232 - How to Make Easy Money Using Government Grants with Hector Resendez

0:00Right now you're doing between$300 ,000 and$400 ,000 a year in top line revenue? No,$200 ,000 a month. Oh! We're on pace to do$3 million this year. So what are your margins on a business like this? 80%, 85%. We're private labeling a course for$1 ,000 and we're selling it for$10. It's pretty crazy. Let's talk about some of the mechanics of the business. How do you acquire customers right now? For free. So are you doing any pay-per-click, any SEO, any direct mailers, any traditional marketing? Nope. I'm just like, man, the state of Texas is giving you$10 ,000 per student. You're teaching them a trade.

0:29Perfect. Wait, so they're giving you the money? Oh yeah, not the student. Net 30. Oh my gosh. I know, it's crazy. You know what? For your in-laws, you actually are a part of the cartel. Yes. This is cartel-like behavior.

0:43Well, I'm glad we're here because I could get to put my in-laws to peace of mind because they think I'm with the cartel. But my own online trade school. No one's ever heard of online trade school because they all think you still got to go in person to learn trades. But I debunked that idea, trying to spread word about a grant that scaled my school that no one talks about. So help me understand, because I'm in the minority as well. I think of trade schools working with your hands in particular, right? So when you tell me an online trade school, it just doesn't compute for me. Like, what is an online trade school?

1:19So online trade school is exactly what you think. I teach HVAC, plumbing, electrician, all apprenticeships, delivered online. We were birthed during COVID and we stayed online because if you think about it, what do all those traits have in common? They still have to go take a test on a computer and the computer is not going to care if you could climb a ladder, pull wire, unclog the toilet. Did you memorize enough theory to pass the test? If you think of online, you get on these big old planes and they learn virtually through simulators and you trust them so they could trust our students too. So like, I know there's a lot of nursing schools online.

2:02There's a lot of theory, theory, book learning, all that stuff. They've still got to do the practical pieces, maybe, you know, with somebody in person, but you're essentially delivering the curriculum that you would otherwise learn through a book. You're just not doing it online. correct we're doing it with vr goggles gaming style are you really oh yeah i know tell me about how this kind of came about through kovat sounds like there was some grants given that incentivize people to do these trade schools online so fun fact the grant has always existed you know that yes right sure okay so same funding source so this really the grant is called wioa workforce innovation opportunity at Google, we all in Idaho, you'll have to go to those little offices that are called workforce solutions or Idaho works or whatever it is.

2:52But if you Google it, this grant's always been there, but it was always for like blue collar, like CDL drivers and welders. But the grant's been to do anything because the government's boss behind this is if we pay for your trade school and you learn a new skillset and you earn a decent hourly wage, we get you off benefits and now you're paying taxes. So the grants always existed. Why do they keep it a secret? I don't know. So it's a federal grant though. Oh yeah. Who administers it? Is it Medicaid? Nope. No, no. The grant is the labor in DC, like the big wigs. It's always, it's always been there.

3:30Wow. Okay. So it's always existed. How did you find out about it? So an ex-employee called me that worked for me a long time ago. And at the time, short stint, I bought an insurance franchise that didn't work out but the silver lining behind this was he called me for cdl truck insurance and school insurance so i was like wait a minute i can't help you with either but what do you mean about school and why would somebody give you a school how do you even own a school but even these little vocational schools are owned by somebody bob's you know trade school or whatever or nick's vocational school i just mean i never knew it was a business so i went down there I saw what they had.

4:07They're in a big parking lot with like a, what's it called? Like a affordable building? A little trailer. And there were people how to do trade school. I mean, how to do CDLs drivers. His brother's the one that figured out because he's the one that got the grant to do the CDL license. So when they opened up a school and I'm like, I mean, there's like 20 people here. How are you doing this? Like, man, the state of Texas has this grant and And it pays for if you're unemployed, dislocated worker, military spouses, if you're low income, if you're on food stamps. And I'm like, dude, I went down a rabbit hole for like a week and I figured it out.

4:44I'm like, man, I love your concept. I think you're doing it wrong because it's trucks are going to break down. You're in person. The DMV shut down. I want to deliver this online only. Let me see what courses it unbeknownst to me. We've heard of online schools this whole time. No one's delivered it. So what year was this? Was it, was this during COVID? Yeah. Yeah. We're in the craziness of COVID 2021. And you think we should do this online. How many people were doing it online at the time? I mean, everyone was that's a big university or community, but not like a individual person like me and you where people, people, most schools start off with the grants, but they go quickly to get accreditation so they could get FAFSA loans, grants, and all that stuff.

5:30I don't, I didn't have that kind of vision. I'm just like, man, the state of Texas is giving you 10 grand, but at the time, five grand per student. And you were teaching them a trade. Perfect. I found out that five grand is only 10 grand. They're giving you the money. Oh yeah. Not the student. Net 30. Oh my gosh. I know. I know it's crazy. That's insane. I'm scared to say it, but here I am. you know what for your in-laws you actually are a part of the cartel yes this is this is cartel like behavior hector okay believe me her dances a lot of times she heard you married the wrong mexican because i don't do any labor you will all right so a lot of these schools get into it like you said because they want to get into fafsa and uh some some of these other federally guaranteed or backed programs because, I mean, we've seen this over the last 30 years in particular, the price of higher education has just skyrocketed.

6:28Part of the big reason because it's skyrocketed is because the government subsidizes student loans. A lot of these universities are looking at this saying, we want to go after the big dogs. We want to get access to this other funding. Who cares about the WIOA grants? Let's move forward. You didn't take that stance. You're like, wait why are we forgetting about this let's lean into this thing i love it i mean fast forward i mean i opened up the school like the wrong way i mean not the wrong way it's lesson learned you know i took an investment i took shareholders and i opened up with teachers because i thought you needed teachers to write curriculum fast forward now i privately will all our courses now so let's just say i buy the course for a thousand bucks hypothetically speaking if texas did 10 grand you could do the margins math there so it's pretty fun dude all right i don't even know where to start let's back up what's your background definitely not school if you notice my hand well i got a phd which is a public high school diploma

7:28none okay you know i've been inside my whole life i sold my soul to the devil early when i was 18 college was in an option i'm from south texas border town poor my pink you know my parents did as best as they could for me they loved me they raised me but i just something about selling and talking to people I love. So I ended up doing timeshare sales, my very first sales job. And so when I say I sold my sales to the devil early, I did. A lot of people out there don't like me, but I sold some useless timeshare and I got really good at sales. So you just started selling, it sounds like you had an insurance franchise.

8:03Have you just been a serial entrepreneur? You've kind of just been doing different things? No, that was my first really crack at it. I failed it. I failed it a lot of things. I started a grass painting company, like spray painting grass. real estate. Remember those little real estate books where you only bought real estate back in the day? Yeah. Maybe? No? No. Yes. Yes. I know exactly what you're talking about. No. I would somehow, you know, I was barely playing any golf. I was golfing one time and I saw the guy spraying grass. I'm like, huh? And I'm like, our yards are terrible. And a buddy of mine was a realtor.

8:34He said, Hey man, if you come spray my grass before I take pictures, I'll pay you 200 bucks. I'm like, interesting. And I started a grass painting company that flopped. All right. Now's the part of the show where I feel the most uncomfortable, but my therapist says I need to face my fears. So here we are. I've started a newsletter and I want you to subscribe. And what you're going to get every single week are the aggregated conversations from that week that I have on this podcast with an overview of what their business actually looks like. I'm also going to throw in a review of one or two businesses that are listed for sale.

9:01I'll give you my opinion on whether or not the EBITDA multiple is good or there's customer concentration or there's red flags or green flags. And then lastly, I'm going to give you one piece of actionable advice every single week on how to buy your first business. So click the link below, subscribe to my newsletter, and let's get back into the show. I tried to do mortgages. That flopped. I quelled a couple of times and embraced it. But then, but the majority is I did go, you know, I rose the corporate ladder. The highest I went in sales for industry was a VP. I've always made decent money. I retired my wife nine years ago.

9:32She raises her kids full time. So, you know, being in commission sales and that kind of organizations, always did my cup of tea. What was appealing about this grant program and doing the vocation? schools online? Because that's a very broad background from painting grass to working corporate sales. Obviously, the through line is sales. Are there a lot of sales associated with this WIOA grant? At first, yes. No one scaled it like I have on grant only. I don't do any self-pay until recently. We'll get into that later. I did it all on grants. The sales was, my sister actually worked as a counselor at one of these offices giving out the grant.

10:09She told me, hey, if you're going to build a school you want to do these things talk to counselors this way so i you know during 2021 when you couldn't do in-person visits still i called so remember who our audience is low income on food stand unemployed transitional living women's shelters sober living shelters i called everyone in texas that has a non-profit women's shelter whatnot because we started off as a health care school and i called them i'm like hey do your applicants or residents want going to go back to school for free. And on top of that, I'm going to give him a free laptop. There's the least I could do with Texas giving me 10 grand, right?

10:46I go to that Walmart that you know a lot to buy laptop. You know me by first name. Like, what's up, Judy? I mean, everything. But so I called all the nonprofits and I get unlimited leads because why wouldn't they want the residents getting a free skillset before they leave their environment? And I pretty much broke the grant, broke the internet because to this day I get unlimited leads because, I mean, I'm calling Nick's foundation. I'm like, Hey Nick, I see you have a women's shelter where they want to come back to school, learn the trade. And by the way, I'm going to throw them a free laptop.

11:17Okay. Give me an idea right now of like the size and scope of your business. Like what are you doing in revenue? What are you doing in bottom line? How many students do you have going through your courses per year? We've done 350. We're doing about 20 to 25 a month. Um, every, every, every County has a different training cap. So where Texas maxed out at 10, Austin maxed out at 7 ,500 for the same grant. We just have a different. Is that 10 ,000? Correct. Okay. So I don't know, a decent amount's 180. Like at what point did you realize, dude, this is a bit like, this could be a real business. I should lean into this and just continue operating.

11:56When I saw what my buddy was doing, I mean, he was doing 10 students a month at 4 ,500. I'm like, between him and his brother, that's 45 ,000. That's kind of too shabby. But, you know, if you went online only, you can really scale this. And because I'm online only, I have access to the whole state of Texas. So, you know, Nick that lives in Odessa with no options, I could help him out. Like, do you have to get approved or vetted county by county? Because you said there's a county cap. Do you have to get credentials essentially to say like, yes, you are approved educator within McLennan County? Sure.

12:28Good tenants right next door. That's in Waco. Good job. Throw me off. But yeah. So you get access to the state of Texas and then Texas does have 28 different little region board deals. And some of them make you go through like a small little step. But mainly what it is, is are your courses on our target occupation list, meaning medical system, policy technicians, CDL drivers? Each county has a different what they deem on demand list. So if you go closer to Houston and the coast, that's going to be like welders and boat technicians. And, you know, if you go out in the rural East Texas, West Texas, that's going to be like pipe fitters, oil this, oil that.

13:05And so I just try to stick to courses that would meet as many target occupationalists as possible. And when we first started off, we started off with medical assistant, pharmacy technician, medical billing, coding, things like that. How did you know to pick those ones? Like, was there a list that the county or the federal government has that says these are the types of courses we will reimburse? Yeah, that goes back to what I was just saying. The target occupation list varies by region. So I just put it all on an Excel sheet. I saw which were like the top four on all the regions and just went with us.

13:35What is the accreditation process look like? So we're not accredited. We're licensed to the state of Texas to be actually accredited. That allows you to go to cross state lines. And then now you're a big boy school. That's in the future. So you're, you're licensed by the state. You're paid by the federal government, but the federal government needs to see your license before you can bill them. Correct. Well, they don't have to see it. So when you're licensed, we're called an eligible training provider, ETPL. Yes. If you're on the ETPL list, you're getting grant money. ETPL list. Dude, you are blowing my mind right now.

14:07So I come from the world of home health and hospice, which is 99 % of our revenue is government revenue, right? Medicare, Medicaid, managed plans, et cetera. So I know that anytime you're working with the federal government, you've got a credentialing process you have to go through or licensing process, whatever you want to call it. And then because of our federal system, we've got state requirements, in some instances, county and city requirements. So we're in a similar position where the state gives us accreditation, they give us licensure. And then once the state gives us licensure, we can then go to the federal government and say, hey, we're an accredited home health and hospice agency, please pay us, you know, see our credentialing.

14:47But essentially the federal government is outsourcing the licensing and accreditation to the local states to decide how they want to administer. How did you learn that process? Like, is it a pretty easy process or like how long did it take for you to go from, hey, I'm in my buddy's trailer. He's got 10 students at$4 ,500 a month to first check hit. I got my first$10 ,000. Like, what was that process like? So five months. That's not long, man. It's because it's Texas. There's no waiting period. Some states have an actual waiting period. They want you to do a self-pay model and kind of before they give you access to the grants.

15:24Also, no one knows how to do it. It's not, no one advertises, you know, it's like going through the state. Like when I said online school, they were just like, what? Did you pay like a consultant or were you just reading up on it online? Did you make friends with somebody at the state and they walked you through it? Like, again, I'm coming from that perspective of, it took me a long time to figure out home health and hospice, how to actually get licensed in these places. And now granted it's healthcare. So it's, it's much more heavily regulated than I would assume education, but how did you get up to speed?

15:54Was it just Googling? No, I, I don't, I officially helped my buddy scale and obviously he paid me after a while. Cause I mean, he didn't have a CRM. So I knew that stuff, right? Like I've always known KPIs, CRMs automation. So I'm like, dude, you're, you're, you're working on post-it notes, right? I'm like, you gotta get so much. And they love it they're still doing it to this day but i had a different vision and i just read on it and i'm in i called around other schools none of them have a script like even a simple call it oh i want medical assistant okay it's two grand plus start every month or whatever and that's really it i'm like man i come from such a sales background i'm like oh nick you want to be a medical assistant well why do you want to be a medical assistant what do you currently do now oh you have paycheck to paycheck come on in man let me put you on a video call let me show how you can do this online So it's just automating it, man, just selling it.

16:43And like I said, it's not much of a sell. It's free grant. It's just then what I got really good at them is showing people how to fill out the grant so they get approved. Because if you just walk into the center, you know, and you're like, hey, I'm an employee. I lost my job. They're going to do this to you, right? And they're going to say, you know, go fill this out. No one knows what to do with this stuff, right? And so I got really good at that. I even got so good. I convinced a counselor after numerous Chick-fil-A attempts of lunch to go on video with me and show me how to fill out the paperwork.

17:12And I recorded it. And now I shoot that to the students. They get approved. So tell me about the curriculum because it's an education program. There's obviously the curriculum and then there is the practical practicum. I don't even know what you call it. You probably have to have a certain number of hours of apprenticeship, depending on the trade, I'm assuming. How do you find the education piece, the curriculum? That's the secret, right that's what i have and i and i charge people for the curriculum i accidentally found the one that private labels it so the curriculum this company i found they sell it to military and government like in the masses i wasn't their target demographic but after talking to them i'm like why wouldn't you like you have this piece you figured it out i'm like just sell it to small schools like whatever you want to sell it for because then we'll just mark it up that's how we found it the curriculum is not what matters it's the exam they go take that has to be nationally accredited.

18:04So for example, HVAC. HVAC, you have to get an EPA 608 test. That allows you to touch refrigerants and coolants, right? And again, that computer is not going to care if Nick went to in-person school and Hector went online school. Can you memorize enough theory to pass the test? And then you guys are business owners. Think about it. Any of your businesses, you don't let me go in there and do the stuff I want to do. You're going to train me how to do the things. Business owner out there, I'm like, I don't care what hands-on experience you've got. The way I want to do things here is a b and c so most employers you know they don't care about the hands-on you learn that on the field like just just like anything else so we teach you enough to be dangerous to know and have the conversation but maybe you learn on the field every hvac owner is i'm going to throw keys at a work truck to the guy on the first day go show 30 days but but i'm so like physical therapy i know and in order to do physical therapy you've got to go through some school you've got to get your doctorate but you've got to get i think it was 2 000 hours i could be totally wrong here but it's a lot of hours in the clinic in order to get your license.

19:06And there is a written piece, but there's also an hours hurdle that you have to hit. Is there an hours hurdle that somebody for an HVAC, I don't even know, is it a license? It's a license on HVAC, but it's just an EPA license. That's it. So you're right on the hours for electrician and plumbers. Here, we just give them a basic certificate that said, hey, you took so many hours, you understand the language. then those do have to complete 8 ,000 hours before they could get their journeyman. So it depends on the vocation. Yep. But with these facts, there's no license. There's no hours. Once you're licensed, you're licensed.

19:41EPA. Now, you have to do it for so many years and become a contractor license to go open up your own thing. As soon as you pass a little rinky-dinky EPA test, off to the races. What about like, okay, medical coder? There's a national federal test in order for them to be a medical? It's called PHA, National Healthcare Association. recognized nationwide. Oh, and what's it called when they pass that? They're just a certified medical biller? Yeah, NBC. Certified. Yeah, it's just a certification. We completed so many hours. And the certification, like I said, no one knows who my school is. No one knows who I am.

20:15But everyone knows who the EPA 608 is in that world. So carry that in your wallet. You could come work on a house. How long does it take? So the state of Texas gives you$10 ,000, depending on the county. Yeah. They give you$10 ,000. How long does that 10 ,000 work for? Is this like a two-year program? Is it a six-week course? Does it depend on the vocation? How much time are you given to fulfill, essentially, the training, the courses? 80 to 100 hours. They're done in two hours. What's your completion rate on the courses? 82%. Is that good or bad? I have no idea. Well, college is 44%, so we're doing pretty good.

20:57Well, sure. College is 44%, but college is not 80 to 100 hours. College is probably, it's four years, right? The difference between us and the vocational school, they have to go in person. They fluff up the hours with lab hours, resume building, where they do at least 300 hours to qualify for all the grants and loans and FAFSA and everything. We just stripped it down to the - You don't care about that? We just stripped it down to the curriculum to go pass the test. Is it capped? Is there a number of students that you're capped at? Or is the cap just the revenue per student, depending on the county?

21:30It probably should be capped because we broke certain counties. I mean, when we do that monthly review, we did more enrollments in Austin Community College in Austin, at least for the grants, not traditional. So yeah, if Austin County or Travis County has a cap of a million, we probably got$800 ,000. them. The only reason we do that is because we could process them so fast as we streamline the process. So again, I'm going to home health and hospice. How do they monitor fraud in your space? Because in hospice, for example, if a hospice company is keeping people on inappropriately, there is a mechanism.

22:06It's called the cap. And it's something that the federal government monitors. I'm assuming there's something that the government looks at, whether it's completion rate, whether, I don't even know, but what do they look at to essentially assess whether or not you're doing a good job as the vocational school? Sure. Good question. All of it. We get annually audited and biannually audited, and you have to have a certain completion rate. Let's call it 70 % completion rate to stay on the ETPL list. Remember to get the grants. And if not a 70 % completion rate, we have to get 60 % of those jobs. So do you have to track after they graduate whether or not they got jobs and then show the documentation to the federal government when they come and do the It's like, yep, Jason Jones got a job here.

22:48Like what's the documentation you have to show? It's an Excel spreadsheet and it's still manual, like a folder, like Manila folder, a ton of them. Unfortunately, it's also collect that. The same is going to go to the cloud, but yeah, we have to keep it on the record for two years in case any changes. We do really well with that. We give incentives like, hey, you know, we'll buy your first work boots if you tell us where you land or whatnot. And so we get involved in the counties love that. so back of the envelope math 40 ish percent so it's 60 of the 70 that graduate need to have jobs yes extremely do you know how easy it is to get somebody a job in these apprenticeships if you show up to the interview sober you're getting the job is there a time period are they like hey they have to have found a job within two months not necessarily and if there is i don't know about it because it takes an hour to find them a job yeah yeah we're part of the staffing companies and they call us all the time like, dude, we need your leads.

23:41And because we're not charging them anything, we don't care about a placement fee or anything. We're like, dude, just place them. And they love us for it. So what are your margins on a business like this? 80%, 85%. They're like SaaS-like margins. Yeah, well, I mean, think about it. I mean, we're private labeling a course for a thousand bucks and we're selling it for 10. I mean, obviously we buy a laptop. There's, you know, some hands exchanging and things and phone calls to be made, but it's pretty crazy. What if somebody wants office hours? What if somebody wants extra tutoring or what if somebody wants extra support?

24:10Like, do you have a staff that does those things or is it all within? We do have a staff, but the questions are the same. So we're recording Loom videos and they frequently ask questions and they kind of knock on 90 % of the questions. Wow. What do you do with people who have questions that you haven't answered in the Loom? We're a school. We're only open from nine to five or send in an email. So from 2021 to today, you've been doing this and you said right now you're doing between three and$400 ,000 a year in top line revenue. no 200 a month 2.4 our second month we're on pace to do 3 million this year okay okay

24:50wow tell me what your team looks like tell me what like like what does your administrative team look like obviously there's there's you do you have a sales team yeah two enrollment people two enrollment people two success coaches they're like the teachers that we hired that, oh, come on, Nick, you could do it. Log in a little more. Are they onshore or offshore? No, they're off here. Okay. So you have like an office that they work out of? Now, we're at home. We started off with a big old office. We looked the part. We bought Veritas, did coolers, and we thought we were a startup. And boy, no one came.