How to Go from Laborer to CEO in Your Service Business [Mike Andes]

Hey everyone, it's Mike Andes. And today we're going to be talking about how you can start a service based business out in the field as a laborer and over the course of time grow it using a step by step model to become the CEO where you're not working in the field and you're working on your business. That's really the goal for so many business owners. My name is Mike Andes. I'm the founder of Augusta Lawn care. We have 150 plus locations around North America and in Australia and also the founder of Copilot CRM. So let's go ahead and jump in. We're going to be talking about the journey from labor to architect where you're working on the business. So how this presentation is going to make you money is the fact that I'm going to give you the exact three step process to build your business faster with more profits. Now originally I was going to use a whole bunch of diagrams like these. Talk about SGA and cogs and a whole bunch of other things. We're not going to talk about that. I want to make this as simple as possible and instead I want to use the example of the three little pigs. That's crazy. I can guarantee you remember this a lot more than all those other diagrams I was going to show. So my contrarian opinion is that those straw and wood houses might be the more efficient choice to build. Let's see why. Now, the brick house is the goal. The great business, the incredible hard, you know, well structured business is what we're looking for. But it doesn't mean you should start with the bricks. Here's proof to support the straw house. Pig was actually using his brain. And if he would have moved on, moved up to the wood and then moved up to the straw, it would have been a better idea. Here's why. Because if you would have been focusing on building the straw house, you could get reps and practice and if things messed up, it wouldn't matter. Like if the house falls down and you built the straw house, who cares because you can build it again in one day. Whereas the brick house literally could have take you years to build the brick house. And so a lot of times I see people try to build this perfect business, the brick house, and takes them so long to do it. Whereas if they just focus on incrementally changing their business and incrementally improving it, starting with the straw house, then the wood house, then the brick house, they'd make much more progress. Not only would they get practice and reps, it'd be much safer and better quality because they would have built the house multiple times as they made iterations towards building the brick house. Also, just the speed and less wasted resources. Because when you mess up, it doesn't matter if it's straw, who cares? It's not bricks, it's not as expensive. And so yes, I could build the brick house in 10 years here on the left hand side. Or maybe I take one year to build those straw house, then two years to perfect the wood house, and then three years to build the brick house. And all of a sudden I've built the brick house in six years and now I have more reps and it's better quality. It was done safer. Why is it safer? Because if you start building a brick house and it falls down, you're going to hurt somebody, you're going to waste resources. The straw house, who cares? It's not going to hurt anyone if it falls down. And so when we build our business, I think it really comes down to the fact that following the steps in order has the greatest outcome. And we look at straw, wood and brick houses, you build the house faster and with Betsy, better quality. If you follow the steps in building house, I think the same in business is true. Following the steps in order has the greatest outcome. Build the business faster and with better profits. If you do it in certain stages and steps, instead of trying to go right to like building this massive million dollar business where you're working on the business, you have all these employees and you're trying to manage them, do this in stages and you'll be much more successful. All right, so when we look at the straw, the wood and the brick house, let's look at the skills that are required for the straw. You need to be a great laborer. Why? Because you got to keep running out and getting more straw. It's a lot of straw. You gotta get a lot of it. You're going back and forth and getting the grass, drying it out, putting it up. Let's go, wood. Now you've got to become a manager because now this resource is a little more special. It's a little more hard to get wood chopping down trees. You got to strip off the bark, you got to make sure everything's plumbing plane. If you're able to use these logs, be able to use the wood, you got to manage labor now. Whereas with bricks, because it's so heavy, you really got to become an architect. You really have to understand the physics and the construction and the ability and the Skills required is much greater because you're using heavier materials. And I think the same for business is true. When we look at a business from zero to $200,000 in annual revenue, really the skills you need to be focused on is being a great labor, doing the work really efficiently. When you are between 200,000 and $800,000 in annual revenue now you need to get a bunch of employees and you need to become a great manager. Same thing as when building the the wood house. You got to actually deploy someone else's labor and it requires management. But now when you build a business past $800,000 in annual revenue, you need to become the architect. Because now you actually step back and not work in the building, being sweaty and doing the work with your team, but actually step back and be the architect of the job, of the project, the house and of your business as you grow past 800,000. Let's look now at this first stage and dig deeper into what a labor needs to be focused on when you are building a business from 0 to 200,000. So these are the skills of a great labor. Attention to detail, super organized, high hour capacities. You can work like crazy amounts of hours, understand seasonality and demand of every single service. So during spring rush, during your off season, et cetera, you have technical and mechanical skills. This is why someone that can do mechanical things in home services is great. Because you work on your truck, work on your equipment, fix things yourself, and leadership by example. So Maybe you have one employee that helps you on the weekend at zero to $200,000 in annual revenue, you just need to be able to show them and lead by example. Like you, you work hard, therefore they work hard. Now let's look at the next stage of the business, the Woodhouse. When you need to really focus on being a great manager. From 200,000 to $800,000 in annual revenue. Here's some of the skills of a great manager. Following systems and procedures, working with the team and scheduling. Strong leadership in team meetings. Understanding marketing and sales delegates, non sales activities. So basically everything in the business that doesn't have to do with selling, the manager is going to delegate that. Create systems, standard operating procedures and get people in place to do those jobs. Loves perfecting and refining processes over strategy. If you're trying to find a general manager, by the way, and you're an owner and you need someone to manage your whole facility, these are the, these are the skills that you are looking at for in a great manager. And if you're the owner in a business that's doing 200,000, 800,000. These are the skills that right now are going to make you the most money. Look at an architect, someone building out biz into that million dollar range. The skills of a great architect is they motivate and inspire their operators and their managers. Because now at every single stage, you've built this infrastructure underneath you of laborers, managers. And now you're the architect. You need to inspire them. And they don't meddle in the operations of their managers. They leave. They have a large enough vision for their operator or manager to have their own vision inside of theirs. And so this is very important as you begin to really grow and scale, have multiple locations and managers and estimators and build out your company and your empire is you've got to have a large enough vision for your managers to have their vision inside of you. Become a strategist and you really are looking at risk and growth analysis. That's majority of what you're focused on. Building the business. This is my thesis. Building the business in the wrong order will keep you poor. What happens if these steps are not followed in order? So in other words, if I am trying to be a zero, you know, if I'm not trying to follow the straw, then the wood and the brick, I'm just going to go become a wood house. You got a problem. Also, if you have an $800,000 business trying to become a laborer, you can see these arrows are all over the place. Like if I'm trying, if I'm. If I'm $800,000 annual revenue, I should be focusing on being an architect in my business, but instead I'd be trying to become a laborer. That's going to become a, it's going to become a huge problem when I get these steps out of order. Here are the type of things that you're going to see in the business. Over hiring. Why would you over hire? Typically because you have a manager's mentality, but you're not doing 200,000, like 800,000. That's not what you should be focused on. Someone doing $150,000 in annual revenue and three or four employees, they're never going to make money. They have a manager's mindset. When they should be focused on being a great labor. Low cash and high growth. This a lot of times happens when someone's in the manager phase. They should be focusing on a great manager, but instead they want to be this architect and figure out the big strategy of the business and acquisitions. And so what Happens. They have very little cash, but they grow super fast. They usually go into a lot of debt because they're trying to be an architect of their business instead of focusing on being a great manager. This is why a lot of times when I do turnarounds on the main channel, I'm trying to work with the owner and becoming a better leader, becoming a better manager when. But they're trying to, like, grow the business. And because of that, it causes a bunch of debt and a bunch, like, very little cash. Slow communication, high churn. Micromanaging. Like, no one's going to like you being an architect of your business and you jumping out into the field with them and trying to become a labor and telling them what to do. They don't want that. They want you to focus on becoming the architect, be a great leader and a strategist at that size of business. So here's an example. If you look at my main channel, this is. This is a case study of St. Laurent property mains, where they went into a whole bunch of debt. They were trying to do all these different services. And this is caused by the business owner not building the business in the correct order. Going from straw to wood to the architect. And in this case, they are such an awesome person. They were trying to be a manager when the business was doing over a million dollars in annual revenue. And they should have. What they would be more successful in doing is allowing their managers, office manager, general manager, field manager, to be able to just run with it and make decisions in the business instead of getting into their business by being at the size of which you should be an architect, a million plus. But trying to become a manager to your team is going to lead to micromanagement. It's also going to lead to people feeling like you're tripping them up and you're telling them what to do, but then you're tripping them up and micromanaging. It's not a fun place to work. So who is the big bad wolf? If we look at the straw, the wood, and the house, who is the big bad wolf? Stress is the huff and the puff that's going to come in business and test whether or not your business is built correctly. And so if we look at some zero to $200,000 in annual revenue, that's when you have the most physical stress. Because you're a laborer. From 200,000 to $800,000 in annual revenue, you. You're usually going to see the most financial stress. Why? Because your overhead's going to increase Your profit margins are going to decrease as you hire. All these employees have to buy more trucks, your insurance is going to go up, your overhead is going to go up. And so a lot of times your financial stress increases dramatically during 800,000 in annual revenue or more. A lot of psychological stresses, you as the business owner, because just every single day there's fires and problems and issues, and then you come very taxing psychologically. And so that's usually the stress you're going to have at each stage of the business. The huff and the puff of the big bad wolf simply changes the type of stress. The type of huff and puff just changes as you grow the business. So that's why be careful when you're in physical stress and you're smaller, be like, oh, one day, if I can just do a million dollars in revenue, everything will be fine. It might be different type distress, but there's still going to be stresses nonetheless. You're just having a psychological stress instead of physical stress. Figuring out what type of stress you want to deal with is going to be extremely important to determining how big your business should be. Because if you grow beyond that, you're probably not going to be the most happy. All right, so if I'm building the business correctly though, I need to focus again at each of these stages. 200,000 or less in revenue, I'm going to have that physical stress. If I focus on being a great laborer, I'll be able to withstand the physical stress. And if I become a Great Manager at 200,000, $800,000 in annual revenue, I'll be able to weather the huff and the puff and the stress of financial issues that come along with lower margins. If at 800,000 plus in annual revenue, if I focus on being a strategist, an architect in my business, I'll be able to handle the psychological stress associated with building a big business. Building the business in the wrong order will keep you you poor. If you're trying to, again, trying to be a labor. When you're an $800,000 business, it's a problem. You're trying, you're taking on physical stress at a time when you should be focused on being the architect of the business. So again, this is just another way of saying that the stress that comes at the size of business you are building will negatively impact the building you are trying to create, the business you are trying to build. If you're focused on the wrong thing and the huff and the puff, the stress that comes with will blow your house down, will take out your business if you're not focused on the right thing at the correct stage of your business. For example, simply lawn care, another example on the main channel went and did a turnaround with them is they were building a big, big business. And the problem was now the owners were really having a hard time delineating what the roles of each of them were going to be. Who was going to do operations, who was, who was going to do sales, who was going to do admin. And because of this, it started, the roles of manager, architect started to get blurred. It's like, well, sometimes we split roles, sometimes we do a little bit of labor, sometimes we do a little bit of operations and a little bit of sales. Sometimes we're working on the business together. And there was no definitive roles for the business. And because of that, you saw the financial pressure that was created, you saw the admin.

Lack of leadership that was there for, for the team members that were involved and employees being confused into who to go to for what. And that's the type of thing that will happen if you not focus on the right thing at the right size of business. Building the business in the right order will keep you from being poor. So here's, here's the thing. If you are doing zero to $200,000 in annual revenue, yes, we want to keep growing, yes, we want to get to the brick house. But focus on being a great laborer. Be okay with starting in the dirt and getting dirty. You will make more money if you focus on being a great labor and doing everything possible to refine and improve that skill in your business. If you're 200,000, 800,000, focus on being a great leader. Focus on being an awesome leader and efficiently organizing to a team of individuals to do the labor. You will make more money if you focus on how do I do great team meetings, how to do one on one meetings, how do I ensure that my team is running efficiently? I'm using pay for performance. These are the type of things that a great manager takes on. And you will make more profit and make more cash in your business if you focus on these things at this size of business. Now if you're doing over $800,000 in annual revenue, focus on being a great architect. Build the infrastructure, the systems procedures of the business. Empower your managers to are coming behind you. Because as you grow this business, you can't just leave laborers out like, oh, we're just going to become managers. No, you've got to create labors to manage. And then once you have great you know, you continue to grow the business past 800,000, you now need to find managers so you can become the architect. That's how you build the business in step by step processes. But when you're 800,000 plus, focusing on the infrastructure and the systems and building these things and empowering your team is really where the greatest benefits are, are had. And so the reason I wanted to talk about this today is because I see so often the times myself back in the day and other business owners when I go and do turnaround videos is I see them focusing on the wrong things. They're focused on their equipment and the tiny little details of how they're going to paint their truck and things like that. And those things are important. But when it comes to a business that's doing a million plus in annual revenue, that's not going to make them more profit and it's not going to change the business and have the largest amount of impact. And so a lot of times we as business owners, we simply don't know what to work on next. Like, what's the next thing? The most important thing I should be working on. And honestly, at every single stage of business, that's going to change. And so saying that, oh, it's super important that everyone show up on time and that we work hard, that's important. But as time goes on, that's not going to be the skill that you need to manage the team effectively. You're going to need to become a great manager. As time goes on, you're going to find managers to do that job and you'll need to become the architect and focusing on really developing the skill and having meetings with your team and really cultivating leadership, that's a different skill set. And in order to be able to withstand the stress and the huff and the puff that comes along with business ownership, you're going to have to change that skill and make sure you're focused on the right thing. I hope it's helpful. Go down the links below if you'd like more resources. I appreciate you all. We'll see you next time.