Capacity Ep. 17 - Chad Jones of Turbine Supply Co

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When Chad Jones bought Turbine Supply, a 40-year-old water-pump component manufacturer in Lubbock, Texas, he wasn’t buying a turnkey business. He was buying potential — and a fair amount of pain. In this episode of Capacity, Chad walks through the leap from engineer and product leader to owner–operator, the numbers-first negotiations, the first-year accounting mistakes that almost sank the company, and the culture and systems that fueled a comeback.

A builder from the start

Chad’s obsession with making things started early — school projects with one grandfather, wiring and carpentry with the other — then moved into injection molding, CNC prototyping, and a Mechanical Engineering degree at Texas Tech. That foundation shaped how he evaluates operations today: “manufacturing is manufacturing,” the processes rhyme across plastics, machining, and assembly; what changes are the particulars and the people.

“Never get emotional about a deal”

When it came time to buy Turbine Supply, Chad valued the company the way many operators do: EBITDA × an industry-appropriate multiple, sanity-checked against cash flow. The seller’s first ask was roughly 3× Chad’s number. He didn’t walk — he explained the math. If the business couldn’t service the debt as-is, it wasn’t a fair price.

“Never get emotional about a deal… Go back to the numbers. If nothing else changed and you ran the business the same way, can you afford that payment?” (15:33–16:21)

Financing clicked into place faster than expected — “I kept waiting for the other shoe to fall, and it never did” (11:08–12:02) — and the real work began.

Day one realities: own it, learn it, fix it

Chad took over as a true operator. The prior owner stayed available by phone for context, but the future called for different processes, systems, suppliers, and customers.

Then came the gut punch: first-year accounting mistakes. Growth was strong, but costs were bucketed incorrectly (expensing where inventory would have been appropriate). Bonuses were paid and equipment bought based on misleading numbers, and the company ran short on cash.

Chad’s three-step rule guided the recovery:

1. Own it. No excuses.
2. Learn it. Understand exactly what went wrong.
3. Fix it. Rebuild the system, not the story.

He brought in a new accounting lead, partnered closely with his CPA, leveled with the bank, and used the line of credit as it’s meant to be used — draw, pay down, repeat — while re-establishing financial controls.

The metric that steadied the ship: material margin

Labor hours swing. Overhead fluctuates. Chad normalized the business around material margin — what’s left after raw material cost, before labor and overhead. By tightening quoting discipline and tracking daily/weekly quote and sales order flow, material margin stabilized to within a point each month. With the front end under control, the team could manage expenses with far more confidence.

Chad’s profitability habits:

• Track material margin relentlessly.
• Monitor daily/weekly quotes and sales orders to ensure the funnel is healthy.
• Close the loop monthly on P&L, and see every invoice and wire.

Culture first: benefits, transparency, and shared upside

The team had talent and tenure, but not clarity. Chad met one-on-one with every employee, introduced the “table stakes” (handbook, goals, accountability), and made two big moves:

• 100% employer-paid healthcare.
• Quarterly profit-sharing, calculated transparently as “bonus hours,” paid to everyone when the business wins.

Skepticism turned to buy-in as people saw the math, the consistency, and the checks. It also surfaced necessary changes — like parting ways with a long-tenured salesperson who refused to modernize. The result: better teamwork, less siloed thinking, and decisions made like owners.

Sales: say yes (and automate the follow-through)

For years, the company reflexively said no. Chad flipped that default: the answer is yes — sometimes “yes, and.” He complemented that mindset with process:

• Quote follow-up automation integrated with Fulcrum (via Conversion Solutions) so every quote gets a courteous nudge without stealing time from new opportunities.
• Rebrand, new website, and a web store to increase surface area for demand.
• Call tracking and responsiveness standards (unanswered calls are visible and actionable).

Operations: flow beats heroics

Fulcrum became the backbone for disciplined flow:

• Break multi-line orders into discrete jobs routed to the best machine and person.
• Ensure the right material, tools, and inspections are ready — so skilled machinists spend their time machining, not hunting.
• Add capacity where it matters: a DMG Mori mill-turn created a “Ferrari” for high-volume, tight-tolerance parts. In the first 90 days, it ran ~10,000 parts, enabling U.S. pricing competitive with imports and cutting lead times.

The outcome

• Revenue: doubled since acquisition.
• Headcount: +1 incremental hire to achieve it.
• Team: engaged, faster, and sharing in the upside.
• Finance: a clear view of cash, margin discipline, and a bank relationship built on candor.

Chad credits the team first — and the fit with Fulcrum’s philosophy of live, traceable, operations-driven data.