How to Go from $1M to $10M (Coaching Call with Mike Andes)

Mr. Gustin. How's it going, dude?

Good. How are you?

Good, man. It's only like three years since the guys came out into the video. You guys?

Yeah, it was November of, of 21.

Okay, let's go. That's great, man.

It was super cool. We, I prepared this like infographic yesterday and I used one of the photos that the guys took. Just crazy to see how much we've grown. Like back then I think we're doing like a hundred thousand a year. And then since then we did like we've done like 1.7 in sales. It's just been God's blessing on the company for sure.

Let's go, man. Cool. Let's jump in. I have historical context so we don't have to beat around the bush.

Absolutely. And also happy birthday. I saw your post. That's one of the birthday.

Cool. Well, I'll.

I'll be respectful of your time and I want to make sure I get all these questions out to you. So one thing, one thing I want to pick a GR on is how we should structure our business. So for context S. We have a LLC taxed as an escort. Second location is a dba. I know me and Will Kelly are really good friends and, and we talk about a lot of the stuff. I asked my CPA what we should do and she said are you wanting to do a series LLC or subchapter llc, stuff like that. And I'm just trying to figure out how we should structure that if we want to do let's say like 12 locations in a 10 year. In a 10 year span. Sorry, how would you recommend we structure that?

I would probably do an escorp and do it the right way like actually setting up with articles of incorporation, everything. And then I would set up an LLC for each of the locations. And then I would. That way you can set. You can do one tax return. So you don't have to do a tax return for every single location. Because right now if you do LLCs that are taxes S Corps like the way you're doing it, you're going to have a different tax return for every single location. So 12 locations you're going to be spend 24 grand a year just on filing your taxes. Whereas with an S corp just doing it all under 1, you'll just take 1, you will take 1 W2. So it simplifies your payroll and it simplifies your tax actually prep.

Okay, I, I ran that by our CPA and she said something like we can have one tax return doing it. That model. But there would be separate payrolls for each company.

Yep. Either new, there'd be a different ein for every single llc. But the S Corp would be the only one that would actually submit a tax return. And then inside of that, you have all your schedules from each of the different entities. What's nice about that too, Sam, is then you don't have to worry about like. So, for example, usually if you have one one entity, like let's say it's your one that's starting new locations. If it has like four or five years of straight negative. Because just starting locations, that can flow a big red flag in terms of irs. Whereas if you do it all into one S Corp and one tax return, the losses can offset the gains of another location very easily. Instead of. It just makes it really, really simple. So I'm actually in the process of doing this from like all my businesses to all my business. And not just like the location stuff, but it's going to go all into one escort.

Okay. And then so I get like GMs and below, we'll have their own separate payroll. Now in terms of myself and like, let's say we're not necessarily doing a command center per se, but like we're going to have office help all the locations. Who, what payroll are they going to be on, like the main location we. Or how would you recommend doing that?

Yeah, there's so many ways you can do this. I would probably for the sake of like, are you doing profit sharing from the individual locations to GMs?

Just the GMs, but with the distribution model instead of profit per se. Yeah.

So then what I would do is I would just pay your headquarter company, like your escort from the S Corp. I'd pay your command center if they're servicing all of them. You just have to figure out a way to track how much revenue, you know, how much of those that cost is attributed to each location, whether it be by minute, whether by revenue. Like, revenue is gonna be the easiest. So if you're just like, hey, we're just gonna divvy this up. If you have 300,000 revenue, another has 700,000, 30%, 70%. Like that's the easiest way to do it. And just do a journaling entry at the end of the year. And then keep in mind that's gonna make your individual locations look very, very profitable. Right. But then what you're gonna do is give a lower percentage to your GMs on profit sharing. Because what's going to happen is they're going to be really, really profitable. And then they're going to hit by this, you know, journal entry of command center from the S Corp. Does that make sense?

That makes sense. And we're splitting up between the two locations. That's how we're saying my salary is a portion of that is based on a function of revenue percentage.

And honestly, honestly, Sam, you could probably, you could probably completely forget about doing journal entry and forget about.

Anything. You could probably forget about completely trying to do journal entries and doing individual location like the settlement between revenue or minutes. If you simply just made the understanding with your GMs, like, hey, your location is going to look like it's making 35% profit. But keep in mind that money then goes to the S Corp, and then we have to pay all of the command center essentially. And then you're just. So that way you wouldn't have to worry about a journal entry. The only reason you do a journal entry, if you want to know the actual profitability of a location, you would need to have that journal entry being done. But if you just simply want to be like, okay, look, all admins going to be cover, covered by the S Corp. You guys, all your money flows to us as distributable cash to the S Corp. And then from the S Corp, you take your W2 and you pay all your command center. Just realize those locations individually will look like they're making between 20 and 40% profit. And then I would just make sure that the GMS know that there's like, hey there. By the way, there's an extra 10 to 15% coming off the top once it gets distributed to the Escort. Because it's not coming to me, the digital cash, it's coming to the escorp.

Okay, I'm. I don't know why I'm having a tough time understanding that. Maybe it's just because I'm super unfamiliar with the ESCORP world. I know that our LLC is taxed as an S Corp. So like the S Corp isn't its own entity. Like we don't have our own separate ein for our escorp. So when I'm hearing you saying like, we're going to transfer money to the escorp, how I'm understanding it is we're going to transfer that money to our main location right now. Because we're kind of treating that as like the hub for everything right now.

Yeah, that, that'll get messy. So here, let me, let me just pull. I'll just write it out for you. Give me one second. Yeah, I'VE just gone through a ton of this, so it's actually very top of mind because I'm doing it all for all my businesses. Me. One second. I'll just share this with you. That was your screen. Okay. Business here. I should be able to share this. Okay, so this is my recommendation. And again, you, you would get 10 different opinions on this if you talk to accountants and attorneys. So I would have an actual S Corp here. Well, I mean, actual as. I mean, like doing actual articles of incorporation, doing minutes annually, like legally, really setting this up correctly, because this is going to be the thing that would prevent any sort of lawsuit from getting to your LLC or to you is having an actual corporate veil where you have annual minutes, et cetera. So I can, I can. I'll give you a recommendation for a legal firm too, for, like, down the road for you. That might make sense down the road for you to help set this up. But then you'd have, like, each location would be an llc. I would not recommend, like, right now, it's working like, your current S Corp being your first location, that's going to get really messy. I would recommend breaking it out. And like S Corp, under this entity, you're going to have obviously an ein, and that's going to be paying your command center. And then this would be obviously your LLC for each location. And then basically distributable cash would flow down to the S Corp, not to you. And then you would pay your command center from here, and then you'd get a distribution and a W2 from the escort.

Okay, so all distributable cash, however we define that, is going to go from the LLC to the S Corp. Okay. And then, but like, let's say we give our general managers 30. We keep that.

I wouldn't, I would not do 35% of distributable cash in this scenario because that number's gonna look massively inflated because you're paying command center after that. So I would, I would be very upfront with your, your friend, your, your GMs, like, hey, like, look, 10 to 20% of revenue is going to be spent on admin. So this distributable cash, I'm not going to give you 35% of it because there's this other cost I have to go pay afterwards. Now what you could alternatively do, Sam, is pay the command center, like to hear from here, and then do this whole journal entry and charge back to each location. You can do that. And that, that was going to. That would then make Your distributable cash not coming back. The S Corp, it would be coming back to you.

Okay, that helps me understand because I didn't even know S Corp could have its own. That might sound stupid. I just thought our LLC was taxed as an S Corp. And so it is.

Yep. But a lot of times, like for example, do you have articles of incorporation and do annual minutes.

We like, we do it. I don't know if we necessarily track it. Right. We kind of just like at the end of the year kind of like put the Augusta rule and just say we did whatever, but. Which I don't like that rule or not, but you know.

Yeah. Like little things like annual minutes not being done, which is essentially just saying like here, what were the big changes here? How much money did we distribute to the owners, etc. Just by not filing that with your. With your annual report. Can. That alone could be an attorney's way to get past the corporate veil and get to you personally. So like, people set up LLC and things like protected and they don't keep their. Their filing up correctly. It's doing absolutely no good. They. The. The corporate veil can get pierced by like you doing personal funds in and out, but can also get pierced by just not filing correctly annually. And it gets. Happens all the time.

Yeah. And I don't want to spend too much time on this question, but is that like, is that something that keeps you up at night? Is this mate, like, with everything you have going on, how do you. How do you juggle that? Do you delegate making sure that's set up?

No, it's a defensive measure. I spend as little time as possible. Think about it.

Okay, cool. Next I want to ask you, Mike, is I'll provide context after I access. But I'm curious how you avoid burnout with everything that's on your plate. A little about me is I lead worship. Like you can see my guitar lead worship at our church. You know, business and then wife, kid, and there's just days. And maybe, maybe it's because I'm motivated by different things. But I used to just be like, I would want to stay up until 2 in the morning. I was like, this might sound bad. I was like, if I was single.

I could do a lot.

Like, you know, I'm not, but I'm not. So I feel bored now. You know, I'll be sitting in the office and I'm kind of just bored and like, like twiddling my thumbs. Like I don't really want to send an email or you know, curious how you avoid that if you've encountered that. How do you get past it? If you can kind of break that down a little bit, A few different.

Questions, like, in terms of me a more. Because there's like, five in there. Give me one. Give me one. How.

Now that I've accomplished the goals that I've. That I've envisioned when I first started it, now that that's, like, a reality, I'm bored and I feel burnt out because maybe I've lost my purpose and I need to restructure my purpose.

I just, I. I said, like, getting really, really clear then, like, what's the next hill to conquer? Because you've been in go mode, like, climb mode for so long, and then you, like, reach the pinnacle. And, you know, if you would have said five years ago, you'd have what you have the day, you'd have been like, oh, I'll be, well, now you reach the top of the mountain, and now you're just like, it wasn't. It wasn't reaching the hill, reaching the top of the mountain. It was the climb. It's like, you're just gonna have to figure out what the next hill is, and that might not have anything to do with the business. Right? And so, you know, re restructuring your perspective according to what your goals are in terms of, like, you know, church involvement, the family. Like, those are other hills you can conquer or you have the business, you can, you know, just change your business goals. No one said you can't now do 12 locations, whereas five years ago, you've been thrilled one or two. And so, like, defining that, I would say is first. Secondly is like, in terms of the burnout side, it's just like, look, no one's forcing you to have these goals, so you made the decision. And if you. If it's burning you out by having big goals, then lower the goals. And, like, burnout is simply the function of, like, what will keep 95% of people doing from what the goals you're set out to do. And so if you're going to have the massive goals, it will come with, like, a ton of sacrifice, like, pain and stuff. But if you're having, like, you're kind of. You're kind of saying both things, like, you're kind of burnt out. But then, slash. I've kind of reached what I want, and I don't know where to go next.

Exactly. And I'm kind of curious. And maybe. Maybe the simple answer here, Mike, is that our. Well, obviously our brains are different. For me, If I had, if I was balancing everything, I would just, like, I would feel like a weight on my chest. Do you feel that at all with everything you're doing?

Because I'm trying to balance it.

Well, just because you have so much.

Right?

So you have like, let's say I don't know how many companies you have. Let's say you have 10 companies.

Yeah, but see, if I felt that way, like, it's my problem. I created it, like, I could undo it. Right? So it is, it is ludicrous to be like, oh, man, like, I've created all this, these businesses and I have all this, this, these real estate things and employees and like, it's so dry. Go fire a bunch of people, downsize the business. Like, what do you want in life? Do you want the stress of having to manage all these things and be responsible for all these things, or do you want the stress of not having money to not having people that love you and not being able to provide for the people that you care for?

Yeah, I, I think mine is, I. I don't want to let people down. So if I, like, I want my vision to be big enough or others can fit with inside of it. And so if I commit to growing something, but then I'm like, I don't know if I can do this, which I, I don't feel this way about my lawn care business. But I'm. I'm just curious if I ever get to a spot where, you know, I feel like I have 12 locations and you have 10 different business. I mean, you have a hundred and whatever locations. I was just curious if you ever, ever felt that way and if you've done anything to, to shift your mindset about it and it kind of just.

Sounds like, just fall in love with the climb. Realize that like, the currently you've always been like, I need to get to this goal and I'll be happy. You get there. And you just realize like, oh, like, this is super unsatisfying. And I like, the climb is what you start to love. And what's cool is when you financially can kind of like cross that, check that off your box and be off the list and be like, okay, I'm financially secure now. You can actually just focus on the climb. And that is a little bit more rewarding. And then if you're completely addicted to it, you just call constantly. Stay living on the edge.

Okay, gotcha. And then I, I'm looking over here because I have all my notes over here. There's a question that kind of feeds off of that. I don't know exactly where it's at. But how, how did you navigate going from being in the business every single day and I've heard videos where you say I only show up to a location maybe one hour a week. How did you navigate that? Were your managers kind of salty? Was there was the standards more loosely held because mom and dad is gone? How did you navigate that, that shift?

Yes. Like now I don't go to any of my locations at all. But in terms of like making the transition is you just make it incentivized for them. So it's like, hey, look, when I'm not have to show up anymore, you're getting extra 5, 10% profits, you're going to get a raise. Right. So I just made it where it's like if I have to show up, you're going to make less money. And if they're money motivated, it's easy because they're like, yes, I would rather have an extra 10, 15, 20 grand a year and Mike not show up than him show up for an hour a week and just be a pain in my butt. So assuming that they have like say for example, I would probably do if I was you is like, hey, after one year your pay will go to this. If I'm only showing up X amount per week and as soon as I am out of daily operations, I don't know who you're hiring, I don't know the marketing and nothing's being handled, then these are the benchmarks. Just want to benchmark it. And then I would keep in mind that you're eventually going to need regional managers between the two of you. So they'll take a big brunt of that and that'll be their job. Right. But if you're going direct to GM to you, then you want to have some sort of incentive for them.

Yeah. And without, without finding the document. Share my screen. That's how we have it set up where if we did 12 locations, two regional managers, each regional manager covering down on six GMS and then going up to the, to the CEO, whether that's me or whatever. I like that because coming from a military background like the chain of command, one thing I kind of like paint the picture for my guys is there's a commander's intent. And so if you have like the commander has 150 people underneath them, you can't have a private come up to the commander and voice his concerns like there's got to be a chain or else the commander can't actually accomplish the mission and you know, do what they got to do. So I'm 100% with you on that. How do you organize your systems? I get, I get what a system is, but I'm curious how can we organize it to where somebody can simply go like, like pull up if they need to have a question.

Like. Creating a repository for each of the businesses is helpful in terms of like documentation and storage. You can make it happen. Some people, like we use Connecteam for one business, we use Jira for another business. Like more of the software side. So it's like having repository is nice, making a searchable database, things like that. I think people over complicate and overthink this and they spend way too much time most of the time. Because what happens is if the business is growing and changing literally that doc, every single document in that repository has to be updated every year. And so you become, you basically create a full time job of just updating the system and like no one actually looks at it because within three to six months it's been changed. So I'd be careful with like going too much in that direction. Usually what I recommend is just like keep growing the business to the point where it's like, I must have this in place. Otherwise like it creates so much drag. Instead of being like I'm going to create all this infrastructure and then build the building just like, like it's like trying to build scaffolding for the entire building versus like you build a little bit of building, you build some more scaffolding. Build more of the building, you build more scaffolding. Like I generally believe most people overthink this part, especially when they get like 1 to 3 million. Like I got to all this infrastructure, it's like whoa, whoa, whoa. Like you don't need all these systems documented the way you're thinking. You just need to have a process for onboarding people. Like I think in terms of systems like focus more on the onboarding process and like systematizing that instead of documentation of all the systems because they change so much if the business is growing.

Yeah, yeah. And I'm under that same belief as well. One thing that just kind of takes the wind out of my sails is if I'm like working on strategy or like working on the business and then somebody comes up to me and it's like, hey, how do I, you know, do this simple thing?

It's just like, oh my gosh. And if they ask it twice, I'm just like, I can't. I, I Like, I'm a, I'm a good leader in the sense where I don't like show that it's frustrating, but I'm just like, okay, I want to figure out how to not have simple questions be asked.

Yes. If you mean like a Google Drive, like you can make this really simple. It's a Google Drive. So it's like, okay, one folder is command center. You open it up, it's like, okay, there's 10 functions. There's billing, there's invoicing, there's scheduling inside of those. It's like how to schedule a recurring job, how schedule a project based job, how to schedule a job. Every little. You just create, you create looms, you create screen recordings for every single thing. And then anytime someone asks like, oh, that needs to go into the binder or that needs to go into the Google folder. Right. So I do the same thing with like the franchisees. Anytime it's a question, I'm like, oh, that should be answered in the training. Okay. I just have an ongoing list. I'm constantly adding what needs to go into training, what needs to go into training. And then either a, is this a document that needs to be in the initial training or is this something they're going to experience later on? It needs to be in like the back end academy or in this, in your case, a Google Drive.

Okay, cool. That answers that. Now a question I have. I've asked you this one already when you're doing like the P4P webinar. I've asked Lee this question, I've asked people. I get the same answer, but it doesn't make sense to me. So I want to figure out how to do manual adjustments without impacting labor efficiency. And I get. So labor efficiency is budgeted hours completed divided by clocked. But if we add a manual adjustment, we add it to the P4P, that manual adjustment doesn't hurt the employees P4P, but it would technically hurt the labor efficiency metric. Because clocked hours stays the same whether you do manual adjustment or not. But there's zero change to a budget hours completed. Right. So if like we wanted to pay, give somebody manual adjustment for an hour of maintenance, they're clocked in, but it's going to hurt their labor efficiency. Does that make sense?

Yeah. The reason for that is because if you allowed manual adjustments to go, in fact, so a company could look really efficient and in reality not make money and skew that number. I'd rather that number be true to what actually budgeted hours is being completed per clocked hour in the business. And yes, that will mean individual employees will be impacted if they have manual adjustments for like sharpening the blades or doing other shop work. And, and I'm okay with that inefficient like that, that lack of accuracy. But I want as a whole to know what that percentage is and know that it's not being skewed by like a general manager being like, oh yeah, the entire guy like everyone today is just gonna do shop maintenance. Man, their efficiency is great. They're crushing it. And I actually drill into it and the business is unprofitable because they're spending so much time being paid for non revenue producing work.

Right. But if, if they, the whole company was doing maintenance, they would actually look really inefficient because they've added 10 clocked hours with zero budgeted hours.

Which is, which is the actual truth.

Right. But okay, wouldn't that. So we, we have a thing called a contribution score bonus because I think labor efficiency only plates shows a certain picture. So we have budgeted hours completed multiplied by labor efficiency. We call that our contribution score. And so we have a, that that metric truly shows the top performer. If we have somebody that's doing manual adjustment because they're actually changing blades and getting more money, they would actually be dis. Disincentivized to do additional work. If we have bonuses based off of labor efficiency.

Yeah, if you're doing, if you're bonusing it, then yeah, you'd be careful of it. So like I would probably in that case make a budgeted hour or whatever their time was spent. I'd make it a. But like if you just assign a budgeted hour to it now it becomes efficient.

But then that would skew the data on how many like what our labor revenue would be, right?

No, because efficiency scores budget hour divided by clocked hours. So the efficiency score, if you're trying to keep that tried and true, you would be fine to just add budget hours for whatever. And this is what we're doing now at our shop for maintenance. We're not being like, oh yeah, just clock your time. We're saying it is going to take you one budget hour to do those four trucks. One budget hour. It's a job on their schedule. So then I can treat it like a job in terms of efficiency score. They might get done in 45 minutes, might take them an hour and a half. And so this really puts more pressure on the general manager to chunk down how long should these tasks take instead of is what I really don't like about manual adjustments. It's like, oh yeah, just clock your time. So I'm a big fan of. Okay. How many budget hours does it take to spray the shop? How many budget hours does it take to change the blades? How many budget hours it take to wash the truck? Like assign a labor rate that you would correspond with your regular services. If you, if you really, really are wanting that, that, that labor rate to be accurate. Like the effective hourly rate. If you want that to be accurate, you'd have to also assign a per hour to it. And I don't think it's a bad thing. Like they're not producing revenue, but you want to be careful of. But I don't think there'd be any problem with putting a labor rate in there.

To me it, to me it shows. It would jack up your effective hourly rate. So like if we wanted to see how we're profitable, we would take our effective hourly rate minus our break even point, our clocked hour. But if we're do. If we're assigning a labor rate to non billable work, that would skew that data.

Yeah. Then you, then you could just leave a zero. If you're really worried about leaving the effective value rate correct, I'd put the budget hours in and leave the rate at zero. So that way your efficiency score would be correct, but then your effective hour earlier it would also be correct.

Okay, cool. Yeah, I did. I didn't mean to make that super complicated. It's just that has confused me and.

I'm like, what we do in copilot is we just set their P4, P4 shop maintenance is zero. So but then the budget hours can be assigned. So I can do it. One budget hour of shop maintenance, whatever. And they get done in 45 minutes. They clock in and out like a regular job.

Okay, perfect.

Because I just got tired of like all of a sudden taking like four hours to spray the shop. I'm like, what in the world?

Yeah, yeah, yeah, for sure. That would, that would annoy me as well. Do you, how do you go about. I would assume you set up an annual budget, you know, per location.

How.

How do you go about doing that? Like we have a budget template and everything. I'm not asking to see yours at all. How do you go about setting that up with like your GM or communicating that to your gm? What percentages are you looking for to like what is like a red flag on equipment maintenance or whatever? How do you go about setting that up?

Yeah, we don't really. I Don't do budgets for my locations. The reason is because all I need knows are you in profit mode or in growth mode, that's going to set the budget. Because if you're in growth mode, you essentially have an uncapped budget. If you're in growth mode, which means if you keep hitting capacity, I'll keep, I'll buy you trucks, I'll buy equipment, I'll do whatever you want. And then if you're in profit mode, then it's like, okay, I need your labor efficiency score, I need to know your close ratio and I need to know how far you're booked out. They're like really the only three things I need to know because between, between those three things I can determine if you're in profit mode or growth mode. And so in terms of budgeting, I'm looking much more percentages. Like for example, if more than 50% of, of revenue is going to wages, that location will never make money. Like those are, those are the things I'm looking for. I really don't do a lot of budgeting because like, am I really not going to buy the mower when I need one because it's not in the budget but I'm in growth mode makes no sense. So it really comes down to like, I would be much more looking at cash on hand. If you're in, in growth mode versus okay, can we afford the mower? Yes, we can. Because we have one month of payroll in the bank. Anything above that we're willing to spend. I'd be putting more like caps and checks and balances instead of doing a budget. That's just what I do though.

Okay, my follow up question to that Mike, would be how would you set your hourly rate if you don't actually know like what your break even point is roughly going to be based on budget? You just use a previous year's expenses and maybe add a few percent just for wiggle room.

My, my hourly rate to the customer, I'm much more looking at P4P. I'm trying to get that percentage of the, of my base pay going towards that the hourly rate to the customer as low as possible. So when we raise prices, I just, I just don't look at my budget to determine how far I can raise my prices, right? I'm raising my price as high as I possibly can based on my close ratio and whether or not I'm in growth mode or profit mode. And so I, you know, I'm gonna, I'm gonna be incentivizing profit and I'M going to like I just don't think about budget at all. I really don't.

So yeah, so this is just how, this is how you oversimplify everything. Because if going back to the first question I asked her second question, this is when I start getting like stressed is because I think I read too much into, into a situation. Like I want to know exactly based on how many estimated clocked hours I'm going to have what my break even point is. This is how much profit I want this location to be. So let me like add it to it.

Like those are all defensive measures, right? Like I really believe that. Like there's so many things that get talked about that are defensive measures. Right. That don't actually move into like knowing that break even point isn't going to change your profit and loss statement. What will change your profit loss statement is selling more jobs, doing it more profitably and more efficiently and at a higher price. So I just focus on those four things instead of like this, this other metric that will change all the time. Because when I raise prices now, sudden that break even point is going to change. If I get more customers. If I'm in growth mode, it's always going to be changing. And so I would just really focus, like simplify everything. It's like I know that if I can produce this product to the customer at an efficient labor, so I'm really looking at labor and I can be booked out far, therefore allowing me to be able to raise prices because of a high, high enough close ratio, I'm good. That's why you only need those three things.

Okay, got it. Let me see here on my notes I have them like highlighted to see what I have to ask and if I get to others, it's fine. You mentioned in a recent mastermind about the car lease like you would you've really thought about getting a. Leasing a Tesla. I know, I don't know if you've done this or not, but I want to pick your brain on how, how much research you've done on it. With commercial insurance, could they use it for. I'll kind of ask a few part question here. Commercial insurance, can they use it for personal. With it being a lease, are you going to set like monthly mileage limits that they can drive it? What if they just beat it up because it's not theirs? They're going to drive it like a rental. What, what's your thought process on all that?

I would assume they're going to drive it like a rental. I would probably have some Sort of thing about like, hey, please clean it before you come back to us. But then assume they're not. So have some sort of like, okay, I'm going to clean it out once a month.

Because again, like, we don't want to make this hard for them. We're trying to like, reward them. Right. So we need to take on the risk. And so, yes, you can do under commercial. And then it's basically an employee benefit. Talk to your, your insurance agent. I would probably say it's going to be an estimate vehicle and then run the estimates for like one day a month or like during the winter, run it. Excuse me, as an estimate vehicle. And then because, for example, most companies that like, have their employees take the cars home, they drive for personal stuff all the time. And so that's not the issue. The issue is classifications. Like, you probably just need to talk to your insurance agent. Like, hey, if I just say this an estimate vehicle and I use it periodically as an estimate vehicle, but then let my employees take it home sometimes, is that fine? That's how I'd be. I'd be classifying because the coverage will work. Like the insurance coverage will work. It's getting the coverage. I'd just be classifying by as a company vehicle.

Okay. I was always under the impression that if it's a commercial vehicle and you drive it to dinner and you just completely smoke it into a wall or something, that's not covered because it wasn't being used for commercial purposes.

No, not true. Not true. No. Like my, my. The one. The last year when I got in, my GM got in an accident. It's all covered.

Cool. Perfect. I think that those are all like the must ask questions. So now I'm just going to kind of just pick your brain and other stuff. How do you make time for, for Christ in your day with everything you got going on? That's one thing that I like, almost feel convicted by. I'm like, I'm almost having other things be my idol. And I want to make sure I'm making time. Curious how you do it with everything you got going on.

Yeah. Like, I think first off, not judging yourself, like, too hard. I would say what I'm looking for is actually just keeping the conviction. Like, if I don't feel that way, I would feel I would make big changes. The other aspect is just like making sure your managers know this like the back of your hand. Like they know. They know when to not talk, talk to you. You know, have a chain of commander who gets to you and then Having spots on here that are specifically blocked off for those, you know, priorities in your life.

And then you live by that. Like. Like the back. Like, everything revolves around that. And then realize that even if you can't, like, if you have to work later and you. You can't do those things, like, don't beat yourself up. Like, you're trying. You're human. And so that. That would be my biggest thing. Like, I'm always looking for the. Is the conviction still there? Because I generally believe. I don't think that regardless of how much time I would spend on that area of my life, I would ever be like, I'm nailing it. I'll always feel somewhat inadequate. And if I ever lost that, that's when I would address this and be like, okay, time to block out some stuff.

Yeah, yeah, I know. Like, every thought is not your thought. So it's like, I feel like sometimes the devil's the. I think it's me talking to myself or possibly even the Holy Spirit, but it could be the devil being like, you suck. Like, you didn't. You didn't talk to God today.

But okay. Just wanted to see if. If I appreciate you showing me your schedule because that kind of gives me freedom to protect my time where I feel like I have to deploy my time to everybody else.

Yeah. Like, so, for example, for me, like, between four and eight, for example, like, that's where I get all that stuff in. But I know I have this other block till 11, so, like, if there's stuff that's popping up, which there always is, I know I can get to it. And so. And then you start block off, for example, your strategy stuff where people. You're annoyed by people to bothering you. Okay, well, I'm doing a strategy every day from 8 to 9, or I'm doing it twice a week between these plan blocks. Don't contact me. Like, the only people that can contact me during the blackout sessions are Liz and Josh. Like, if your name is not Liz and Josh, you don't contact me. I'll just get annoyed if. If that's happening.

Yeah, cool. That.

That.

That answers a lot for me because I imagine a lot of people have your cell phone and want to talk to you. And I didn't know that there you could set something up, which sounds so stupid. I didn't know you could set something up like that to be like, don't talk to me. I would almost feel like people would be like, wow, Sam is like this on a. He's all righteous now. Like, he And I would just hate for people to feel like that about me. Cool. It kind of just gives me freedom to do that.

Another thing is like after the times that you have blocked off for church or whatever, have an hour where you're allowed to go work and get sign off it from like your spouse and the family, like you're like, hey, that way I can be present knowing I have the time afterwards allocated to jump back in the fire and get stuff done.

Very cool. How do you we. We kind of created this thing called a CEO dashboard. I'm curious, let's just say just for your locations, for Augusta only, how do you go about organizing and tracking all of your KPIs so they're in one spot so you can just quickly see like a row and sheets and be like, okay, oh crap. Or oh, we're good. How do you go about organizing that?

Yeah, we built software for it. So like we have a separate thing where we keep track of all the KPIs so I can just kind of look at, glance at that. They update it every week for the GMs and then every month the whole location.

I would just like, I'd be really focused on like you don't want to be tracking too many. The GMs will like they are not thinking like you, right? They're thinking about making their paycheck, keeping the guys happy and making profit sharing. And so like our GM scorecards that we do weekly is very basic. Like again, it's like what's your labor efficiency, what current jobs are pending that you're trying to sell, how much money is in the bank account, how far we booked out, how many budget hours are completed last week. Like it's very, very basic and things like no more than 10. And it's things that like they don't need to do a bunch of digging for. It's like it's on PvP, it's in Copa. Just look at these few little places and you'll have it. And if you keep it simple like that, then, then it gets updated more often. Actually gets adhered to when people start wanting like what was payroll last week? Well, now they've got to go into QuickBooks. Now they've got to do math and you got to divide a thing by two. You're not going to get the metric. So I just keep it as basic as possible. Like if it can't be done in two clicks, like filter estimate sent, boom. That's like no more than that. That's all I want to be saying.

Yeah, we, we have like direct labor percentage, number of callbacks In a week, GM, like total budgeted hour, GM billable, budgeted hour that they complete. So there's 10 to 12. It's not all horrible. I was just curious if you had like, because you get a lot of free documents that you put out there. Just curious if you had something that I could read. But I think what we have that. That's a question I've had for you for probably a year and a half now. And I just figured I might as well ask it today. Even though I think I figured it out, I want to make sure I get all the good ones done here. I don't want to spend too much time on this because I'm not like horribly convinced that I would become a franchise owner. But a two part question. There's a franchise rate by us and Casey, I think is his name.

Yes. Yep.

If we were to become a franchise one day, would we just have to give up like all 700 customers? Because there's a guy right here. How would that look?

No. So how it works is you keep everything inside of someone else's territory. You just can't get new leads inside their territory. So basically we've had a few that joined. What usually happens is they have like 30, 40% of their business in someone else's territory and they keep them for like a year or two. And they'll usually then be like, hey, if you, you like trade me. Because basically if you're adjacent to someone else, usually they also have customers in your area. So we've never had a time where they either don't trade or they sell. Like, hey, I just want to get out of your territory completely. Can I just sell all of these to you? So we've never had a huge, you know, deal with it, but you know, he has two, two market, two locations. But unfortunately he hasn't really started on the second one because he's had some big personal problems with his health. But yeah, kind of that north, North Austin side of things. Yeah.

Okay. And then I know you guys like average location is doing about 41,000amonth. Last time I checked, we're doing like a hundred thousand a month. With a company our size, do you think the value received is it like we wouldn't experience the full Augusta experience because we're kind of built past that. What would you be your opinion on that?

Yeah, I think it really comes down to what you want, Sam. Like I would say if I was in your shoes, like you're going to save time if it depends on what you want. Like, do you like, if you want to build to 12 locations, it'll be faster in a franchise system because you just send your general manager to get trained, right? And you just like literally a few thousand bucks, you send them here, they get trained, pay for their hotel, and they're back. And then if someone drops out, you send another one, right? Versus what usually happens even at 12 locations is you are the trainer for everybody. Like, everyone has to still come through you. You're still in the hiring for GMs. And then what's nice about having a franchise is that someone for them to be answerable to besides you. Because right now you're creating the scorecard, you're creating the sheet. If you have like something bad about the numbers you're going to them versus the coach handles it, or they ask me in a mastermind and I'll give them my opinion. And you're like, thank goodness I didn't have to say anything. And I, I'm very careful because in the mastermind that we do daily, there's lots of GMs that ask questions and there's owners that ask questions about their GMs. And so I'm always playing, okay? So if I'm a gm, this is how I think about. If I'm an owner, this is how I'd be thinking about. So a lot of times the GMs are really helped vicariously and I'm able to say some pretty harsh things to them that it'd be tough to say as an owner. That'd be like the benefit. There's also a huge amount of pride. If you built the 12 locations and it's under troops mowing, that you'd probably feel. But if it's like about speed and like, you know, taking out time out of the equation, the franchise would make a lot of sense. But you know, for you, it's not going to be like how to market. It's not going to be even like the oper, the command center side. You figured a lot of those things out. It would be the community and it'd be the ability to have your general managers trained and for them to feel part of something bigger.

Yeah, yeah. And that's, that's, that's a huge thing. I always love coming to the conferences and just that the community is, it's just nuts. It, it is not. And actually that feeds into the next question I have is how do you. You have a vision. And I imagine using the commander like the military chain of command structure that we were talking about. How do you ensure that your vision is adhered to and like accomplished? From like you're sitting in a, in an office talking with Liz, you say, this is my vision for the next two years.

Go.

Like, how do you make sure it's done and how do you make sure it's communicated to the newest hire in Oregon? You know what I mean?

Yeah. Like, stand like, standards are always created by firing. Until then they're just suggestions. And so whether it be an executive, and we've had to do that in the past year, that doesn't adhere to the values that you just fire them. If it's a franchisee that doesn't adhere to the values, like, you just, you just release them immediately. We just did this two months ago as an owner that wasn't cooperating with owners next to them, it's like, okay, you're out. Here's all your customers. Leave, get out of here. And so that creates the, that that's why the community is so strong, because they know. I will literally fire franchisees, I will fire customers, I will fire employees, I will fire executives if they're not adhering to it.

Okay. And then I have like three or four more questions and we can just zoom right through them because now I think we have six minutes. Master production rate. How do you. As far as I'm tracking, there's not like a master report that we can pull from copilot on exactly how long. How long properties are taking. How do you go about figuring out like, hey, 5,000 square feet for a two person crew. This is what it is on average. How do you do that?

Like, we'll have visit reports down the road which will be helpful for like individual properties. But you're asking like, as a blended, I would like what I did way back when was literally just took all my customers, did a custom field for square footage and I took their price and I just put them on an Excel spreadsheet and literally just got a dotted graph of where they're all at. Like, if that's like, it's the easiest way to raise prices. It's the easiest way to come up to actual real production rates. Is literally just doing a scatter plot of your square footage versus your price and you're immediately find like all the laggards. Like, oh, I need to raise price on all these. Like, I can. I just know a lot of things until you have more than a thousand customers should be done manually. Everyone tries to jump the horse on like, I need to automate this, I need to see this as a dashboard. A lot of times creating the metric is actually where you get all the value. Like not actually running the metric every single week. And so there's a, there's a lot of times I know there's ways to automate things and I'll tell the owners, don't do it automatically, do it manually. You know it's going to take you ten times as long. But you will learn so much more about your business. And so like for example, the square footage thing is super nebulous because certain parts of your market goes way faster because there is no ditches or there are no gates, there's no fences. So like if you're going to have all of these asterisk next to a piece of data, it means nothing. And you're like, well then I'm going to have segment it. Okay, now we're going to spend so much time on this versus just being like, okay, we're going to raise prices across the board and 10% of people are going to leave. And then the time savings of you and your managers and all this analytics and like, well this person, they've been to this for a long time and they don't have a lot of gates. That's why it's lower. Like all this other stuff, like all these asterisks that come the data is what I don't like. That's why I just focus on how far my booked out. What's my close ratio? Oh, it's exceeding. Okay, great. We're going to raise prices. That'll reduce demand and increase my profits.

Yeah, I just want to stay away from, from like artificially creating budgeted hours. And then the guys are at capacity but then they get out at 1pm every single day. So then instead of going back and changing budget hours for everybody, we're going to say like, well technically you have to be 120% efficient. To me, just like gets muddy when.

You raise your prices.

Increase your labor rate. So if you're going to raise prices, great, but that's going to artificially bump all the budgeted hours. So we, I mean like what all you'd be doing is changing your.

Your, your people underneath item and services just go to the P4P rate and change it from 80 to 100. For example, if you're raising prices because like if you just raise the price to the customer, it will give them more budgeted hours. But if you raise the rate and the price, the budget hours will stay the same. Yeah, so we just recently happened our Bellingham shop because like all of a sudden they're. They're getting like 10, 12, 14 budget hours of mowing done a day because we raised prices and we kept the rate the same, the customer. So we just moved the rate up to 100 instead of 80. And now like, the budget hours are back to where they should be at.

Okay, so are you calculating budget hours after the fact? Like, you're not looking at the actual production time on like a dispatch board, you're going to say total price divided by like total labor revenue divided by hourly rate. That's how you're getting your budgeted hours for the day.

Yeah. You can go both ways on it. Right. It's just a math equation. So like, you can either a say, okay, I need to know what my budget hours are. Well, then I just take my rate divided by my revenue, divide my rate. There's my budget hours. So. But. But if you're trying to go the opposite direction, it really comes down to I just want my budget hours to be accurate. And so if my guys are denning 12, 14 budget hours a day, and it's always that way, I'm going to be moving my rate up. That does not affect P4P a percentage of the labor revenue. Right. I just want the budget hours to be accurate. The rate doesn't really matter to me. I'm more worried about what's the price. And is my budget hours close enough that my guys, you know, it's accurate enough?

That's exactly what I want. Because the way I view it is budgeted hours for production rate is a constant. The price of the customer is variable or is. Is dependent. And then the hourly rate is variable.

Yeah. So the big thing is when you raise prices, increase your hourly rate. So that way when you go through, you'll just change the rate. And now you can just go into items and services and change it and it'll affect all of those items.

Got it. Two more quick questions for you. Credit card processing fees, the legality side of it. For what are you telling your locations? Just a blanket statement. Are you having them pass fees or eat them or like, kind of.

I don't think anyone does. We all bake it in.

Okay, got it. Because we started passing it in. But then if you, if you bake it in, the amount of fees are. You're actually never going to get to the spot. You're never going to find an equilibrium. Because if you bake it into the price now 2.9% on 60 is different than 2.9% of 55. And you just kind of just like eat the few dollar difference there.

I just rather raise the rates. Like I just generally believe that if I absorb credit card processing fees, I could raise prices on everyone by 5% instead of the 2, 3% charge am getting charged. I don't want to. I don't want to take admin calls over it. I don't want any. Like there's cost of having those in there that customers call, they ask about it, et cetera. That's costing me a lot more than 2%. So I would personally just bake it in and increase my prices. And then I would probably do that next time you raise prices like 15 or 20.