2 Things to Double the Efficiency & Profitability of Your Business

Hey, everyone, it's Mike Andes and you're listening to the Business Boot Camp podcast. Today we're going to be talking about the two founding principles of basically everything I believe in in business. Alright, so I've talked a lot about different things on this show, but these are probably the two most fundamental things we're going to be talking about today. It's a short episode, but probably the most summary of everything that I have talked about before. Before we get into the show, though. Thank you. Today's sponsor, which is Gusto, if you haven't already, go to gusto.combootcamp, try out their software for 90 days. It's going to allow you to pay your employees and make sure that compensation is transparent, seamless and simple. Something we're going to be talking about in the episode today about making money and compensation, benefits, all of those things. Something in your business that you don't shy away from, but you openly talk about. So check it out today, go to gusto.com boot camp. Now, today, in a nutshell, we're talking about two different things that I feel will completely change their business. And for that reason.

It'S all premised from the fact that most owners, regardless of what industry, they struggle with this fact that they know the speed and the efficiency and the quality in which they do work, and they struggle with the fact that their employees cannot do the same. And really, at the end of the day, it's a very simple answer, like, you are an owner, they are an employee. You have equity in the business, they do not. But I truly believe that a great culture is one in which the employees and the owner are pulling in the same direction, have the same interests in mind, and are all wanting the same metrics to be increased or decreased in the business. And one of the biggest reasons why that's not the case is because in a lot of small businesses, you're paying your employees by the hour. That is, the longer they take on a certain task, the more money they will make. And yet you, as the business owner, are looking at efficiency and how do you cut time out of the equation? How do you make things faster? And so we're always at odds with our employees because they're going in one direction, trying to take longer, make more money. And we are trying to save time and save, you know, make things more efficient in order to save money. And so we're always going in different directions, pulling in opposite directions, and that is the tension between the employees and the founder. The question is, how do you get everyone going the same direction. So this is all, you know, I've always thought about this sort of thing. How do you make an employee think like an owner? It's always the magic, you know, question. And a lot of times we talk about culture. We talk about how to make a culture where people care keep. People are interested about the financial well being of the business and interested about how the company is growing. That's all important. But at our franchisee training last week, we talked about the how, the what and the why of Augusta Lawn Care and our brand and our why is to change the level of professionalism in the landscaping industry. But how we're going to do that is something unique. And that is we're going to create a working environment where employees are compensated and treat customers the same way the owner does. So in other words, we're trying to get employees to get on the same page as the owner and be compensated and treat customers the same way that the owner does. So there's two different pillars that make this possible. And I truly believe that in order to be an owner or to get your employees to think like an owner, they need two things. They need a change in compensation and they need a change in information. Today is nothing new that I'm sharing with you. No new educational pieces or facts or tips or anything like that. I'm talking about things that we've talked about before. But it's very, very simple. If you want your employees and your team members to think like you, think like you as an owner, think in terms of efficiency and profitability and net margins and all of those things. They need two things. Number one, they need their compensation to be aligned with that of an owner. And two, they need information that you as the owner have. The only reason that you work faster, are more efficient, come in sooner, leave later, is because you have information. You know how the business is doing. You know that you can't make payroll next week. You know that a certain supplier is about to go to business. You know that there's a oncoming threat from a competitor. You have all the information and thereby you act like an owner. Most employers, though, don't give their employees enough information. And then they wonder why the employees don't treat the business with the same amount of scarcity or the same amount of urgency. It's because they don't have information. They don't have the information that your ad budget has been cut in half or that economic times are coming and you have to store up money and put cash aside. You don't give them the information to allow them to even think like an owner. And so I feel like compensation and information are the two things that must be aligned with the owner. How is that possible? Number one is you need to pay them like owners. Number two, you got to give them information like an owner. And the magic question is, how do you do those things? Number one is P4P. That's the thing that we have implemented with our franchise, pay for performance. And regardless of what industry you're in, this can be possible. Making sure that the employee's compensation aligns with the performance of the business. And I don't mean like a quarterly bonus based upon gross revenue or anything like that. I'm talking about how do you make on an hourly or on a pay period basis where their paychecks are being affected by the level of performance and production that they bring to the table. So that's how do you pay them like an owner? Because as an owner, I'm always thinking about efficiencies and productivity and net profit margins and thinking about cutting out waste. As someone being paid hourly, they are not being compensated any more or less. If they think that way, all right, they have to rely on the fact that if they think that way, that down the road, maybe one day next year at annual performance reviews, that they'll maybe get a raise. It's such a, such a far off reward that there's no actions, nothing that changes in their actions. And so I want to bring that reward as close to their performance as possible. And that's by instead of having an hourly wage or having some sort of salary, you have it based upon performance of some sort. Regardless of industry, regardless of what you're in, you can make your performance based pay system for your employees. So that's the number one way to make them think like owners, is to pay them like owners. The second way is actually in some ways harder. These are not easy things like P for P took us eight months. A lot of trial and error, a lot of figuring out, a lot of testing, a lot of experimenting, losing a lot of good people, even over the system. It took a lot. It was hard, it was painful. It took a lot of team meetings and cooperation and trust and all those things. The same thing goes to the next part we talked about. How do you compensate like an owner now? How do you give them the information? Like an owner, you have open book policy. What that means is you share all the numbers behind the business, you show your profit and loss statement, you show your employees exactly how much money you made, exactly how much money the business made, where the money in the business is going. And you'd be amazed. They will be shocked at where, you know, how much money you spend on insurance, how much you spend on fuel, how much you spend on all these different types of overhead. And they'll begin to start thinking about ways to save money or improve the processes or, you know, make it more efficient if they can see that the profitability of the business aligns with their growth and success. So if they just see you driving up in a newer truck whenever the business makes more money, it's not necessarily going to inspire them to save, make things more efficient, make the business more money, make it more successful. But if they can see that the success of the business and the growth of the business leads to their personal business or monetary success, they are going to invest in the business just like an owner, if they can see that correlation. The problem is we don't give them the information. They don't know if you're making a million bucks a year or if you're barely scraping by. I know companies that go out of business, go bankrupt. They are on horrible financial terms. And yet if I talked to their employees, they would have no idea. They would think the company's doing well. You know, they're just looking at the growth of the company. Everything looks fine. You know, hey, we just had a team meeting last year. Everything looked fantastic. And yet the business is drowning in debt and is about, like, on its last legs. And the reason that we, you know, we can't expect the employees to think any differently. Like, if they knew that and they even cared at all about the owner, maybe they would try to kick into high gear. Maybe they would try to figure out a way to make things a little more efficient, try to save some costs. But because we don't give them, don't give them information, we can't expect them to make the decisions like an owner. If you know in your business that you are drowning in debt or, you know, way behind on bills or whatever it might be and you're not doing well, you are always thinking it's consuming your mind of where can we improve? Where can we cut costs? Where can we save an extra dollar? How can we get past this time? And your employees are just kind of doing what they've always done because they're not giving the information. And so I highly recommend, if you want your employees to think like an owner, you've got to compensate them that way based upon performance, based upon what they actually bring to the table, what their production is like. And then you also have got to give them information. And guess what? If there are skeletons in the closet and if you are hiding things and you aren't doing things above board in your finances when you give them information, yeah, they might leave. And so you can't do this. If you are going to try to be untrustworthy and doing things behind the employees back or doing behind things behind the government's back. Like if you, if you can't show your employees their compensation and be open and honest about that and you can't show the numbers behind the business, you will never be able to get them to think like owners. If they don't have the information to make decisions based upon. Like they have to make a decision every day, are they gonna show up on time? Are they gonna put 110%, are they gonna go the extra mile? Are they gonna do something for another team member that they might not get compensated for, but they do it anyways cause they care about another team member, they make those decisions every single day based upon the information given to them. And if they're not given the information, the financial information, the projections, the goals, what the business is trying to achieve, the strategic moves behind the business, if they're not giving that information, you cannot expect them to think like an owner. The same way that if you had an equity partner, you would make sure you had meetings to make sure everyone knows where the business is going, how everyone's doing, what financials are like, what the numbers are like in the past, where are we at now? Balance sheet. And then what's the future looking like in terms of our projections? If you had an equity partner and you didn't have those meetings, there would be no reason for them to stick around. The same way an employee, if they're not given the information of where the business is going, what we've done in the past, where can we improve what we're trying to achieve? If they're not given that picture and that information, they cannot make a decision as to how hard they should work. They can't make the decision of should I even work at this place longer. You've got to give them information, alright? Those are the two things you must do. If you want your employees to think like an owner, you must compensate them like an owner and you must give them the information that an owner requires to make decisions in the business. If you have any questions, post below on Facebook or YouTube. I'd love to hear you. My name is Mike Andes. I'll see you here next time on Business Boot Camp podcast. Until then, be great, because nothing else pays.