Business Bootcamp: David's First Zoom Call

Welcome back to the Mike Andes 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. For the next couple of episodes, we're going to be having one focus Business Boot Camp. We've been challenging four different home service business owners to overcome their challenges and build their business into something great. Right at the challenge is a zoom call. Check in that we do along the way. Mike has tons of great advice in here 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 a little 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 they 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 Andes YouTube channel. So let's get into it. This is the first call with David from Headband Movers.

Hey, everyone, it's Mike Andes. And today I'm going to be showing you a zoom call from last week's episode of Business Bootcamp. Last week was Episode A Business Boot Camp, where we would follow different business owners for 30 days and try to help turn around their business. Now, today we're talking to David, who is the owner of Headband Movers, a moving company headquartered out of Denver, Colorado. Now, he has a small team of about six people, but there's a couple of people on the team that are really dragging them down. And he's having a lot of cultural issues. Today I'm going to be going over open book management, profit sharing, and what he needs to do to make sure he can keep and retain his employees and keep a good team culture. This is just a part of last week's episode, so if you did not get the entire episode, check it out here. Episode one of Business Boot Camp. It was fire. But now for the full extended version of the zoom call. Here we go. How's it going, David?

Good, man. How are you?

Good, good, good. Let's jump in. How was the week so far?

Pretty good week. Team stayed busy.

Dealt with some frustrations with the crew. Got some guys that are giving me a lot of pushback. There are guys from other moving companies, so it can be a challenge. Bringing veteran movers on. They just have bad habits. Right. And they don't really play into the culture. So it's been dealing with some headaches with a few guys, but other than that, things have been good.

Cool. Let's dive into that a little bit. And then I want to talk about kind of that middle 10 days of the month that we're kind of struggling to fill up right now. I had a few ideas about that one to bounce off of you because I know that's kind of a limiting factor to grow somewhat. So let's dive a little bit though, into the crew side of things. First and foremost, how are they being compensated? Is it an hourly? Do you give them some sort of compensation based on customer service or speed? How is that all equated?

Yeah, right now everything's hourly. And then I do bonus pay for like five star reviews. You know, guys that are active in our slack chat or chat, guys that are following policy, stuff like that. I give them all bonuses.

And then you're charging the customer. Not by the hour, but mostly it's by. I, I know I talked about this last time. Is it like the, the room, et cetera?

No, we do an hourly rate for the customers and then we do a flat rate truck fee.

Got it. Okay. Um, in terms of the frustration side of things, what side of is it? Mostly that's is them showing up. Is it sloppy work? Is it not fast enough? What's kind of the, the, the frustration.

Right now with these two guys, it's. They're both constantly late to work, right. So 15, 20 minutes. So then the entire crew and the dispatch manager waiting on these guys to start the day and then trolling me inside the team chat.

Not following policy, uploading when they're supposed to be uploading. And then if I ask them to do something, it's always like, why?

Instead of, you know, instead of just doing what they're supposed to be doing, they just, I don't know, for whatever reason, they feel like they can give me pushback.

I would imagine, like, speed is actually not a huge issue because the customer is kind of watching them the entire time. Is that right?

Yeah, yeah. Most of the time the customer's there. Speed's not a problem. Like, all my guys are efficient. All my processes are efficient if they're following them. So we really don't ever get any sort of complaints from customers that the guys aren't moving quickly.

Okay. Yeah. Cause I would imagine especially on hourly, if someone's late by 15 minutes, you have five guys waiting. You're talking about 40, 50 doll dollars wasted, let alone the, the time value of that money. Okay. Do you guys have team meetings very often at all, David?

Yeah, so I do a team meeting once every two weeks. We do a, we do a promo day. All the guys go out, I pay them to do promo, I take them to topgolf, and then we do a, we do a big team meeting.

Got it. And, and do they have any sort of profit sharing or anything like that.

Other than the bonuses? That's, that's pretty much it.

Okay. Yeah. Because like, even when we do P4P, it's still a matter of, like, there's some things you can't wrap up into either hourly or P4P. And a lot of that has to be like being on time, the intangibles of, like you said, taking the pictures that they should be, et cetera. But what's nice about profit sharing is it's completely based upon your objective opinion and goal posts that you can move around. Right. And so, you know.

Have you ever thought about doing a profit sharing program?

Yeah, I've thought about it. Actually, I didn't think about it until I started watching your channel. Watched a couple of videos on it. I've considered it. Just, just haven't, you know, taken the chance to, to do it yet.

Yeah, because like, some of it, some of it just gives you an opportunity to talk about, like, why, like your reasonings, especially when they're asking why a lot, you know, the inclination is to be annoyed. And I, I'm the most annoyed back in the day was when people question why for every little thing. The thing is now when they ask why, I actually enjoy it because I'm able to explain from a business perspective how it affects the profits. And now they actually care about that. Right. And so, you know, making that a meaningful amount is good in my opinion. The thing that you're going to save and the reason why you'll actually make more money from the business perspective, doing a profit sharing program is not only then just being on time and the savings there, but your retention will typically be higher. And it's very easy to see who buys into the game. Right, right. And I think for you, like, the struggle has been finding people. So these guys, you kind of let them do their quote unquote bad behavior because you just need bodies. Is that right?

Yeah, that's right. Yeah, we're spot on.

Okay.

What, like, if you gave a percentage of profits on, like I say, a quarterly or monthly basis, what do you think? That would mean need to be for them just to get interested. If you didn't say monthly because your churn is pretty high. So monthly might be. Need to be what you have.

Because, like, we. We've played with. We've played with like, for example, if they have perfect attendance for the month, they get $100 gas card. Right? And then we have other. And that perfect attendance is a matter of, like, they're not allowed to do anything. Like, even if they're sick, that would be considered imperfect attendance. So that's like one thing we do for tenants. We do another thing for profit sharing. And that's the one where it penalize them for being late or unexcused absences. Right. So that might be something to think about. But, you know, you got two kind of bad apples currently are people that might be trending in that direction.

No, no, everybody else on the team is solid. Everybody else on the team comes to me and they're like, hey, man, like, can. Can you, can you fix this? It's. It's really messing up the culture because most everybody's really positive except these two guys, right? Job and moving. Stressful, man. Nobody wants to have a complainer on the team the entire day.

Right.

But yeah, the rest of the crew's solid. Everybody's positive. Everybody's great.

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And then in terms of finding quote, unquote replacements for them, if you had to. Do you already have an incentive program for the current guys that are working with you if they brought in new hires?

Yeah, yeah. If they bring in a new hire, they get like $250 bonus if they stick around for 60 days.

Okay. Okay. All right. Okay. So I think for that one, like, I'd be really interested to see if you had a team meeting and said, hey, guys, I want to share some of the profits. Obviously, the biggest thing in our business is that we're positive and we work together the entire day, and it is stressful. Because you have the customer there. Right. Like with lawn care landscape, it's somewhat easier because you can kind of just unplug from everything that's going on. If you're having a bad day, if you're having a bad day and moving, like you're with customers that are also very stressed, you know, moving is not fun. And so, you know, having a team member that's not having a great day or is going to be negative, it just tear anyone apart. Right. So yeah, that'd be interesting. Right now, is the business a spot where it is consistently profitable and could give profit sharing?

Now? We are, yeah. So the beginning of the year was tough, man. Like, we got hit with COVID My entire team got Covid in December and then I had to pay all of those employees. I had to cancel like 15 jobs. It was just a complete disaster. Business almost went under. So we had to do a lot of peer to peer loans. And I spent like all my profit the first half of the year paying all those loans off to get out of debt. And so now we are profitable over the last like three months.

Okay.

Have you looked at the erc, the employee retention credit, by chance?

Yeah, so we, we actually got approved for the ERC credit for startups. They ended up changing the legislation. So we do qualify for that. So we're just waiting on, we're waiting on a check.

Okay. Okay. Like the challenging part is when you're first getting started, if there is no profits, having a profit sharing program is absolutely meaningless. Right. So I haven't seen your financials, so I don't know exactly what that number would look like. And it could even be a matter of like, hey guys, we got to pay off these loans from last year. Once that gets down to zero, then we're starting a profit sharing program. And so one of our largest locations that Augusta has done did that when they first joined, they had like 150, 40,000 in debt. And they just put a big thermometer in the office. And basically every month they would do open book management and they'd show how much they're chipping away at it. And then it's like, hey, once we hit zero, profit sharing starts. And so it took them a year, year and a half to pay it all off. But everyone knew what the goal was and now, now they're starting to see the benefit of that. But it's a way to open up the books and share why things have to be done a certain way. Right. What is the meaning of the, of this decision? Well, Here it is directly on the profit of the business. You know, most guys, if you don't do open book management, didn't know how much, you know, the cost of fuel just crushed so many people this past spring. Right. But if they see, okay, went from 3,000amonth to $6,000. Oh, that's a big problem that, that can be. Hopefully get more buy in when it comes to. Okay, well why do we need to park the trucks? Why do we not leave them idling for 30 minutes? Like all those things that now are like, why this, why that they got to know, they have the information of like, here's how it actually affects the bottom line.

Yeah, yeah, like that.

Do you open those books at all or not yet? I know it's not easy, especially when you're first kind of getting going, getting started.

Yeah, yeah. So I do a monthly meetup with my bookkeeper and my cpa. They're actually working on my books right now. They're just, they're short staffed and they've fallen behind. So I'm meeting with them next week. I'll have all my reports and everything in hand and know exactly where things are at.

But I mean, sharing those numbers with the team. Have you ever done that?

No, No, I haven't. I usually keep, keep that all, keep that all to myself. I, I've discussed like, you know, some of my expenses like insurance and fuel and materials. Especially materials. Right. I'll explain to guys, you know, why you shouldn't be using this much stretch for stretch wrap. Because this month I've spent like $500 on stretch stuff like that. But I've never really opened the books and disclosed that to the team.

If you don't mind, like, what's kind of your apprehension in doing that? Cause I had the same apprehension back in the day. So what, what, what's kind of holding you back or why would you think it, you wouldn't want to share the numbers with the team?

Honestly.

I just think of like as a business owner, that's something that you should always keep personal. Right. And for what? I don't know why I think that, I just do. But I've never even considered it in the past. I just thought that's, that's, that's how people operate their business.

Yeah, like I had the same thought and this is the thing. I honestly got to the point where we were doing so poorly that I figured, you know what, my last ditch effort is to share all the numbers of the team so they know just how bad the situation is. And hopefully they find a different gear. That's what it came down to for me when we were. When I, When I opened up the books for my team. And I really think if you're doing really, really poorly and you have a lot of debt or it's, It's. It's pretty skinny, it's a very good thing to share with the team because if you do now they. Because, like, I guarantee you right now, David, they just assume you're just raking it in with, like, those trucks you have look amazing. The branding is fantastic. The problem that employees have is they see that and they immediately identify that as, he's just raking money in hand over fist. Now, if that's not happening, then it's a matter of, okay, now they have this massive change of thought. Like, they're not going to ask for raises. They're not going to be trying to like, do. Do like asking about why you need to increase the profit. They. They can see like, my job is on the line if we don't turn this business around, right? And then if you're doing really, really good down the road. Now it's a matter of profit sharing, right? I really think you got to open up the books. Then you do profit sharing once. It's becoming really profitable. So now they still are motivated to improve that bottom line because they get a piece of it, right? And I think it's transformational because I, like, every employee somehow thinks that their boss just makes a bunch of money and they'll find evidence to prove it. The trucks for you look phenomenal. Like, your branding is on point. They look amazing. And I really think that an employee would look at that and be like, okay, if he can afford this, you know, 60, $70,000 truck, he's probably making a, you know, half a million bucks a year. Those come up with those random numbers in terms of what you're taking home and pay.

And so whether you're doing really, really good and you should be doing more profit sharing or you're doing really poorly. And it's a matter of like, hey, guys, you know, I literally made. And especially you could use this. This first half of the year when I was struggling, like, we lost money. And when you say that, they see your behavior of showing up every single day, grinding and hustling, like, dude, this guy's committed. We lost money and he's still showing up, right? And now when they ask, you know, you say something that needs to happen in the business, they will not ask why, because they have all the Information that you as the owner have, has. And that is we're struggling, we need to cut. The reason we gotta save on the shrink wrap is because we can't afford 500 bucks a month. We gotta figure this out. And so I would really encourage that. Like after I say that, is there still apprehension as to like them using information against you or something like that?

No, no.

Like one thing we did that was really helpful because a lot of the guys, honestly, Frontline, if you showed them like a profit and loss, they just like cross eyed and would not care. So one thing you could do is if you take a $1 bill for every $10,000 in the business and you literally just sit down with all the revenue from the past 10, 11 months, right year to date, you could do even right, run the P and L, you could pass those out. But then for every dollar, every 10,000 in revenue, just give them a dollar, have a dollar bill stacked up and then just go through your P and L and start handing out, you know, insurance, okay, there's $3 bills that went so and so, okay, fuel, okay, there's four that went to so and so and you just go. And all of a sudden they're going to see either a, a very small amount of profit or potentially no profit. Whatever it is, they're going to actually have the physical evidence like where the business is at. And if it's, if it's a lot left over and there's lots of profit, that's when you have a profit sharing program to keep them motivated so they get a piece of that. But if it's, if it's struggling, especially in the first six months of this year when it was tough, I would share every number. Like I guarantee you the buy in from the team would dramatically go higher when they see like, okay, we're not crushing it or there wasn't money flowing in the first six months of the year and David was still hustling his butt off. Like the buy in from your team just jumps through the roof. Especially as you grow in the business now to the point where you're not in the field as much and you're not with them, they don't see you sweating. They just make up stories like, oh, he's driving around in the air conditioned truck all day, I'm sweating and hustling, he's pulling in all the money. I'm making 20 bucks an hour. Like they'll come up with all these stories unless you give them the information that's actually happening in the business.

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I mean, I hear those stories, right, because there's four guys in the company that just really have my back.

Right.

They're all in. They tell me, and most of the time, like, I really don't want to hear it. But I think you're right. I think that there's a lot of value in that. So I think I'll do that. I think that I'm going to look at the first six months of the year and just put it out on the table and just say, hey, you know, this is what I had to deal with for the. For the first six months. This is where I'm at right now.

I think it would be a shocker for them to see how much money I'm actually making right now.

Yep. I guarantee you the two guys would completely change their attitude. And it would give the other four guys that are good the latitude to say things to those two guys that are very pointed when they're complaining. So if they start complaining about how much money they're making or how much you're making and they say something like that on the job or they're complaining now, those four guys who have bought in will have the artillery because they have the actual information and data to throw back at them.

Right.

So that's the one thing I'd love if you're able to have that meeting, even if it's later next week, because you probably want to prep for it a little bit and look over your numbers and understand them. But if you can somehow get a little bit of that on tape, that'd be very helpful. And I'd like to see your.

Your fears right up to that meeting, because I was freaked out in my mind when I first did it. And then what will you feel like right after? Okay. And then open it up for questions. Ask them, hey, guys, from now on, I want you guys to be able to walk up to me and ask me how much something cost. I want you to know how much money we're making, I want you to know how much things cost us. And here, from this day on, you're going to see these numbers. And right now, they might not be great in the future as we become more profitable. I want to share a piece of these profits with you. And I don't know exactly what that profit sharing program looks like, but for now, I know that I can't expect you guys to think like owners and be efficient and be profitable if you don't have the information. And that's what I'm doing today. And I'm being vulnerable and maybe I'm making a mistake, but this is what the business is doing. And I want you to have everything that I know in your mind when you're out working for the. For us, every single day.

Okay?

Yeah. Last thing, real quick. I know I'm over time. Those, that middle part of the month, I want to talk about that next week, too. But have you ever tried doing more commercial packing or commercial moving?

Yes. When the pandemic first happened, all these offices were closing up. So we were, we were doing a lot of commercial jobs. But we dialed it back over the last year and yeah, we really haven't been doing a whole lot this last year.

Is that more consistent, is that more consistent than residential in terms like end of month, beginning a month? Cause that makes total sense, like with, you know, rents and leases ending, end of the month.

Yeah, I'm not, I'm not sure in my experience, like, if I'm going to move somebody's office, it's, it's just like, it's really random.

Got it. Because my thought, my thought is like, even if, if you're really busy to capacity for, you know, the month, you know, the 10 days before and 10 days after the, the end of the month, it's like, hey, we're only going to book office moves during this week. And you just literally select that week every month. And then you just start running ads against potentially, you know, office managers or business owners in your area.

Or even talking to property managers, especially if they are, you know, commercial. If they have, they can have up to 2, 300 leases that they're managing. Commercial property manager. And you know, if you can somehow be the referral for them, that might be an option. But I'm sure you probably have information like, did those not work very well? Like, the commercial side is not something that is super profitable. Like, what was the sticker. Stickling point for that?

The biggest thing was, you know, so an office manager books the move, right, Gets permission from the owner. The guys come in, they do the job, it's profitable most of the time. But the guys never get tipped because the owner's never there to give permission to the manager to tip the guys. So I'd say like 90, 95% of the time the guys don't get tipped on commercial jobs, and then they don't want to do the jobs.

Right. Could you raise your hourly rate by five bucks and then just give that to the guy?

No, because my. My guys make more and they make more hourly than any other. Any other guys in Colorado.

Well, I think this potentially could go back, though, to, you know, opening up their books. Because if you're really able to share everything with the team and explain to them, like, hey, guys, I understand during this week we're not going to make a much on tips, but here's why, like, we got to make sure this, this week we don't lose money every single month. Month.

Again, if you're doing good, it's a matter of they're going to make a piece of the profits. If they're. If you're not doing good, it's like, we've got to survive here and we've got to be able to do this work. And they're like, they understand why the tips are less during that week. And you've been very clear with them in terms of this is the week every month, you know, and they already know which week of the month that is. And yeah, they might dread it a bit, but because of all the information, they understand why you're doing it and why you're pushing them towards office. And you've been clear with them, like, hey, I'm trying to minimize the damage to your paycheck by putting it all in one week when were otherwise slower. Yeah, right.

Yep, I can do that.

So cool. So this week, kind of homework would be. If you can have that meeting, that's not an easy meeting to have. And I don't. I'm kind of. I don't even know if you'll be able to have it next week. But, like, if you can somehow have that meeting and open up the books, by all means. I really think you walk out of that meeting completely, like a big burden off your shoulders. And the four guys that currently have bought in the fact that they're already bought in, like, it'll take it to the next level. Like, it really, really will. In their mind, having that information, there'll be a. Like you're just loading their gun with Ammunition. When those other guys are complaining on the job, when you give all the information to them, there's nothing that is obtuse or gray or like that. They think you're hiding. You just shown everything to them. And when. And when you can say, hey, I'll tell you what the hourly rates are, I'll tell you anything. Because now they've seen the bottom line. They. Okay, if we're struggling, you have. You should have no shame in saying, we charge $80 an hour, whatever it is, to the customer and being very clear with those numbers. There's just nothing I've ever seen where it's like, massive negativity after that. So if you can pull that one off, that'd be great. And then maybe just start thinking about potentially having a week where you do something. And it might not even be the commercial, like the office side of things, but is there another service, whether it be packaging or something else for the week, that it's slower that we could just advertise to a niche audience for that one week, and then we'll. We'll talk about that maybe next week.

Okay. Yep, I'm on it. I'll make that meeting happen. And then.

Yeah, dude, that's me. Fun. That's. That is an intense meeting. I don't feel bad if you feel like, yeah, I'm a little nervous going in. That's tough meeting. But I remember doing it myself, and I was scared of my brain. It was simply a matter of, like, I was at the point where the business would not have gone forward. Like, we were losing money. No one cared. I was like, you know what? I'm just gonna show them how bad it is. And, man, it just changed everything.

Okay.

All right.

I look forward to it, man.

Yeah, me too.

Have a great weekend. We'll stay in touch.

Yep, you too. Take care.

Yep. Alrighty. Bye. Bye.

Bye.

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