a room or certain hours or certain days to teach. And they're already doing that anyway. I mean, they got to train somebody for so many days, but why not now add an additional revenue stream? And it's been really profitable for them. Well, there's a guy on Twitter who we were just talking about, Chris Hoffman. He owns Hoffman Brothers. I don't remember exactly what they do. I think they do HVAC. I know they do HVAC, but I think they do some other things as well, but they're big. They're like a...

13:01In St. Louis, right? Yeah, they're in St. Louis. I want to say they're like a hundred million dollar company, right? Yeah. I think they do all three, HVAC, plumbing, and electrical. Okay. The big three. Is that what they call them? The big three? It's just what people are starting to do. If you look at vans, they're not just HVAC anymore. They're dipping into all three. Okay. I mean, it makes sense, right? You're already in the home. It's intertwined. Selling more stuff, right? You're already in the home. anyways he opened his own school within the company correct is that a school like we're talking about or was it just he's just funding it himself from my understanding he's just funding it himself i love the guy's content i just think he's leaving a lot of money on the table based on his numbers he's probably living a million dollars on the table every year i'm hvac company i'm an electrician i'm a plumbing company anybody who's in the home services business and i have multiple employees this is probably best for a company that's like $2 million in top line revenue and above, I'm assuming.

13:59You'll be surprised. One of my newest clients, they do quite a bit. I mean, this dog grooming business was only doing 500, you know, just because they're so backed up, but they just added 300, you know. Okay. So maybe the threshold instead is like, they have two employees or more or something. Will it working for them as a tech? At least five and they're looking to scale and this is going to help them scale because it's fixing your staffing problem. I mean, even if you do the courses online or with a virtual reality, we all know, and what we were able to debunk the first time I was on is our bootcamp style classes through the grant, just get you the credentials, the piece of paper.

14:38Once you go to that employer, they're going to want to train you how they do things their way. They're going to be here, go shadow knit for 60 days before you throw your keys to work truck anyway. So that's what we've been able to do, but it works for anything. It's not just traits. I know we talked about that last time, but like, man, I've been involved with a dental school, with a CNA school, with an IT school. Right now, IT sales has been hot and it has always been hot. And it's, you know, a lot of people want to work remote because with all this return to office mandates, people still want to be remote.

15:07I help a school right now, you know, scaled really fast their IT tech sales course. Well, in many services businesses, healthcare is a services business as well. Like that's where I come from. The bottleneck is not demand. I mean, yes, we're worried about demand and we'll run paid ads, et cetera. But the bottleneck in my experience for many of these industries are the labor necessary to fulfill the demand. And that's really where you see these companies hit the ceiling. It's not that, oh, my ads aren't converting or my mailers didn't work. It's usually not that. It's usually we don't have enough people to meet the demand that's coming at us.

15:44The flip side is though, they're thinking, how do I fix this problem? And if I'm a business owner and I'm listening to this, it's like, I don't have time to open a school. Like, how am I going to do that? Can you walk me through like, what does it look like? What are the economics? What are the time commitments? So let's go into it. Let's use my CNA school as an example, right? And I say my, somebody I helped, it's not mine. But so I met this guy, profitable boutique elder care living, so high-end assisted living out of residential homes in the Austin area. And he charges, I mean, without, I think like 10 ,000 a bed, you know, so really, really high-end professional chefs.

16:22Yeah. A month. Chefs. But because of that, now he needs CNAs 24 hours, but around the clock, you've been in the industry, you're just talking about it. It's hard for CNAs to stay motivated, stay doing that work because they're not compensated as well, but it's an entry level to like nursing. Right. If you will. So what he does with these CNAs. Just so I want to just educate everybody. CNA certified nursing assistant. Yes. And so what they're doing is they're doing things like bathing. They're helping with daily tasks. They're not a nurse in the sense that they're going in and like changing wounds or any of those things.

16:56But they're kind of the backbone of many facilities. Like they're the ones that do the hard work, getting in and out of bed, changing their diapers, bathing, you know, all of those things. Grooming care, those types. So that's what we're talking about here. They're almost like a teacher. They have to really love what they do because they're not getting paid for it, right? It's hard work. It's very hard work. It's hard. And that makes your break here. Like, are you going to want to get into nursing, start off a CNA? You get a front row seat if you want to be in that world, right? Right. So this guy, he's like, man, I'm spending$50 ,000 a year just fixing staffing, like with staffing companies and getting people training and staffing.

17:32And underneath my breath, I'm like, dude, you should start a school. And he's like, what do you mean? I'm like, well, I mean, let me ask you this, which again was shocking to me. He already has 30 CNAs and only five are certified. So there are 25 who are just doing the role, kind of like a home health provider. You really don't need much, but you do it. And I'm like, man. There are actual differences. So you can be a home health aide and there's a CNA. So one is this, like you're a certified nursing assistant and like an aide is just somebody who they pay 15 bucks an hour to do the real work without being certified.

18:05You get paid more if you're certified. Yes. Yes, yes. Hey, I don't know if you remember this, but when we started this podcast, we entered into a social contract. I would spend time, energy, and money producing this podcast, interviewing these individuals and giving you insights into how to build, buy, start, grow your business. And you would like, subscribe, and leave me five-star review. Now, out of that, we both get to talk to really cool people and hear really cool insights. We both get a ton of value. But I just want to help you keep your word. So would you do me a favor? will you go leave a five-star review for me on Apple or Spotify?

18:39It would really help. And if you want, even share this with a friend. So he says, you know, he tells me that, and I'm like, I could really do some math. And I'm like, let me ask you something just without being so nosy. How many of your CNAs are on food stamps or low income or have kids? And he said, probably all of them. Does they make, no, 16 bucks an hour in Austin, Texas? That's not anything, right? That's minimum wage, I guess. So I told him, dude, you're already sitting on a pipeline. If you certify your own staff 25 times, let's just say Austin pays$7 ,500 for somebody to go through training.

19:15He keeps all that. You find a CNA course, white label it. You slap your new school name on it, CNA Academy, and you get to certify your own staff and get paid a lot of money for it. If he wants to scale from there, which he is, he's going to always find new CNAs, train them, pick from the cream of the crop, and the other ones get certified and go on their way. It doesn't take much time because you're buying a white label course. The course is already done. You're just administrating it. He's going to have one like office manager kind of run the school and they're still going to go through their training.

19:48He's just, we just helped them fix his staffing problem. So$7 ,500 per student? Per student. Again, what are you expected to do that? If I'm the employer, I've got to offer obviously the curriculum, but where else does that money go to providing? Do they get a laptop? Do they get? Sure. They can do whatever they want. What's really cool with his is they do the course online. They come in and they spend a month training, which he's also going to apply to be an OJT, on-the-job training provider. So he's going to get half of his wages reimbursed, and he's going to be able to pick from the cream of the crop.

20:20But let's just say that course only costs$500. The rest is profit. But what's cool with him is he actually has a career growth program. He starts them off at$16. After 30 days, they made their training. He moves them up to$18. after six months another review he moves them up to 20 and then the real career progression there is as he scales they're going to be house managers after a year or two or two years and those house managers make between you know 60 and 70 so it's it could be life-changing for somebody i don't know the answer to this maybe and if you don't know that's fine too could you pay like let's say he has those cnas and they want to be or those aids and they want to become cnas could you pay them a bonus once they become a cna does that make sense what i'm saying well Why not?

21:03I mean, he's making$7 ,500, right? The least he could do is give him a bonus. He's going to go to the laptops. Yeah. Yeah. Yeah. Yeah. Because what happens is you also don't want to interrupt their job. I mean, they still got to work for him. Right. But the cool thing with online courses, you get to do it on your own time. And not only that, like, I don't want them leaving in six months. Right. Like I just spent the time and energy to invest in them, to train them up. And now they've, now they're a CNA. Well, now that you're a CNA, like there are other options open to you. Right. So like, I would want to see them stay.

21:32And that's where I think of like a retention bonus or maybe a bump of pay or whatever it is. Not only that, you're going to use that for future training. Like now let me pay you to become a phlebotomist and let me pay you to learn, you know, insurance, medical billing, encoding or whatever. There's no, there's a lot of legs here and it's going to be fun. I know we're just talking about this specific scenario, but this will apply to any tech. For the aid who decides to become a CNA and go through the program, 7 ,500 from the government. Are they paying anything? No. Okay. No, no, no. As long as they qualify, right?

22:02Because remember, you still have to Google WIOA. Most CNAs are going to fit this bill because they make about 14 to 16 bucks an hour. And as long as they're on food stamps, Medicaid, some kind of life there, which you're in that world. So you know, a lot of them still are. That's right. Tell me the qualifications again. How do you qualify for it? You have to be low Low income? Low income, U.S. citizen, transitional housing on SNAP, TANF, Medicaid, WIC, some kind of life barrier, some kind of government assistance. Do they have to be on all of those or is there like a combination of those that they have to meet?

22:34Just one. Just one. Just one of those. Because you've got to remember, the purpose behind this grant is to teach you a new skill set, earn more money, so you don't have to rely on government benefits and earn a decent wage and get into a career progression. So if it's CNA, in hopes, his career progression is he wants to turn a CNA into a medical assistant. So it's just another step up. And eventually maybe get into nursing or whatnot. I don't know what you can and can't do in adult and elder care. I know he says that he still has some kind of other services come in to perform certain duties. But yeah, this, to your point, this applies to anything.

23:09To welding, to dental assisting, to medical front desk. It's such a turnover role and everyone's always looking for it. You're the first person they see. You were just telling me, so there's a list of like qualified techs for this, but then there's also some creativity that can be involved. For example, I think you were talking to me about a dentist where you're like, yeah, they're looking at using this for their front desk person, but that's not typically where a dentist would look, right? No, no. Most dentists you think, cause you see everyone advertising dental assisting school. We have enough of those.

23:45this dentist, his real pain point was, you know, it's my front desk position. Like, how can I train them to use open dental, the most common CRM? How can I teach them to use AI for insurance and billing and coding? How do I teach them how to do, you know, soft skills, how to deescalate a client that's mad that the insurance doesn't work. And it's a real need right now, but not just for dentists. You could do this course for dermatology, medical front desk, GI doctors, just about any practice, that role is really important. And it's such a high turnover. So why not get paid by the government to fix it?

24:19Is the grant state specific or is this a federal grant? It's federal. It's in your backyard. It's in Meridian, Idaho. Shout out. Does the ability you can charge change depending on where you are? Yes. Yes. So unfortunately, the grant's the same, but every state has their own requirements. Inside every state are broken up in regions and every region will only pay for certain courses, certain fields. Like if you go to Galveston, Texas, it's going to be more coastal, like underground welding, boat technician, like stuff like that. Right. If you go to rural Texas, you're going to see like wind turbines, solar, oil and rig drivers, like stuff like that.