Every Question You’re Too Afraid to Ask About Scaling

Hey everyone, it's Mike Andes. Today we're taking your questions that were submitted@mikeandys.com? and I'll be answering those live. These are videos that you can submit. You can take 30 seconds, go to that URL and submit your question. Today we're going to answer these variety of topics from home service business owners. So let's jump right in.

Hey Mike, we're looking to hire our first estimator this coming year. For a little context, my partner Scott and I have been running our main location in Peabody for the past five years. We we average around seven, eight full time employees. Last year we shifted Peabody into profit mode and used much of that profit to expand into a nearby service area that we call the Melrose location. This year Melrose produced about 150,000 in revenue while Peabody will finish around 800,000 in revenue. We currently have about 150,000 in the bank and our goal is to grow Melrose to 350 to 400,000 next year before separating it into its own location and LLC in 2027. So here are my questions. We'd like to promote from within and find an estimator. Any advice for finding an estimator within the current team? Additionally, if we can't find someone from within, what's the best approach to hiring externally for this role? Secondly, how do you recommend we train this person whether they come from inside or outside the company? Is this a put them in the field kind of thing or just have them shadow the current estimator? And then thirdly, once trained, who should they report to? Should they report to me as the owner of the company as if they were my sales department? Or should they report to the general manager since he is responsible for ensuring quoted work gets completed and kind of treat them like his team member? Thanks, Mike.

Okay, so when you have multiple locations, if you have an estimator that is floating between the locations and doing all sales and the general managers are not required to be involved in estimates, this is something that can be very difficult if you have two different shop spaces. If you have one shop space and you kind of have general managers over certain departments or areas, service areas of the business, I can see this potentially working. The reason I see this sometimes break down in terms of communication is because the general manager can always blame the salesperson or the estimator for bad estimates, bad budget hours, the materials not being accurate, et cetera. And so you want to be very careful with aligning the incentives of the salesperson with the almost the exact same Incentives of the general manager. Because you got to be very careful if you like. Okay, well I'm going to have an S1 estimator. I have two or three locations, but one estimator is new sales for everything. And then I'm going to have the general managers just take care of the team. If the general managers are based on profit sharing, that's their kind of compensation. And then the salesperson's based on like close rate revenue growth or any other metric besides what they're getting, they will think that there's perverse incentives. And I've seen that break down multiple times. In the perfect world, when you're doing locations that are between, you know, 7,800,000, 900,000 million in revenue. In the perfect world, my working GM is able to do the sales themselves, but there's not a lot of sales to do because I'm mostly having instant quotes on my website or I'm doing over the phone estimates for from my office. So there shouldn't be a lot of sales work if you're doing simple services. Now if you're doing more complex services, that's when you're going to need a salesperson. And when you start doing multiple locations, it can make sense to find an estimator that just does all of your locations to take sales completely off the plate of your general managers. I would say though, I would rather that sales position being going to my admin via over the phone estimates or instant quotes as much as possible. Anything that's above that I want very minimal and ideally using the Field Force mobile app inside Copilot, just videos from my crew put on inside of there and then someone at the office or even an estimator or the general manager can just watch the videos and send the estimate out very quickly. And so it doesn't require a full time overhead person because if you have a very experienced estimator, whether you hire them internally or externally, you're looking at probably 800,000, 80,000 to $100,000 of overhead, costs of training them, an extra truck or vehicle to drive around in, fuel, maintenance, etc. There's like 100 grand. You're going to have to produce like three or four hundred thousand dollars of revenue to cover their wages. And so I would rather cut out some of my revenue that is project based or simplify the systems around submitting video to my general manager. So my general manager can be in with the team doing everything a normal manager would do. But I've either done any instant quotes on my website, I'VE done over the phone estimates or videos just being submitted to my general manager and then they're able to just watch the video and submit the estimates that are project based are one off jobs. Now, should you hire from within? Yes. In the perfect world, you're able to find someone from within the company that's been with you for 612 months. They already know the systems, they know pay for performance, they know budget hours, they know how the operations of the business work. They have a built up trust with you and Scott, the owners. That's the ideal scenario. If you do that, usually you don't have to pay as much because they're looking at this as upward mobility and being able to gain new skills. If you're hiring from outside of the company into a two location model that's going to do 1.5 million revenue, you're probably going to be paying, like I said, 80 to $100,000 to find some of that caliber. Because you're usually looking for someone that has sales experience, not so much experience out in the field because. Cause if you're doing simple services, you can teach that part relatively quickly. In the perfect world, they have come from your industry and they've also have sales experience, which usually means they've been an estimator at one of your competitors. Which also means that comes with baggage in terms of how they did job costing, how they did pay for performance, how they did budget hours in the past and you got to retrain them and sometimes more of a hassle than anything. So in the perfect world, yes, I would have one of my crew, my technicians, grow up inside the company, learn a lot of so much about our systems operations, how we do pricing and then just move into the estimator role. If I'm tiring from without, I am looking for someone with outside sales experience, meaning they had to go hunt for sales. Not inbound sales where they just sat on the shop floor and waited for people to walk in the door. Because I need someone that's okay with and used of knocking on doors, asking for the upsell, doing follow up phone calls. And those are outbound strategies, not inbound strategies. Think inbound as in like people come into them. So like I did, I did insurance sales. Okay, were you cold calling? Were you going out into prospective businesses or were you sitting in an office waiting for the phone to ring? That is the difference between outbound and inbound. I want someone that's been going outbound because they're going to be much more used of putting themselves in awkward Situations and being able to sell to cold audiences. Next question coming in. Oh, real quick. Brandon asked who that person should report to. That's very difficult because again, I think if the incentives of the GMs and your estimator is aligned completely, you might be able to get away with estimated just reporting directly to the owners of the business and it being outside function. That's the only way I think it could work because otherwise that general manager will feel handicapped if they don't have some sort of control or that estimate of reporting to them. And again, if you don't have the estimated reporting to the gm, you there's also going to be a level of miscommunication. Many times between job notes, videos not being done correctly, budget hours being off, and the small amount of data that system failure when the estimated does need to be pulled back on the job, there's going to be a little bit of tension there unless that estimator sees the GM as the person that they're reporting to. So I would be careful about that. You could just set the expectation, hey, estimator is here to serve general managers. Whether it's two or three or as you more add more locations, you, you could set that as the precedent. Just make sure their incentives are aligned. But in general, this is why I avoid having this scenario when you have multiple locations that are not going from the same shop space. If you're from the same shop space where every single day the estimators and the GMs are communicating, they can see each other in the morning, I can see this working, but as soon as you split it and they might not see each other for a week or two and now there's a job that's way under bid. I can see that being a friction point and I've seen that happen a couple times. All right, next question is from Dave up in Canada.

Hey Mike, it's Dave here with Spots Carpet Cleaning. We're expected to do about 140, $150,000 of revenue this year with one main technician plus myself. Right now we're in the process of acquiring the assets of another local carpet cleaning business which will include a van and then another lead technician that will be working for us, which should about double our revenue overall what they're currently doing. So my main question is.

We'Re trying to maintain our brand of Spots Carpet cleaning in the long term. We have a pretty strong presence in terms of five star reviews, but our organic SEO is not amazing. So we're relatively new business and so their company has pretty strong rankings, especially locally in a certain area for organic and their SEO and their website. I'm just trying to figure out the best strategy on how to utilize their strong ranking organically, but still continuing on the same branding as Spots Carpet Cleaning for us just to make it clear for the clients who they're dealing with, even though they're probably finding us through another brand. So curious. Any thoughts for that or any other strategies you have for smaller acquisitions? Thanks.

Yeah, so we actually have a lot of experience with this because when members join Augusta lawn care, about 70% of them have an existing lawn care business that might have been in business for years. And so what we recommend is on your existing website that you have that's ranking and in this case Dave, the person that you are acquiring that has a good website that's ranking, I would simply change the phone number, the email address, the where the form is going to you, and then next to the logo at the very top, just say whatever. The name of their carpet cleaning business is a division of Spots Carpet Cleaning. I think that's the name of your business, Spots Carpet Cleaning. That way when they call or they contact you and you reach back out to them or you answer the phone, they're not surprised by Spots Carpet Clean. Like they understand that that's who should be answering the phone. And then what you do as you build your brand and it starts to outrank them and it gets more views, then down the road you could just redirect, do a 301 redirect of their, their URL, their domain to your business. So but for now to maintain getting those leads and you just watch like how many leads are lead forms are coming in from their site versus yours. And as you grow your brand in your market, get more reviews, et cetera, now all of a sudden it's like, okay, they're, they're bringing like 3% of the amount of forms. Let's just merge their URL traffic over to ours. Great. But for now, if they're like we're there at 50 and we're at 10, great, let's tap into that, not change very much and simply just put it, make it very clear that their business name is a division of. So we do like a division of Augusta Lawn Care. So when they call and command center answers and says I got the lawn care people aren't surprised. And as long as you put that right at the top, I wouldn't make a splash page. I would not make a pop up, I would just put as a picture against the other logo. So wherever it mentions their name, put your name. And then even in the text of their other website, you could just simply say every time it says their business name in parentheses, a division of Spots Cleaning service, for example, or whatever, the name of the businesses. That's the way to kind of slowly merge into it. Let your SEO start to build up. You get more reviews and rank better and over time they'll become inconsequential to the number of leads you're getting. And then just swap it over to 301, redirect or just completely redirect all their website traffic to your page. If this is helpful, go to mikeandys.com where there's over 50 hours worth of online training completely free to help you grow your home service business. All right, next on the docket, we're coming from Andrew.

Hey, Mike. My name is Andrew. My business is Edge to Edge Lawn Care. We're based out of Virginia Beach, Virginia. My expected revenue this year is between 250 and 300,000. I have one full time employee, so it's just me and another guy. My question for you is for next year, my plan is to hire two more people. So I'll have three full time and then me. So four total essentially. And so my question is.

How, what's the best way to do marketing for that? Because obviously I'll need to grow a lot to sustain that crew. And so what is the best way to go about like Google Ads or Facebook ads or like anything like what's the best bang for your buck in marketing? Which I know is a very broad question, obviously. Very. It varies greatly between like states and cities and all that kind of stuff. But as far as just like generally what do you and Augusta and other, the other businesses you meet with, what do you guys typically find is the best marketing strategy? Whether it's Google Ads, Facebook ads, physical marketing like flyers, which you already do a bunch of. But yeah, so I just wanted to hear your thoughts on that. And yeah, thanks.

So again, I've talked about this before, but before you go and try a new platform, I would always look at trying to take what you're currently doing and doing more of it and doing it better. Because whatever you did to get to $250,000 in annual revenue, fantastic. You and one other person, you're doing it pretty profitably too. You're at 250 to $300,000 doing simple services. You're doing it pretty profitably. And I'm going to go out on a limb and Say you haven't spent a ton on marketing, but if it was all from flyers, just do more flyers. Like if you 10 if you like, how do I get to $2 million? 10x the number of flyers you put out. If all of your leads came from flyers. And so instead of trying to chase the next marketing channel, like, we don't do flyers. I'll be honest. However, if flyers is what you have and you have at least data on that, there's a question. Just becomes, what happens if you did 10x and when you did 5x, you got way better at it. And then we need the next iteration, it was also better. So by doing more, you get better results, and by doing more, you get more of the results that you had in the first place. So if you just 10x your volume, you'd probably 10x the business, but in 10xing the volume, you'd probably double the effectiveness of the flyer. Because you start redesigning it, you start altering it, changing it. When we rolled out door hangers like five, six years ago in Augusta, it was like the general, hey, here's your services. If you want us, give us a call, go to our website, blah, blah. Over the course of five to six years, we've iterated and changed slightly. After doing hundreds of thousands of them, potentially millions, hundreds of thousands of door hangers, we said, okay, that was more. Hundreds of thousands. But then better is okay. What about QR code? Instead of them writing out their email address, oh, what if we put the price with a Sharpie Instead of printing out, what if we cross out the price and put a lower price? These are all little tweaks that we made over the course of years. And the reason is because we realized that we knew the numbers of the door hangers at the beginning. And if we could just iterate on it and just keep doing more and better, more and better year after year. Not few months, not a couple, not a couple years, but five to six years now, where we've been iterating on that original door hanger to the point where now it's five times more conversion than when it started. And so I happen to believe, Andrew, that if you've got this far with flyers, keep doing flyers, does that mean that door hangers are not good? Does that mean that yard signs are not good? Doesn't mean that Facebook ads are not good, doesn't mean that Google Ads are not good. Does. No, it doesn't. All of those platforms work. But the problem is when we try to boil the ocean, do everything we Never actually get really good because we never actually do more and better of any of them. And so choose one and go deep on it. If you have no idea what to do. I would say test all of them and see which one's at least the lowest hanging fruit if there's any obvious winners that you can immediately start to squeeze the juice from. And then it sounds to me though like you've already done flyers and already have some metrics there. So the question becomes, okay, what happens if you create three different flyers and 1,000 of each but you slightly change the design? One has a good offer, one other one has like a tear off sheet, another one has like a free service. Go put all of those out, test which one works great, got the winner. Now take that one, change this slightly and just keep iterating on that. I promise you, if you did 10x the volume, you'd probably 10x the business. Next up on the docket is Lorenzo.

Hi Mike, thank you so much for the opportunity. This is Lorenzo. I'm the founder of the Tidy Troupe. I'm still in the process of opening and this is my question for you. So if you are somebody that is still opening a company, how can you be sure before spending any money on marketing and testing the offer or what else that your offer is going to convert? So just to give you a bit of background, my initial hypothesis is to create a very high end all inclusive service for prices for €2,900 per month. I'm currently in Luxembourg in Europe, so I'm not in US and what is going to provide this €2,900 per month is going to be a weekly housekeeping. So for six to eight hours we reset your full house to and hotel standard and then we have a monthly restoration day for party pressure wash or car detailing or cleaning the appliances.

And then additionally vendor coordination and then stock management. So the essentials such as toilet paper, kitchen towels, shampoo and whatever the clients probably is going to need in the future. We could also potentially take nannies and babysitters or whatever. So yeah, I just want to be sure like before spending anything and you know, because I'm on a tight budget as every probably founder that is starting out, how can I be sure that my offer is going to convert and is going to do the best to scale. Well, thanks.

So anytime you're testing an offer, be very careful about doing surveys because people will say that's a great service and yes, that's awesome, but will they give you the money? Money talks. And so in my Opinion because this is a low lift service, you don't need a bunch of assets to pull the trigger on this. I would, if you're really gonna do this, I would actually have everything in place ready to go. That doesn't cost money. Things like a website, a logo, a all the little stuff, business licensing, a website, you could do a lot of this stuff for a couple hundred bucks all in. If you did it yourself, I would have all of that ready to go and then I would start running traffic to it from an ad. This really comes down to a lead acquisition funnel and that is like can I drive people in? Drive them to a call? Like you're like when you have a high end service like this, people are not going to just click on your website and sign up for $3,000 a month. There's going to be a more of a sales process. And if you're dealing with multimillion dollar individuals, you're actually likely dealing with their house manager. And so I actually think that there is a real opportunity here in terms of like LinkedIn or going to small groups on Facebook of people that do house management, people that do property management. For very high end individuals they have to coordinate cleaners and landscapers and house people and maids and all the rest of it. So if that's your go to, I think you could get really, really focused on actually who your market is. Instead of trying to go after the exact the consumer, I'd go after the house manager because that's usually this type. If someone's paying $3,000 a month to all these little things for you that are very, all of which are high end and you're trying to bundle them all together. Expect a very high customer acquisition cost and, or a long sales process. And so those things are not fun, that's not easy. But what you could do is run traffic to a form or run traffic and immediately you're calling them, you could go after the end customer. I feel like that's gonna be hard to pin them down because if they're really high net worth interval like this phone never rings. Like you can never get ahold of me via phone. And so a lot of them are gonna be very difficult to get ahold of and it's gonna be somewhat difficult for you to explain your service cause it's not a common thing. They don't think I need someone to do all of these things for me. They think I need someone to clean my car. Then they think oh it'd be nice if someone just came like topped off all with my toilet paper and did my laundry, et cetera, each week or I wish I had a babysitter, they think more bespoke or individual. So by you packaging all this together, there's going to be quite a bit of education required. And what's nice though is you have a very clear audience, either a very high net worth individuals or B, for probably even a higher net worth person, a house manager. And so I think you could get pretty good on targeting by calling out house managers on like say a Facebook ad. But I think this is going to be a pretty high cost per click. It's going to be a pretty high cost of acquiring them. However, if you have $3,000 a month and you, you get all of that money like the first of the month and then perform services, you could very well, let's just call it say 1000 or 1500 dollars customer acquisition cost. It's a lot. But if you can recoup that within a matter of 30 days and you're doing these simple services, I think you could potentially put a couple thousand dollars towards ads and probably know whether or not this is going to work. However, you, you gotta know that this is all about sales process. So like the funnel of when they fill out a form or is there a vsl, like a video sales letter, is it. They are going through a funnel. Do you text them right away? Do you call them right away? Do you set up group interview, like a kind of a group interview style? Do you do presentations? Do you drive them to a website and you have content? Like for example, this would be really interesting and that is like creating content for house managers. Will you get a lot of views? No, you will probably get a hundred, 150 views on YouTube if you make videos for house managers on how to do things for their high net worth clients and then you just happen to be the person that they call when they need the service? I'm going to guess too, you would actually. It sounds like you're already thinking this way more of a subcontractor and you probably put these vendors together and you'd be kind of the middleman. Which means you could do this not just in one city unless you're performing the services yourself. But I'd have to have more information. So hopefully that gives you a place to start. I would just be very careful about surveys because everyone says they want this because of course they do. But I would actually get it to where you have a funnel. You could actually collect on the money. You'd always have a start date in like two or three months from now, giving yourself plenty of ramp to be able to get the first five or six customers, which is all you need at $3,000 a month to have a legitimate business. And then it also comes down to if you're going to be the middleman and therefore increase your total decimal market because you can go way wider in terms of geographical expansion, you then also have to build out a network of contractors. And so I actually have a turnaround coming up here pretty soon with Eagle Pros out in Idaho that will be very beneficial to you. And that is they are the middleman between the customer and like 32 or 34 contractors. And they just put pair of people together and are kind of like the quality control and they do the billing and all the back end and they get 50% of the revenue. So that'd be something that you'll definitely want to watch. But I think this really comes down to a lead acquisition. What is that going to be? And bring that under three or $4,000 for this high ticket of an item. You, you're likely going to have to create content and you're gonna have to really nail down the vsl, the sales letter, the copy, the whole process of which you use once someone becomes a lead. So hope that's helpful. If you have a question and you'd like me to answer it here on the podcast, go to mikeandys.comquestion, submit your video, and we'll get you on the next show.