Copilot Mastermind 12/01/2024

Hello copilot family. Hope you had a fantastic Thanksgiving. Welcome back to another copilot Mastermind. I hope everyone had a very safe holiday. Ate lots of turkey. If you missed it last weekend we did release what is going to be coming out in December and throughout January in terms of the new customer portal. And so if you do not watch that video, feel free to look at it on our YouTube channel. I know everyone got a notification this past week as well. The new layout for estimates, invoices, the rate US page, the entire client portal being rebuilt, that'll be starting to go out to the client, the customer advisory board throughout December and then you'll be starting to see things in January. So really looking forward to sharing that with everyone. Ultimately we felt like that was the highest impact because it affects your customers and it affects your close ratio, affects how you get paid, how you get deposits and how you actually get money. And so that's where we wanted to start with the redesign. So really looking forward to it. And like I said, you'll be seeing those changes in your account come January. Let's go ahead and jump in. Looks like today we got six questions that came in on the Mastermind form. If you ever have a question, as always, feel free to post it. There is a description down below. In the description of this video you can leave your comments and questions. You can also go to the top of the Facebook group. At the very top there is a pinned post and that pinned post has a link also to the Google form. So any time of the week where you have a question about business, marketing, hiring, anything that I can help you with, feel free to make those form responses. So let's go ahead and get started. First question is coming from Val Silva says it's always from Silva's landscaping company. Our company has been in business for 35 years. We took our business over from our father when he fell ill and was hospitalized for seven months. At the time, we were only keeping the business small enough to provide for our families. The last four to five years we changed our perspective after correlating our father's experience with yours in regards to when you almost lost your life, we've grown our business to $600,000 and projecting to $800,000 this year. Our business structure has always been a partnership, but we are preparing to switch over to an LLC this coming year. Can you explain the benefits of doing so and being taxed as a corporation? Which one do you recommend, S or C? And when should that be established? Do you recommend us consulting with an Attorney or CPA for this. Also, what are the best way to build your business? Credit. Since most of our vendors like local nurseries and so on do not report to credit agencies. Thank you for all your help. Our business really took off after I decided to click on a YouTube video of a kid in a white shirt in front of a whiteboard explaining how to price commercial properties. After that I was sold on all your products and business course. Well, thank you, I appreciate the support. So let's go through this. So first off, you know, sounds like your father being hospitalized kind of forced you all several years ago to really get the business in line. Systems, procedures run it correctly. So.

So now hitting around 800,000. I'm glad you're trying to make this go from partnership to an S Corp. I would definitely talk to an attorney, I would definitely talk to a cpa. But in terms of whether or not you should S or C, I would not do a C corp. A C corp is going to be typically for businesses that have above 100 masters inside of it and is usually reserved for publicly traded companies or companies that are preparing to go public or just have a ton of investors like 100 plus of them.

Also, a C corporation pays corporate taxes which means you can be double taxed. If you have another, you have corporate tax and then you get taxed in your dividends or your distributions to the owner, you get double taxed. So you want to avoid that by having what's called a pass through entity that's going to be either an S LLC or an S corp. So an S corp will do this for you. When you set up the entity you can break apart how the entity is, the equity is broken up between your brothers if that's something that's of importance to you. So I would definitely do an S corp, talk to a CPA or talk to an attorney and they'll help you set that up with the correct entity or equity for each of your brothers. If that's kind of a bit of a concern in terms of building up your business credit, I would not worry about this. This is an overblown in my opinion thing on social media about like buying trucks in your business's name etc. Almost all the time until you're a much, much larger business. You will have to co sign on these loans and you have to do a personal guarantee and if you don't you're going to pay way more interest. And so I would only do that if you're like very concerned about losing the business. Like if it wasn't going to work out and then you'd be concerned about losing your own personal assets, etc. But usually I'm trying to get the best bang for my buck in terms of my terms. I don't want to have to pay 2 or 3% extra interest because I didn't co sign on it. I didn't do a personal guarantee. And so yes, there's risk. But think about like the business is going to go under. Like there's gonna be a lot of horrible things happening in your life. You're not going to be concerned about the fact that you have a personal guarantee or on it are not. In my opinion, you're probably actually going to liquidate your personal assets to fund the business and ensure it doesn't go under before it actually would go under. So I don't really understand everyone's like preoccupation with this, trying to get their business credit built because almost all banks want a personal guarantee because they know what you're trying to do otherwise. And they do. They're not stupid. They know that if you're not doing a personal guarantee, you are more likely to walk away from their debt and just let them try to collect it or go to go through bankruptcy court or take back the asset. So I don't know why everyone's so enamored with this. I would just, you know, take business credit cards, keep paying off every single month. Use them as a way to keep track of your expenses. That'll build your credit score up. If you take any debt on like trucks or any equipment, take it to the business's name, you'll probably have to do a personal guarantee and just sign on it. I don't think that building business credit is as big a deal as people make it out to be, to be honest with you. Sam Gustin from Troops Mowing and compared in comparing a growth mode location versus a profit mode location, how, how do you view the attrition rate expectation? A higher attrition rate for a profit mode location due to intentionally losing customers by raising prices? Yeah, I'm going to talk a little bit about this at conference.

So whenever you raise prices, you're going to see an increase in attrition because people believe, however, usually when you have new customers join at a higher price and they're a premium customer, they're also less price sensitive. So I'll actually see usually a little bit of a bump increase in attrition when people raise prices, but then followed by actually a decrease compared to the average in the past, because now the customers that they get at the new higher prices are more sticky, less price sensitive, and typically stay around a lot longer. Now with a profit mode location, if you're going to raise prices every year for the next three years, like I kind of recommend, and not buy trucks, not buy equipment, assuming we have plenty of lead flow coming in to be able to backfill that attrition, then yes, you're going to see a, what looks like a steady, consistent, higher increase, elevated amount of attrition. However, if you don't continually raise prices after one price increase, you actually kind of reduce the lowest customers in terms of their price sensitive, et cetera. And once you've locked them at the higher rate, they're actually less inclined to leave. So it just depends if you're going to consistently raise prices profit mode, which I would recommend, or if you're just doing it one time, yes, you're going to see a bit of a spike in attrition, but then the customers that stay like you've just removed the fact that like they see higher value in your product than what they're paying. And so it's a good way to kind of almost weed out the lowest brand advocates.

Sam Gustin also asks in relation to attrition rate, when a customer accepts a mowing estimate, we schedule a recurring mowing job as well as a recurring winter services job. If that customer cancels services, let's say in July, we have to cancel both their mowing and their winter service visits. Wouldn't our attrition in copilot be twice as high as the true metric? Yes, but you'd also. The same could be true if they didn't have, if you didn't have winter services. So I would look at this as two different services.

Also because there are people that, especially once you really start to know winter services, that will only have you for winter services, they won't have you for mowing. It's not frequent, but it will happen. And so it will be considered as two different recurring jobs inside in terms of account accounting for attrition rate inside of copilot. But also keep in mind, if you have two jobs on there, it's going to take that into account if they stay with winter services, as if there's two recurring jobs, two jobs being accepted, two jobs staying on the schedule, and that is a positive boost to your attrition rate because now the, the gross amount of recurring jobs in your account is higher. So you're right, it will, it will artificially increase attrition rate, but also having winter services doubles the amount of recurring services in your account. Therefore halving your attrition rate simply due to the gross number of recurring jobs inside your account. Good question. Good question. Juan Oro Orozco from Orozco Landscaping Services. How do I put all my lawn care maintenance customers on automated service or billing on the 1st of the month and on the 15th of the month? Please help me kindly. Yeah, this is a great question, Juan. I would book a call with the air traffic control support. I'd book a zoom call. They'll walk you through your settings. I know that sometimes the fact that you can invoice and then collect on different dates, et cetera, can get a little confusing. So please just book a call with them, do it zoom and in probably 15 minutes or less, they'll just walk you through your settings and explain each one and ask what you what you want and make sure it's exactly the way you want. I could do it over this right now and just kind of like do it auditorily, but I'd recommend having someone see it with you and you explain exactly what you're wanting if it's not making sense to you. If you're confused on this, please just book the call and they'll walk you through it directly and make sure it's set up the way you like.

Latua Tua from Jay's Lawn Service. On many occasions you mentioned simplifying services to grow faster. Okay, so just to clarify, when you simplify services, that is you cut services out, you actually will usually see a reduction in revenue because you're cutting out services. And the fastest way to grow revenue is to add services and add geographical expansion. So if you do the opposite of that and remove services or you constrict who you're willing to serve, you're going to receive a reduction in in. In revenue. We offer mowing, hedge trimming, mult installation and bagless leaf removal. I would like to add fertilization, weed control, but I'm not sure if it's a good idea. At our current stage of growth this year we will make just over $250,000. I want to build to 800,000 to a million dollar business before opening a second location. Should I add fertilizer and weed control next year or wait until you've grown more and more? Any help is greatly appreciated. Thank you. So like I just said, in terms of revenue, the fastest way to get to a million dollars is to add about five more services, right? So you've proven that you can add between 50 and $100,000 per service when you add those. So you could just add services and you'll hit a million dollar business or 800,000. Like you can hit that just by adding in. Okay, I'm going to do, now I'm going to use snow plowing. Now I'm going to do fertilization, weed control. Now we're going to start installing some paver patios. Those are big jobs. We'll get more revenue. So it's very easy to actually grow the business by just simply adding more services. And a lot of people do that hit the million dollar marker and realize they're not making any money or they're required on every single project or they're, they're bound by one person leaving before an apartment gets wiped out because they're spread so thin. And so there are businesses that are over $1 million that do just molten salt, that do just hedge trimming, that you just mowing, that do just leaf removal. And so instead of trying to spread yourself thinner, although that will in the short term get you more revenue, if you're trying to build the business in a way where you're going to a second location, I would not, not be adding more services. I'd be sticking with my four or five core simple services and I just double down on marketing and getting better at those. Now if you were doing 800,000 and you said hey, if I offer we control you immediately, I'm going to have 150 customers on, on a, on a package that could easily sell to all my customers. This is gonna be a breeze to get to another two, $300,000 added. Now we have a real argument, good margin service. You don't have to buy a lot of more trucks or equipment. Maybe you already have certifications, your crew does. And then, then there's a different conversation. But when we're talking about adding more services for business, that doing 250,000, it means that you haven't fully mastered yet the acquisition of customers for any of these four or five services you currently have. Which tells me that yes, if you add more services you will get incremental revenue, but you will not take full.

Advantage of the new service. It doesn't make any sense to add this new service until potentially you're 7, 800,000, you want to add another service and you immediately know if you send an email and a text message to 2000 of your customers in your database inside copilot, you're gonna immediately get 150 customers then we can have an argument about that. Even then, I could, I would probably say, like, I wouldn't be adding services. I just see so many people like add services. They grow a big business and they're tied to it 24, 7 or it doesn't make a lot of profit. And so if you want to be profitable, if you want to start the second location, I would focus on doubling down these existing core services. It is the easiest way to grow revenue, and it is grow the. The number of services and your service area. It's the fastest way to be able to grow revenue. Usually the least profitable and the least simple and systems oriented. So.

All right, another question. On many occasions you mentioned simplifying service. Oh, yeah, I think we just did this one. Is it a repeat? Oh, no, I just did the same one. Okay, next one. Jeff Brand from Blue Sky Property Services. I'm paying my crew 23 to $25 per hour. I've heard you say your wages should be 25% of your hourly rate. That puts me at $100 per hour. Okay, so just to be clear, when I talk about the 25 rule, that is a general rule for determining base wages on pay for performance, as well as ensuring that on pay for performance, there's enough meat on the bone for your crew to be able to get above base pay. So just to be clear, that's why I call the 25% rule, and that is 20. No more than 25% of what you charge the customer per hour is what should be going to base pay on pay for performance. Okay. Currently I'm shooting for $80 an hour, and I would like to grow this coming season. Is $100 per hour for residential lawn care in Northwest Washington realistic? Mostly run at about 30% wages to rate. Okay. So if you're at 30% wages to rate, that tells me that.

Yeah, so what I would recommend is getting at least to $90 per hour if you're trying to implement pay for performance. All right. Because on pay for performance, I think you probably potentially get away with giving out your crew like 28% or 25%. So you'd save a little bit there, give them more upside, but you'd probably need to increase your rates. You sound like this must be a pretty small operation. I could be completely wrong here, but I'm guessing this is a relatively small operation because you're extremely efficient with your wages. I'm wondering also if you're factoring your wages into this. If you're out in the field a little bit so that would be my concern there. That's why I'm really hesitant on that 30% wages part.

Because, yeah, like, it doesn't really match up. But also with P4P, you're saying, and paying my crew this wage should stick with this base or go down. I have one driver or lead quality. I'd like to keep moving up. The others have tons of experience and both are very loyal. And I like them to get paid. Well. Yes. Like, I think if I was you use P4P software, you get a month on there for free. Sync it up with copilot. They don't have to see anything. The crew, they sync it up with copilot and on the back end, it'll bring all their hours over. It'll sync with the quick with the dispatch board. It'll bring everything over. Clock in, clock outs, everything. As long assuming your items and services have the P4P rate in there. I just went one second. Let me try to switch my camera out. Check one too.

All right.

Boom.

Okay, let me switch back to this one. I don't know why it does that sometimes. Anyways. All right, we're back in business. Okay. So I would probably, if I was you in this case, first off, run a month of pay for performance software, actually see what you'd be paying them on P4P. I think that I'm a little concerned about your 30% wages to rate. I have a feeling you're contributing labor. What I would do is run the numbers, see if they're able to make above base pay. Right now, they're probably gonna be around base Pay, which is that 23, $25 per hour. It's gonna be around there. And the reason for that is because they don't know they're getting paid based upon performance. But run the numbers in the background, knowing that once you actually switch, you'll see a 20 to 30% increase in efficiency. And then they can make 28, 30 bucks an hour. And in terms of whether or not it's realistic to charge $100 per hour for residential lawn care in northwest Washington. I have two locations in Northwest Washington, and both of them are. Or actually one of them is 100, I should say. The other one, I think is at 90. But yes, this is absolutely possible. It's not about the hourly rate. The hourly rate to the customer is inconsequential to the price because you're giving the customer a certain price for a job, for a lawn service, for a molten stall. They just see the price. We all look at the hourly rate. But the problem with that is if your crew is more efficient, you might have a higher hourly rate but a lower price to the customer than your competition. Because they budgeted in for seven hours, you budget in for four because your crew is way more efficient on P4P. That's why determining the hourly rate as whether or not you're expensive in a market is a horrible metric if you're doing flat rate pricing. Because if your crew is more efficient, you can have a lower price with a higher rate per hour to the customer. So if I was you, I would probably run the test for a month inside a co inside of P4P, see what your crew is making. Now. I think you can absolutely get to a hundred dollars per hour. But if your wages are really around 30, 35%, I don't think you need to raise prices. I think that.

You'Re probably going to just need to determine your, your base pay if you want to do like 24 bucks an hour. 25 bucks an hour, whatever it might be. But it sounds to me like you might be contributing labor and that's why it's driving your 30% wages down. I guess if you actually scaled and you weren't in the field or you were count taking your salary into equation, you might be more on that 40% marker. That's usually what I see in this range of, of wages. So yeah, I would run a test. It's like as always when, when it comes to like what should I pay on P4P is like run the test. That's why we have a whole month of free in PVP software. Sync it up with copilot, make sure that your items and services all have the P4P rate in there. It'll bring it all over. You won't have to do any manual entry and you're just gonna kind of see like who's your highest performers. How much are they making? Is it close to what they're currently making? Is it a little bit above, is it a little bit below? And you'll be able to gauge what percentage you need to give them. But I'd probably start with like a, you know, give them 30% inside of P4P, 30% of labor revenue and see what, where that's coming out at. I have a feeling that that's going to seem really low compared to your current wages that you're paying them. But that's because you're contributing revenue revenue and labor revenue right now. So I think you're probably maybe go to 33%, maybe 35% in order to make sure they can actually get above base pay. And then if you raise your prices to say 90 or $100 per hour, raise prices to your customers and actually generate more labor revenue per job, then you might be able to trim back off of 35 or 33% of labor revenue going to the employee. Mount down to 20 or 30 or 28, something like that. So as you raise your prices, assuming your crew is making a lot of money on P4P, you can bring back the percentage of labor revenue giving them. So as we raise prices at my, my location this past year we, we took them from 38 through 33% down to 25% on of labor revenue going to the employee on P4P. But we could do that because we raised prices. So we raised prices at the same time we reduced their percentage and they still netted out a little bit higher wages because we raised prices significantly like 27, 28%. So. All right, I think that is all we have for today. I appreciate you all tremendously. Hope you had a fantastic Thanksgiving. If you are looking to come to Blue Collar Summit, I highly recommend using the promotion that we have this week. We have a buy to get one free. We also have if you join home service web design or lawn care web design, you're going to get a free ticket as well. So look out for our Cyber day. Cyber. What is it called? Cyber Monday tomorrow there's that deal coming out about home joining lawn care web design and home service web design. Otherwise, if you want to come with three people or more, book two tickets and you get a third one for free. Again, that is likely in your email from this past weekend because we emailed everyone out about those promotions. Hope you all have a fantastic rest of your day and we will stay in touch. We'll see you next weekend.