EP #26 - Your 1st Year in Business: Optimisation, Common Roadblocks + How to Avoid Them

Welcome back to The Local Guys Business Show. In this episode, we're going to go over what your first year in business might look like, some common roadblocks and how to avoid them, and then how to optimize your business for maximum income. So Jarrad Goulding, one thing you talk about in training a lot is the J-curve. Now, firstly, is that named after you?

No, unfortunately I can't claim that one. It's not got anything to do with myself. It's more around the shape of the letter J rather than anything that starts with J.

Can you explain to us what the J curve is, why it's so important, and what it relates to in business?

Absolutely. Yep. That's a big question. There's a lot to unpack there. But simply put, it's the fact that things get worse before they get better. So it can relate to lots of different areas of business, whether it's cash, whether it's motivation, whether it's marketing. There's so many different aspects that it relates to, but it's ultimately that we go on a journey where it tends to dip down and then it tends to boost up higher than where we were, much higher than we were before after that. But we've got to be able to understand that, recognize that, and be able to get through this trouble period, which is the dip, basically. Yep.

And where do we find the J-curve to be most common?

Yep. So as I said, it's in pretty much all or a lot of areas of business and in life in general, to be honest with you. So I guess first one that we normally talk about is when it comes to profitability and cash flow in the business. So just like any startup, when you first get things going, say you buy a new franchise or something like that, there's obviously a lot of money that's going out. I might have to purchase a new vehicle. I've got the cost of the franchise. I've got to set up business entities. I've got to get insurance and rego and so many different things that you've got to get. And that's before I've even made $1. So that would be ultimately that original dip of things heading down. And that's the part that could be the most challenging for people because, and the most scary for people emotionally because they're seeing all this money going out before we start to get a return and things start to go the other way. And it's about consistency and sticking with it. And then if we can get through that period, then it gets to the other side where it gets very exciting. Yeah.

And sort of how long do you expect to get back up to even?

Yes. So it really depends. It can change massively for different people. And that's— there's so many different factors involved in that. It's very hard to sort of give an actual time. It can depend on the industry that you're in. It can depend on the location that you're in. It can depend on the effort that you put into the business as well. Your marketing efforts can depend on so many different factors in there. But generally we like to sort of, I guess, prepare people for anywhere for like really the first year. We tell people like allow the first year to be your build year. Now for a lot of people, it's a lot shorter than that. For some people, they don't experience a J curve at all. And it just happens to the right. Yeah, it just takes off. So we've seen that as well. For other people, it can be the complete opposite of that. And, you know, it can be a long and drawn out one, especially if they're only sort of running the business on a part-time basis and expecting full-time results and stuff like that. It really depends on the person in the driver's seat of how quickly or not quickly that happens.

Yep. And what sort of traits does someone have who wants to flatten that curve? What do they need to do?

Yep. So you need to be a sponge. You need to, I mean, we see it all the time. New franchise partners that come into training and you can spot the ones that are just like, they're excited. They're on the edge of their seat. They're absorbing everything that sort of comes in. When our trainers are talking, you know, they're writing notes down, they're going home and they're doing the homework and they're, you know, rehashing all of the stuff that we've gone through on the day. They're the ones that generally will tend to fly through that process because they're just onto it straight away. The ones that were like, yeah, yeah, yeah, that's cool. I'll look at that and maybe I'll do that at some point and have a crack at it or whatever. And it never quite happens, then it's just extending out that time that you're going to be spending on the uptick, basically.

Yeah. So you've got to be on the front foot from the get-go.

Yeah. Yeah. And I always say to people, you give me 12 months of hard work, I'll give you a career that you want to do to the end of your, until you retire. And I say that to almost all of our franchise partners that come through and consistently it gets shown. And I speak to franchise partners at the 1-year mark or 5-year mark or whatever. And they all said, you're 100% right. Like, this is, you know, we have a very low drop-off rate on the, with our franchise partners. And that's because the ones that lean into it and put the hard work into it, that are like, this is, this is fantastic. I can see myself doing this till retirement. So yeah.

In what other ways does the J curve apply to business?

Yep. So motivation is another big one. So the analogy I like to use for that one is like trying to learn an instrument. Right? So when we first try and start to learn an instrument, and I'm guilty of this, I've got two guitars that are sitting at home right now. The one sitting outside getting rained on and dust on, the other one's in the garage collecting dust. So electric and an acoustic, and both of them done nothing. So I dropped, fell off on the J-curve on those ones. And the reason why I fell off was because I thought I was going to be the lead guitarist of AC/DC, and you know, just coming out and smashing out all of these amazing cool songs, and that was what it's going to be. And it turns out that I was doing, you know, Mary Mary Had a Little Lamb and Baa Baa Black Sheep and all this stuff, and I could get the C chord, but I could— that F chord was a nightmare to get. And then, you know, there's all these other ones and all the rest of it. And what happened was I didn't have the consistency on it and I didn't have the repetition on it, so it just fell by the wayside.

So motivation went AC/DC to Bubba Blacksheep. And then you didn't even go after that.

You didn't go after that. Yeah, dropped off. And that is the point right there on that J curve where it goes down, it goes down. All of a sudden it was exciting and the shine of it, of being a brand new thing. It's just like when we purchase something in a shop or anything like that. We're all excited about this new coffee machine or this new thing that we're going to buy. And then I'm guilty of it. I bought an e-scooter. I think you remember I brought it into the office once. And it's probably been used 3 or 4 times. Like, it was, I'm going to use this for my commute to work and I'm going to do this and all the rest of that. So I was really excited before I brought it, but then when I got it, it was just like, I'm too busy, you know what I mean?

So sensing a little bit of a trend here, Jarrad Goulding.

I'm pretty—

I've got barriers in my shop.

Yeah, no, I've got barriers on myself now. I've got my, uh, my fun money that I have once a week that gets dedicated to it. So at least I have to build it up slowly to get to it. So if it gets blown on nothing, it doesn't matter. It's within my my sections. But anyway, so that is the important thing that we have to be mindful of there is after it turns off the shiny new thing, that we're consistently keeping that motivation up and keeping those habits in because motivations doesn't continue to last, but habits do. So you want to be constantly out there pushing things like local area marketing or constantly pushing yourself to book in your repeats or anything like that, just doing those 1%ers because that's what's going to get you through that first year of business. So then it just becomes an autopilot and you're just doing all these things like a Jedi mind trick, but you're just doing them all unconsciously. Yeah.

Yeah. Talk to us about local area marking and how does the J Curve apply there?

So J Curve applies a lot there in the fact that you feel like you're doing a lot of work at the beginning and not getting any results on it. But that is a consistency game. So a lot of our new franchise partners will come into this expecting that they'll go, okay, cool. I'll hand out flyers or I'll contact the business once and they'll go, oh, I've already contacted everyone in my territory. No one's interested. And it's, I think there used to be a study where it's saying it took 6 times, 6 points of contact with someone before someone gets into a buying state. I think they were saying now it's actually up to like 12 times. So it's significantly more because everybody's getting bombarded with advertising and sales stuff. Everywhere they go online.

What's the point of contact? Is that just seeing an ad or seeing the logo?

Yes, anything like that.

Just hearing about it?

Yep, yep, absolutely. So if they've done a flyer drop, that's one point. You know, it could just be the vehicle driving past. There's another time, right? So it takes 12 points before they get into a buying state. So if you're going out and saying, oh, I've dropped off flyers to everywhere in my territory, cool, you did that once. Well done. Like, you've got 11 more times to go. Do you know what I mean? So, Yeah, yeah. And that's the problem. That is the problem right there is even if they've done it once or twice, they're going, yeah, I've already done it like 3 times. And you go, fantastic. You've warmed up that customer for a competitor now. So they're going to come over and do the extra times and they're going to take it from the hard work you've done because they'll go local guys, Test and Tag, whatever other competitor, Test and Tag. Yeah, cool. Whatever. We just need Test and Tag. So you warm them up for someone else. So really important. I would rather you go back to one street of, one street of businesses, hit it over and over and over than just going to everyone in your territory once and you've done nothing. It's like running one TV ad once. Businesses know, companies know it's about repeat all the time. Coca-Cola don't have signs everywhere saying Coca-Cola, drink Coke everywhere you go. They don't spend billions of dollars on it because it doesn't work. It works, but they understand the principles behind it and how many touchpoints that they have to have.

All right, Jarrad, let's talk about some common roadblocks in that first year. So what are some common roadblocks franchise partners run into in their first year of business?

Yep. So there's a few. First one that probably after they get started is, okay, cool, I've gone through the training, I've gone out and had my time with the franchise partners. Actually being doing the technical side of it. Now I'm out in my first week. What do I do? And it's all on me now. Like there's not a, especially if they've had a boss their entire life being told, go off and do this, go off and do that. And they're like, oh my God, it's just me now. Like that can be a scary thing. Luckily our franchise support people do come in and they're giving them tasks and they're getting things for them to set up. They've laid out a detailed plan for them for the local area marketing. So that does help a lot. So, you know, So that's probably one of the first things is just mentally being prepared for the fact that I'm in charge of my own destiny now and I've got to be my own boss and say, right, my full-time job now is that I go out and I do this and I've got to go out and do something. So it's 9 AM on a Monday. I've got to go out there and local area marketing becomes my full-time job because right now the business is brand new. It's as quiet as it's ever going to be. Which is great because it's an opportunity in the fact that now we can dedicate our full time to local area marketing. Now that time is going to get shorter and shorter, obviously, because hopefully that gets filled up with more and more jobs. But you see it as an opportunity is that I can just lean into heaps of local area marketing. But then all of a sudden, oh, now on Tuesday I've got a job, so I can't do any on that day. So you swap out the local area marketing time with the job time. Yep. So going forth like that. So that's, that's one. And that's just a mindset thing that you— and a habit thing that you have to get yourself into of being able to do that.

It could be a trap. You know, you've got all this free time. Yeah. You don't want to sit on your ass.

Well, that's the thing, right? Like a lot of people— I don't have my phone on me, but a lot of people will sit at home and just look at their phone and just go ring, ring. And like, that's, you know, there's offense and there's defense, and you want to be spending a lot of time on offense at that stage of being going out there and pushing for things and, and trying to Drum up the local area marketing. And then just like the way that we like to look at it is think of any of the leads come that come through as a bonus, right? So I'm going to build this engine. I said it from day one that we started The Local Guys. We're a marketing company that happens to do franchising. Okay. It happens to do test and tag or happen to do pest control or cleaning, but we're a marketing company first. So if franchise partners think of themselves in that same mindset is I'm a marketing company first. That happens to do whatever division I'm in. And if they do that, then all of a sudden it changes the mindset up here. And they're actually out there doing it. Now, do we provide a lot of these? Yeah, we do. But like, if that covers itself, then, then let's worry about worst case scenario.

Yeah.

Because best case scenario will take care of itself. Yep. Yep. Yep. So there's that one, you know, like there's cash flow things that you need to be thinking about now as well. Before, if you're an employee, every Friday's payday, I know I've got to go out and blow it all. And then I've got some another pay coming through on the next Friday. When it comes to a business owner, you've got a lot of things that you've got to think about as far as taxes, as far as I do the job and then I might not get paid for 14 days. You know, lots of different things like that. So it's not as simple a process as it is when you're an employee. So you've got to think about that. You've got to make sure that you've got some cash reserves for that as well. That you're putting money away for taxes, that you're putting away money for things like royalties and lead fees and stuff like that.

It's the old grandma with the envelope method.

Well, that's it, right? So we talk about Profit First a lot. So we talk about the different buckets. So every dollar that comes in, we've got, you know, 30 cents going into this account, 30 cents going into this account, 30 cents going into this account. So I know actually maybe only 30 cents of it is for me to go out and spend, you know, for my own spending and stuff like that. And the other ones have got allocations that they need to go through. And we're just updating our systems on that at the moment where we're creating all new videos for our franchise partners to talk about the Profit First system and giving them percentages and stuff like that to help them as a guideline to begin with. So if they're brand new to this whole thing, they would give them some default percentages they can work on. Now everybody's different because obviously you might drive a $100,000 car and I might drive that you've got on loan. And I might drive a $20,000 car that I own. So obviously you're going to need more expenses for vehicle, more money for vehicle expenses than I will, but it's a guideline. So yeah. Yeah. So, so that's another one that—

Have a budget, basically.

Have a budget. Yeah. Know what your expenses are in that budget. And no one's ever done it. We'd never been taught it in school or whatever, but it's a really important thing to do. So that's something we do in our onboarding and our training with any franchise.

It's just too easy to get hit with a bill and then another bill and then you're out on the street.

It's the one-two punch. You know, I talk about it all the time is whenever you have an incident that happens, it's never one thing that goes wrong. It's normally two or three or four things that all happen at once and that puts you into a scenario. So having a buffer, having a budget and having a plan to work towards, and we lay all that out for our franchise partners so that they don't have to reinvent the wheel. They can just follow what they lay out for them is a really good way to do it. But there are a couple. Yeah.

What about pricing for your services?

Yep, sure. So pricing is a massive one as well. So not a really, really good point. That's one where people can get into all sorts of problems with because they'll go out and they'll see competitors are charging X price or whatever. Or, you know, they've got, they've never been in the industry before and they're coming up with their own pricing. But they've literally on day one of starting this business in this industry. And the hard part about that is, is you don't know where the market is. You don't know what is going to get you a good conversion rate or a bad conversion rate. Like we've got pricing for all of our divisions. We've got some guidelines around the pricing, which helps set them up. But if they want to be eligible for the turnover guarantee, they stick to our pricing or lower for the first 12 months. And then after that, they can go to whatever pricing they want. But, or they can, they can change the pricing whenever they want. It's just, they're not eligible for the turnover guarantee for that year. But that helps set a lot of people up. I've had franchise partners that have gone rogue with pricing before. And you know, it would be like they were winning all the small jobs because they were leaving the price of that. But when it came to the really big jobs, they were keeping the pricing the same as little jobs. They weren't doing like a sliding scale. And the problem, and so we're seeing their ATV, their average transaction value. And it's like, why is it so low? Like, why is the conversion rate not there? And this is why we've got scorecards and we can we can pull the stuff apart and go, what's going on here? And that was the problem, right? They were keeping their pricing the same across the board. So clients, obviously, if you've got a $10,000 job, they're going to go to more competitors. We have to get 3 quotes at least. And obviously all the competitors want to win that job because you've got volumes. So they're going in at a lower, lower price. And this particular franchise partner was going at the same rate as a smaller job. And not winning any of those ones. So, and the worst thing is they understood why we had that pricing scale after the fact, but it took them 4 or 5 months to work that out. Now you've had 4 or 5 months of paying royalties, paying lead fees, but not getting the conversion of those bigger jobs. And the only ones that are winning are the little ones, which aren't, you know, it's the big ones that you really want that make the big difference. So, you know, that's a hard one.

What should they do? Stick to the pricing guide?

My suggestion is for the first 12 months, you're brand new, stick to the pricing guide, right? You don't know if there's a, you might say, oh, well, there's a competitor in my area, or I've checked a couple of websites and they're charging X, Y, and Z, and they get really excited because they go, oh, I could charge that, and they spend the money, or in their minds have spent the money before they've even won the job. And I've seen that a few times as well. And you don't know if that competitor has been in the industry for 10 years and their book is completely full and they're just trying to fill the last few spots in their book with higher paying customers or getting rid of some of the lower paying customers and fill them up with higher paying customers. So you don't know all these things that are happening. So my strongest advice is, what do you do? Stick to the pricing for the first 12 months. Learn the industry. Understand that by the time you're in for 12 months, you know a bit more what you're talking about now. You know, you know the area. You can have done some competitor research. You understand you've got a good feel of where it's at. You can afford to play with the pricing a little bit while still having a good conversion rate. So that would be my advice in that scenario. Yeah.

Yeah. Okay. What about customer service. A lot of people that come through, they buy a franchise, maybe it's the first time they're in a customer-facing role. How is customer service a roadblock in the first year and how do they overcome it?

Yeah, it's a massive one because it will affect your repeat jobs considerably. We're in a relationship business, so everything's about relationships. Anyone can come and offer a new cleaning service, new pest control service and undercut you. Same thing with test and tag. It's the relationships that are going to keep you in the job where they will say, sorry, we're happy with our guy. We've been using him for 5 years, 10 years, whatever. And that's all going to come through customer service. So it is those 1%ers that you put in for, you know, just spending a couple of minutes with them before you leave, making sure you keep your promises, making sure that you're friendly, smiling, and happy as you're going into there. I remember my old Boost Juice days, we used to have a franchise partner that had come from the banks. And when he was first getting started, he had written on his hand, smile, just as a reminder because he was not a people person naturally. So that was something that he wanted to work on. So every time he'd go through and, you know, put his thing through the register or whatever, he'd get the reminder to smile and just connect with everyone. So it's just little things like that. That, you know, like you just spend that little bit of extra time with people, leave behind a couple of minties on a pillow, or, you know, just the 1%ers that no one else does that then all of a sudden repeats, referrals, and reviews, the big 3 Rs kick in. And all of a sudden your customers turn into your marketing machine.

Yeah.

Yeah.

That's, that's the thing that sets you apart is your customer service.

Yeah.

There's a million people doing test and tag.

Yeah.

It's all the same.

Commodity.

How are you presenting yourself?

Exactly.

What else can you provide?

Yeah, anyone can clean a house, anyone can do pest control, anyone could do electrical tests and tagging. It is the relationships that you build what is going to ultimately make sure that you've got those repeat clients booking in year and year and year again.

Talking about roadblocks with local area marketing, it's one of those things that can be a bit scary at first.

Yeah.

But what do you suggest for people in their first year?

Yeah.

Tackling local area marketing for the first time.

Sure. Yeah, it can be a scary one for people and everyone's got to find what method works best for them. My suggestion on that is to try everything, try every different type of local area marketing and just do them all. Like, you know, it might be myself and my wife like to go for walks in the evening. Okay, cool. So let's take a bunch of flyers with us and let's, you know, walk up and down and we'll do our how many Ks or how many until all the flyers are gone. We don't go in. So that could be one way that we do it. Same thing if, you know, going into businesses or calling up businesses in regards to trying to win the work. Let's say it's pest control or test and tag, anything really on commercial cleaning, going into businesses. And that's the most effective way, to be honest with you, in my mind. Face to face. Face to face.

Yeah.

Or calling either. Probably face-to-face is better.

Yep. You got them there.

You've got them there. You've actually taken the time to go and visit them. It's easier to get past gatekeepers and things like that where you can just, a friendly smiley face, especially if you're a pest controller, right? But the pest control is the easiest one in the world because if you're a pest controller, you walk into a cafe and you say, oh, pest control, I'm here to talk to you about the pest control. Everyone panics because they think they've got something. So it's very easy to get to the business owner or the decision maker if you're a pest controller, especially if you're wearing all your pest control gear.

So ready to go.

Ready to go. Getting that conversation should be super easy. And then it's just a matter of just saying, you know, it's just, I've found the best way to do it is to be as honest as absolutely possible. So instead of just trying to turn it into a Wolf of Wall Street hard sales process or whatever, it's none of that. It's literally, hey, I'm a new franchise partner, just, and I'm trying to do all the right things in regards to growing my new business. Do you mind if I provide you some pricing? Yeah. You know, what you say is, you know, we're just, I'm growing a family business and trying to get up. Everyone in Australia, everyone in New Zealand loves a, you know, a battler that's trying to have a crack at something. So they'll give you the time of the day for that. And if you just, it's no, it's not high pressure or anything like that. It's just a matter of saying, hey, do you mind if I grab your business card? I'll give you mine and I'll send you through some pricing if it looks good. And then make sure you follow up. That's probably the biggest thing that our People forget in 2 seconds. They forget in 2 seconds. And you know, you've done the hard work of meeting the person. You've gotten their business details. They like you. You've sent through some pricing. And again, what do we talk about? The points of contact that we were talking about. You've done 90% of the work, but the last 10% will be the one that produces the results. Send through the pricing and touch base with them next week and just say, hey, I just want to see how you got on with my pricing. Does that look acceptable? Is that something we can—

Low pressure.

Super low pressure.

Yeah.

And they'll tell you in 2 seconds, ah, yeah, sorry, I haven't had a chance to look at it. Oh yeah, yeah. Looks good.

You know what I mean?

So build that into your system. It takes 10% of the effort. It makes 90% of the impact. So really important, that follow-up.

Yeah. So local area marketing, just play to your strengths. See what works for you.

I would say, if possible, try everything. The only thing I reason why I say play to your strengths is a lot of people will say, well, yeah, my strengths are fly dropping because it's the easiest one, right? So I would suggest that you try every single one and base it on the result you got rather than how you feel because you'll build the muscle, right? So you will build the muscle. If you're not used to walking into a business and being able to speak to the business owner or whatever, we were talking about this before. My strongest advice to that is break it up into chunks. It's just like anything in life. If a task seems too overwhelming, you put it into a too big a process to do. If you break it up into small chunks, it'll be a lot more easier to do. So if you don't feel comfortable walking to a business and asking if you can grab their business card and or speak to the business owner or whatever to provide some pricing, if that seems too much for you, you've chunked it up too much. So just chunk it down way more and just, just role play until you basically burn that fear out of your memory. So what I mean by that is instead of going into a business and trying to do everything, literally just walk into the business and say, hey, do you know where the local post office is? Okay. And they'll just go, yeah, yeah, it's just down that way. It's just down that way. Well, where is there an ATM near here? Right. And if you go into 10 businesses saying, hey, do you know where the local post office is? Local ATM is? Yep. Cool. No worries. Down that way. You've all of a sudden done it 10 times and had 10 successful wins. Yeah, they told me every time. It doesn't feel anywhere near as scary. So then you can do that 10 times, and then on the 11th time, you can just say, instead of just asking the ATM, hey, um, do you mind? I do pest control. Do you mind if I just, um, give you my business card? Is there someone's business card I can grab? Yeah, cool. All right, then just get used to that one. Oh, that one was okay as well. Now I did that 10 times, and then you can eventually turn it into, say, hey, do you mind if I speak to the, the person that looks after it? And then all of a sudden we're there. Do you know what I mean? So if it feels daunting, just chunk it up, do it slowly, get the successful wins where it's almost impossible. No one's going to go in there and even say, hey, where's the nearest post office? And they'll say, get the hell out. No one's going to do that. You know what I mean?

Like, so you get an easy win for the confidence.

Correct.

Keep going a little bit and then you can go for it.

And then you can chunk it up a little bit as you've had 10 out of 10 successful ones and you feel like that was easy. It doesn't it's much, much easier to ask for the next one.

Fantastic. So for some franchise partners, that first year is a build year just to get the wheels moving.

Yep.

That's very normal. And you can't let that get in the way of the success of your business.

Well, you don't have any repeats. You don't have any momentum or anything like that yet. So the way I like to think of it is you're starting up a car and you're in first gear and you've got no momentum yet. So revs are high.

Yep.

But momentum is low. As you're going through the first year and all the rest of it, you start getting to second year, you start to get into third year, the fourth year. Before you know it, you're in fifth year, you're on the highway, you're going 110 kilometers an hour, but your revs are the lowest that they've been. So that's how I kind of like to think of it.

Maximum output but for minimum effort.

Yeah, correct.

How do we optimize to get through those gears as fast as possible to be in fifth year as soon as possible in that first year.

Yep. So what always comes to my mind anytime I'm thinking about this or business or anything like that is we actually have it on the wall in there is our 5 Ways in Business, which is the chassis of a business basically. So first thing is, and maybe we can get a thing up that shows exactly what I'm talking about, but it's basically the math formula to business. So that works out to be, you've got number of leads in at the top, which is times your conversion rate equals the number of customers that you have. Number of customers you have by how much their ATV is. And then that works out how much money you're making on that one. Then it goes down to number of times that you visit that customer. So are you getting repeats, uh, on there as well? That works out how much money you're making for the year, turnover. And then you times that by your profit rate, whatever your profit rate is, and then that works out to be whatever your net profit is. So anytime I'm thinking about—

It sounds like a lot, but it makes sense once you go through this.

Yeah, once you go through it and you understand that, then it's literally, I've just got a couple of drivers because although it sounds like a lot, there's only a couple of variables in there that are actually ones that you can manipulate because some of those ones are just results. Of the effort you put in. So number of leads is one. So how many leads are getting into the top of the funnel? So obviously leads come from the support center, but we also get them from around local area marketing. So that's the first one that we'd look at. Then your conversion rate as well is how quickly am I getting to those leads or the rest of it? And then your ATV, your average transaction value is another one. So am I increasing the sale of each, of each job? Am I upselling them, cross-selling them? Adding more value. And then finally, how many times am I visiting those customers? So really there's only those 4 aspects that you need to put your will into and the rest are just results-based.

What would you say is the most important aspect in there?

Yeah. They're all really important. I would say the one that we try and push our franchise partners on the most, if I had to pick one and they're all like crucially important, would be probably conversion rate. And that's probably because our franchise partners are a little bit spoiled on the fact that we do provide leads. So they're at least going to get leads from us, which, you know, can quite often be a lot. So conversion rate, though, is massively up to the franchise partner. And that can come down to things like what price I'm going in at, how quickly I'm contacting the customer. As well. If I'm waiting 20 minutes before everyone that comes in, that's a big problem. Am I demonstrating value as well? So am I just saying, yeah, I can clean your office, it'll be $150, $250? Like, okay, what's included in that? I don't know. So am I demonstrating my value enough on there as well before I'm talking about the price so they understand everything they're getting along with that? So am I following up my leads as well? We just spoke about following up. Do I have a process in place for touching base with them after I've provided with the pricing as well. And I've got a strict timeline that I do that. So there's some really strong elements to making sure that you've got the strongest conversion rate possible.

Conversion rate sounds a lot like, you know, selling yourself and being a good people person in the process.

Yep. So that's part of it for sure.

Yeah.

Yeah, absolutely. Yeah.

How about the number of transactions repeats? Let's talk about repeats again, because it's a huge part of of franchise, service-based franchise business, right?

It's massive. It's my favorite part of a service-based franchise, to be honest with you. What do I say? If you want a Rolls-Royce, you need recurring revenue. So it's hard to, you know, when a client comes through, you know, you have to first get them to like you, know you, and trust you. Set you up in their system. If for commercial, if it's residential, you know, they still have to like you, know you, and trust you. You have to go out there, perform a good job. And so you've done all of that, done all the hard work. It's way easier to turn that client into a second time visit client and a third time and a fourth time and a fifth time and for the next 10 year client than it is to keep winning new clients and have to go through that whole process again every single time. Plus we charge lead fees, right? So you have to pay a lead fee for every new client. If that client, the existing client calls us up here and says, I need to get a job done. We just pass the details onto the franchisee. It's already your client. You've already paid for that client years ago. So much, much better to have ongoing clients profitability-wise and just hassle-wise and everything than it is to constantly be getting new clients in.

And what are some levers they can pull? To get those repeats going every single time?

Yep. So for me, I like to think of, I mean, that's why we call them clients. We don't call them customers. One, because if it's Test and Tag, I look after your electrical safety now. I'm extended part of your team. Okay. So I will notify you when your testing is due, before your testing is due, like a month out or whatever. And we'll have that booked in. A lot of our best franchise partners book that in. Before they leave the job. So it's booked in for 12 months' time again, and they send them a message to notify them a week out or whatever, just as a reminder, but it's pre-booked in. Same thing for pest control, you know, like if you need a pest control done, general pest done, my guy comes out, he doesn't even let me know, or he lets me know the week before, but it's pre-booked in. I don't want to have to deal with it or whatever. I just know every year, just before in springtime when we're getting close summer and we're starting to see the bugs and Stacy's, you know, the kids are freaking out that they're just about to start to see bugs, they're due to come out again and get it all done. So it's cleaning way more so, you know what I mean? They can be every week, every night, every fortnight, whatever it is. So having recurring clients in there is way more important than just trying to hit those one-offs. Yep. Yep. Yep. So thinking of it as a subscription model. And I am your pest control guy now. I am your bug guy. Anything you need. Pushing the warranties, you know, we do have offer warranties. They're a really good thing because that means you're my guy and I've got that protection around what I've paid is going to cover me for X, Y, and Z amount of time. So really good on that side.

How can we increase our margin? Because margin's that thing down the bottom.

Correct.

It feels like maybe one of the hardest ones to to change?

Not really, because the model, the model should be set up where there's a good margin there anyway. So you've just got to know your worth. And again, there's offense and defense when it comes to margins. So you've got your expenses and then you've got obviously what you're bringing in as well and your pricing and stuff like that. So obviously you want to make sure that you're tracking all of your expenses and making sure that you don't have wasted expenses. You're not, you're spending your local area marketing effectively. You've got SLAM instead of LAM, so Strategic Local Area Marketing instead of just local area marketing. You know that your funds that you're putting into things are actually getting money back into it as opposed to bringing back a return on your money as opposed to just sponsoring a sports team. And you've got no idea whether it's working or just a feel-good thing. So really important that you've got that stuff dialed in. And that's where again, we teach our franchise partners and now franchise onboarding about having a monthly check-in with all that sort of stuff. But then obviously on the offensive side of things is making sure that, yeah, all of your pricing set up in a way, your time set up in the way that you know that every job that you're going to be completing is going to be profitable as well. Yeah, because you don't just want to be out there— what is it, uh, turnover's vanity and net profit's sanity, something like that? Yeah, yeah.

From what I gather, that first year is all about one thing, and that's just being fully involved in the business.

Absolutely. I couldn't say it better. That is, I'm a sponge. I'm soaking it all in. I've made a couple of mistakes here and there, but I've learned from those mistakes quickly. I'm networking with all of my other franchise partners. I'm getting to know a lot of them as well. I may be doing a ride-along with some of them to learn some good behaviors. I don't want to do some of the bad behaviors that I maybe see. So if I've gone out with 5 guys, I've become better than all of them because I've taken the best one of that one, best out of that one, best out of that one, and made my own way to do it. I am getting faster. Better at the job as well. I'm getting more effective with quoting, more effective with pricing. It's a lot to learn. And that's why, you know, a year is a good, good time frame to sort of say that I'm dialed in for it.

Just dive in headfirst.

Yep.

Really be involved, care passionately about the business.

Yep. And then I would just think as well, the only other thing I'd say on that is, is think of it differently than, than some people do. Don't just go out there and say, I'm going out to do a job for, say, $350, $350. That's what I'm getting out of this. The $250 or $350 is nice, but that's not what I'm doing it for. I am there to build an ongoing relationship with a person so that I'm going to get that $250 or $350 every year for the next 10 years plus. But not only that, even more than that, I want that to turn them into my marketing machine where I'm getting the repeats of referrals and the reviews through from them. Particularly say referrals, right? Where all of a sudden I'm a pest control guy and I'm doing their entire family and their friends and all the rest of it. So that is what I'm trying to set up now in the first year. Obviously almost everybody's a brand new customer, but that is the opportunity to wire in those habits in your mind. So then all of a sudden you're turning into this super successful franchise partner. Yeah.

Think long term.

Yes. Yeah. Yeah. Think, think long term. And don't think of, I'm going out for $250 and that's it. Like, it's quite often— we had one franchise partner went out and did a minimum charge job in our test and tag division. It was for a university, ended up being a $150,000 a year job. So, you know, if he'd just gone, ah, minimum charge job, I can't be bothered, I didn't put much effort into that, oh, I got— took ages to get back to them for the quote, blah, blah, blah, blah, blah, blah. And all of a sudden, you know, he's gotten this massive client that's just you know, filled up his book for half the year, a little bit less than half the year, uh, and his love life. Do you know what I mean? So fantastic. Okay, no worries. Thanks, Harvey. Cheers.