He Did the Job. They Ghosted Him. $750 GONE!

Hey everyone, it's Mike Andes. And today is a very special episode. We're going to be feeding questions that you've asked Mike AI and then I'm going to respond to those answers. What in the world is this? If you go to mikeandis.com AI all of my content, my books, all of my training, my courses has been downloaded and for free. You can Talk to Mike AI anytime you want 24. 7. But today we're going to go through some of the questions have been asked and we're going to see what Mike AI said and whether or not I agree with it. The very first question, I had to repo a lawn I serviced months ago because the the client ghosted me and never paid. I'm out $750 labor, fuel, time, all of it. And it seems like I got robbed in slow motion. How do I stop getting stiffed like this? All right, so this is now Mike AI. First off, I get it. That slow motion robbery feeling, it's brutal. But here's the thing. You can't let this happen again. You're not a bank and you're definitely not in the business of giving out interest free loans. Here's how to stop this. Number one, prepayment or card on file. Moving forward, require every customer to prepay or have a card on file. No exceptions for recurring services. Charge at the start of the month, not after the work is done. Next option is tighten payment terms. Shorten your payment window to seven to 14 days, max anything longer and just giving more time to ghost you. Third option is automate your collections. Use a system like Copilot CRM to send automated reminders, texts, emails, calls starting the day to invoices over. Day 1 text. Day 3 email. Day 7 call. Day 14 stop service. No payment, no work. All right, looking good. Fourth one is late fees. Add late fees to your invoices. Make it clear in your contracts that unpaid balances will accrue fees after a certain date. It creates urgency. Number five, stop service immediately. If someone doesn't pay, stop servicing their property. Don't wait months to realize they're ghosting you. Number six, deposits for big jobs for larger projects require 50% deposit upfront. No deposit, no work. You're not alone. This happens to so many small business owners. But the key is to put systems in place now so you're never in this position again. Let me know if you need help setting up these processes. You've got this pretty good. I would give it a solid 8.9 out of 10. What can we do to improve this answer? So a couple things. First off, late fees. Mr. AI, you gotta be careful. Cause in every single state it's different in terms of what you're allowed to charge. So in some states they don't allow fees unless you disclosed on the estimate. Others they have limits of how much you can charge per month. In terms of percentage. Be careful because if you're like a $10, you know, service or a $20 service and you're, that's like a 30% fee, you could be in trouble. So sometimes like it's easy, like well, 1% a month. Okay, great. That's like 12% a year compound. Probably 15% a year. So kind of like a credit card. Okay, cool. But be careful. Make sure it's legal in your state. So that's the first thing that Mike AI needs to do. Oh, and by the way, Mike AI is trained on all these videos. So by me saying this right now, it's retraining Mike AI to be better in its answers. Very good. The next thing I would say is deposits for big jobs. So I agree, 50% upfront. Yes. I would also say have a threshold of deposits that's low. So for example, it says for larger projects, I would just make it like anything that's one time jobs. Even if it's a 300 or $400 job, I still want a deposit or even prepayment, which it did nail in the first one, like having a prepayment. But here's the thing, I would do two things differently. Number one, instead of asking for prepayment or deposit, I would also have the option to pay in full. So we just added this feature in copilot and anytime there's an estimate that they're accepting, they have the option to pay the estimate in full. Because sometimes if customers have done jobs for you in the past, you're not really concerned about them stiffing you like this person is. But getting that cash up front is so nice. And so now inside Copilot, when they accept the estimate and they're paying the deposit right next to it, be like, hey, do you just wanna pay the whole thing in full? So yes, 50% is nice, but I'd rather get all the money up front. And I was talking with an owner the other day and they're like, well, I'm really afraid to do that because if the person pays me all up front, what if I spend it on other jobs or other materials or paying other.

My employees for other projects? And I'm like, he's like, well, I'm robbing Peter to pay Paul. I'm like, yes, but that's a different problem because theoretically, I should always want to collect money faster and pay people slower. So vendors, materials. I always want to wait to pay. That's why I actually like using a credit card, because I can pay for things today and pay for, like, I can swipe the card and get things today and pay for it in 21, 30 days down the road without any fees, without any interest. So I actually like credit cards for the sake of. I get better cash flow because it's slowing down how long money actually takes to get out of my account. But on the same token, I want money coming into my account as fast as possible. So if I am not going to have a deposit or I'm not going to collect, you know, pay in full, which is the most ideal. I'm technically waiting. Sometimes, like, sometimes you're going negative by 3, $4,000. On a $7,000 job, for example, let's say there's a $5,000 job. It gets accepted today. Let's call it 20% profit margin. So that's $1,000 in profit on a $5,000 job, in revenue, $1,000 in profit. Here's the problem. Let's assume there's $1,000 of material and $2,000 worth of labor. That's $3,000 worth of costs. Okay? And then there's some other miscellaneous costs that make US then get 20% net profit margin after other overhead. Great. Here's the problem. If I don't get money down, what happens is day one, after they accept the estimate, great. Now I get buying materials. I'm actually negative. I'm negative $1,000. And then I go do the job. I'm negative $3,000 in direct cost, which is that material and all that direct labor that employs out in the field. I'm $3,000 in the hole, negative cash flow. And yes, hopefully after the job is done, and then after I send them the invoice and the invoice falls off their desk and the dog eats it, I could potentially be floating the extra cost of $3,000 of negative cash flow for weeks. I gotta pay Home Depot. They're not gonna wait for the materials. So this is the cash flow that you have to manage. That's probably the only couple things I would add to that one. Let's go ahead and go to the next question from Mike AI, see what else he's got in terms of answers. The next question looks like it's coming about employees threatening to sell sue. I let someone go after they no showed three days in a row. Now they're saying they're going to sue me. I thought I was well within my rights, but now I don't know. Okay, answer from Mike AI Again. If you if you have a question, you can go mikeandys.com AI and test it. See if it knows its stuff. All right, answer. First off, don't panic. If you're in an at will state, you can legally terminate someone without needing a specific reason, as long as it's not discriminatory. That said, documentation is your best defense. Number one, check your records. Do you have documentation of the no shows, texts, emails or time logs showing they didn't show up? If not, start documenting everything now. Dates, times and any communication you had with them. Number two, review your employee handbook. If your handbook states that no shows are grounds for termination, you're in a stronger position. Make sure they signed it during onboarding. Number three, stay professional. Don't engage emotionally with their threats. If they contact you, keep responses short and factual. Avoid admitting fault or making promises. Number four, consult a lawyer. If they do not follow through on the lawsuit, get legal advice. Most of these threats are empty, but it's better to be be prepared. This is a good reminder to tighten up your systems. Always document performance issues and make sure your policies are clear and signed by employees. Let me know if you need help refining your processes. Yeah, this is really good. I give this one a 9.8 out of 10 from Mike AI. Very good. Most people when they get in this situation, the reason they feel angst and anxiety is because they didn't have the employee handbook that was signed and they don't have security cameras that could potentially tell them if someone didn't show up to work and or they don't communicate well with their employee when they say they're calling out and screenshotting that or keeping that on file or on record and is scary because if they ever showed up in a lawsuit you would actually be embarrassed or could put you in other legal issues like discrimination at will you can let someone go and there's a short of ours that I think went viral. I think across the system it got like 10 or 15 million views and it's about me saying like hey, you're in an at will state, you're okay. That is true. If you're just letting someone go, you can just fire someone. They can also just leave your place of business. I always like to think of it from that frame if someone was leaving my place of business, I would want them to leave on good terms. If they're leaving and I'm firing them, you just because you're trying to get them away from everyone else to preserve the culture. And so most of the time you're not going to give. I would not recommend ever giving someone like, hey, in two weeks you're fired. I would never recommend doing that. So there's a little. That's why, that's. This is the whole reason why people will sometimes do severance. It's like, hey, I need to let this person go. I need to cut them out fast. But I want to give them a bit of a cushion. They've contributed a lot to the organization potentially in the past, and that is why sometimes that will take place. I will say that if you are firing someone, do not give a reason. It will be misconstrued. The very first employee that I hired that was not a friend of mine that I knew directly or a family member took me to court after I fired them. I ended up settling outside of court. I can't say a whole lot about it because I settled outside of court, but it's my mistake. And that is I fired them really, because they're bad performance and they kept walking off the job when they were getting trained, like literally their first few days of work. That's why I fired them. But instead I kind of put it off as they got injured. They said they got injured and I said, hey, just to make safe, I'm going to. I'm going to let you go. Just, I don't want it to affect the workers compensation if this gets reported. That was a dumb thing for me to do. You cannot do that. That is discrimination. That is a dumb thing to say. Now, they had no proof of them getting hurt, et cetera, so I was able to settle with them and didn't go crazy. However, they would have had no case if I would have said, hey, it's not working out, you're fired. They would have no case against me. However, I tried to be nice. So unfortunately, when it comes to firing someone, just use facts and be abrupt and be short. And that's not how I'm built. I like to give reasons and say, hey, you're doing a great job and we'd love to keep you, but it's just not working out for X, Y and Z reasons. And sometimes when you do that, you just dig yourself a big grave that potentially could be a legal hole that you get buried in. Sometimes I don't recommend it. I don't like that, though, is the worst feeling. I'd rather talk to the person, explain, give them letters of recommendation, et cetera. And I've done that a few times. Very, very few, though, because most of the time, when you're firing someone, you have to do it quickly. Now, leading up to that, I'm gonna be of performance improvement plans. Tell them what they should be doing, how they should be doing it, and by when it needs to get done, and if there isn't change in behavior, that they will be terminated. So it shouldn't ever be like, a big surprise to someone if they're getting fired. They should know they're not hitting performance numbers. They should know that you aren't happy with. And there should be no surprise when you're like, all right, you're out. This should already be talked about. In my opinion, having this all documented, like the AI said, is super important, whether it be an employee handbook, documentation of them not being there, as well as documentation of, like, performance improvement plan. So, for example, I probably wouldn't have fired this person if this was, like, six months into them working. They didn't show up for a couple days. I'd probably give them a performance improvement plan, and if they did sign it and then they did not actually perform on the performance improvement plan, then they'd also be fired. I hate firing people. Everyone thinks that. Quite the contrary. Because of several shorts that have gone viral. I hate firing people. It's just simply a fact of, like, I care more about the culture and I have to cut cancers out. No one, when they get fired, thinks they're in the wrong. No one. None of the family of the people that you fire will think that they are in the wrong. They will hear all the other stuff when they go home. I have to focus on the organism, the entire organization. And if you allow a cancer to stay because you're like, well, there's friends with so and so, or they know so and so. They've been around for a long time. If you allow the cancer to stay, it will kill the whole organism. You're gonna have to cut them out. And that's not fun. I hate it. That's really where I draw the line. And in someone that is not going to rectify that behavior. Sometimes, unfortunately, it's because of medication or family situations or medical issues, and that stinks. But I can't let that cancer in the organization because it affects the business. It affects everyone else's jobs if that business gets affected. And as the leader it is my duty to fire that person. Next question to Mike I I've got over 120 unpaid invoices sitting out there. I'm running jobs just to pay for past jobs. Feel like I'm chasing ghosts instead of growing. How the hell do I dig myself out of here before I lose my business? Mike andy.com AI completely free. Check it out. First off, here we go. First, stop the bleeding. No more work for anyone with an unpaid invoice, Period. You're not a charity and you can't grow while you're bankrolling other people's lawns. Automate collections, prepayment or card on file late fees Focus on cash flow. Forget growth for now. Your priority is collecting what's owed and stabilizing cash flow. Once you've got that under control, then you can think about scaling. This is a tough spot, but you can turn it around. So I agree with this one as well. We need to collect money that we have earned as fast as possible and with certainty. Fast as possible is all the things we've talked about. Card on file, deposits pay in full terms. Don't give people 30 days to pay you. What in the world. Make it due upon receipt. If you're not paying me by the time you get that invoice, it's overdue. You say, how can you do that? Require a credit card on file, Require a bank account on file. They should never get an invoice that has an amount that they owed. I should be charging them for the invoice prior to sending them a receipt. Also, I will reduce the amount of bad debt. I have seen a bad debt in the upwards of 2 to 4% on businesses that are 10% profitable, which means 20 to 40% of their profits was simply bad debt. In other words, they never even collected on the money. 2 to 4%. You're like, that's not very much. But on a 10% profit margin business, that's 20 to 40%, almost half of your profit gone because you simply didn't take these measures. But the bottom line is if you're not texting, emailing and calling and have automations as well as manually calling people, yes, calling them with a phone. You're leaving money on the table. And if 40% of your profits isn't enough to convince you, I don't know what is. We could do all sorts of gymnastics about how to increase your profit margins, but if you're not collecting on 2, 3, 4% of your revenue because of bad debt, we've got to put these things in place. Mikeandys.com AI, go ask a question yourself. One thing that we haven't talked about today is the fact that you can actually upload your profit and loss statement, your balance sheet to Mike AI and I will diagnose the entire thing and give it back to you as a turnaround. Where's the constraint of the business in the 4L framework? Or tell you how to get more leads or potential problems I see with your financial statements? So go check it out. And if you like this comment below, I'd love to take other crazy questions have been asked to me on Mike AI, thousands of them, and share them here.