The millionaire plumber next door

Oct. 1, 2010
The bulk of the plumbing company owner's portfolio is in himself. He invests in his own company, his own future, and can directly influence the return. Contractors who work hard and work smart can generate significant returns over time.

Has anyone noticed that most financial investments aren't doing so well? While Wall Street has recovered much of its precipitous drop following the financial meltdown, it's still not a stellar investment. And real estate? Oh boy! Good thing you've got a better investment.

Indeed, all of those Wall Street tycoons and real estate barons wish they had an investment as stable, strong, secure and controllable as you … as strong and stable as your plumbing company.

While the recession has been hard on many small business owners, plumbers should fare better than most. No consumer can live with a broken pipe and most can't fix it themselves. While service and repair work might suffer in a downturn, it never disappears. Thus, plumbers, by and large, should sleep better than the average investor.

The bulk of the plumbing company owner's portfolio is in himself. He invests in his own company, his own future, and can directly influence the return. Contractors who work hard and work smart can generate significant returns over time.

Wall Street investors are restless because they have so little control. The mutual fund owner depends on the vagaries of the market. As a rule, no investor can consistently beat the market, though many try. Investors profit as the market profits as a whole.

The small business owner can be the market. He can grow faster, generate greater returns, and operate as conservatively as he chooses.

Anyone who invests in publicly traded equities or mutual funds is turning funds over to the smartest guys in the room who know everything about finance, but nothing about real value, about building a product, delivering a service or creating real wealth.

Wall Street's original role was to assemble capital from divergent sources and provide it where it can earn higher returns for the purpose of making business more efficient. That's a legitimate and necessary function for a market economy. But somewhere the smartest guys in the room outsmarted themselves with credit swaps, derivatives and other arcane financial instruments that are parasitic and do little to help fund industry with the capital it needs to expand.

Plumbers, meanwhile, create real wealth and deliver real value, while growing their businesses and creating jobs. I’d rather invest $10 in ten different small businesses run by plumbers than put $100 in any mutual fund run by an Ivy League MBA.

Yet more than any other investment, I'd rather put money in my own company because it's the only company where I can directly influence the return. If you own your company, I bet you feel the same way.

If your business is profitable, every extra dollar it generates is taxable. If you take the extra dollar and reinvest it in your business before the end of the year, it won’t get taxed. From an investment standpoint you’re already ahead, provided your company is a good investment.

The argument against investing in your own business is that you're putting all of your eggs in one basket. If your business stumbles badly, you could lose it all. Yet, in today's equity market environment, even blue chip stocks are volatile. Your company is probably a safer investment than the market. Certainly it's less sensitive to Wall Street’s mob mentality. It's also your best and surest shot at exceptional returns.

The plumber's best returns come from investing in his company. While the external business environment is outside of the plumber's control, everything internal to the company is within his control. The plumber has more ability to influence his own company's fortunes than any other possible investment.

Your company is the best investment available for you today. Yet, I bet many of your peers fail to see the possibilities. Rather than build up in the down turn, they hunker down and hang on. This is a mistake. And this explains why some plumbers are suffering.

They project the state of the general economy on their company and think, "Why bother?" In truth, the general economy is not monolithic, but the amalgamation of millions of separate and distinct businesses, which are all performing at different levels. In any economy, some grow, some stagnate and some contract. Even in a contraction, some companies are growing. Why not yours?

Economic turmoil represents a time of crisis and opportunity. It's a time when you can leap past timid competitors and give their customers a new home when they falter after failing to invest in marketing at the very time they need marketing the most.

Invest in yourself and your company today and you can not only make gains when others aren't, you'll be poised to vault to the next level when the real recovery begins. Now, more than any time since the Great Depression, investing in your company and investing in marketing is critical.

If you invest in marketing and grow your company, you can become the millionaire plumber next door.

Matt Michel is the CEO of the Service Roundtable, a business alliance of plumbing, HVAC, electrical, and service contractors. Learn more about the Service Roundtable at, or e-mail Matt at: [email protected].

About the Author

Matt Michel | Chief Executive Officer

Matt Michel is CEO of the Service Roundtable ( The Service Roundtable is an organization founded to help contractors improve their sales, marketing, operations, and profitability. The Service Nation Alliance is a part of this overall organization.

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