How Simplifying Services Saved My Business! [Mike Andes]

Hey, everyone, it's Mike Andes, founder of Copilot CRM and Augusta Lawn Care. And today I'm talking about simplifying your services in your home service business. And really though, the better title for this would have been How Karen. We all know Karen. We all know Ken. How. How Karen literally cost me $120,000 and a trip to the hospital. So let's go ahead and get started and see how this ties in with simplifying your services and. And just how important it is to ensure you don't end up in the hospital and you can save 120 grand. Let's see if we can do it. So, first off, Karen's love to create fires to divert your attention and make you focus on a bunch of different things. And that's really what simplifying services is all about, is focus, focusing on things. And because they love to create fires, they can make us get confused with what is urgent versus what is important. There are important things in your business to get done, but because of Karen, making big fires and complaining and screaming and making social media posts and whatever, those issues now become urgent when really it's not the most important thing for your business if you want to move it forward. So the question is, like, you have all these things you got to focus on inside of your business, and it can be confusing. You got social media equipment, branding, CRM. You got estimate speed, feed, web forms, emails, upsells, team training, damages, hiring, new service. Just a ton of different stuff you should be trying, like you've got to do. But what should you focus on first? So this is how I originally built Augusta 10 years ago. And this is actually before we get into how I built it. Let's talk about how you should build how I eventually built Augusta. Okay, so how I eventually build Augusta after learning the hard way is I realized that showing up was the most important thing. Just showing up. A lot of times you'll beat the competition because the vast majority of your competition won't even show up to estimates. They won't answer their phone, just showing up. Communication speed. So not only do I show up, then what was most important to my customers is the fact that they wanted me to effectively communicate quickly. So answering the phone as much as off as often as possible, getting back to voicemails, emails, text messages, doing so quickly, getting the estimates back to the customer fast. Communication speed, very important. Then complaints. How. How quickly do you deal with complaints? Do you do it in a professional manner? Do you embrace them and say like, thank you so much for Bringing this to my attention, or do you get mad and retaliatory and get super frustrated by them? Okay, what services do you offer? Okay, this is again, important part of, like, what do customers actually care about? What is important in the business? I realize that what services I offered wasn't as important as showing up. Because, yes, the customers weren't super happy if I didn't perform a specific service, but I would never make them mad if I just said, hey, look, I don't have that service. I'm going to refer you to. So and so who does. You know, some other service like fences or decks, I don't do those. I'm going to refer you to someone else. But they did ultimately care about my services because otherwise I wouldn't be able to serve them. And then lastly, the complicated stuff. This is all the other stuff that goes into running a business, like your trucks and your brand and your logo and your uniforms and your insurance and all this other stuff. They didn't really care about those things. They most, first and foremost just cared that I would show up. And so eventually, this is how I kind of determined what is the most important things I should be focused on in the business. How can I prioritize the chaos of Karen's? Because Karen's going to freak out because I don't do paint, I don't do decks, I don't do fences. But honestly, in terms of the hierarchy here, this pyramid services is a whole lot less important to me than showing up. So her freaking out and causing some fire and creating this urgent problem that I must serve her on this specific service could potentially throw my business through a loop. Now, when I look at this kind of category of graph, this chart of what is most important to my customers, what I've seen work over the past 10 years is you can see here all the white text. So from here down, these things decrease dissatisfaction. Okay? So complaints, communication, speed, showing up. If I can do those things, I will be able to keep customers from being unsatisfied. If I can keep complaints down, if I can communicate fast, if I can show up, that will keep people from being unhappy. Now the things on the top will increase satisfaction. Because if I can serve Karen, if I can serve my customer, they will. It will increase their satisfaction. But if I do so and I get a bunch of complaints, I will make a dissatisfied, unhappy customer. Now stick with me for just a moment. But that is not how I actually built Augusta. I listened to Karen and I let Karen dictate what was most urgent in my business instead of focusing on the most important things as we currently outlined. Because guess what? If it doesn't affect whether or not I show up, it's not as important. If it's going to affect though how fast I communicate, that's very important. It's more important that I focus on these things at the bottom than adding a whole bunch of services or focusing all the complicated stuff inside my business, like how I'm going to retarget my ads and all these other things if I can't show up. That's the most important thing to my customer and the thing I should be focused on first. But again, it's not how I build Augusta. Unfortunately, at the beginning I listened to Karen and this is what Karen comes across as typically. It's deafening. These are some of you. Can you zoom in and look at these if you want. These are some of the negative online reviews that I got early in my business. These are several years ago that I would hear these and it was just deafening. It was crippling to hear these negative one star reviews online of Karen's going off. All right, now the reality of the situation is that this location has like 440 positive reviews. But those few reviews, those few Karens, will cause massive fires inside your business that you go and focus on and make an urgent problem out of something that's not important to the business. So here's what really happened because I again, I learned the hard way how to build a business and focus on the things that are most important. But here's what really happened. This is spring 2014. All right. Yes, the logo there was our old logo for Augusta and it was copyrighted because Augusta national is too close to that logo. This is me standing next to our very first trailer, the six and a half by 11. And yes, I wore a white suit. Like a overall suit that they would wear at the Augusta National Masters is white, doesn't mix very well. Dirt and a white yellow uniform. Not great. All right, so this is what we started doing. We started installing mulch. We started doing tree services. I started doing hydro seeding. This is back one of the trucks. We still have this truck today, actually. P4. We started installing trees. There's an auger you can see. We finally figured out the fact that white uniforms don't work. So there's some green and yellow and brown finally. Then you know what? Guess what? I'm going to add more services. I'm going to do cleaning. This is actually Augusta Cleaning Services operated for several months. Then you know what? We're gonna have a tree service. We're gonna do a tree chipper and that massive dump truck. That dump truck ended up almost killing me. But like literally just adding more services. And I remember this job specifically. We made like $20,000 in a few days. I was like, this is amazing. We're gonna make so much money. Well, that dump truck almost took my life. Went underneath it with a hoodie just like this one here. And got my hoodie caught in the PTO and it bunched all my shirt and my sweater around my neck and the PTO was trying to spin me around. Fortunately, my shoulder got caught in the gearbox. Everything shred and I dropped out. Ended up in the hospital. Not good. But still didn't learn the lesson. Still had dingoes, installing walls. We had a track loader and did work with pavers and patios and dirt work. And then you know what? Excavators installing this paver patio, this massive $80,000 project in the backside of a cliff. You can't really tell here, but there's about an 80 foot drop off right behind this excavator to that the behind which is the Pacific Ocean. Okay, we did flagstone, we did putting greens, we did snow, snow removal, all of these things. Okay, now what happens when you focus on the wrong thing? Because I focus on adding more and more services and really because of Karen. Because Karen told me that I needed to install flagstone. Karen told me that I needed to install a putting green. All the Karens in my life. And it's not necessarily just the person online screaming at you. It could be your mother in law, it could be your spouse, it could be a friend, it could be a competitor. But these Karens that come into our life cause us to make things inside of our business urgent that are not important to the customer. All right, so this is what Karen potentially might say. I need some grinding. Why don't you offer that service? Like, oh my goodness, I should offer some grinding. Like I could make more money. And Karen, Karen, she's a great customer and I need to serve her because she's going to be mad if I don't do that. Okay, great. Let's go ahead and add a new service in the short term that's going to increase the satisfaction of the customer and it's going to increase top line revenue. Why would you not do this? You can absolutely go serve Karen and. And she will be happy because you're increasing satisfaction. Sorry, Increasing satisfaction by adding the service and you're going to increase revenue. Let's look what happens to this business, okay? A million dollar gross annual revenue. They offer four services. And you can see I kind of just quickly sketched out what those services are, those four services, and what percentage of their revenue and their profitability of those services. So on that $1 million, they profited $205,000. So 20% profit margin, not bad for a million dollar business. They offer four services. Now this other business does more in revenue, $1.2 million in revenue. They offer seven different services. But look what happened. Their percentage, their profitability dropped in all these services. Even though they offer way more services, their profits only $85,000. So less services equals better for the business. Here's why. In my opinion, you have less equipment, you have to train your employees less because you have less equipment, less trucks, less different types of services. You don't have to store as much equipment and have more storage and space for your shop because you have less equipment, you have less insurance. And typically the more services you add, the higher insurance is going to go. And most important, you're able to focus more of your marketing efforts on your core offerings. Again, back to here, we only had to market these four service. We only had to tell and advertise to our customer four services so we can spend more money on marketing those services to our customer. So there's a greater focus on your core service for marketing. So less services equals better for the customer. Why? Because when it comes to complaints, we look here on the board, we look at complaints. You have increased reliability the less services you offer, because now you're focused on just these simple core competencies that you've created in the business. So there's less complaints. When it comes to communication time, you're much faster to respond. Why? Because it's easier to train your admin and your office staff on just a few select services and give them all the information and training they need and so you can respond back much faster. They don't have to wait for the estimator or wait for someone who's super highly skilled to be able to come and do, you know, answer a customer's problem or get back to a customer. So I think I actually might have messed this up. So increased reliability and less complaints should be flipped. Okay. Because you're also going to get less complaints and increase reliability. I apologize. The complaints part and the show up part, those are backwards. So we talked about complaints. You will have less complaints if you have simple services. When it comes to showing up on time and doing the work and getting it done, you have an increased reliability when you have less services. Why? Because there's less inclination that you're going to break equipment, that jobs are going to go way over budgeted hours, that you're going to have to go manage the job and therefore miss three appointments for that day. So the ability to show up for the customer greatly increases when you simplify services and reduce how many services you are offering. So why do people get the shiny service syndrome? Okay, now everyone heard about the shiny object syndrome, but I call this the shiny service syndrome or the 3s. Why do they do that? Because it makes perfect sense. It increases revenue. And if you're trying to grow your business, why would I not offer stump grinding to Karen? It increases my revenue. I can make perfect sense of that decision because it increases revenue. But this is what adding a new service looks like. First off, you have the idea. And you see, I charted this out on the graph. You have the idea. Karen gives you advice you should offer stump grinding. Okay, that sounds like a great advice. I should. That's going to increase my revenue. And sure enough, in number two, you know, Karen is a genius. Why? Because you're going to upsell that same stump grinding service to all of your other customers. So you make more money. You make more money because now since you did something grinding for Karen in number one, you did that service for Karen. She's genius. Now I'm going to upsell it to all my customers and make more money. Then three, number three happens. What do you do? You advertise. You spend some of that money on advertising stump grinding to, to more of your customers, to other customers. You can invest into a better stump grinder. You can buy more equipment. You can really invest into this service. But because of that, it's going to reduce the amount of profit you're making on the service. And then this is what happens. Because you see the declining in profitability caused by the fact that you're not investing into the service, spending money on advertising. This new service, you get the off ramp. Number four on that chart is where the off ramp to 3s happens, the signee service syndrome. Because guess what? Now you can do another service. You can install putting greens. You have so much more profit. And you know what? Another Karen has again asked you and Karen down the street in the form of your competitors, started offering the ability to be able to stain decks as well. So you're going to do that as well. And so you get on the off ramp to the 3s and guess what happened? Revenue increases profits Stall and fall. So you're going to get a little kick there. Number five. See, revenue kicks up again because you added another service. And so the same process just happening and happening and you add another service and time goes on. And you keep adding more services. But what happens is adding more services as time goes on, your profit slowly declines. And so you're getting off of the shiny, it's hard to say shiny service syndrome. And you're adding another service because in the short term it adds more revenue. But your profitability, you. Your profitability, how much money you can actually take home is going down over time because you're adding complexity. It takes longer to train all of your employees. You have to manage your team way more. So you start. You're not on time to all of your estimates. Things start falling through the cracks because your office staff can't answer all the questions about the bazillion different services you're offering inside the business. And so five years into Augusta, we started had to tear all these away because after I got underneath that dump truck and got hurt for a couple weeks, I couldn't come back to work. I was in the hospital. And what I realized that all these complicated services I had built in my business need to be stripped away because I had added all of these service because it was important and super urgent that I do this. And guess what? It made perfect sense because I could add more revenue to the business. But I realized that by adding all of these services, I actually reduced my profit over the course of time. And I kept adding all of them. Cause it increased my insurance bill, increased how much shop space I need, increases the increased the training. It reduced my ability to be able to be on time and deliver to customers reliably and increased all my complaints, which are all those things are so much more important than simply adding more services. So five years in Augusta, I had taken less than $50,000 in distributions in five years. And we had $60,000 in debt. And I was working in the business 60 to 70 hours per week because I let the urgent Karen again. Karen could be a competitor, could be your spouse, could be one of your customers adding new services. I let that urgent thing distract me from what was most important to my customer and to the business. And that's when we created P4P Pay for Performance. You can check it out. P4psoftware.com it's completely free training. You go to mikeandys.com P4P4 free training to see what exactly happened. What happened is when we created P4P. I like when we took all these services, we nixed, got rid of all these services that were taking all my time and energy. I actually had some brain power to think about creating pay for performance. A model where I paid my employees more the harder they worked. The harder they worked, the more money they made. It made perfect sense. But I was so wrapped up in the urgent of adding more services and add adding more complexity to my business, I failed to actually focus on what was most important for my business which was compensating my team fairly and accurately to be able to get more efficiency from them. And honestly I was able to start P4P cause I stopped listening to Karen, stopped getting distracted, started prioritized. I had prioritized the fires in the business and implemented P4P in year six. So after those first five years, $280,000 in distributions in that one year. In the sixth year I paid off 90% of my debt. I I was able to add medical benefits for the team. I added paid time off and profit sharing and I was spending one hour per week in the business for a meeting. That was it literally from year five being in debt, hardly any profits whatsoever to speak of in one year because I stripped out all those services and the things that I thought were urgent and added revenue and made perfect sense but actually just focused on the what the customer really cared about was like me showing up and communicating quickly and be able to reduce complaints. Those are things that are most important and I could achieve those by stripping out services. And a side effect of being stripping out services was I reduced by insurance. I reduced how much time it took me to train my employees and it made me much more profitable. So adding a new service is just one urgent initiative. All these other things are going to be thrown at your way when you're starting a business, when you're running a business, regardless what size, these are going to be urgent things that will come and be a Karen in for you. Karen again can be anybody come into your life and throw one of these and try to make them urgent for you. And I ask you this year, where do you rank your initiatives? You all these initiatives, things you want to do in your business. I want to raise prices, I want to send out this new marketing email. I want to change the way I pay pay for performance. I want to do all these new things, new website, I want to change the trucks, I want to change the logo and the branding. All these things prioritize and execute. You can only do so many things in a day and Honestly, if you make them all urgent, nothing's going to get happen, nothing's going to worthwhile happen in your business. And so you got to figure out which ones are most important, what's most important for my business, and then where did those urgent initiatives fall on this continuum? Is it going to affect, if I show up to the customer, is it going to affect my communication speed? I'm not going to get in the weeds and, and spend all my time focusing on the complicated stuff in my business, otherwise I won't be as profitable. Because if you don't actually rank the initiatives and all the things that are on your plate, Karen will prioritize these things for you. And it will make you poor if you're constantly trying to do what everyone else is telling you what to do. Your customers, your employees, your competition, your spouse, your friend, all these people throwing these urgent things your way. You will do what I did and a whole bunch of services because people just kept telling me what I should be doing, what I needed to do in my business instead of actually figuring out what do my customers care about and what do I prioritize and work on first in my business, you do that, you're far more profitable instead of chasing your tail and it won't cost you a. You know, hopefully you don't have to go to the hospital to figure out the fact that you've added too much complexity, too many services. And so a lot of times people talk about simplifying services. I don't mean you have to do just basic, small little jobs. What I say is, even if you're doing massive projects, you can standardize what you're doing. You don't have to be able to install 15,000 different types of variations of blocks. You can install three or four and serve 95% of customers. And in doing so, reduce the waste on job sites, reduce the amount of training for your crew, reduce the amount of overages that you have to purchase, and be able to get discounts on buying more of the same materials. There's so many positive things about simplifying your services, reducing the amount of services that you offer, and focusing on your core competencies. But really the only reason I talked about this today is because it's an example of being able to focus on something in your business and realizing what the most important things are. It's not going to be adding more service. One piece of equipment is not going to completely change your business. Doing one small thing, although it seems super important and urgent right now, probably won't revolutionize your business. But honestly, getting these things out of priority and getting them in the wrong order will absolutely confuse you and make you less profit. So if you're adding too many services, if you've made a bunch of complexity in your business, I highly recommend that this just be a warning that making sure you are able to focus on the core competencies of your company and what services are going to be most profitable might serve you well in the future.