$0 to $1M: The 12 Steps for Blue-Collar CEOs

Hey everyone, today I'm going to be giving you a 12 step process of how exactly you can build a $1 million business. Home Service Industries with $0, you don't need any money to get started, don't need a ton of experience and most home services, you get started without a ton of equipment or huge amounts of skill. You just need to be able to work hard. Let's go ahead and jump right into it. First thing is we've got to define why a million dollars? Why do you want to build a 1 million business? In my opinion, in order to grow a 7 figure or $1 million business, that's going to be the thing that allows you to be able to actually build a company that is providing for you without you working in daily operations. For example, if I'm running a 10% profit margin business, and I mean net profit, in fact I mean taking 10% out for you personally, if I am trying to build this business, that means I'm going to get a hundred thousand dollars out of the business every single year. And if I'm trying to do that on say $300,000 business, it's not enough to live. And the reason I'm only assuming 10% profit is because I want to be able to pay a general manager and other managers significant amount of money so I don't have to be there every single day inside of the business. I want to be able to show up when I want to. I want to be able to work on other investments or be able to travel. And, and so if I'm trying to build a $1 million business, I think that's the size you'll have to build it to, to be able to afford management and profit sharing and compensation for your team, to be able to run the business without you being there. And for everyone mocking 10%, I would just say this. Have you built a 10, 10% profit margin business that runs without you ever being there? And every single day you're able to take 10% of the revenue. That's really what it comes down to. Everyone mocks 10%. Honestly, if you don't have to be there, that's not a bad deal. You know why? Because you will build another one. Also you get 10% every single year. So in my opinion, it's my opinion based upon me seeing thousands of home service businesses, I think you need to build a million dollar business and it might be a couple locations that do 500,000 each, that's fine. But gross revenue, I think you need to build a $1 million business to be able to allow it to run without you and be able to afford the management required for that to happen. So first off, we defined. Now let's talk about number two, and that is pre sale. If you're just getting started, you don't have a bunch of money to run Facebook ads or Google Ads or YouTube Ads or Big banners. You don't even have the money to potentially go get registered and licensed and insured. You don't have the money for your trucks or equipment. We're assuming that you have exactly $0. So what can you do? You can go door knocking, you can go talk to your network, you can go talk to everyone on your Facebook account, on your social medias account, all your personal groups that you might be in. This could be church groups, this could be online social media groups. Your whole goal here is to pre sale, which means I'm going to go out and I am going to, before I even have the equipment, before anything, I'm going to go sell jobs and I'm going to be able to knock on doors and promise them the service that I am going to provide. Now I'm, I'm not going to actually do the work and I'm not going to just give them an estimate. This is the hard part about having $0. You don't have the money to go get the tools. Like we are assuming we have $0, which means you have no money to even get the tools required to get your business started. You don't have any money to even do any advertising. But you know what you can do if you don't have, if you don't have money, you have time and so you can go knock on doors. Is it fun? No. But if you're going to get a business started from zero, it's going to require a lot more work and a lot more upfront effort than if you had the cash. Just go spend a bunch of money on advertising. So I would first pre sale, which means I'm going to go talk to people that I know, people that I already know like and trust me in my personal social groups and try to sell them on my service. Next thing I'm going to do, I'm going to collect prepayments. All right? The reason I need to get prepayments is because like I said, I don't have any tools and I just need the basics. For example, if I was doing a landscaping business, I don't need to get an excavator, I don't need to even get a truck. I just need probably. Let's look at for landscape business, a rake, a blower.

Let'S just see, maybe some hand shears.

Probably a bin, a tarp, maybe some gloves. This is probably all I need in order to be able to sell property cleanups. Raking out their beds, pulling the weeds, trimming the bushes. All of this can be achieved with what I call my MVP minimum viable product tools. My most valuable tools. That's what I'm going for, the ones that I must get. And I know that I can probably get a decent rake, blower, shears, bin tarp, gloves, et cetera for probably a few hundred dollars, maybe 500, let's just call it $500. Especially that blower. It's going to cost a little bit. Honestly, I could probably get away if I didn't have enough money just with a broom. So again, I'm just trying to get started. This is the minimum viable product. This is not getting a ton of trucks and equipment and all the fancy schmancy stuff. We're not doing that. We're getting the minimum. How can we make this business just get started And I'm going to collect prepayments on all those jobs that I pre sold. So remember number two, I pre sold before I even got the business off the ground. I went out and I sold to the people that I already know on my social media inside of my network. And then I said, hey look, by the way, I could do your property cleanup for 500, but if you gimme 300, I will do it. Now the reason they're going to let you do this is it's because they already know you. You're selling the people you already know like and trust. They're in your neighborhood, you already did, you went to school with them, you know their family. And so because of that they are willing to trust you without any sort of prior you being in business to get their job done. Say look, I'm going to give you this discount, but I'm going to get the job done. I don't even care if you have to do it for free, and I'll show you why in a moment. But we're going to collect on as much as possible our prepayments, which is before we even get the work done, I'm going to then go use that money to go myself some tools. So then let's assume we keep doing that. We get our prepayment, we've got our couple tools, and now I just keep going doing these jobs of people that I already know inside of my market. But now what I'm going to do is test marketing channels.

Because if I go out and I pre sell and I'm able to knock on doors and talk to a bunch of people, I'm not going to have any time to actually do a whole lot of marketing potentially. And so what I want to do is go test what's working. All right, so what, what are some of the things I can do? Well, if I have a little bit of money, I might do a little bit of Google Ads. All right, I might do a website.

Right. Those are great ways, forms of marketing and advertising. To be able to get more leads, I need to increase the size of my business because guess what, you're like, well, I'm just going to work off word of mouth. Great. It could potentially take you five or 10 years to build a million dollar business, which is completely awesome by the way. But I do believe it can be done faster using advertising and getting eyeballs on your business because no one knows about you, no one knows that you're the best person to do property clamps, the best person to paint their house, the best person to clean their windows. And so in order to be able to get that message out and grow much quicker in the first few years of business, we're going to have to do some advertising. But I want you to be able to test it. So we're going to do some door hangers, all right. And you might go to, if you're doing something like landscaping, you can go to lawn caremedia.com and get a bunch of door hangers or flyers. All right, we got some flyers in here and maybe we do some every door, direct mail. Our goal is to be able to test things out. Maybe we do some yard signs. I'm not going to go spend thousands of dollars on some elaborate online campaign or a massive billboard. I don't have the money. I need to be able to test all these different ways of marketing though in my local market. All right, number five, we're going to move forward is the rule of 100. This is something that Alex Hormozi talks about in his books. And that is every single day I'm going to do something 100 times because I truly believe you can build a home service business using this one step of the process and build a seven figure company. And that is every single day I'm going to do a hundred doors for door knocking. Maybe it is door hangers. I'm going to actually go put a hundred of those out every single day. And if you Just have this rule every single day. I'm going to do this one action 100 times. Here's the thing. What I'm trying to focus on is inputs I can't control, the outputs I can't control whether or not customers accept the estimate. I can't control whether I get more customers. But what I can control is my inputs. And doing that 100 times every single day, I can guarantee you without any shadow of a doubt, you will get closer to building the million dollar business doing that action 100 times. The output I cannot control, but the inputs I can. And so it could be doors. How many? Your door knocking. Let me just fill that in. Knocking. Okay, so door knocking, you, door hangers, you say, you know what, I'm going to go to a hundred different people and talk to them. I'm just gonna go talk to a hundred people. I'm gonna go knock on, go to local coffee shops, I'm gonna go to property managers, I'm gonna go talk to other contractors that in my market could potentially subcontract to me. Or they're kind of around my industry, but not directly. So for example, I might go talk to a tree service and say, look, you don't do landscaping, you don't do property clamps and trimming bushes and pulling out weeds. If you ever any have any work, shoot it my way. I'm gonna go do a hundred things every single day. A hundred door hangers, a hundred yard signs, 100 flyers. I'm gonna do something a hundred times. And again, at this stage in your business, you have more time than you do money, all right? So if we look at the fact that, hey, we have way more time.

Than we do money, all right, you know what? Instead of just putting money, I'm just gonna put a dollar sign. We have more time then we have money. And because of that, I'm going to use the rule of 100 to do an action 100 times a day. No one likes this. No one likes door knocking. No one loves putting out door hangers. But if you don't have a lot of money and you're getting started, this is the way to get initial inertia and momentum in the business. All right, now we've started to get a lot of leads coming in. We're doing the rule of 100. We might be doing that rule of 100 in the evening, working in the middle of the day, in the beginning of the day, but we're trying to get 100 of something out every single day to try to get the business momentum rolling. Now what I need to do is I need to buy equipment so I can increase my labor efficiency. All right? Because just having that rake and just my gloves and just the broom, not super efficient. If I get an electric or a gas powered hedge trimmer instead of my hand shears, I will go three or four times faster. If I can get a bigger blower and be able to move much faster, I'll be much more efficient, which will allow me to. To be able to get the jobs done faster. So faster.

And more volume. I need to get more jobs done every single day. How do I do that without having to hire a bunch of people is I get more jobs done faster. So instead of taking one job to take me the entire eight hours of the day for working, I'm going to get two jobs done in the eight hours because I'm more efficient. That's what we call labor efficiency. So I can use my tools and equipment to be able to increase my efficiency. Maybe instead of having to, like pull around a little in a little tiny car that you can throw in all your tools in there, maybe you get a truck. Why is that important? Because now I can haul this stuff to the dump instead of having to take a whole bunch of debris in my car back and forth three or four times. So this is the point where I'm growing my business. This might take you a couple seasons, by the way, to be able to actually afford the equipment required to expand services and do the work more efficiently. All right, Number seven is I'm going to raise prices. Why am I going to raise prices? Well, up into this point, I've been trying my very best just to get the deals and just close the jobs. All right? But at this point, I'm filling up my schedule. I don't have a lot of space left because I'm trying to do rule of 100. I'm trying to get the jobs done throughout the day. And I'm hitting capacity, which means I don't have any more time left in the day to do any more jobs. So I'm going to raise my prices because I hit capacity. I have no more time left in my day. Guess what I'm going to do? I'm going to raise prices. And so we are going to raise the dollars per hour that we are charging the customer. Now, I don't necessarily tell the customer how much I'm charging per hour, but I do give them a price. And that price is based upon how many hours it's going to take me to get the job done, and I'm going to increase how much I charge per hour. So if you're charging right now at the very beginning, maybe you're only charging, you know, let's just call it, you know, $50 an hour. That's fine if we charge $50 per hour. But here's the problem. I've got to start thinking about if I hire somebody else, if I hire an employee, am I going to make any money at $50 an hour? If I'm just working, doing all the work myself, I can make a decent living because I don't have a lot of expenses. I have my, like, maybe my truck, some tools, some insurance. I pay every month, pay for my website. I might be looking at a few hundred dollars per month in expenses. Other than that, it's all straight profit. However, this is the problem. If you actually start thinking about, okay, when I hire my first employee, what that, what's that going to look like? Well, I, I'm going to pay $25 is going to go out the door to labor. So immediately, half of my profit gone. Now all of a sudden, they're also less efficient than I am. So they're not going to get the work done as fast as me, which means I'm not going to make as much revenue in one day as when I'm doing the work, which means I'm probably going to make 30 to 40% less because of them working instead of me. So now all of a sudden, it's actually going to cost me the equivalent of like $35 an hour. Well, now I tack on like tools, I tack on the, all of my materials, etc. And all of a sudden I'm not making any profit. And so the problem that a lot of people do is they go, they're making a bunch of money and they say, oh, I'm going to hire employee and be able to double how much money I'm making. No, you're actually going to reduce the amount of money you're making because they're less efficient and you've got to pay them a bunch of wages and they're not going to work as hard as you. And so that's why a lot of people don't hire employees. And then all of a sudden they're not making any money. Why? Because they didn't raise their prices. They never made sure that when they actually hired an employee, they took into account the fact that, should I raise this $50 to more like 70 or 80 per hour in order to be able to actually afford hiring an employee so that when I take out their wages, when I include the fact they're not going to be as efficient as me, I still make make a profit. And I recommend you take some time here and keep your capacity at high, like you're booked out two, three, four weeks. Great, raise your prices. Any new jobs that come in, they're going to be charged the 70 or $80 per hour and you're going to bid them at a higher rate. You're still three, four, five weeks booked out. Great. Raise your prices again. This allows you to be able to know with confidence that you'll be able to hire an employee and still make a profit. Number seven. We're going to run the math. We're going to run the math on what a $1 million business is going to require. Let's assume that we are charging $100 per hour. Say that's impossible to charge $100 an hour. I guarantee you that the vast majority of very profitable home service businesses in the matter of just a couple years, will be charging over $100 per hour. This figure probably used to be $50 an hour. And as an average just 10 years ago, it's increasing because of inflation. The cost of wages, cost of everything is going up. And I believe that you can charge $100 per hour at Augusta Lawn Care. A lot of our locations are charging 90 to $120 per hour for lawn care, landscaping, et cetera. So if we run the math, how many hours of labor are we going to have to, you know, bill out every single year to hit this marker? All right, if we take $1 million, $1 million, and we divide that by $100 per hour, that means we have to sell 10,000 hours.

Per year in order to be able to make a $1 million business. And this is assuming all of its labor. We had a bunch of materials and extra costs for charging the customer. Who cares? We need to sell 10,000 hours per year to make at least a million dollar business. Now let's break down the math. Let's go ahead and divide that now by, let's just call it 50 weeks in the year. So take a couple of weeks off. That means that we got to sell 200 budgeted hours per week. Now, budget hours are the time actually on the job site, not how many clocked hours our crew has, but how many hours we are selling on the estimate. So we got to do 200 budget hours per week. Now, realistically, how many, how many, how many hours can an employee actually get completed in a single week. Well, let's go ahead and assume they complete 30 budgeted hours. 30 budgeted hours per week, you say? Oh, no. Well, they work 40 hours a week. Yeah, but the problem is there's also load time and unload time. You have safety meetings, they have, they drive between jobs a drive time. They stop at gas stations. So there's always some sort of a, sort of inefficiency to some degree. Right. Now what we're going to assume here is that in a 40 hour workweek, they get 30 budget hours completed, which means if I take 200 and I divide that by 30, it means I need to have probably seven employees out in the field working every single day. Assuming I'm not doing any work in the field, I need seven employees. Now you're just asking, well, am I going to only do a million revenue? No, you're probably going to do like 1.2 or $1.3 million if you have seven employees. Because there's other fees that you're going to charge in addition to just the labor estimate fees, dump fees, you're also gonna have materials. But we need seven employees. The reason I have number eight here is run the math. What size of business are you gonna have to build? Because off of the seven employees, I say, okay, well, I'm gonna need at least four trucks then, and I'm going to need certain amount of space for my shop. I'm going to need certain amount of equipment, et cetera, because ultimately back here when we raised our prices. The whole point that I'm trying to figure out here is what am I going to have to pay my employees? So, so, for example, if I am paying $80 per hour, I've got to hit what I call the rule of 25%, which means what I am paying my employees per hour. I need to be able to make sure that only 25% of that is going to wages, which means if I am paying, if the customer is paying me 80, I don't want to be having to pay my employees more than $20 per hour. You're like, well, I'm going to have to pay them 25. Great. The rule of 25% means you'll have to get this to $100 per hour in order to hit the rule of 25%. So I don't want what I'm paying my employees per hour to be more than 25% of what I'm charging the customer per hour. And that means I can then, with confidence, move into number eight and Know what my hourly rate is and then run the math on what it's going to be to build the one million dollar business. Now number nine, is your close ratio our target? Where are we going? We're trying to hit the target of 70% close ratio. What does that mean? What does the close ratio mean? Is the number of accepted estimates, accepted estimates divided by total sent. Which means if I send out 100 estimates to my customers in a month and 70 of them are accepted, that would be a 70% close ratio. I want to be at 70% close ratio all the way up until I build a $1 million business. Again, I'm assuming I'm trying to maximize growth. I'm trying to grow the business as quickly as possible to a million dollars. I am going to have be shooting for a 70% close ratio. Now, once I hit a million dollars and I want to go into profit mode, which means I want to extrapolate and pull out as much profit as possible, then I actually want my close ratio to be under 50%. Why? Because I know that if I raise prices, my close ratio will go down. If I'm, I'm still closing 80, 85% of my estimates and I'm 80% of them are getting accepted and I'm running a million dollar business, I'll keep growing, but I'm not going to be super profitable typically, or at least I can say that you're going to be leaving money on the table profit that you could be making otherwise. So I want to raise my prices until my profit until my close ratio goes down underneath 50%. That way I know I can still maintain a seven figure business, still be 1, 1.2, 1.3 million. But now I'm making more profits and I want to be making like 20% profit in my goal, ideally. Why? So that then I can afford to hire a general manager and management to take over, give them good profits, give them good incentives to run the business without me. So I want to be able to actually increase, keep increasing my prices until my close ratio goes back down under 50%, but only after I've hit $1 million in revenue. And until then I'm going to be focused on 70 for 70 cent close ratio. All right, we got to think about value versus price. Now this is how it works. It's like a seesaw, all right, where boom. Over here we have value, over here we have price. As long as the value is higher than price, the transaction will take place. All right? If I think that this drink in my mind, I'm really, really thirsty. If I think it is worth $10. Well, if it's on the shelf for $3, I'm going to buy it because value is higher than price.

This is how it works. Now the problem is this. If value is higher than price, it means that the transaction will always go through. You know what happens is so many people when a customer says no, I don't want that estimate, you know what they do? They just lower price. Because if I can lower prices far enough, I'll eventually get the bid. Eventually I'll get to zero. And this is what causes a massive amount of people being erased to the bottom in home services is they just keep lowering price. Cause if they can keep lowering price enough, the job will always get accepted. And so what I want to challenge you to do, instead of trying to lower price to make the job go through, I want to focus on increasing value. Okay? And this is why Mike Andes and mikeandys.com There's a whole bunch of resources for you to do what? Increase your value. Whether it be making new website, having, having a great brand image, all the things around your business that you can do to increase value, follow up with their customers, be able to communicate with them with automations and using copilot to be able to text them and put a credit card on file. This is all increasing value without having to lower your price. And so I'm still able to get the transaction to go through because if I'm only valuing this drink at $1 and it's cost $2, I'm not gonna buy it. So there's two things I can do. I can, oh, lower the price down to 50 cents and then guess what would happen? Value would be greater than price and I would sell this can. However, what's more important, what's, what I could also do is increase the value of this in your mind. And so instead of you think it's only worth a dollar and the price being $2, the transaction doesn't happen. I can sell you on, hey, this is gonna give you energy. This is going to allow you to be able to ace your test. This is going to be allow you to work out harder. This is going to allow you to grow muscle because you have extra energy while you're working out. And all of a sudden I'm increasing the value of what I'm selling to you and all of a sudden you're like, well that's worth like $5 now the value is higher than $2 and the transaction will go through. So focus on increasing value, not on decreasing price. Otherwise you'll be in a race to the bottom. And that's why my entire Brand exists@mikeandys.com and all my channels is to raise the level of professionalism. Because if we do that, we'll be able to continually charge a premium price and be able to offer a premium service to our customers. And that's how we change the level of professionalism in the industry. You don't want to be in a race to the bottom. There's plenty of people that will do it cheaper. Don't focus on that. Have a great website, follow up with the customer. Have professional uniforms and decal trucks and have a software that can take their credit card on file and do automations have answer your phone for crying out loud. Those are all things you can do to increase value. Now the busy season. 11. We have two more steps to build this million dollar business. Cause I don't want you to fail when you're almost there. And a lot of times what I see when businesses are growing really, really quickly is they'll actually fail during their busy season because they just get completely overwhelmed with the fact that you're going to have a spring rush. Now, spring rush, busy season, this is when it gets crazy. And for most home services, we're somewhat seasonal. There's a period of the year where we get really, really busy. And so if I look at the fact that this is January, this is maybe the summer July and this is the end of the year December, this is what for like most home services, you have this spike in demand when it comes to spring rush. All right, this is your busy season.

You'll need to prepare for the busy season because this is when a lot of people burn out.

It gets so busy and so intense. And during this season, employees leave because they're burnt out. There's so many leads just pouring in. And so how do you make sure you get through the busy season without failing? You've got to prepare for it right here. I'm going to make sure that I have all my trucks and equipment ready to go. I'm going to make sure that I have, I've hired all my team and I've trained them all up. I'm going to ensure I do that so that during the busy season, during this period of the year, I'm able to continually keep marketing and advertising to my customers because at that time everyone needs my services, demand is very high. And if I can keep advertising during the busy season, I'll be able to get Way more customers than if I have to stop taking new customers. I'm booked way out. I'm late to all of my estimates. I don't have enough team members. A couple of them walk off the job and all of a sudden I can't do my jobs. I can't follow up with customers. I'm showing up late to my estimates. I don't want that to happen. And so planning for the busy season is the number one way you can grow your business faster. Have the employees, your trucks, your equipment, the systems in place to be able to scale. Haven't. Have someone be able to answer the phone as much as possible on the weekends is even better. Maybe you get a virtual assistant to be able to answer the phone when your office is closed. The goal here is to be able to take as many leads as possible and not have to turn customers away. Ideally, you do estimates over the phone or you're allowing yourself to be more efficient, to be able to absorb as much business as possible during the busy season without having to turn off your estimates or tell customers you can't serve them. Now the next thing you'll want to do is the off season. So there's going to be three or four months in most of our business where it gets really, really slow. This could be the winter. For some people, it's the summer. If you're doing snow plowing services, winter is great. Summer is actually your slow season. So what can we do during the off season? First off, I'm going to do other services. If I'm doing that landscaping business, doing property cleanups and trimming bushes and weeding during the summer and the spring and the fall, great. I've got leaves that are falling down during the fall. During the summer, I can do some projects during the spring, people want their property cleaned up. Fantastic. But during the winter, those three or four months, I've got to figure out a different service. And so I've got to create season specific services, services that I offer during my go time during my really busy season and services I offer during my off season. This could be. If I'm doing landscaping, I could do snow plowing. I mean, that's a lot of equipment. Well, maybe I could do Christmas light installation or maybe I could do some other service during the winter that I can't do during the busy season. So. So I've got to increase my service mix. I've got to increase the service offering to my customers. Also what I'm going to do is I'm going to upsell because I'm going to create those other services, check. Then I've got to upsell my existing customers that I have had all year long. I've got to upsell and also cross sell them into other services. So upselling, I'm going to sell more of my current services to my customers. Cross sell, I'm going to sell them another service that is adjacent, a little bit different. But I'm able to increase my revenue during the off season because most home services, most home service businesses will go out of business because they're off season. Why? Because of this very, very bad thing called fixed expenses. Fixed expenses come in the form of expenses that do not go down even if your revenue during the off season goes down. So your revenue might go from $100,000 a month, but if it drops all the way down to $10,000 a month, well, you still have fixed expenses like your insurance doesn't go down, your rent doesn't go down, your utilities doesn't go down. Any salaries that you're paying your employees, they don't go down like they're still paying paid salary. Any debt, this is the one that really kills people. Like the bank isn't going to not let you pay for four months of the year because you have this big debt. So these fixed expenses, if I can keep those low during the winter months, during the slow season, you'll absolutely be able to weather the storm and build a 7 figure 1 million dollar business. I truly believe if you follow these 12 steps, you'll be able to build that business. And that size of business is required to be able to afford the management and be able to give them incentives, profit sharing and bonuses so that you can go somewhere else, go build another business, go start a different industry, start a second location, invest in real estate, go in it, do whatever you want. That's really the goal of building a $1 million business. And I believe if you follow these 12 steps, yes, it might take you three, four, five, six years to build a business. But I promise you, building a business that's doing a million dollars in revenue and every day you don't have to be there for operations is well worth 5, 10 years dedicating yourself to it and putting in the hard work. If you want more resources, there's a bunch of courses, templates, everything that you need. Go to mikeannies.com and if you want to grow your home service business, use copilot CRM.com to be able to create systems and procedures in your business. We'll see you soon.