Business Bootcamp: David Wagner Call #3

Welcome back to the Mike Andy's podcast where we discuss the ins and outs of owning a small business. If you're new here, the Mike Andes podcast is all about taking your business to the next level. We're covering season one, episode three of Business Bootcamp, zoom calls this week. If you haven't heard, we've been watching four different home service business owners overcome their challenges and build their business into something great. Part of the whole thing is zoom call check ins that they do with Mike along the way. Mike has tons of great advice for anyone who runs a small business. So here's what we're getting into. We're talking to David from Headband Movers out of Denver, Colorado. This one is tricky. David has been dealing with some serious pushback from his employees. Not only that, but hiring new employees and keeping them around is a problem too. This sounds like a work culture problem and we just might be able to fix it. We're going to talk about what open book management and profit sharing can do to get your employees on the same page as you. As always, you can find all this and more over at the Mike Andy's YouTube channel. So let's get into it. This is the third call with David from Headband Movers.

Hey everyone, it's Mike Andes. And today we're gonna be watching the full consulting call with David Wagner from Headband Movers out in Colorado. A piece of this was used in last week's episode of Business Boot Camp. You can see in the description there's a link to last week's Business Boot Camp episode. But this is the full consulting call with David and we're talking mostly about the fact that he only needs laborers for about two or three weeks. I think sometimes we as business owners think like, oh, I need to offer like full time year round work when some people actually looking for little gigs two, three weeks before they go to school, between jobs and etc. And that's why I really pushed him on today is how do we fill in the gaps when we really need labor. But in that middle period, there's like no work to be done and he's literally spending money on just having his guys walk around and give out flyers and do very basic work that's losing money and killing his profit margin. So let's talk about how you can get employees that are seasonal but in a very, very small window of time. And for his case, just a couple weeks long.

How's it going, David? Good, man. How are you? Good, good, good. How was the week? Great week Good stuff. Good stuff. I'm out in Kentucky, so sorry for the background and everything, but.

No, it's all right. I see you're out at the convention doing your thing.

Absolutely. So we talked last week a little bit about the potential of trying to pay the guys more of a percentage base instead of an hourly wage. Were you able to run any of the numbers in the back end or kind of seeing what that would potentially look like if we did that?

So I wasn't able to run the numbers for that. I lost the notes that we had. So I was unfamiliar with exactly what I was doing with the software. But I did get the chance to sit down with my main lead and my dispatch manager, open up the books to them, and it went really well.

Cool. So what was their kind of reaction to that?

They were surprised about how much money it cost to operate the company.

And what day did you open those books up to them?

So today for the lead and then yesterday for the. For my dispatch manager.

Okay. And what was some of their questions they had when you did that?

They really didn't have a lot of questions. They were just more so surprised. I kind of explained them while I was opening up the books, and I just said that we. We'd get the opportunity next week with the entire team to actually sit down and dig into it, and if they have any questions, they can just address it in front of everybody.

Got it. And they were mostly surprised, just like, operating, obviously, the bottom line being potentially lower than they thought, etc. Do you feel like since you talked to them either today or. I know it's been a small sample size of one or two days, but, like, did they change their behavior at all? Was it a matter? I feel like those are the guys who've already bought in, more or less the other crew members that are going to be the ones we're really trying to work on. Is that correct?

Yeah, that's correct. They're. They're both bought in. They're both solid.

So it's. It would be the. When we get the group together, some of the newer guys, it'll. It'll. I think it would be really good for them.

And did you share with those guys just to kind of dip your toe in the water, Feel more comfortable with doing that before you did it with the whole team next week?

Yeah, man. I was really nervous about just even opening up the books to anybody. And then after. I mean that, those initial conversations, I feel a lot more confident doing it, and.

I see now how beneficial it can be. To actually do that.

Good for you, man. Good for you.

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So next week is your plan is basically a team meeting, kind of take 15, 20 minutes, show the numbers, go over them a little bit and kind of just open up the books basically.

Yeah, we're having, we're having a really big team meeting on Tuesday because we're going into the next two weeks just like head on. We have a conference in Vegas and I'm bringing the entire team out so the entire conference can see us. And just going into that, I just really want to hype everybody up and it's going to be the perfect opportunity to open up the books and getting everybody on the same page.

Cool. And is that conference for customers or is it for like a moving kind of trade fair?

It's a military influencers conference. There's going to be speakers from all over the country, A lot of big military tech companies.

A lot of small businesses. It's just, it's going to be a little bit of everything.

Very cool, very cool. And then right now in terms of the market from the marketing standpoint, what are we working on to try and drum up the, the work? I know we're coming to the end of the month anyways, but in terms of that middle of the month, what's sort of the strategy we've been working on so far?

Yeah, so I've been targeting commercial leads and then we've been following up with some commercial buildings doing fires. We've had one lead generated for a small office move, which is great, it's better than nothing. But we're still not generating leads for those commercial moves. It's just going to take some time.

With the Google Ads and everything for everything to click. So the strategy is just continue to do promo with my team. They've hit 100 plus apartment buildings in the last like four days. They've made some really good connections with some apartment managers.

So we're hoping to see a turnaround on that. We've actually already booked two jobs just in the last four days. So.

We'Re hoping that the promo keeps us a little bit busier during the middle of the month.

Okay, and is there a specific kind of promotion that you run during the middle of the month or is it matter? Just like you're basically trying to keep the guys busy by getting reaching out, using door hangers, flyers, whatever it is to connect with those people.

Yeah, we're keeping the team busy. We're making sure that we're keeping the guys happy with their hours. Uh, they're not getting the hours that they want in the middle of the month, but they're all hitting, you know, like 25 hours, uh, which is something manage. Um, and just.

Yeah, just keeping them busy with the flyers and just meeting as many people as they possibly can.

Are you able to pull up by chance 2 things? Number of hours worked, like on payroll last week. Are you able to pull that up by chance? Like you are even clocked hours? Like, do you have like a time clock kind of that you use right now?

Yeah, so I use gusso so I can pull those up. I can't pull them up right now.

Okay.

But I can give you an idea. Last week's payroll was about 4,500.

Okay. And so in terms of total. Here, one second. See here, total hours, so 4,500, I'm assuming that's like what, 200, 210 hours worked approximately, like five guys kind of full time. Ish. 200, 210. Okay, and then what was the total build out? Do you know.

Like build in terms of just revenue for that week?

Yeah, I want to say about 14K.

Okay, so 5, so about $70 is your effective hourly rate. If we just take 14K divided by 200.

So it's 7, $70. And if you're paying out 20, so that's 20. So about 30% of your revenue. 30% of your revenue goes out to wages right now.

And so that was really good.

Yeah, we usually operate around like 40%.

Okay. Okay.

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Did you play with the idea of talking like thinking about, especially your lead guy about doing a percentage based pain, seeing if you could punch any holes in that?

Yeah, yeah. So I've, I've just slowly been bringing up to guys throughout the day, just getting a feel for what they're going to say. So I've brought it up to like three of the guys already and they're like oh, okay, well yeah, that sounds, that sounds interesting. What would that mean? But I haven't had the chance to just really go into detail about it.

And what are you trying to charge per hour to the customer per guy? What do you charge?

I should say so if I pay my guys 25, I'm trying to book each mover at 75, 60 to 75 per hour. So things are slowing down right now. They're getting really competitive with prices. So we're at about 60 to 65. But on the top side from referrals or like realtor referrals, word of mouth, It'd be around 75 an hour.

Okay. Yeah. So like I want to see what those exact numbers are because something's not adding up in the fact that your effective hourly rate is basically 100% of what you're, you're billing out to the customer. Which means that would assume there's zero waste. That would assume that there is no drive time, there is no load time. So it'd be really interesting to know what those actual numbers are for just time clocked in on for a week and then what the revenue is. Because if you're, if you're trying to bill out at 70, but then when I did the math of 14,000 divided by 200, you're at $70 per hour there. That would assume that there is no wasted time in their day. Right. And the reason I want to know that number is because that's going to be determining probably how effective instituting a percentage based pay system is going to be. Is that number was more on if the effective rate was like $50 per hour, which I assume that's more what it's around 50 to 55 and then you're billing out at 65 or 70. That delta there is where the waste is. That's, that's time that you're, there's non billable hours essentially. And so that, that's where I would see the benefit of switching to More of a percentage based pay system. But if you keep seeding that to the guys, keep getting their feedback, I know even if it's something that you're kind of apprehensive about or even just like, you know, you're not sure how that would work, if you can even get them to like, hey, we want to try it out, let's see how that works and try it out for a week and just see what that changes. But first, before we do that, we need a baseline. And that is, okay, how many hours are worked, divide by how much revenue was made, that that's going to give us our effective hourly rate. And then take that number and divide it by what we charge per hour to the customer. That's going to essentially give us what percentage of our day is billable versus what how much percentage of it is non billable time. That's that number is going to give us. And so if we can at least get that number, like from this week, for example, and then whenever you like, ideally next week, you say, let's try it out, or even if we run the numbers in the back end, but until you actually, their pay is based upon it, it doesn't move the needle. Like, their behavior will not change on wasted time until their pay is. And so, you know, if you really want to be aggressive about it on this weekend, look at, okay, how many hours were clocked, what was our revenue on that time? And then divide that number by what we charge the customer per hour. That's going to give us our percentage of time that is clocked that is billable. And then if you run a week and tell me, hey guys, I want to try this out, I want to see if you guys can make more money doing this. I want to give you guys a percentage of the revenue that you make in a day and you can just say, hey, we're going to try it at 30%. Oh, and by the way, you can't make less than you make typically on hourly, just to give them the coverage for that week. Like, hey, for this one week we're going to join this trial period. I want to see if you guys like it more, if you're able to make more money and you can't make any less than you would on hourly. And if you do that for a week and then all of a sudden you run that math and it goes from what I believe is going to be like 70% efficiency to 85% efficiency, that is a lot. That is massive in terms of just profitability. And they'll be able to make more money, right?

Okay.

Cool.

I'll start tackling it tomorrow. Question for you. I know.

You'Re good.

So leaving a lot of money on the table right now for the last two weeks of the month and then the first week of the new month. Right now, in the last three days, I've turned about 15k down in jobs. I have the trucks, I have the equipment. I just don't have the guys. So what do you recommend as far as convincing like a private contractor or just like a part time guy to be willing to want to work only two months, two weeks out of the month or three weeks out of the month?

Have you ever tried to run an ad for like a two or three week position?

Never. No.

Give it a shot. Give it a shot. I think you might be surprised at how many people are actually looking for short term gigs like that and literally just post on Craigslist and Facebook and say, hey, we're looking for the next two to three weeks. You're going to be getting a minimum of 40 hours. For example, someone starting school December 1st, they're moving December 1st, they just finished their job and they got the next five to six weeks or next two or three weeks. For example, we're looking for the next two to three weeks. You're going to make a base minimum of X amount per hour. We give a percentage of our revenue so you can make up to X. So that way in your ad, this is why switching to percentage base is powerful. But now in your ad, you can pitch that two to three week window of time when you're busy and pitch it as you'll make 18 to $24 an hour.

Okay, so the zoom call literally cut out right there. But what I was talking about is the fact that so many of us think in terms of, oh, I need to offer full time positions, et cetera. It's the only way I'll be able to find good people. A lot of times there's really good people that just need a short term gig between jobs before they go to school, between life events that they're going through. And so pitching that as a positive thing instead of like, oh, like it's a negative, it's only a side hustle or a part time job. Some people are actually looking for that and you might actually get higher quality people. And so pitching in a manner, especially if you're giving a percentage of revenue to the employee instead of an hourly wage where you can pitch a range of wages, there is absolutely an ability to for people to make 25, 26, whatever he can afford when it comes to P4P. That's the advantage of doing pay for performance on those short term stints is that upper end of that range can be pretty high and people are going to typically assume that they are able to be in that higher rank and that higher band because they're a high performer. So that was basically what I was talking about. David let's see if he can execute on being able to get these short term employees and pitch it on Craigslist Facebook Indeed she sharing this in local community boards. That's where you're going to find these type of people that are looking for these short term stints.

This has been the Mike Andes podcast. Now you have some ideas on how to take your business to the next level. But if you like what you heard, we have tons of lectures, interviews and more over at the Mike and his YouTube channel that'll be right up your alley. That's all we have for you today. We'll see you next time.

Sam.