Chapter 1 - You Have Cash Problems ( Total Business Turnaround Book )

Hey everyone, it's Mike Andes. I'm gonna be reading Chapter one of the Total Business Turnaround book today. Again, this is completely free, so if you could do me a massive favor and just rate the podcast, give it a five star. Tell me what you learned from the book. I'd really appreciate it. It gets the message out to other business owners that are trying to find us and find the message and trying to get help for their small business on podcasts. It's almost impossible to get noticed without having other people tell you about the podcast. So if you could share this with someone, make a five star, that would be consider payment that's required for this free version of the book. So without any further delay, Chapter one of the Total Business Turnaround Chapter two You have a leaky sales process why you don't have a million dollar business Reason number two you have a leaky sales process. In this chapter we are talking about sales processes that let leads fall through the cracks. Lead efficiency is the key to making money. It considers your whole sales process. It starts when a customer is a prospect. It ends when the service is scheduled. Close ratio is the number of accepted estimates divided by the number sent out. It's an important figure to track. Later we will learn how to use it to determine your business's financial health. Yet your close ratio lacks one thing. It does not consider the whole sales process. It doesn't tell you how efficient you are at turning prospects into customers. Most business owners self report converting about half their leads into customers. I often later find that their real lead efficiency is closer to 20%. Why? Because they are only taking into account their close ratio. To understand your effectiveness, you want to measure the full sales process. That's what we are doing now. In this chapter we will review the sales process. Our goal is to spot leaks and find out what's keeping prospects from becoming customers. This is low hanging fruit when it comes to business growth. Take people who are already interested in your service and maximize the odds of closing the deal. Everyone wants to learn the new marketing hack to get more leads, but they ignore the process that turns that lead into a customer. There are eight steps in a typical sales process. The first takes place when the prospect contacts your business. Often these leads will come in through your website. It could also be a phone call, a direct message on social media, an email, an online chat. It doesn't matter. The important thing is that the prospect contacts your business and in some way says I need service. Stage two takes place when your office replies and sets up an appointment. It's this stage where the prospect winds up on your calendar for a consultation or in person estimate. In step three, you go to the property and assess the work. This is called an in person estimate. You will walk around the property, determine the scope of the job and meet the customer. It's important that both of you understand the details and expectations of the project. During step four, you create, format and send the estimate. This usually means compiling notes you made during the assessment. Then you put them into a proposal, determine a price and send it to the customer. Do this using email or text messages. The fifth stage happens when the customer receives the quote and accepts. Ideally, they accept your proposal through a link that leads to your client portal. There they should be able to view and accept the quote with the push of a button. If that's not an option, you can accept your quote with a written response by email or text. Now the job has been accepted. Your office needs to respond and and figure out a day on the schedule that works. That is stage six of the sales process. That may mean a recurring job such as weekly mowing. It could be a one off project such as a paver patio installation. The important thing is to propose the scheduling details to the client now that the job has been accepted. Step seven requires getting the deposit paid and credit card on file. For large one time projects, collecting a deposit before starting the job is common. For some recurring services, you may require a card on file to ensure payment after accepting the quote. People often automate this step and set it up through email or text. If you don't have the necessary software, you can call the customer and ask for their deposit or card information. In the eighth step, you finally put the job on the schedule and can get started on the project. Here's the problem. Every step of this process contains jumping off points. At these points, the ball can easily be fumbled. The customer chooses to not proceed further in the sales process. Your close ratio only tracks leakage between steps four and five. That's when the customer receives and accepts or denies the quote. That's important, but it's not completely comprehensive. To improve your lead efficiency, you need to understand the whole sales process. Let's look at some situations where leakage happens earlier. It happens at each stage of the sales process. Here's 1. Your estimate request form. Maybe the customer starts to fill it out, but then they realize you asked for 20 pieces of information. Or they do fill it out, but they forget to hit submit. Perhaps they do hit submit, but it doesn't go through since the page is slow to load or they have a bad Internet connection. There are many reasons someone might not finish your request form. The challenge is we don't even hear from them. We just assume I can't get any new leads Leaks can happen even when a customer contacts you via phone. This could be voicemail messages that are unclear or incomplete. You never get their contact info. The customer expects you to get in touch, but you can't. They didn't say their address or phone number clearly enough. Or maybe you did get their information down, but now you can't reach them on your return phone call. While you're playing phone tag, they may be moving on to request a bid from your competitor. This is why at Augusta Lawn Care, we use Command center and AI technology to answer our phone 247 if you answer your phone 40 hours per week, it means that more than 75% of hours in the week you don't answer your phone. During those closed hours, on average, only 38% of missed phone calls leave a voice message. Step three, as mentioned earlier, is going to the property. But what if the customer called during the spring rush? You're super busy. You can't get there for a week. Or you get there fast enough, but you can't find the time to put together a detailed estimate and price proposal. It's easy to lose people with these hiccups. While you're scrambling, another provider can swoop in and land the job. During stage four, you send the estimate, but what if that gets sent to their spam folder? Or they do get it to their inbox, but it's buried beneath 60 other emails. In step five, the client should review your quote. That can't happen if they don't understand how to use the client portal you send them to. If they have to jump through hoops just to accept a quote, it may never happen. Yet we assume the customer didn't want the work or thought it was too expensive. We assume this because we have never heard back from them. Even if the customer does accept the proposal, you can still lose them during stage six. During this part of the process, your office should respond with scheduling info. But what if the customer didn't follow the right steps? Maybe they didn't input their payment information correctly. Since you can't collect on the deposit, the job never gets scheduled. Perhaps you reach out to get a credit card on file. You require it for service and your reminders get lost in the shuffle. No response, no credit card. No completed work. As I see it, a job is not accepted until it is confirmed and on the schedule. Also, you must complete all the sales steps. Set the customer up with a date of service. Once you have done that, you cut out most variables. The customer stops contacting other providers until you've gotten your deposit and booked them. You can't be sure you've landed the job. Little mistakes cost you work. Sometimes it's just a communication issue, for example, playing phone tag or filling out a complicated online estimate form. Other times it's overbooking or simple mismanagement. All problems that don't reveal themselves in your close ratio. Worry less about increasing your leads. Instead, plug the leakage in your sales process. Why does so much focus go to the close ratio? One reason is that other leaks are tough to figure out. Lead count. Super easy to measure. Close ratio is also easy to measure. Lead efficiency? That's harder. It forces you to look at all the stages of the sales process. More steps, more leaks. It involves factors that are tough to measure. It's easy to count website visitors, clicks and estimate conversions. Picking apart your sales process is hard. You must study each piece to see why these clicks didn't turn into paying customers. So how do you plug those holes? Let's start with stage one. A prospect contacts your business. Your goal here should be to make things easy for them. Don't ask for 10, 15, 20 information fields. You don't need their shoe size or their Social Security number. Get the information relevant to the quote. Omit everything else. The main goal here is to move them forward in the sales process. Remember, the customer is coming to you with a problem. Their goal is not to get a bunch of estimates. It's to have their problem solved. Make it easy for them. When they come to your website, they should be able to see how to contact you. One way to do that is put your ESTRA request form and phone number above the fold of your website. Make sure you do that for mobile and desktop versions of your website. Above the fold just means that you don't have to scroll down or go to a different page to see your contact information. It should be right at the top of the homepage. Stage two is setting up the appointment. There are a few ways you avoid leakage here. One is to use appointment windows. You don't have to give a specific time for every estimate. Consider setting up a one to two hour window of time to show up in. This gives you some flexibility. As the estimator. You have to set up many in person appointments each day. You should be able to automate reminder messages for the client. This will ensure that they are on site for the estimate meeting. And don't forget, you can also remind them manually on your way to the property via phone call or text. One simple way to increase lead efficiency is to schedule more time for in person estimates. Instead of doing estimates on Fridays only, can you also provide in person quotes from 3 to 5pm each evening? I can guarantee getting to customer's property faster won't reduce your close ratio. It will only add more chances to connect with potential customers. You'll do it before your competition. For many jobs, the first estimate in hand is the estimate that gets accepted. Certain jobs don't need in person estimates. You don't need to lose an hour just to get the square footage of a lawn, house, rooftop or driveway. You can collect this information from satellite images. You can also find it on house for sale sites like Zillow or even Google Street View. Set up your office staff to be able to take phone calls and sell the jobs on the phone. Cut this step from the sales process. Reduce the number of in person meetings as much as possible. It saves time and removes jump off points for new leads. Another way to boost your lead efficiency and prevent leaks is to give price ranges on your website. For example, on Augusta Law and Care's website we show picture examples. They show small, medium and large properties in our area. The customer clicks on the one that looks like their property right away. We can give customers a price for mowing their lawn. Then we can upsell them other yard services. Some customers will wind up selecting a property smaller than their own. Others will go bigger and pay more than they would have if we had measured the property yourself. It rounds itself out. It also cuts down on overhead. With this option, you don't need someone always answering the phone to give out prices. They also don't need to be out on the road meeting customers in person. If you are doing larger projects, you can also use time on the phone to qualify customers. Then you can set up an in person meeting. Are they a good fit for your business? Do they have the right budget? Can you perform the services they need? We can figure this out on the phone. It will cut wasted trips. The trips are from the estimator. They are usually a very skilled and expensive overhead employee. If you do meet the customer, ideally you give them the pricing fast, format it and send it back within 24 hours. The longer you make them wait, the more likely it is they will go to someone else. No one will ever complain about you getting the pricing info to them too fast. When you go out for estimates, try writing your notes from their driveway. Do it before you leave the property. You will remember more useful information since it's fresh in your memory. To complete your estimate notes efficiently, use a template. Copy and paste the standard phrasing for any of your services. For example, instead of titling the estimate as Install BARK Mulch for 799, I would have a template of estimate notes for bark mulch installation jobs. The title would be Install bark Mulch and the subtitles would be as follows. 1. Bar pull weeds in flower beds along driveway and throughout front yard. 2. Haul debris to dump. 3. Deliver and install five cubic yards of medium brown bark mulch number four clean up and blow off the walkways. 5. Video job record for service crew. You can store these templates on your cell phone notes app, Google Drive, or your CRM. Add in specifics manually for the unique property you are creating the estimate for. This saves time. It also impresses the customer. They'll appreciate a quick, detailed estimate within minutes of you talking with them. The added details in the estimate notes will prevent confusion. They will also prevent debating over the invoice later. Pro Tip when you have to go on site to make an estimate, take a video of the job. This eliminates the need to come back to show the crew the property. You'll be able to hand the video off to your project crew along with any estimate notes you took. They'll be able to take it from there without needing you to come back on site. The estimate notes are the checklist for the crew. Between these notes and the video, they should have a full grasp of the job and how to perform it successfully. This strategy will make your operations much more efficient. The more crews you have, the more important systems like this become. During the fifth stage of the sales process, the client receives and accepts the quote. Make it easy. Keep your client portal user friendly. Reduce the need for passwords and login information. Ideally, they can click one button from your email and immediately see the quote. You can also attach a PDF of your quote in the email. This ensures the customer has the information they need. The customer sees the quote. They see it even if there are technical issues with opening the client portal. Some people like to send long terms and conditions with the estimate, or they force customers to sign a long contract. While that may be appropriate in some cases, it's not always best if you are trying to maximize growth. Signing contracts with pages of fine print is friction for sales. This is true for small recurring jobs. They scare customers away. Scaring customers away is a surefire way to not build a $1 million business. Be careful that your quote for home service doesn't feel like the customer is buying a 30 year home mortgage. Contracts aren't always bad. They can weed out bad clients. This is especially true when you aim to maximize profits, not growth. You just don't want them to scare away good customers when you're trying to grow to seven figures of revenue. Another thing to think about in the fifth stage of the sales process is the open rate. People look at texts more often than emails. Sending estimates via text increases the view rate. We send all our estimates out via text and email at the same time. I do not want any leakage due to spam filters or cluttered inboxes. In the sixth stage of the sales process, your office reaches out and schedules the job. There are a few ways you can do this more efficiently. Start by budgeting labor hours more deliberately. Assign an accurate number of budget hours to every single estimate. Every job, every meeting, every task. This will allow you to accurately schedule jobs months into the future. This is easiest to do once you optimize your route pattern. For example, if you have a recurring series of jobs, it helps to be able to move left to right or top to bottom in your territory. That way, for recurring jobs, you will know exactly when to schedule a new customer based on their address. Remember, our goal is to give the customer a date of service as fast as possible. This will lock them in and secure them as a customer. You can avoid overbooking by setting up labor capacity alerts in Copilot CRM. This way you can get alerts if you try to schedule a job that would exceed your labor capacity. This prevents overbooking. It stops the need to call customers back to reschedule. That could make us lose the job even after they accepted the estimate. It's tempting to put as much on the schedule as possible, but if you are regularly exceeding your team's budget hours, it will cause burnout. Your best employees will get burned out since they are forced to work more and more overtime. Mistakes get made. Customer relationships suffer. Team morale plummets. Employees leave. The workload keeps growing. It is a vicious cycle. It's better to budget your hours well. You should do so with confidence that you have enough workers. Then you can get the job done as promised. Having software like Copilot warn you when you're about to over commit is an easy way to make this happen. The seventh stage requires either a deposit or a credit card on file. This usually happens once you've established the date of service. After that you want to confirm they have a credit card so you can charge them at the end of the billing cycle. At Copilot, we removed this step. Customers must enter their credit card before they accept the estimate. You can do the same for projects that would otherwise require a large deposit. When you accept checks as a payment method, it could take a week or more to get the details squared away. It also requires another touchpoint with the customer to secure the down payment. At Copilot CRM, we use automated deposit thresholds. When an estimate is high enough, we automatically ask for the deposit. This means that when we get notified an estimate was accepted, we can put the customer on the schedule. We also know that the deposit was already paid. The eighth stage of the sales process is something we are currently working on at Copilot Automating scheduling. We call it drone mode. It will use budget hours, the customer's location and your cruise skills. This lets it quickly know when you can schedule accepted jobs. We've been perfecting this technology for a while. We want to ensure that when a customer comes to your website, they can accept the estimate. They can also put their payment info on file and get a date of service. They can do all of this before they leave the page. Make this process as quick and painless as possible. Our goal is to cut out all the steps between stages one and eight. It's so much easier to get a customer on the books when their estimate is already on your website waiting for them. They get the price. They accept it. They input their credit card information. They get on the schedule. They have crossed the finish line. They will now stop contacting other vendors for bids. The more streamlined your sales process becomes, the more prospects become customers. Don't waste your marketing dollars. Use them to bring people in and get them scheduled effortlessly. I mentioned at the start of this chapter that diagnosing a leaky sales process is tricky. At this point, you understand why. I also mentioned that your close ratio is a valuable tool even if it only paints part of the picture. Even if you can't measure your lead efficiency precisely, be aware of all the steps of the sales process. Knowing where the leaks can occur will help your business. This awareness will help you convert more prospects into customers. I often use a business's close ratio as a diagnostic tool when I go in for a turnaround. My time with the business may only last a few hours. The close ratio gives me a quick insight into the business. If most of the estimates you send are accepted and you still have a cash problem, you can raise prices. We will Take a closer look at raising prices in the next chapter. The only reason not to do that is is if you have plenty of cash. You want to focus on growth by keeping your close ratio high. You don't mind lower profits in exchange for more revenue. When your close ratio is under 25%, it's a red flag. It means your customer acquisition cost will likely be very high. If you are paying for marketing, you will have to buy four or more leads just to get one customer. Advertising and add in costs associated with sending proposals have real costs. It takes many leads to get one customer. This makes scalability very difficult. A service business's goal is to take $1 in marketing spend and turn it into 10 or $20 of profit as fast as possible. The black box is between marketing spend and profit. It contains the systems, equipment and skilled labor in your business. You can't run an efficient black box with a super lows close ratio. It eats up too many leads so it wastes marketing dollars. Only 1 out of 5 cent estimates are getting accepted. If perceived value exceeds price, the transaction will go through. Lower the price to boost the transaction's chance of going through. The fastest and easiest way to increase your close ratio is to lower your price. That can turn into a race to the bottom. In theory, you would have a 100% close ratio if you offered your services for free. In Home Services, everyone knows you can get the customer to accept if you lower the price enough. Increasing value is much harder. How do you increase value? The first step is to fix your sales process and make it quick and easy for customers to give you money. You can't let leads slip through the cracks on their way to becoming customers. Read this chapter a few times. Take notes of areas where you can improve your sales process and prevent leakage. If you don't reduce sales leakage, you will face an uphill battle to grow your business. Excess leakage will demand many more leads to get enough customers to build a $1 million business.