$1M vs $10M Business: Which One Actually Makes You Richer?

What I feel is like quote unquote the perfect size business is 6 to 8 technicians optimizing over the course of a few years from $700,000, and as you raise prices up to $1 million.

I want growth. I think that's become the theme here. I just want to grow because I can, I can always dial it back and I can clean things up. And I think you have to go through those phases. I want growth. And so for me, if I'm like growing at 7% a year, which I've had plenty of experiences doing, you know, City Turf doing not super fast growth as it got bigger, it's more painful for me.

Statistically speaking, only 9% of people will build a million-dollar business. I was always talking to that 9%, and then I realized that 91% of people can't, they're not capable of it. They would break.

I have the financial, the metrics, the people, the technology. I have all this experience. I would love to roll up a bunch of companies in home services and build something really, really big. It's this idea that you need to know what you're going for and optimize for that. And if you don't wanna build, build the big business, and it's just burned you out in every possible way and sucked all the life out of you, you don't have to do it. All right. Hey Mike, how are you doing?

Fantastic. I would say, I would say thanks for having me on, but this is still like, but it is your show.

It is your channel. So what's been going on the last week? I haven't talked to you since last Wednesday.

All right. Yeah. So the past week, uh, last week I mentioned the fact that we were, I was in this conundrum. Of the events bug hell situation. I kept having members being like, "Hey, I've been reporting this bug for months." And I'd go in the back and I'm like, "I don't see this anywhere. Like, no, there's no report. I don't see them reporting this anywhere.

Why?

Like, I don't wanna call you a liar, but I don't see it." And sure enough, this week I go in there, I'm like, "You know what? I'm gonna try submitting a bug." And the AI was basically caught in this loop of telling me to report the bug in the chat, but never actually taking it, creating a report for the human to see. Oh, it was so annoying. I was so frustrated. Well, so we've decided like this, there's 90-day sprint, we have it split up in like 4 different things that we are gonna attack. And so the next 90 days we're focused on basically refactoring the events code. And then the second thing on a more fun note is we have our Claude connector that we've built for Homeworks. And so I've been playing with that, which has been a lot of fun just to see the capabilities of it. And a lot of authentication stuff and making sure like someone can't get into something stupid. So that's what we're working on. It's a, it's just in beta. We haven't released it yet, but that's your MTP connection. Yeah. But it's been a lot of fun just to be like talking to it and just using the agent line to like say, hey, I want to move this job. Like is so-and-so behind today? Cool stuff like that.

So, okay. That's cool. I think that's a great idea. And I'll be curious in the future to talk with you and see what you figured out around throttling usage. Cause that will, potentially just pound the database.

So totally. So what's, what's interesting in the world? Yeah. So like a couple of weeks ago, someone, one of the members just started building their own thing without any MCP access, without anything for this, just use the GraphQL and just started jumping in. And a lot of it was like, they didn't really know what they were doing. It was mostly using just like a browser and a cursor, like moving around.

Okay.

And they made some errors on their end and man, it hit the database like crazy. And so yeah, throttling that, we had to change our terms and conditions, like, and just update everyone, like, hey, just so you know, I know everyone's jumping, you know, jumping at the bit here, but you know, if you do this sort of thing, it's gonna— so like immediately Twilio SendGrid is like, hey, someone's like hammering out these emails that look fraudulent. And so yeah, again, like we've talked, been talking about like letting public in versus just playing in your own sandbox is very different.

And what a new world.

Yeah. And then like, do you, do you price, based upon the usage of the MCP and how many times they're hitting, or you just say, hey, you gotta be like a higher tier. So like even how we price it, because it's like a whole team that now like it's a whole thing to, to support, right? So anyways, that's awesome.

Well, I think I've got this week— last week you did the lineup, this week I did the lineup. I am very intentionally answering some of our commenters' questions.

Yep.

So, uh, please keep those coming. The more you ask us, the more we'll know exactly what to give you so that you're getting great value out of listening to Mike Andes and I chat every week. And so this week I'm going to address several of those, and I hope you find it super valuable. But I want to throw something at you first, Mike. Okay. You don't, you don't know what's coming. Okay. And I want to, and what it is, is I'm going to throw 10 questions at you. 10?

Oh my word.

10.

Oh my word.

I thought it was 10 too much, but in my normal fashion, we're going all in.

So we originally thought an hour for these podcasts and it's quickly become 2.

I'm going to blow that up, but I'm going to make you answer them fast. It's like, okay. You have to give me an either-or answer and you can't give me any explanation. All right.

Very non-politically correct.

Yeah. Yeah. Yeah. Okay. And, and then I will, if I comment, I will just say agree, disagree.

Okay.

We'll see. This is what I'm most curious about. I was trying to come up with some stuff. Where are we going to disagree? Because I know we, we unfortunately agree quite a bit. Maybe that's a good thing for the viewers because like maybe that means it's truth. I don't know. So agree, disagree, or maybe I'll just say interesting. We'll see what your answers are.

Okay.

So let's start at the top. I think this will be pretty quick. Okay.

All right.

All right. So I had to, I wrote these out. I gave them some thought. All right. More dangerous, growing too fast or growing too slow?

Growing too fast.

Disagree. No, I, uh, 100% agree. Okay. Sorry.

Okay.

I should have wrote down my answer. I 100% agree.

Too fast.

Okay. I'm supposed to be quiet. We're going to go fast.

Okay. Under $1 million.

That's the business. Would you rather have a world-class operator or a world-class marketer?

Am I trying to grow?

Yes. Well, when would you not want to grow? Yes. My, my— always.

Yeah.

My default is, yeah, you're trying to grow.

Okay. If you're trying to grow, then a world-class marketer, I would say.

Okay. I agree. Same question at $5 million.

Okay.

Would you still say marketer? So you're at $5 million, you're trying to grow. Would you say marketer or would you say operator?

Operator.

Agree. I'm sure we're going to disagree at some point. Okay. All right. Again, at $1 million in revenue, what's more important, better pricing or better production efficiency?

Are we trying to grow?

Always trying to grow.

Always trying to grow.

I don't know. I don't know why you wouldn't want to grow. Um, and I understand that sometimes maybe you don't care, but yeah. Yeah, just assume I want to grow. I want you to grow.

Um, I would say pricing.

I agree. Okay. All right. What belief about business have you changed your mind on the most in the last 2 years?

Oh, okay. This is interesting. That, that you should always grow your business. Okay.

Interesting. Okay. Um, harder for a founder to replace themselves in sales. Or operations?

What service?

Ooh, that's a good question. All right, so we'll make this a two-parter.

Okay.

And well, since the following is generally green industry, first we're going to go with like mowing and bush trimming. Harder to replace yourself with in sales or operations?

Operations for that one.

Agreed, felt easy. Now landscape, the other side of the industry, that's design, build, installation.

If you're trying to scale, man, you need—

well, it's where you're trying to replace yourself and get out of that.

Okay. Probably in sales. Yeah. You'd move up to sales. All right.

Dang it. We still agree.

All right.

Um, more expensive mistake.

Okay.

Bad pricing or bad people?

Oh, bad people.

Yep. Okay. 3 more. More underrated recruiting or training?

Training.

Ah, we got one. Okay. I went recruiting on that one.

Okay. Well, it depends what position are we talking about? I'm not, I'm not telling you crazy. Okay.

It's like, I just— yeah, I agree. And that is the nuance. That is the challenge. When I was writing these, I was thinking about them. I didn't think about these little questions you might have, and they're good ones. So I was just thinking in the business in general as the business gets bigger. All right.

Two more.

And you're right, it depends on where you're at in the business at that stage.

And if it's a technician versus like a manager.

Yeah, 100% agree. So at $2 million in revenue, would you rather— and you're trying to grow, let's be clear, you are— you care about growth. You don't— you care about growth. I got it that way. At $2 million revenue, would you rather have 25% net profit growing at 7%, or would you rather have 7% net profit growing at 25%?

The former, because I'd take the profit and invest it back into marketing.

Yeah, it's a little— that's a little tricky one. So I went the following.

Oh, really? Okay. So growing 25% with 7% margin.

Yes.

Okay.

Yeah, I think that's a good one to talk about in the future.

Okay. I'm assuming that's the snapshot. You like the snapshot better than like the future prospects.

I want growth. I think that's the theme here. I just want to grow because I can, I can always dial it in as Mike. I can always dial it back and I can clean things up, but I want to, and I think you have to go through those phases. I want growth.

Right.

So for me, if I'm like growing at 7% a year, which I've had plenty of experiences doing, you know, City Turf doing, not super fast growth as it got bigger. It's— I don't— it's more painful for me.

I don't know, man. Okay, so if you got $140K profit, that's 7%. Okay.

Yep.

And then if we have 25% profit, that's going to be— what is it— $500,000. And so theoretically, I can spend $360,000 on marketing, and all I have to do is go from 7% annualized growth, so that's 140 to 25%, 5. All I have to do is make up this, like, all I need is a 2-to-1 ratio on LTV to CAC.

I agree, I should have put rails around this. This is the world you have to live in for— I mean, like, yeah, so in my analogy, like, I agree, if the analogy is, hey, um How could I fix it like that? I want more money so that I can apply money to marketing.

Right.

But if I have to get stuck living in a world—

okay. Snapshot. Yeah. It's stuck in this world. Got it. Yeah.

Okay, cool. So I thought that one, I just wanted to like, how would you think about it? Like, so yeah, because 7% net would suck for the long-term. I wouldn't be happy with that.

Right.

And so, okay. One $10 million location.

Oh yeah.

Or 10 $1 million locations.

Ooh, okay. Okay, I can't say that depends. Ah, are— what are we max— what are we trying to optimize for? Like profit?

I just want to know what you— what your philosophy is.

What I want? Like what I want?

Yeah, we'll go with what you want. Maybe even— maybe what you would want versus even what you would advise a lot of people to do. Like what, what would matter to Mike?

Okay, what I would want would be the 10 locations. From a profitability perspective, I would go one location, $10 million.

Oh, one location, $10 million.

Yeah. But I would want the 10 location one.

10 locations doing $1 million?

Yeah.

Why would you want the 10 locations over one location if the one location is more profitable?

Okay. So the first, so the $10 million—

maybe I should have read your book. I don't know.

This might be covered. The $10 million location, for example, would not work in my market.

And yeah, totally agree with that. And that's a, that's something I think that can lead a lot of people astray. They hear me talk or some other people talk with the big business, they're like, what's wrong with me? It's like, dude, I'm in Dallas Fort Worth.

Yeah.

I'm not in whatever city you might. Yes. Okay. That makes sense.

I personally would be doing 10 locations from myself down to Seattle. Um, and I would get that way. And then I would have each of those million-dollar locations have 6 to 8 technicians with one working GM, no overhead. Other role, and then I have a centralized office in one spot. Um, that being said, if I lived in Seattle, the $10 million location would probably be, uh, much more feasible.

Yeah, so you're just building to the market?

To the market. And then also, like, I really enjoy having the ability for them to get up into a GM role and getting out of the field themselves, the technicians, and kind of having a path for that. Um, And I found it harder, like to your point, like the larger locations, the recruiting game becomes the hardest part because the level of skill required is so much higher.

When I run the bigger—

Correct.

Business. Yeah.

And so I'm much more of like, I don't want to be going to these locations. And so I want the level of skill required as low as possible. And if someone drops out, I can put someone else in pretty quickly. And the downside to that is I'm dealing with a lower skilled person. But they're also cheaper and easier to find because I've dumbed down the skill level down to, hey, you need to manage a few crews, 6 to 8 technicians tops, and do simple services. But from a profitability perspective, centralizing everything, assuming your market can bear that, I would go that route to maximize profit.

Yeah, that's a good explanation. Do you think you lose— and this wasn't planned, but I'm really curious about—

it kind of rolls into our first question.

Yeah, yeah, it does kind of roll into the first question. Does this— yeah, so it's a little bit more of a, as I hear you describe it, a little bit more of a McDonald's concept in the sense. Now, I actually mean, before I say that, does this necessitate, and I assume it necessitates keeping the service structure pretty simplistic? We offer a few services of a certain type. Is that, is that a given?

Yeah, the other reason why I would tend to for the 10 locations with $1 million is because of that. Like almost every service in home services, I can build a million-dollar business.

Yeah.

And I think what happens when people stretch past a million, they start hitting the churn, catches up with them, and all of a sudden they start adding more services. And so now they have this basket of 15 services they offer to get to $4 or $5 million. And that's not a business I really want, but that's just, again, I'm looking at the generic, what people will do instead of honing in the one service or two services or the simple service. Those add more complexity to the business to add more revenue. Yeah, that's generally why we would do it.

I like the answer. Back in the day, early days of Service Autopilot, I think this was more talking to some guys that were really big in commercial, but I had observed, and maybe my sample size was too small, there are a whole bunch of individuals running locations that were about $3.5 million. And again, sample size could have been too small. I think it was predominantly commercial I was observing this. The commercial guys tended to be more aggressive, I guess you'd say, than I noticed in the residential space. And I also think I've always believed you could build a commercial business bigger in top-line revenue because it took fewer customers to get there, so fewer moving parts in some ways. Um, yeah, so I've always kind of wondered, what is that perfect size for a location in most markets? So your, your number's around a million in residential is what I'm hearing.

Yeah, it's not so much the revenue dollar amount, it's actually just the number of technicians being managed by one person.

That makes sense. Actually, that makes the most sense.

As soon as we go to 9 or 10 people, 11, 12, a founder can usually manage that many people, but replacing themselves gets very difficult. And so what usually happens is they have to get an operations person or another full-time non-revenue-producing team member. And that's usually when I see this wilderness of profitability between about $1 million and $1.5 million. You gotta grow through that. As soon as you get a secondary you know, ops manager, office manager, you get a bigger shop. So you kind of have to scale pretty quickly up above 1.5. And I, yeah, like this kind of goes into our first question. Um, yeah, but it's the whole concept of like that sometimes for most people growing with this perpetual treadmill of I want to keep growing is the things that causes burnout and like mental health stuff. And this is why I said 2 years ago my belief about business changed. Is, and it's because it impacted my family and people close to me so, so deeply. And the cause of it was the addiction to constant growth.

Yeah. So tell me again, so everybody hears it in case they missed it. What was your answer to that question that you changed your mind on?

Yeah, that, that we should keep growing the business. We should always just be growing because that was my mentality back in the day. It was my mentality when we started Augusta. And I quickly realized that there were people that started their business for freedom of their time, spending time with their family, being able to take some vacation, not being locked down to a 9 to 5. And because they had subscribed or even watched what I was doing or wanted to grow a bigger business or other people growing bigger businesses, they started doing exactly the opposite of the whole reason they started the business, which was to have time, have freedom. And a lot of it, like it's mental health stuff. And I know you and I have talked about this before of like people even in your circles where it's like, it's just like they, they lose it, they snap. And I, I've just consistently seen that the only way to lose in business is to quit. And so I always mitigate for disaster, which is quitting. And so if, if pushing someone past their personal capacity is going to cause them to quit, I just mitigate that hardcore. And so another thing was I just kept seeing on the Turnaround Show all these businesses at $1.2, $1.3, $1.4 million. As this really unprofitable time because they have to go hire 2 or 3 overhead roles. And now all of a sudden they're not making any more money than they were when they had 1 or 2 crew members and they're really profitable and they had raised prices. And a lot of times it's because they start hitting where churn does equal new growth and they're not— they're stalling out. So they start pouring more money into marketing, they reduce— keep their prices low, and all of a sudden you have a business that's unprofitable, deep in debt, and stall at 1.4, 1.5. You don't have enough money to pay a really good ops person. But you don't, you kind of need to like get everyone working out in the field. And so it's hard to hire some dedicated to operations and really managing the team. And so for me, like, I think if I was talking to— statistically speaking, only 9% of people will build a million-dollar business. And I had to be— I was, I was always talking to that 9% back in the day. And then I realized that by forcing everyone into this one model, or like grow to a 7-figure business, that's like the starting line for where you start entrepreneurship. I was, 91% of people can't, they're not capable of it. And it's no shade on them, it's just that they would break. And like seeing that live up close with someone caused me to rethink the thought that we should keep growing. And that's why now I'm much more of the opinion, like optimize for the smaller size that you can manage without getting overhead. And then if you make it really profitable and you're, you're 20, 30% profitable and you wanna make the next jump, now you have the cash reserves to go hire a good ops person and get past 1.5. So anyways, that was a long answer.

No, no, that was a fantastic answer. I, I'm really glad the conversation ended up going that direction. In fact, I kind of wanna continue it, but I wanna, I guess let me tell everybody what the first question, what's on our docket was. And basically it was this idea of how big should I grow my business? And it came from someone in the comments asking, like, how big should they grow? And there was more context to it. If I remember correctly, they were around $700,000, approaching $1 million, and they're trying to think through how big should this business be. I think it's an— it's one of the single most important questions that you can ask yourself. And I have a couple thoughts on this that— I mean, Mike, frankly, you really articulated it well. I tend to live in this world of I want to grow things bigger and bigger because to me, I like forward progress and improvement and growth. And so that stimulates me. And we're all different people. We all want different things. We care about different things. We have different priorities. And so for me, bigger is better in that, but I'm not really like, you also have to know about me. I'm not a guy that tries to optimize everything for myself. And I don't really, I'm, I, this doesn't even probably mean anything because I'm very well off financially, but I, there comes a point where I also don't believe in optimizing for more money. However, and the reason, only reason I thought to say this, because I think most people I know who are as successful as I have been or more are still optimizing for more money in a massive way.

Yeah.

And it becomes more of a game than anything else or an accumulation thing. So, uh, that's the reason why I said that. I think it's a trap, like it's understanding what you want to get in life. I think the ultimate, like, power move in a sense in life is saying good is good enough. Like, it's like, I'm good. And versus always going for more. So I do want to put that out there and let you know that that is my wiring. That's what I believe. But I still like growth in business because it feels like improvement in business. But man, you really hit on something that I'm aware of, but I don't give it a lot of thought. And that is that most people— and I've definitely talked about because back when at Academy we would talk about this. It's this idea that you need to know what you're going for and optimize for that. And if you don't want to build the big business or you've tried and it's just burned you out in every possible way and sucked all the life out of you, you don't have to do it because everybody around you is saying they want to do it. And to your point, the data says most people will never do it. And so I think that's really good. And to make a point on that, one of the questions I asked you was the first question: what's more dangerous, growing too slow or growing too fast? And when I wrote this question, my initial answer was growing too slow. But I'll, but I'll give you why. Because I would have never thought this except you said something, Mike Andes. And, but I changed my mind because without question, it's actually, it's for sure growing too fast because people run themselves out of money. They burn out, they destroy marriages, they destroy companies, they destroy relationships with children. There's no question that's it. But my first inclination, had you asked me that question, the first words that might have come out of my mouth would be growing too slow. And that's probably technically the wrong answer, but for a lot of reasons, I actually think it's the right answer. And here's the right answer, or why I think it's the right answer. What I know, what I worry about for, for a lot of people is there's growing— there's this idea that you don't keep growing. And maybe that's, uh, okay, but that's only okay if you do it the way you teach, and that is you grow a really profitable business. Unfortunately, what I've seen is there are a lot of people that stop growing, but they never— they— if you grow big and you grow fast, you have to learn a lot of skills. If you don't choose to grow big or fast, that doesn't mean you don't have to do the hard work and learn all the skills, because if you don't do that, then you don't have a very profitable business. And that is a— that's the flip side of the coin. And that is destructive as well. I mean, there's so many individuals that have smaller companies that work 70 hours a week, and it's them and a couple of guys, and they've done all the same destruction in life as they did as the guy building the giant company that went too fast. So I see that too. And the reason— going back to my question, the reason I thought too slow is one of the things I've most observed You said it. I don't remember how you said it, but you're just— I don't— you'll, you'll probably know. It was something about keeping people in business. I don't know if that rings a bell, but you said something to the effect that you can make it in business as long as you don't screw it up. I don't remember how you worded it.

Does that mean quitting is the only way to fail?

There you go.

Okay.

Now, why might you quit? Sometimes I think it's you grow too slow and you don't get past certain milestones and you're still stuck working the 70 hours a week. Or more and you burn out and you're just so done and you could have stayed in the business, you could have made it, but you didn't learn and apply some of the really critical lessons to get more help inside the business, to take more stuff off your plate or raise pricing. So another long answer, but to kind of piggyback on what you said, that's the other side of the coin that I worry about. So probably the secret sauce, whether you want to just grow to a certain size or you want to grow really big, is In either case, there are really, really critical principles you've gotta learn and apply along the lines of getting clients and pricing and not doing too many services and not spreading yourself too thin and saying no. And whether you're big or small, if you apply those things, the odds of you staying in business long-term, being successful, go up by exponentially.

Yeah, 100%. Like, I think I always go back to like, it's supply and demand and the fact that if demand is greater than supply, I have an option. And that is I can either— I call it go into growth mode, which is I buy more trucks, I hire more people, I continue to market, I continue to expand my capacity in terms of asset capacity and my labor capacity. Or I have this other option of raising prices, i.e., dampening down the demand and increasing profit margin. And I think the thing that I've fought hard for, and this is like actually the reason for the Copy and Paste Millionaire book, it was all the logical side of what I'm talking about, but the actual crux of it, I saw so many people quitting around this trying to get past a million and just scale, scale, grow, grow, go into debt, have unprofitable years at the expense of, oh, I doubled in revenue. I think it's okay to like take a year and—

Oh, I agree with that. Even if you're in growth phase, I totally agree with that.

And like you mentioned a couple months ago, is like having plateaus where you jump and then you plateau, you jump and you plateau. And what I see people do is they just, 6— 0 to 60 as hard as they possibly can and ramp straight up without taking those— that one season where, hey, we're going to raise prices, our close rate's going to go from 60% down to 40%, but we're going to put $150 grand in the bank and we're not going to keep going paycheck to paycheck and putting pressure on the kids and the family. Because like, those things is the reason you started the business, and we lose sight of that sometimes. And I think a lot of it is we are comparing and So I have really pivoted hard towards this, like, you either in growth mode or you're in profit mode, and you gotta choose one or the other. 'Cause to say that I wanna be profitable, but I also wanna grow by like 80% this year from $1 million to $1.8, like, you're kind of speaking out both sides of your mouth. Like, which one are we doing here? Yeah. And so we've tried to create two very distinct tracks of business. I'm in growth mode or I'm in profit mode. And then we give recommendations around like, you wanna grow as fast as possible, to your point, past a certain size. 'Cause if you're $250,000 annual revenue business, you will burn out. Like physically you just can't do that long term, like 20, 30 years of that. You just can't. And so to your point, that, that will also cause someone to quit. But also, I, I see the same thing happen when someone hits the ground running, $300,000 their first year, $1 million the next year, $2 million the next year, and all of a sudden they have $500,000 worth of debt. They're not making any profit because their cash is so— they're just, they're demoralized and they just throw in the towel because it's on paper, they're insolvent. They have more liabilities than they have assets. And it's— they've built the infrastructure to the point where even raising prices is difficult to make up for the huge gap they've created when you have $20,000, $30,000 a month going out to debt payments. So anyways, that, that's my, my— the real reason why I actually wrote the book and talk about this and talk about this, like what I feel is like, quote unquote, the perfect size business is 6 to 8 technicians optimizing over the course of a few years. From $700,000 and as you raise prices up to $1 million. I also think though, for the 3, 4, 5% of people, you take that money and then you go hire a great operations manager, you learn the skill of leadership, you get sales, operations, admin covered and become the CEO and build a $3 million plus business. But yeah, that's my contrarian take now. And it is, it changed a lot. Like just seeing it so close to me of what it did to family, what it did to someone's life, everything they had built, and just realizing that, like, I have to be very careful to put that in front of anyone because statistically speaking, a very few, few percentage points of the population can handle that kind of psychological stress.

Again, going back to Service Autopilot Academy, I was naive to how much debt people carried to get themselves where they got, which wasn't very exciting. And just the unbelievable damage that came from it. I'm very, I'm very— like, when we had Academy, my, uh, my contest that we had where, uh, where you're, you're— the Academy members were going for competing for an annual vacation, a $15,000 vacation we'd send you on where you had to prove changes in your world. I made 50% of the score personal, not business. Yeah, because the destruction— it's everything you said. Like, we all start out in business and we say we want freedom, we want this, and then we find ourselves in traps greater than if we had a job. And, and there's just so much damage that comes from that. So I 100% see that argument, and I've seen that live out. Where I always get a little stuck is I think maybe in the Service Autopilot world, I saw a large self-select of bigger companies. We had a lot of bigger companies. And so you, you meet a lot of the people that are going to build the bigger things. And then the other part of me is that there's a part of, like, I think a little the way I'm wired. I've worked with hundreds and hundreds and hundreds of people over the years and just, I've known so many people. I generally feel that a lot of people could be and do way more if they were just exposed to people doing bigger things and way more. Like, it's within them. They're completely capable of it. And so there's this part of me that also— it doesn't negate anything you said, I agree. But there's also this part of me that's always looking at people and thinking, hey, it's all inside of you. You are fully capable of this. We just need to get you doing these few things consistently, and you could transition from the business you have now to something— you're so close. That's, that's like the best word, the words you're so close. I just see that with so many people. And so there's this part of me that like my heart for them is like, you can do more, you can be more. And so that's a little bit of also why I like my messaging or I've gravitated to this messaging of go bigger. But I think the way you say it is, um, is wise. Like it's, it's, it's an important picture to paint both sides of this.

Yeah, what, what we do, we actually have 3 different capacities. So we have asset capacity, we have labor capacity, and we have personal capacity. And so we measure every single month for the owners of like, and I talk about like people could calculate it themselves, but like how much revenue can we do or how many customers can we serve using our assets, our trucks and our equipment, and how much can we do based upon how many employees we have. But then the hardest part to quantify is the personal capacity. Because I can—

ever expanding.

What's that? Sorry.

It's ever expanding, hopefully.

Right. And that's, that's the part that's so beautiful is like so many times people get the victim mentality like, oh, I can't. But the beautiful thing about personal capacity is I don't have to spend anything now with the, with technology to be able to extend my personal capacity. And in the short term, any of those 3 capacities, if you go past it. So for example, if you have 3 trucks but they're running 7 days a week, if you have 3 employees but they're all working you know, 60 hours a week. In the short term, if you extend above capacity in any of those 3, you'll make more money in the short term. And in the short term, if you extend above your personal capacity and you're working way more hours, you're stressing your personal relationships, your body's giving out, and in the short term you make more money, but in the long term you quit. Like, long term, the truck breaks down, the employees leave on mutiny, and eventually, no, your wife gives you the talk. And, um, how we've always looked at it is like when you, when you're coming up against those capacities is the time to go into profit mode. But then you got to look at your lowest capacity and increase it. So like, if the reason I can't grow is because I need to buy more, another truck, like increase your asset capacity. If it's because I know I can't get any employees, you got to increase your labor capacity. And then the challenging one to, to really quantify is that personal capacity. But it's so beautiful because you can get around the right people, you can listen to books now and like You know, I learned so much from you and we never even met years ago. And so the ability to do that now and increase your personal capacity is the part that I think most people don't tap into. And I actually have kind of thought of it as it's pride. And the reason people's personal capacity doesn't grow is because of pride. They're not willing to go in the right rooms or admit that they might need some help or get a coach or read a book because— or go into a podcast or watch a video. And so that's why I've always said like pride is the enemy. Like ego is the enemy comes from the Stoic thing. But like, um, pride is the enemy because ultimately you can increase your personal capacity. Yeah.

Which is my belief and kind of my want for people in general. That's very good. Is all of this covered in your Copy and Paste book?

Uh, generally, yeah. Like the part that, so when I saw the, the question on the docket, uh-huh. I was like, hey, well I, it's one thing I've never talked about and there's like the reason for the book. It was all the mathematical reasons as to why a business should do it for most people. And I talk about how like, hey, I'm going to give you the roadmap to a big business, but most people should stop right here and right here.

Like, what's that? Is that number a million?

6 to 8 technicians, raise prices.

And that's a better way to think about whatever the revenue sizes of a tech.

Yeah.

Which you're saying 6 to 8, what a manager can easily manage without 7 people. Yeah.

Book yourself out, take a vacation, have a 20, 30% profit margin over the course of a few years. Yeah, like all of that. Like I talk about the math of why it makes sense, but the part that I never shared before is the fact that that was a result of seeing time and time again, like one of the biggest reasons why Augusta locations closed down is divorce. And when it came really close to like my family and seeing a, you know, someone's business go to nothing and it was that going, trying to press to that $2 million part and I realized that like me saying that or putting that in front of people was gonna cause damage. And the part that I felt bad about, and the reason why I felt I needed to write the book was, if I told people they should keep growing and I just told them how to keep growing instead of how to become profitable, is no one would come back to me when their family fell apart and blame me. Because what I was saying is true, but it was only true for the person that had the right level of capacity personally. And I just had to realize that most people don't. And I'm, I will do my best to try to increase their capacity or give them the skills, give them the knowledge, give them the education, put them in the right places. But, um, yeah, I, I, I felt more responsible for the content I was putting out in terms of how I say it.

I like it. If you were to, to our question here, how do I know what size business should I build? If you're trying to answer the question of, if I'm trying to answer for myself, what is my capacity? What's my capability? What capability is even limiting? Because it's a temporary thing. Our capabilities should grow. But is there— are you able to articulate how I would think about that for me if I was asking the question in terms of what my capability is or capacity?

I usually actually try to reverse engineer it. I say, what size of business do you need to satisfy the goal? And so if the goal is, hey, I just want to not work a 9 to 5 and I want to be able to have a couple of weeks vacation with my family and that phone Over there it doesn't ring from customers. Okay, well what size of business do we need for that? If you're, if you're saying, hey, I want a private jet, we have a very different size of business we need to build. And so I like to think of it that way because otherwise we just get on this treadmill and it's like, well, I started a business and like, I wanna do a million. You hit a million. Like, I remember when I hit a million and I was like, when I hit a million, I will give all my money away, everything over what I need. And I'll just like give all, like, I'll just be philanthropist. Like, I'll just give all the money away. Cause I thought a million dollars was like everything.

Then he didn't really—

"I gotta get 10." They hit 10, "Gotta hit 100." So like, the whole idea of like getting off the treadmill and I have seen, like I see so many P&Ls from small businesses and I consistently see people doing $900,000, $1 million, $1.1 million that have built the business over 5, 6, 7 years. It's in profit, it's making 20, 30, 30+ percent profit. And then I'm looking at a $2, $3 million business where the guy's saying, "Hey, I got 2 weeks or else my wife's gonna leave me and I got $500,000 worth of debt." "My ops manager just walked out and I don't know what to do." I just started this new thing called the Confession Booth and people call in anonymously and we garble their voice with AI. And on the most recent one on Monday, $1.5 million business, the guy's crying on the show and he doesn't know what to do. His employees have left, he doesn't have any money, there's stress in the family. Like, I have seen it so many times where I have to just like, okay, step back and realize that like sometimes speaking to how I think of the world or how I think about my business is actually my ego speaking down on other people that might not have it yet. And so I don't know, it's strange because I also like to talk about big businesses and like multiple levels of management and I've done like, that's my business. And so sometimes it's difficult to say, hey, I don't think you should do that. Not because you're any less than, but because your goals are a lot smaller and you'd be just fine with a smaller size business. Uh, so I usually like to work reverse back from what's the goal, cuz I believe that the business should serve you. You should not serve the business. And a lot of times people flip that the other way around.

Yeah. And the argument would be you can always change your mind. You can build to whatever you want. You could say goal number one, we're gonna build a $700,000 business. It's gonna look like this, it's gonna generate this income, that's gonna be golden. But then you find you've become this different kind of person, or the kids move out.

The kids go bigger.

Yeah, whatever. Yeah, yeah. I know. I think it's very smart. We, uh, one time I did this session in Academy with, uh, you know, Jason Cupp. Yeah, with Jason Cupp. And we had this debate and it was a whole session and I was on the go bigger side and Jason Cupp was on the your side.

Okay.

And, uh, he is, I would, I would say he's probably pretty firmly on your side. I think I would be speaking correctly, but I mean, He's in— and I'm not actually— I would say I'm on your side too. I'm like, I think this is really well said. I, I, I have to create some debate. I love the bigger conversation. Like, I, I love the bigger business. I have a lot of my friends own big companies with significant wealth. I love that world.

It's ex—

and I didn't live in that world forever. I, you know, I grew into that world. I love it. And it just stimulates my brain. And so where I'm going with this though, so I can talk both sides of this, but I gravitate towards the bigger. And so I took that position. We were saying, what would we personally build based on everything we know? And I, of course, went bigger, which is what I've always done. He took your side and he would have just built an incredibly well-run, under a million dollar business that just gives you an incredibly good life. And his arguments were all the same arguments as you have. That's what most works for most people. He's got a lot of skills. He's seen a lot of things. He knows, he advises people running massive companies. And yet, um, he, he, he would have argued that that is the— I don't know why I brought him into this other than I've had this conversation before. And I think it's a really solid argument, which goes back to the question and, uh, of what kind of business should I build? And so to me, the starting point, I did have this as I was thinking through this question, is it starts with what do you want? Like what, what size business do you want that, that you believe you can build? I think there's this element initially of you just got to believe something. Like if you tell yourself, I'm going to build a $10 million company, but you don't believe any part of that, you're— and you're going to make all kinds of decisions that are probably wrong for the business, swinging too big, spending too much money, trying too expensive of marketing techniques too early, buying maybe too big of equipment too early, too big of a— I don't know. I don't know what decisions it leads to, but I do think that the more, most, more realistic you can be about this, the better. I, I do think it's critical for us to believe, like we hear people like Elon Musk and all these, these other extreme stretch goals that are almost unbelievable. And that works, I think, for a few people, but it does not work in my opinion for most people, nor does it work for the team inside their companies. They just don't believe it. They hear it as just a bunch of talk, like whenever. And so I do think there's this place where you've got to kind of set a goal that you can really see yourself getting to it. And then you set the next goal and the next goal. That is, so where do you want to get to? What do you believe you have the tools to build right now? And then, and then just keep, you know, keep the door open for going in a new direction should you find that you love this thing and you want to go bigger.

Yeah. Like life changes, your goals change. And then if assuming that you've been running a profitable business and you've been investing in yourself, your personal capacity can be ready for that next step. And I think a lot of times what got someone to a million is the exact same thing they have to deconstruct to get to 3 million because now they have to learn the skill of leadership. And that's the part where I feel like as much as like some of those elements came natural to me, and I can sometimes discount just how difficult it is to get managers to work, mid-level people, people have lots of skills, and then I see people beating their head up against that. And putting themselves in a really bad financial position. And honestly, like, the mental health thing is so humbling. It just is. It just, it brings you to this point where you're just like, man, like, I'm a chemical away in my brain from being like that. And it just humbles you so much. And so I'm really like, it was a horrible experience those several years, but like, it was also, and it didn't happen to me, but someone very close to me. And so it was very humbling to realize just how, fragile this brain is. And I would never want to put someone in that place. Like, I don't care who they are, my worst enemy. And so, um, that's really where the perspective came from.

When you're telling someone a million dollars might be the goal, are they— do they— they probably just need an operational type person. So that's your GM. Is your GM generally just an operational person?

Yeah, so we have what we call a working GM, which means the GM still is out in the field producing revenue, assuming you're simple services, because we're trying to automate sales with instant quotes and over the phone. And then the admin side, we're trying to keep where we don't have to hire an office person. So that would be a VA or a call center, for example. We have command center at the Augusta, but like people can do this elsewhere. And then the objective is that that GM is really focused on operations. And they are managing the team. They're the person that they call if there's mistakes, if there are issues. Like all doing of the work goes through them. And that's a role that I can usually get a technician that's been with me 4 or 5 years. I can teach them how to train someone up. I can give them systems that are simplified, give them recurring revenue so they don't have to sell big projects and they can run with it. But yeah, that's what we call our working GM.

So I would've said, so somebody not living in the Augusta world, I would've normally said for most businesses to get to $1 million, you're going to need somebody key in the office that's answering calls, scheduling, doing things like that, shared with the potentially the owner. And then you're going to need an operational assistant manager of sorts. Would you agree or disagree with that basic structure to get you to close to $1 million?

I think it depends on how fast you want to get there. I would agree with the sentiment if it's more like, hey, I want to do this next 3 years. 2 years maybe. What we see is the most conservative route to get there is actually getting to like more like $600,000 or $700,000 in annual revenue and then just raising prices whenever demand is higher than supply.

Is this just an owner with X number of crews?

Correct.

So the owner's doing everything?

Correct. And then once you raise prices, like for example, on an $800,000 business, if we do one price increase, we only, we only raise prices by at least 15%. So that's about, let's call it $120,000. That's enough. That one price increase at $800,000 is enough for me to go get I got a working GM that can manage the business and I can either A, start another location or I can do a different business or go on vacation for a couple weeks and give me a little more flexibility, assuming I have those 20+ percent profit margins. But it's a more conservative path. And I think to your point, most people to be able to scale in a matter of 2 or 3 years to a million, you do need someone full-time in the office. You do need someone to be able to help you with operations, manage the crews so you can focus on sales more.

Tell me again, in how many years?

I would say if you're trying to build to $1 million within 2 or 3 years and you're trying to go very quickly, that's when typically we see the owner needs to focus on sales exclusively. And we do have owners that do that. They're like, hey, I want to go there faster. Great. You're going to need someone kind of like, to your point, we call it office operations assistant that manages the crew so you can focus on sales. You got to just be in there just focusing. That's, that's the engine of growth. And so traditionally, the percentage of someone's day spent on sales is very indicative of how fast they grow. And so the faster they get operations off their plate, the faster they can get to that million-dollar marker.

Yeah. So the way you describe this, it's a little different than what I've experienced in terms of who you need to get to a million dollars. And but I think it's— correct me if I'm wrong— I think where, where I would hold a different opinion is because what I tend to see is most people are complicated. They're doing too many services. So tell me if I'm correct here. I'm imagining that you're saying to pull that off, we're going to keep this to probably just a couple of services like mowing and something else. Is that what you're saying?

Has to be sold over the phone or instant quotes on our website. So basically for us, it's like mowing, treatments, property, basic stuff. Okay.

So this takes us back to last week. The guys that I see running the most successful contractor models, maybe one of the reasons why that works for them is not about the contractors. It's the forced simplicity. Like, you don't normally hire a contractor that's doing 90 things. And I don't see a lot of contractor guys that are providing 9 different services using 9 different contractor types.

But what's funny is, is that's what people think. I'll go get contractors because I have the 9 services, so I should go get contractors for the most complex 4. But like, what they do is they get contractors to do a thing. Yes.

So then the business becomes becomes a thing, mowing, whatever, and then one guy can run the whole business. Because you see this, I've seen this now multiple times where it's like one person and maybe an office person, or one person, even one person is running. Frankly, I've seen contractor guys running multiple millions of revenue with just an owner and maybe one additional person. That's it.

Yeah.

And it's so I think I'm glad we got here because this is a critical distinction. The, what you're describing is not the way I would normally describe what it's gonna take to get to a million dollars. But the reason for that is I see near nobody build a simplistic model of one or two services only. Everybody's doing 4 to 8 service, 4 to 7 services or something like that. And that creates so much complexity. Then you need more team in the office. You need more.

And it's very hard to say no. Like when you're at 200,000, 300,000, for example, and like, I wanna grow a bigger business. It's very hard to say no to a service. When people are offering you money.

Yeah, yeah.

And so it also takes longer to grow a million-dollar business if you're just going to use one service. Like you can extrapolate the math pretty quickly if you just do mowing and treatments versus also doing a, a paver patio and a hedge and installing seasonal color, like very easily able to grow a faster business. It just, what's the quality of the revenue? And to your point, like you mentioned last time, you don't even get into anything that's not recurring. And that's kind of the line we've drawn in the sand. And a lot of times what happens is people grow the million, $2 million business even inside of Augusta. And then they actually take a year or two and they realize, oh, I've got to like rechange my percentage of, hey, it's 30% recurring to now I got to get this to 70, 80, 90% in order to make this something I can, I can go take a vacation for a few weeks. Yeah.

Yeah. Let me say one more thing on this topic and then we'll move on. How— well, actually, before I do that, is there anything else you want to add to this that you feel like would answer the question?

No, I think this is probably one of the most anticipated questions from the owners at Augusta. We talked about it last month.

Oh, really? Okay.

Yeah, because this is their top— this is their always their debate is like, do we go to the 3-month $2 million, or do I do the one location and copy it again? I think the copy part is a lot to do with your market and whether or not you want to start dealing with a lot of mid-level management. But I've been trying to be honest, like from a profit perspective, the bigger business in one location, if your marketing can sustain it, if you have the skills for leadership, it's usually the best thing to do.

Yeah, actually, this became such an interesting conversation for me even just to kind of think through it because I really care about like sending people in the right direction. But I didn't really— I want to say two more things now instead of one. I didn't really answer it from my perspective in a sense. And in my perspective, I'm in the DFW market. And so I have this giant market. It's got 7 million people, at least 7 million people in the market. Now I serve five core cities and with a couple little tiny cities, several tiny cities attached, but there, there's five core cities that are north of Dallas. Like when I say I'm in Dallas, I'm— don't picture Dallas. I'm in the suburbs. Serving that area. And in our case— and it— but it's a sizable market, frankly. Even my 5 cities are a sizable market as compared to what's available to so many people in other places. And we have had this conversation internally multiple times over the years. Would it make sense for us to build a facility on the other side of our market or anything of that sort? And we've just never felt that we could control quality in quite the same way. There are all these little training, safety, there's all these little things we would give up. So it's a market question. In our case, I would never copy-paste, um, in the market I serve, but my market probably would serve multiples of your— well, not probably, 100% would serve multiple Augusta locations. Just in my little market, you probably have a couple of them, I would think. And so I'm attracted to the, the one company serving a bigger market. But if I were in the markets of many of my friends throughout the United States, it would never in a million years work there. So there's a few markets in the United States that support this. So I'm— I think the summary there is it just sort of depends.

One thing to back up what you said there, uh, one of our owners, he was in Rockport, Texas, built a business there for about 10 years, joined Augusta, and in 14 months he started another location in Austin. He got it to exceed the recurring revenue of the business he'd been building for a decade. Because Austin, it's just— and so I asked him, I'm like, hey, well, how much— what percentage of this was the market versus your time and attention? Because he actually moved there. And I'm like, he's like, it's probably about 30%, the fact that I am focused on it, but the 70%, it's the market. And like the customer acquisition costs and the fact the market's just so much bigger, there's so much more demand. And so I think I always discounted the importance of a market, how fast and big you can grow. But it's one of the things that you've, you've talked a lot about that's really opened my eyes to that.

Yeah. So he's— he— his second location was in a bigger market than the first, south of Austin.

Yeah. Yeah.

I'm a— I think, you know, market drives everything. The counterargument to a degree is that a bigger market also comes with way more competition and way more advanced competition. I've got friends again in smaller markets where if you're even slightly sophisticated, they can just run through those markets and they do. And that's kind of interesting to me as well. And so there's so much nuance to this. So we've spent a lot of time on— I want to say one more thing, and maybe this is more applicable to the individual. This is more applicable to the individual building a bigger business who's decided greater than $1 million is their thing. And I've talked about— so if anybody's followed me elsewhere, I just believe what I'm about to say to my core. It's like, so on one hand, you need to ask yourself, what do I want to build? For all the reasons that we've talked about. And the other question is, you've got to ask yourself, who am I? But who am I from a different standpoint than just pure capacity and capability? Like, who are you at your core? Who were you made to be? Are you more of a sales individual? Are you more of an operations individual? Are you more of a process-oriented individual. And the way I always love to describe this one is, where do you get energy? And where does it just beat the life out of you doing whatever the thing is you got to do? Like, for me, I get energy from having these kinds of conversations. I get energy from thinking about sales and marketing growing, which is why I like growth. You know, like, that's where I get my energy from. I want to go, I want to improve, I want to learn, I want to I want to go faster. I want people to come along with me and have bigger and better lives. That's where I get my energy. But we're all made differently. And so then there's other individuals, like I use my wife as an example. Everything I just described sucks all the life out of her. Yeah, she just wants to execute a process over and over again. Efficiency, predictability. And those are a— that's a different kind of person. And so the reason I described it is if you are more clear on who you are, what you're gravitated to, The blessing you got in life by being a founder is you get to build to that. And so if your gift and your thing is that gives you energy and makes you happy, and by energy, I mean, it doesn't mean every day's easy at all. It doesn't mean any of that. It just means that you could keep showing up and doing this thing for the rest of your life. And yeah, some days are hard, but you still are happy that you're getting to do this thing in life. Whereas sucking all the energy out of you is, I despise my I despise my business. I despise my life. So many people get stuck in small businesses doing the things they despise. And I advocate for building a little bigger so that you can hand off the stuff that's not your gift and ability, the things that take life and energy from you to another person who loves doing those things. That's actually probably my single biggest argument to building bigger is that right there. We say we want freedom. We say we want a different life. But then we build businesses that trap us. We build businesses where we get stuck doing every single thing in the business, and 60% of what we have to do is not a value add to our lives, and it doesn't send us home at night to our families in a joyful and happy— and, you know, we're beat down. And so where— so the point here is simply to also think about who are you, how are you made, how are you wired? What, what could you do for the rest of your life and what parts of the business do you like? It's that simple. I despise this in the business, this, this, and this. I love this, this, and this. You are a business owner. Build the thing so you can spend your time in the thing you love and then find people to do the stuff you don't love. Because I promise there's somebody that likes that stuff. And that is to me the other side of the— this that I just think is imperative. And if you want to be in the game for the long term and you want to build something great, Great doesn't mean it has to be big. It could be $800,000 top line producing 34% or whatever the number, 28%. I don't care what the profit number is. A strong profit margin. If you could be in the game and own that for a long time, uh, the way I think you make that possible is by doing stuff that you like.

100%. And then becoming the leader that the type of person that you need actually wants to follow. Like they come on board versus starting their own thing.

I agree with that 100%. So, all right, so, uh, this one, I don't know if this was a question, but the, the topic was how do you— what I just said actually piggybacks perfectly, you know, how do you hire key people for the skills you don't have? So what I just said was thinking about the skills you don't have, like, that couldn't have worked out better actually. So as you think about this one and you're working with other individuals, uh, how do you help them think about this?

The challenging part, to your point about recruiting, is if you don't have the skills, it's sometimes hard to judge whether or not they actually have the skills. Yeah. And so I think this is the part where if you are— for example, this is a big conversation, August, the other day, based on what you had said the other day when you said, hey, we went into a new market, or went to— I believe it was— and you hired someone that had been there, done that, a really solid operator. And someone, someone asked the question and it's like, whoa, whoa, you're at half a million. Let's not go get— we're not ready for that hire.

Right. Too big of a hire.

And you don't even have the skills to adequately gauge whether or not this person has skills. And, and so it's, it's actually really difficult. It was very humbling to me when we were going through all the problems back in 2023 with Copilot. And I had to realize I had to go hire people that had way more skill than me. And I did not know how to actually accurately judge whether or not they could solve my problem. And so like when I talked to Dr. Kashi, he said, hey, he talked about some Sam Ovens, who's the founder of Skool, and said, hey, how he found his, his technical founder or his CTO was did 400 interviews and just tried to learn about all the problems and fix them by asking them, what would you do in this situation? When it came to lawn care, I can, I can ask you if you have the skills. You can tell me if you've been working if you have a technical degree or a certificate, but then to hire someone for a role that you cannot do, it is definitely when you have to lean on your leadership, the ability to, does this person that has more skill than me want to work for me? And that's the part where I've just like continually been humbled as a leader as I've gotten a little older.

Boy, that's a good answer in the sense that I think it makes this point. I gotta tell a quick story, but it makes this point that there are no easy answers. Like, we all want prescriptive. We all want, like, just go do this. And it's never quite that easy because I've lived in both worlds on this answer. So when I was really young, like 17, 18, 19, there was this guy on the radio that I would listen to, and he just— he had owned a bunch of businesses and he just answered business questions. And I don't know why I remember this because this was a long time ago, but his name's always—

huh, what's his name?

I think it was Bruce Williams. He's dad-gone at this point. Like, no, he's like He was just on AM radio. Could have been, I think it was more than in just Dallas. I just remember I listened to it all the time.

I was going to say Clark Howard, but by that time, you guys—

No, I knew Clark Howard back then too. That was the same timeframe.

Okay.

It's Clark Howard. Yeah. Yeah. So this guy had owned just a bunch of different, like a Rose, retail Rose shops, daycares, all kinds of businesses. And, um, he was an older fella at the, I, I, well, who knows? I was 17. He could have been 40 and I thought he was old. I don't know. He, I picture him as like this 60-year-old guy when I'm that age, but I remember him saying, you need to do the different jobs inside the organization so that you know how to hire those jobs. And I always believed that. And then as I grew in business, I thought, no, no, no, totally disagree with that advice. It's too slow. Back to my theme. But I'm not sure if I really disagree with that advice. Like, I kind of— I, I— this is where why I said, like, You just want to give somebody an answer and everybody just wants an answer, but it's complicated, you know? So I think as I've evolved and grown, because I've done like you, I mean, I have spent so much of my life learning and being around people and asking questions and spending money to grow my skill sets that there probably comes a point where without even realizing it, you've developed the skills to be able to hire people for roles that you've never done. And but when you're younger in business and you just haven't had a depth of experiences and skills, I go back to what he said, that there's this element where you need to like— it's probably several things. Maybe you need to do— you're hiring an operations manager. Maybe you need to be the operations manager for a while and you need to feel the pain and what we need to do. Maybe you need to buy a book or two. Maybe you need to interview a number of people and find out what they did their job. Maybe you need to be in a coaching group. Maybe you need to ask questions in the comments on YouTube. It's probably that you need to do like 19 things to be able to put together a coherent plan or a document for they're going to do this, this, and this so that you can look for— go look for that person. And so I, I think my answer to this one would be just that. It's like, You know what, for most people, it probably is doing a bit of this role and all those other things. And it probably is near impossible to just, like, if most people were to say, I'm going to hire a developer. I mean, that are in the trades, like, okay.

I learned this the hard way, man.

That's like, I would just say that's utter nonsense.

I thought I was so smart. I'm like, dude, these developers, I get them overseas for $80,000 or $90,000.

Not a chance.

Stupid.

So yeah, so if I think about it that way and you apply that to the, the levels that you haven't yet been at in business— operations manager, CFO, whatever you might grow your business— a salesperson, my gosh, nobody can— nobody can get you more than a salesperson because they're so likable and like they could, they could sell you on, on hiring them and then they're a total utter disaster. So, um, anyway, I, I— that's how I would probably think about this one.

Yeah, one thing I, I've recently kind of I thought about it as like there's 3 different levels you move through. It's like you do the work, then you teach the work, and then you lead. And it's like do, teach, lead. So doing is like I go out and I do the work, and then I learn how to do the door knocking, do the work itself. And then eventually as you get employees, like I got— I actually have to change my whole role and my identity from to being a teacher of other people how to do that job. And then as time goes on, especially past like 5, 10 million, it becomes are you the leader that these people want to work for? Because they have options. And it always comes back to humility. Like, just, you have to be humble enough to realize that you lack these skills because the person that has those skills, they're aware that you don't have the skills. They know how to judge you. And so realizing that, like, I have capabilities that they don't have, they have capabilities I don't have, and together it's 1 1 3. And then to your point, being young, sometimes the only challenge is you don't have the proof or the evidence that what you say, what comes out of your mouth happens. And the thing that has really been so helpful, I'm so grateful for the past couple years, is like the people that have been around me, they've seen, okay, he said it, it took him a while, he got there finally. Like eventually we got there. And then that evidence is the thing that gives trust and that trust allows me to go faster.

And confidence too.

Yeah, totally. So, yep.

All right. We kind of talked about this one. And when I was putting together the question set, I was trying to logically group together common questions. So we kind of touched on this one as well. And I bet we've both had this as a general theme over time with, with, with our content. So how does complexity impact growth? And I'm just so— I mean, we really did touch on this. Like, we, we kind of pulled out of the conversation The reason why, like, I approached the conversation saying there's no way you're going to get to $1 million in revenue with just an owner. And then you articulated how that would be. And the reason for it was simple simplicity, whereas I don't see simplicity. So I don't see people actually pull that off. They need an office person and some version, not a full operations manager, but some version of an operations manager. So this speaks to complexity. It's an example of the simpler you keep the business, I tend to argue the faster it goes. But also in this example, the less it costs to build it, like you need less overhead or CapEx or whatever you want to— you need less people that are somewhat expensive. So as you think of— I mean, I kind of know where you're going, but let's talk through this for people because again, to the theme of the conversation, we're all watching YouTube and we're all seeing all these people that are doing these amazing things and have all this stuff. We think we're underperforming. We think we're not going fast enough. We think we should want more. And the, the number one way I think most of us think about getting something bigger, faster is always by layering complexity. So how do you convince somebody to fight that complexity?

I think it is a lot of times not knowing the end goal of why the business exists and how big of a business you need going back to what we talked about, because the fastest way to grow a business is almost always in home services is add service area and add more services. It's the fastest way to grow. It's so hard to fight that when someone says that because they will 100% be right that they will add more revenue.

It will work.

It will 100% add revenue. And it's so easy. 20/20 vision looking back or having gone through it and like, oh yeah, I took 2 years to re— go back and reorganize the business because I built it wrong. But it is so hard to go against the logic of, well, I will make more revenue. These people are asking for this service. And so complexity is usually the fastest way to grow the business in terms of top line revenue. It's also the worst business to, to own and operate. Yeah. And so when we look at like what we talked about last week, enterprise value, you look at the highest enterprise value businesses, it has sticky revenue and it's not complicated. To replicate it and it can scale. And if it can't scale beyond you, we don't have a business. We do have a really bad job. And I, you know, you get beat up on social media for saying that, but like, it ultimately, you can't sell it. And the impact, the growth impact becomes your ceiling. Your personal ceiling becomes the ceiling of the business. And for the vast majority of small business owners, we are the bottleneck. Like, we are the constraint, we are the ceiling. And that is usually brought lower because of complexity. If you think about your most complex jobs, that's the ones where you're on the job site. If something goes wrong, you're being brought into it. And ultimately, that, that just will not scale. It will not allow you to get past your own personal capacity.

Well, again, we'll talk in the green industry since a lot of the audience might be coming from that space. Let's say they're not in your world, and they're just building a green industry business. They're like, I don't want to be predominantly in mowing. That's not what I wanna build. How many services, how would you advise them on how to think about how many services are realistic and acceptable to have inside a business that's a million dollars or less?

Yeah. Like whenever, whenever you say simple services or, you know, not having complexity, everyone thinks you must have simple services. But I think of it as a system. If you define a system, to me it's like, in which environments or conditions do systems exist? Simple, but also standardized. So simple being easy, easy to replicate, but standardized being it's the same way every single time. So like D.R. Horton, they have standardized building a whole house. What they've done, they standardized it. All the houses look the same. It's like we're using the same carpet, we're using the same cabinets, we're using the same countertops. We're not going to make it custom. And so I think I believe that you can do very complex work, very, you know, whether it be walls or retaining walls or building a house, like excavation, draining, uh, whatever it might be. But you'll have to standardize to some degree to be able to reduce the complexity of the business. Um, but back to you, like, from your perspective, when it comes to adding complexity, what do you see as the, the main reason for complexity? Is it adding services? Is it the type of service? What's the main— when we say the word complexity, what do you see that as being kind of the kryptonite?

Services. Because services comes with— my perspective is, if you were to again stay in the green industry, mowing is one of the easiest services, but it's not easy. You know, it's got its own challenges. But then when you add something like, say, fertilization and weed control, Fertilization weed control is not just fertilization and weed control. Fertilization and weed control also gets into a whole different variety of challenges that start to appear. Are you being blamed for shade? You took the property over 5 years ago, it was great, trees have matured, now you've got shade. So your techs are now not just diagnosing a fertilization weed control issue, or weed issue, we'll put it that way. They're diagnosing all these other things They could be insect issues, grub worms, shade issues, watering issues.

So it's okay, we'll add an irrigation department and a tree department.

Yeah. So next thing you know, yeah. So that's the complexity. It's like, it's like, oh, we're just adding fertilization, weed control. Well, not really, because there's all this, these levels of experience that now need to be had. And so that's one. It's like, what service did you add? And that type of service could create complexity. Another would be like, we're a fertilization weed control company, and so the natural progression is we're gonna add pest control. Okay, well, that's complexity too, not just because it's a completely different type of service that's— you're now entering the home, you're now— it's a completely different level of knowledge, completely different product material that's treating the problem. It's a totally different mind space in the buyer's mind. Like, it is like, they just— because you take care of their yard, they don't naturally think, oh, this is a pest company. And so that's another kind of complexity. It's like, okay, how do we get traction in the mind of the buyer that we are also a pest control company and this yard company is also skilled in pests and being in the home? So there's lots of ways like that that you add this complexity, or those are both recurring, um, and mowing would be recurring. And so it's like, well, natural progression. We're doing fertilization, weed control, we're doing mowing. What is— what's the biggest problem, or one of the biggest problems why people aren't happy with our service? They don't water enough. It's irrigation. Okay, we should be in irrigation. Now we're in a break-fix business. It breaks, we fix it. Hard to plan around, hard to staff around. Like, there's seasonality. And so, like, those are examples of complexity. It's not just the adding of the service, it's the adding of What service? How are we gonna market the service? What training needs to happen around the service? How hard is it to find the people? So that's how I think about complexity. And, you know, so there's a big movement to move, which I don't argue with, to move to higher margin services. And so maybe you got into the industry as mowing lawns and trimming bushes, like, hey, these are higher margin services. Maybe, maybe. I mean, some people do really, really well mowing lawns. And so we're going to move our business in that direction. And what I observe most of the time is as they move into these other services that have a different kind of complexity, the businesses just kind of stall. It's not easier.

And what I find a lot of times they're chasing better cost of goods sold, but what happens is their overhead gets bloated and it's hard because like if you add, say, irrigation, all of a sudden I need to get a different type of truck. And now I need to bifurcate what type of trucks are going out to properties. And then I have to train my sales staff very differently because they have to—

training is huge—

double it. And then I think of it like if you had one service, okay, I doubled my training required for my admin person answering the phone. I got double how much I got to train them on this whole other thing. Then I add another one. Actually, we look at it as like it 4Xs the amount of time it takes to train them because now I've got to delineate when they use certain language what flows they're using, what forms they're using. Because simply by adding one more service, I double the amount of training required for an admin person, the required training for a salesperson, where I can park my trucks. Because a lot of times, okay, I added chemicals, it's really easy. Like, you can't, you can't be there anymore, your shop space. And, um, it's all the things around the actual work. But there, a lot of times I see people, they hear better revenue and they think better service, add service, And usually it's in chase of a, a lower cost of goods sold, but then their overhead gets bloated because of the complexity added.

Yeah. Uh, that's a, a great way to say it. Uh, that's exactly what I believe. And it's like we could just keep layering on marketing complexity. Yeah. How do you, how do you talk about 9 different services? Yeah. Like, you know, City Turf does quite a few. So I, I started the business doing all kinds of stuff. Like most of my knowledge comes from You're like, pain.

Yeah.

You're like, oh, I tried that. Don't do that. Yeah. So we started, I started as commercial and so in commercial I felt I had to do it all to win the contracts. And so, and then I pivoted to residential and I got rid of a lot of the stuff. And then I started, we, I, we have started adding things back into the City Turf business. Now it's a big business. We can support it. We got lots of money. Like we can do this and we got lots of knowledge, but It's become a more complex business. There are a lot of moving parts in that business, and there are a lot of— it's, it's complicated. If anybody tries to replicate that as a $2 million business, oh my gosh, I mean, that's not a good business. And so I think services. Geography, you know, I think it's bad because it kills profits, but that's mainly around killing of profits, killing of customer service, leading to bad reviews. So services is where I put it.

Cool. Let's go to the next one. We're talking about growing past $1 million and protecting the profit margin. The question specifically, I think you'd already alluded to it, was they're doing $700,000 revenue, 6.5 years in, and they're fighting to hold a 20% net margin. They pay above market, gives them really good people, but it also squeezes their margin. So as they push towards $1 million, how do you manage labor, COGS, and overhead without giving back all the growth? So would love a deep dive on scaling to 7 figures without watching your profit margins erode.

So when I saw this question, the first thing that came to mind for me is— and maybe I read into this— I was imagining this scenario where we're trying to still move fairly quickly.

Yep.

And grow the business. And we're— and so when I hear something like this, it's kind of back to you need to ask yourself, what do you want? I believe you can't keep these if you're going to go super quick and you're going to— and again, I don't think we talked— I'm looking at my note, the question here. I don't, I don't see anything about what services were offered, but if you're going to go pretty quick, I think margins get sacrificed and I don't think there's any way around it. And I'm okay sacrificing the margins which was back to my 10 questions for you. Would you rather have a 7%, a business growing at 7% with 25% net, or the opposite? The, the reason why I'm willing to sacrifice, and I was okay with the growing at 25% with a 7% net, as I see it as a very temporary thing, then willing to sacrifice in the short term. And the reason why I would sacrifice my profits down to 7% is I'm picturing if we're moving at that pace, I'm pre-hiring people because if you're going to go quickly, you have to be thinking about what's going to break, what's coming that's going to break. Okay, I'm— I've added— I'll just make up some scenarios to get quick growth. Maybe we added another service line. Okay, I need somebody to run that service line. Now we need to be marketing that service line. We're going to be inefficient with our ad spend at first. We're trying to figure it out. I need to hire technicians and that tech is not going to be fully booked, but there's That's just— that's the adding of a service line. So to be able to service the client and be able to protect the reputation of the business, I need to spend some money in that area. Or maybe I'm not adding a service line. We're just growing a part of the business really quick. So I need to be buying trucks and equipment quicker than I can fully utilize them. I need to be hiring people that are going to be running inefficient routes so that I can keep my quality and my reputation, my service level up. 'cause I don't wanna hurt my reviews. I don't wanna hurt my reputation. So I'm, so there's levels of inefficiency the faster I go because I need more people. Then there's the training and the, all the other forms of overhead that come with it where you're kind of spending in advance. So the faster you go, it creates, the faster you're demanding. And maybe that's not what's being asked here, but the faster you're trying to grow the business and the, the faster growth you're demanding of the business, The inefficiencies are inevitable. Okay. And for all the reasons I described, but also this one, you start to have to do more marketing that's less efficient, meaning it's costing more to acquire the client because you just need to get lots of marketing out into the marketplace. Then you're trying to staff up sales and you're, and you're going to have some salespeople that don't work out. The salespeople don't work out are going to hurt your closing ratios for a while. Like there's just, There's all these things that are happening and those create inefficiencies which are going to drive down the profits. I'm okay with that if I'm demanding a faster pace of growth in my business. Can you keep 20% and still grow? Sure. But I don't think you can grow super fast. That's kind of what— that's the gist of where I stand on this.

Yeah. Like I always laugh when someone comes to me like, man, I have a million-dollar business, but I am not making a profit. I'm like, well, what's the last 3 years? Well, I started at $200,000, then last year was $700,000, and this year is going to be on $1.2 million. Yeah, you don't have any profit. Like, growth sucks cash. And so what's interesting to me, when I started getting in the software world, a lot of them have really accepted frameworks around profitability. And I'll say this and then I'll explain it for the audience. The 40% rule. So in software, it's a function of you add—

The rule of 40?

Yeah, yeah. So you add in, hey, what's my gross profit or my net profit? And then I have my growth percentage, and that should be over 40%.

So if I'm 20% profitable, or if those are the best companies, 40% or greater are the best companies, correct?

That's kind of like the goal, right? And so if I can grow by 20% and have at least 20% profit margins, we're in the clear. But if I'm only growing by 10% and I have a 10% margin, not good. 20%. So I kind of like that analogy. It's tough in smaller businesses when you're dealing with $100,000, but like or just smaller, under $1 million even. But I think that I wish I had a nice clean framework like that for people to keep their head in the game when they are growing fast. Yeah, it's like, look, you're building this asset and yes, you're in growth mode, it sucks cash, but you just grew by $500,000 and last year did $200,000. You're at $700,000. And I think a framework like that almost would be helpful to be okay. Yes, growth comes at the cost of profit. And this is why I like to have like you're either in growth mode or you're in profit mode and they have to kind of choose one or the other. Because it makes— it's just this mentality that, oh, I gotta do both. I gotta double the business this year.

Not realistic.

And I gotta make 25, 30% profit margins. And it's tough to— I'm not like, man, I don't wanna sound like I'm saying anything negative about him, but like Alex talks about like having 80% margins, anything less than that.

All right, so let's use the 80% example, which by the way is my rule of thumb. This is the number that I get any service-based business over. All right? Doesn't matter what you're selling, This is what you have to get over. All right. Now I'll show you the difference between $80K, $90K, $95K, $100K in a second. But this is important.

Like they hear that and then they're like, why am I not doing that? It's like, whoa, whoa, you've been in business for 3 years and you're growing. And when it comes to home services, you have to buy trucks and equipment to be able to go suffice the demand. And you might get there if you stop growing and you raise prices and you're just upselling and you have a huge brand awareness over the course of 5, 10, 20 years in a market. But there's just no way you're going to be able to have 80% gross margins in your third year of business.

Have you ever met a home service company with 80% gross margins in their 20th year of business? Gross margin?

Yeah.

No, I mean, pest control companies are some of the most profitable businesses that exist. Yeah, they're not doing 20% COGS.

Yeah. Like, I've— the only— my, my target for them is like, because we will start, may say, let's call it 35%. Of direct labor. But direct labor is not all of your COGS. You still have materials, you still have subcontractors in there. And so if you can get that to 20%, I'd be, I'd be happy. Like, if you get under 20% direct labor, we're good.

But yeah, I mean, if anybody's doing 20% COGS in home services and you want an investor, message me. I have money. Okay, so I want to meet you.

I don't want to ruin your video. I don't want to ruin your video. But what's your response to that mentality? Or the ideology?

Well, you should leave the industry if that's what you're going for. Really? I mean, I don't, I mean, I don't, I've never met anybody. I don't know anybody that's doing COGS of 20 or gross margin of 80.

Okay. So let's, you know, we're, this is the part that people want, right? We'll bury the lead an hour and 20 minutes into this, but like, why does Alex say that then?

Well, because Alex isn't building these kinds of businesses. He's building information businesses. And so that's his frame, much like my frame. And I haven't thought through all my points on this. This one just— I haven't thought through like, what am I going to even say in the video? I literally dropped this in Trello last week and I remember that this is like, I think this is one of the earliest pieces of content I ever saw from him and I've never forgotten it because I don't— I do watch— I don't watch a ton of his videos, so I haven't seen real— so this must go back a bit. And it came to mind again the other day. I was like, this is a good video. I don't know why. So anyway, so I haven't thought through all my points, but my— the gist of it, I think we all come from a place of what have we built. Like, that's our level of knowledge. And so we try to apply that to other industries. I'm very fortunate that I've been in coaching and cleaning and lawn care and software, and I, I've— that was in logistics in the very beginning, in technology and logistics, the first company John and I built. I've been in healthcare with the software thing. I've done all these things. So I've seen all these different businesses and business models. And so if you think about where Alex came from, he literally came from pretty close to one of the single most profitable businesses that exist, period. Period. And those are the information businesses. He was essentially in an information business. They're ridiculously profitable. Most guys build their information coaching type businesses to A million bucks, $500,000, $2 million. He built this to like, I don't even remember what the revenue was. Didn't he make like $17 million a year or something like, nobody does that. Like it's a total anomaly, but that is, and he did that on a, on not that much more gross revenue. And so you just, you have a very low headcount inside those organizations. They're very, very scalable. Software even makes the promise of these incredibly high gross margins. The funny thing is, if you look at most software companies, that's the promise, but that's not the reality. Like, it's almost none of these software companies actually do that. It's like, hey, in 12 years, if we spend $100 million and we lose money for 12 years, we're going to achieve these gross margins. But even then, it's not real. And this is like inside baseball here. And then one of the ways you get to those numbers is because of the way you classify your R&D, right? So when you're developing your software, there's building software. And then there's the, uh, maintenance of the software.

Mm-hmm.

Like, okay, I'm writing this new feature and then I gotta keep that feature working. And there's these ways with like games that you're not gonna probably play, or I'm not gonna play, like who cares, where you could classify your building of the software completely different and it doesn't go against your gross margin.

Yep.

Like, but that's still money. I, it's like to the average guy, it's like, you know, that's still money I had to spend. Yeah. It came outta my pocket. And so there's games. I got a little off in the weeds there, but like, I just don't know many businesses that are producing this kind of gross margin, and I do not know any of them in home services. I'm sure they exist, but I can't— in Service Alpite, we had so many different types of businesses that were our clients. I have crossed different industries. I just, I can't ever remember anybody that achieve such a thing. Or somebody might say, well, I have those types of gross margin and they have a smaller business, but they're not including them in a realistic salary. So that again, I'm going to— I'll eventually— maybe I won't record the video now that we've had this conversation, but I never fully thought through the points other than to say if anybody's going for this and this is their expectation, they're going to think they're a complete loser. Yeah. And they're not. It's just not reality.

Yeah, that's the part. That's, that's, that's my only qualm with it because I am all for like, let's optimize this thing, make it better, go for some number that may be unachievable. But it's the fact that people then think they're, they're the problem.

Or that's what, that's what got me going on the whole thing, why I wanted to do it.

Or they think that there's something wrong with this industry and so they should go do the coaching thing.

Yeah, yeah, yeah.

And I always say like, hey, have you ever tried to get a sponsor for $5,000? You go out tomorrow and get a job for $5,000 and make a lot of money. It's not easy. Like the whole coaching thing and information thing sounds great until you go try to make videos or get people to sign up for your coaching thing and all of a sudden it's not so easy.

So anyway, it's not, it's not like, last thing I'll say on that too is, uh, you have to be a marketing machine and an engine with most of those businesses because the typical, I don't know if it's changed, but the data used to be on the typical mastermind coaching business, if there wasn't a contract involved, was about 5-month retention. People, it's a, it's a revolving door. And so, you know, some of the stuff that Alex pulled off, that is his frame of reference that he talks about. It's kind of back to what he says, like around the million-dollar business versus going big. It's like, I know almost nobody that could pull that off. And it might be hard. I think he's kind of pulling it off again, frankly. But like almost nobody pulls this off. He is a marketing machine. And he's proven he's better than everybody else. And he's in a very, very specific kind of business. He's now a private equity guy. I mean, his business is private equity. Again, one of the single most profitable businesses that exists the way he's approaching it. Like, he's very good at picking the most profitable things to go into. That's just not going to be the case for us.

And to think that we should choose that industry because of that is where I think the flaw is. Well, let's get into private equity. Like, have you ever gone into these rooms with these guys? Smart.

They're very smart. They're very smart. And if you, uh, I will also tell you, cause I've been around a lot of these guys, you may not want their life.

Yeah.

They make a lot of money, but you get to live on airplanes your whole life. It's like, there's, it's not, I mean, and you are answering to people constantly about investments and the money of their money that you're managing. It's like, it's a different world.

So tell me, tell me why you didn't go to private equity once you, once you had the exit. And why did you not decide to go that route?

And me get into it?

Yeah.

If I was trying to just purely make money, that's 100% what I would do. I thought about it and I would really be— I would really enjoy it and like it. But I don't know. I, I question— I don't think— I think I, I'm certain I'm doing the right thing. But I still, I would love to do it. It would be fun. The problem is parts of everything are fun and then there's always a sacrifice. Mm-hmm. You and I, there's always something you give and there's this big thing for me. It's like, okay, what's the most ideal life to live and not think about just purely the economics. Um, and so for me that was a, I still would love to do it. It'd be fun. I just don't, I feel like I need to be single. And not have anything else and just be like, I do. If I could just not be married, not have a kid, not have hobbies and not have friends, that would be the perfect thing to go do because I could go all in on that. But I want to balance. I don't want to look back when I'm 90 and say, great, I made more money I'm never going to spend.

Right.

And I like what two things I've always respected. I'll say this. When I was young, I didn't know many people that had money, but I knew a few people. I knew I figured out they had money and they never talk. They like— I already feel like I have to talk way too much about money because of this stuff.

Yeah.

And the people I always respected, you knew they were doing really well and they never said a word and they didn't show it off.

Yeah.

And so I've always liked that. The second one of people that I respect, they do one of two things when they have crazy money. They either do something totally different in life and go a totally different direction, which is what got me excited. I was like, I want to do something totally different. I've done these things. Can I do another thing completely different? Or they, um, they just say good is good enough. Like, it's like, it's to me, it's kind of this power move of say, I'm good. I'm not playing the game anymore.

Yeah.

And those are, that's what I've always respected. So there's a little bit of that where it's like, the game I'm playing now is only because this is what I want to be doing. And so that's where I'm spending my time. Sorry. I hope that made sense. That was another long answer, but that I'm spending my time on what I wake up and get excited about. Like when I was saying the other day, I was building an estimating system just for the fun of it to see if I could do it. That's just what I want to do. If I get to help Riley with EveryChat, if I get to have these conversations, if I get to help other people build their things, that's what I want to do. I feel like when I look back, I will say, you know, I did what I wanted to do. It was fun. It was a good life. It helped other people. That's a value. If I look back and say 10 of my hours every week were tons of fun in private equity and 60 of them were pain and I wasn't any more present anywhere else in my life, what did I achieve? Like, what was the point? So that's kind of how I'm thinking about it. But man, I would love to play that game. I just like, I like it. Yeah.

Like the raising the fund, the money that, that would be the part that like I would have a hard time with because taking other people's money has been like a—

I was going to use my own money, but there comes a point where you can only use your own money so far.

Right. Like, because the real returns are happening if you could leverage, like it's the 2 and 20. Yeah.

That's where the money, I think that's the, that's That's part of the thing. And so the, uh, you know, you really do want to raise some money, but that would just so complicate things. And I thought I would do— I really was attracted to this idea of like, I have the financial, the metrics, the people, the technology. I have all this experience. I would love to roll up a bunch of companies in home services and build something really, really big. And I still think that's super fascinating. And I think I can put it together because I know so many people and I have a bunch of people have said, hey, if you do this, I would like my business to be in the mix so I could immediately have a bunch of companies come in. I just don't know if I want to do everything it takes. And then as big as I think I could make it, I would probably not want to put all my money on the line. Put it that way.

Yeah. I want to ask— go back to one thing you said, just out of curiosity, because it's, it's a challenging thing for me too. So talking about your money, talking about the businesses, and it's tough because like when it comes to social media, the first question I always ask is like, well, are they credible? And if they have built a business, if they have money, I will listen a little longer if they're brand new. And so how have you like weighed this out? Because this is like the hardest thing still for me. And I also know you hedge massively. You don't share certain numbers, etc. But like for me, it's so difficult like to say revenue numbers or like, but it's like, that's also the thing that if I watch a video, that's the first thing I'm looking for. Like, like the founder of Bloom, he started a YouTube channel, like because he owns—

Blue Energy guy?

Yeah. Bloom. Yeah.

Really?

Greg. Greg. And he started a YouTube channel and it's like, okay, immediately credibility because I know the brand and they're doing $500 million in revenue. I will listen even though you— there's some things I just do not agree with how you're acting right now and you act like a child sometimes. But I will put up with that because of the co-signature of the credibility. So how have you kind of balanced it out coming back into the content world?

I'm kind of dipping my toe into— I've said already, like, in the last year, more than I've ever said in my life. Yeah. And I, I, it's still a struggle. Like, some days I'm just like, I'll just start saying more, and then our day's like, nope, this is who I am. So I'm just, I'm still going back and forth. But I, I am certain that you need to, um, you need to tell people why they should listen to you. I, I just, there's so much I think people feel like we don't trust anybody anymore. We don't believe anybody more. It's half the problem in our country, in my opinion, is we don't believe anything. And so we're in a really bad place. And so people are not trusting. And I think, and people talk these big games, like I got whatever, you know, they'll say, they'll say stats that aren't even totally legit. They'll take, they make stuff up. So I think it's important to say what you've got and then back it up because, and so I believe that, I think that is key. And the guys that are really successful, they all do it. Yeah. Like, you know, they all do it.

Yeah.

Um, and so I think where I'm arriving at is I'm slowly saying a little bit more. I'll probably never say it all, but I'm saying more. But the line I've decided I will not cross is I'm not going to start showing off all my cars and all my stuff. I just, when I see that, and I've got friends that are playing that, like friends are playing that game, it's like, and they make arguments to me, like why that makes sense. And they're right.

I mean, it works.

I just can't do it. That's when I feel like That's when I feel like I won't be sincere. I don't know. I don't know. I still struggle with it is the answer. I haven't arrived at my conclusion. Okay.

All right. Well, let's pivot to the last question. We're talking about debt. Should you use it to grow faster? I'll tee this one up.

Okay.

We've talked a lot about growth, increasing your risk appetite, obviously, when we add debt into the equation. Is this a yes/no answer for you? I know you're more conservative. Or is it more a matter of how fast are you growing? And what size of business are you at?

Used to be a yes/no, and I've evolved my opinion with, um, with a lot of warnings. You want me to expand on that?

Yeah, give me the warning.

Like, sometimes I feel like I get going off on these tangents and I talk too much. So, um, so I have always been— I am conservative. I grew up very conservative, um, and it's just bled into my my life in general. And I think on the whole, it's cost me a ton of money, but it's also given me a lot of peace in life. And, um, and so Service Autopilot and doing Academy confirmed my belief that for 99% of people, they should not be using any debt because it's just so unbelievably destructive. I'm not a Dave Ramsey guy at all. I don't live in that. I'm not— I mean, I have no issue with Dave, but I don't agree. I think that's okay. I did finance a house.

I've—

I haven't financed my last two homes, but I, you know, I'm not— I was just because I was in a good enough place. I'm not opposed to debt. But and so I don't take— and I use credit cards. I believe in using credit cards. So I don't take the Dave Ramsey thing. That's where I wanted to go with this. So it's not that. It's just simply that people get themselves into so much trouble and I've seen it too many times that my general advice is you should not use it. Now, how do I think it might be okay if you're buying a building? Okay, but I've got arguments against most people buying a building for their business.

Down payment kill ya.

Down payment is massively destructive. I'm just not destructive, distracting. Yeah, just massively distracting from the business for a period of time. And then this wouldn't matter if the person is going to keep their business small. But again, because I like growth and I want bigger, What I see is it becomes the bottleneck where somebody— I got off topic like normal. So it, uh, it's like they built a business that could support 15 trucks or bought a shop, and now that becomes the constraint in their business that keeps them from going to 30 when they're very capable of it. So there's a few things like that, which is why I don't love buildings for some people. I've now built one, but it took us a long time to get there. Um, different topic. So debt on that.

Okay.

Uh, debt on the trucks. And then after that is where I start to be a little like debt on equipment probably is the next most logical. And after that, I get really nervous with lines of credits. I don't even really frankly love the debt on equipment. That's sort of where I stand now. Where I think that debt makes a ton of sense is to the person that really understands their financials. They understand their gross margin, they understand their COGS, just a different version of gross margin. They understand their labor ratios. They understand all the metrics of their business. They understand their cash flows, the ins and outs, when the ins and outs of the money come in throughout the month. They've got a pretty predictable risk business. It's more recurring. Yeah. There, when you, when you really, really understand the business and you have tried and true marketing methods that have been tested, that you, you can predict this is gonna return. Like if I put out this many pieces or if I spend this much money on ads, I'm gonna get back this amount of revenue, or I'm gonna get this many leads and we're gonna close this percentages. When you get to that place, this is a totally different conversation. But tell me how many people are to any of those places. Like, I've met so many people running $10 million— well, not so many, but many people running $10 million businesses. They cannot give you all that data. Like, there are some that can, but a lot of them cannot. And so if you can't give me that data, you're at risk. And so that's That's the summary of how I see debt. When you really understand what's happening financially in your business, not just at an accounting level, but at an attribution level of the sales and marketing side of the business, then there's predictability. And with predictability, we can make decisions about the future and taking on debt. Otherwise, you're just guessing and you're just hoping and you're hoping everything keeps going good. And we just never know when something will go wrong. And people get wiped out because of debt. It's probably one of the— that and divorce.

So yeah, when I go on the Turnaround Show, it's like, that's always the first thing I look at because that's the, that's the dark cloud over whatever I'm about to tell them. Because if you tell someone, hey, go raise prices or hey, sell some equipment off or whatever, if there's debt, it just immediately escalates all risk and timelines so fast and so hard to sometimes operate because like they have to pay the debt. And so one thing I've always thought about is like, what is the, either the useful life of the thing that I'm purchasing or the amortization schedule? So for example, a house, it's 30 years, right? Or a commercial building, it's, you know, 39 years or whatever it is. I'm more inclined to get in debt on that. But if I'm going to use a mower for 2 years, probably not a great idea to take the huge depreciation hit the minute I buy that thing. And so that's kind of in my lens. And so like, well, I don't think I've ever said this anywhere. The only debt I have outside of the real estate stuff is when the EIDL came along, it was just too cheap. It was like, this money is so cheap. It was, it's a 30-year term on 3, 3.2%, whatever it is, interest.

That was like the EIDL.

Yeah, yeah, yeah, yeah, yeah.

I'm like, that's the COVID time.

Yeah. And that was actually a big reason why we were able to scale the franchise.

Okay.

I was living in the closet at the time, and when all that went down, we didn't need the money. Like, we were just about to, like, we start making it, and I was like, oh, it really brought down my expenses. But we— I got that because it was just so good. I'm like, 30 years? I can't get a mortgage for 30 years for this rate. And it's basically secured by the real estate, but they don't track it. Like, literally, I've sold the real estate since then. And so all of that to say, um, I'm generally in their same camp, especially the smaller size of business. And I think the one part so hard is if, if you, if you know your expected return, that's when I give more credence to it. Like, if you know, if I have $10,000 of, of investment into this business, I get X yield, whether that be, okay, I know my customer acquisition cost, I know my lifetime value, I know my profit margin. Okay, now we can start to work with something here. But if you can't chart that out, you're just, you're just adding risk. Yeah. And a lot of times it is because we're on the growth treadmill of just like, I just gotta keep growing the business.

I've seen a lot of people get in trouble because they've borrowed money to buy businesses and they've massively overpaid for the accounts and the businesses. So it's like in the beginning and then That just leads to more and more debt, like borrowing money. So, um, I've really— I used to be a hard no, and then I got softer on this, and I still am kind of in that place. And I've often looked back and said to myself, for me personally, because I've never had investors and I've never even had a line of credit, and so I've looked back. I mean, I wasn't opposed to a line of credit, we just never did it. I mean, I think I might have had a line of credit actually. But never used it. So, you know, it doesn't matter. Um, where I'm going with this is I look back and say, man, that was stupid. If I had only used some debt in my businesses, how much faster would they have gone? Um, but that's hindsight. I think we all do this. I just catch myself doing this. It's like, you know, it all worked out. I might have made— it might not have worked out. I might not have been capable of doing all these things. I might not have like something disastrous might've happened in the economy. Like there's all kinds of things that could happen that didn't happen. And that's why it worked out. We don't know what's coming in the future. You just never know. And so for that reason, I think you play a more conservative game, but you don't have to necessarily be 100% debt-free.

My other litmus test is if you're jumping through hoops to try to get the debt, that's a problem.

Red flag. It's a bad sign.

If you're like, hey, okay, so I'm going to borrow from this bank account and I'm going to You know, use that for the down payment. If the bank just doesn't just give you the money, then you're probably not ready for the debt. Like, it's just a good litmus test. I've seen so many people like, okay, well, my parents are giving me $20,000. And then that's the down payment. And then I'm going to get $80,000 of debt. It's like, whoa, whoa, whoa, if you don't have the down payment, that might be a good inclination. You shouldn't be getting the debt. So I see people jump through hoops or like using credit cards in a fancy way to try to like pay off things. It's like, That's where I get scared.

Yeah, I'll say one more thing. The beauty of getting to be an entrepreneur and getting to build a business is you get to build— kind of summing up what we talked about today— you get to build the business that you want to build to the size that you want to build. You get to hopefully do inside the business the things that give you energy and make you happy and you enjoy, and you're going to get better and better at them. And let hire other people to do the things that you don't want to be doing. And if that— all of that is wonderful, you got to be your own person. But then if you layer in never-ending stress because you're making decisions that keep you up at night, that make you live in a state of fear, then what have you accomplished? And so there's this element where I would argue, and I think it was a little bit of my story, by not taking some of the risks Yes, I went slower and it could have been bigger and better. But I, I think there's this element that you consider. How can you optimize your life for peace? How can you— like, you got all these other gifts. You're in business. You get to build the business the way you want. You get to do the things you want to do. The other leg is now let's build it in such a way where, yeah, maybe it'll be a little bit slower, but every night you sleep pretty good and you're not stressed out and you're not always angry and you're not always unhappy. And, uh, you know, that's a better way to go. And so for many, the debt makes that impossible.

Absolutely.

So that's everything I had on the docket for us today. Awesome. You have anything else that you think we should—

that's all we got. The Sultan of Service is Sultan of Service.

That's where we're at right now.

That's all right now. We haven't got any other better.

Okay.

Until we hear from a better idea, that's what we're sticking with.

Okay. All right, cool. And I'm, uh, I'm curious. I'm watching the comments from the video. So if somebody has something different, I I want to hear.

So cool.

We'll see what you guys say. So thanks for watching. Thanks for tuning in.

That's a wrap.

We'll see you guys.