How to Handle a Threat, Sleeping in the Closet, Don't Be Late

Welcome back to the Mike Andes Podcast where we discuss the ins and outs of owning a small business. If you're new here, the Mike Andes Podcast is all about starting, maintaining and growing your small business. This episode is jam packed with some behind the scenes glimpses into the life of an entrepreneur. First off, what do you do when one of your clients tries to get out of a contract by threatening to sue? Get your agreements in writing. Next. Mike owns two homes but sleeps in a closet in the gym every night. Makes financial sense. Lastly, Mike lets us in on what an interview with him looks like. Don't be late. Seriously, don't be. As always, you can find the video versions of these over on the Mike Andes YouTube channel. But let's get into it and see what to do when your client threatens you and how to protect yourself.

Today we're going to show the messages that a client sent to a contractor threatening them via text message that they were going to take them to court because they wanted to see the documentation of their employees and they wanted to see the driver's license of all the employees and the owner. So let's go ahead and jump into it. This is a post from our Facebook group, Lawn Care Millionaires. Here we go. Hello everyone. After finishing one project in City Name, the customer asked me to email him proof that we paid our customers for the project. If I do not, he will assume that we have hired undocumented workers and paid them without reporting their income for taxes, which means we have caused them to break the law unwittingly. He gave me two choices. I can leave them alone and take whatever they have paid us already or they will take us to court to legally break this contract, protect their integrity, defend their name, and seek a full refund and damages. We have never hired undocumented workers and our transaction is between company and company. Also, I don't think they have the right to ask us for proof to pay anyone. My question is, how can we defend our rights and get the remaining payment back? We have signed the agreement, but when they extend the construction area, I only gave them a quote without updating the contract. All right, so let's go ahead and jump into the text message that the client actually sent to the owner. A couple of things before we do that though. One thing that is important is when you do send a revision to any sort of quote or a work change order that you do get that some sort of signature on it, or at least in writing via email or text message that they addressed and acknowledged and accepted that proposal. So you don't necessarily need to have a signature, but if you sent the quote and you can prove they saw it and accepted it, even if they just said, yes, go for it, then that's all you need. Verbal is very difficult to protect in court. Another couple things you could do here is have a prepayment where they have to pay before the job even gets started. Or two, you have a credit card on file, but still, people can do chargebacks on credit cards, and they can still go to their bank and try to get things reclaimed.

All right, so now to the text message from this unhappy customer. Dear so and so, Please email me the names, contact information, licenses, photos, and proof that you paid these workers for their project, including your own license. I will give you until Wednesday night to send this information to me. If you do not, I will assume that you have hired undocumented workers and paid them without reporting their income for taxes. This means that you have caused us to unwittingly break the law, too, and we will hold you liable and defend ourselves. It's like they're defending the Alamo or something. Okay, let's continue on with this heresy. This means you've caused us to unwillingly break the law. Okay? So you have two choices. Either you can leave us alone and take whatever we have already paid you, or we will take you to court to legally break this contract, protect our integrity, defend our name, and seek a full refund and damages. Note that our lawyer will be reviewing all this information along with the back garden videos we have of the workers. Okay, so first and foremost, this is a threat. Okay? The way this is written is not actually going to happen. I can guarantee this person is not going to take legal action. Now, a big deciding factor of this whole case is how big this project is. Are we talking about $1,000? Are we talking about $20,000? That is a big difference because no one's going to go take this information to their lawyer over $1,000. They might do it over 20 or 30,000, but they're not going to do over 1,000. That last text message is very indicative of someone who's just threatening when they mentioned lawyers.

And.

And we have video evidence immediately, you know that this is a threat. Keep in mind also that I'd say more than 95% of the population do not have a lawyer. The only people that have a lawyer on retainer that they consistently communicate with is business owners and very wealthy people. So when someone random customer says, I'm gonna take this to my lawyer, they are absolutely blowing up Smoke. And there's absolutely nothing that they are going to do about it. Depending on the state that you're in, there's certain laws that protect the, the rights of the actual workers because you are not going to share their licenses, their information that's personal information to your workers, and they have protections against that being shared with outside third parties. However, a customer can verify the validity of the contractor or the vendor that they're using. And so they can go check and see if you're licensed, see if you're insured. They might be able to ask for proof of insurance, but they cannot ask for the identifications of your employees and how you paid them and all the rest of it. All of that correspondence is between you and the state, and then the state gives you a stamp of approval that is a business license if you meet their requirements. In my opinion, this customer is probably trying to get the second half of the bill basically refunded back to them and just trying to scare away the contractor after they've done a whole lot of hard work. And that's what makes me mad. It is public record for the customer to be able to go and look which customers are licensed and bonded with. The state is the role and the responsibility of the government to ensure that certain standards of hiring and licensing are upheld in order to have that stamp of approval and a business license. So what would I do in this situation? Well, in this situation, before I take this to an attorney or I try to get mad at them, because obviously when you know that they're threatening you, you want to immediately threaten back. You want to immediately come back with proof and evidence and all the rest of it. Try to stay professional, at least through the first communication, and then make sure that once someone has threatened legal action that you basically give one response and then say anything further will go be going through your lawyer. So my response back to this customer will look something like this. Hello, Mr. Jones. Your outstanding balance is whatever amount of money it is and it is due by give the date. If it is not received by that date, you will be going into the collections process. Any further correspondence about this overdue payment will be forwarded to our lawyer and we will have no further correspondence with you. And then I would give them the mailing address and maybe a link to give payment and that's it. At this point, I wouldn't even go and talk to my lawyer because I don't even want to rack up fees because I think 90% of people, they're just going to end up paying the invoice. The other 10% that would respond back say, well, what's your information for your lawyer? Well, then I'll go find a lawyer and I'll be happy to pay someone to fight this case. Before I would even contact an attorney and start racking up the bill, I would honestly go and put a lien on this customer's property. You can put a lien on a customer's property and basically keep that title, that deed from ever being transferred. And they can go run into a lot of problems by having that on their title. This is the way that the government protects contractors from doing work on a property and losing a whole bunch of money because someone doesn't want to pay. So that would again be another level of recourse that if this person responds negatively, I would use that before even going to an attorney. Because as soon as you involve attorneys, the cost of this is going to go dramatically through the roof.

And if you have to go to.

Court like you're talking about thousands and thousands of dollars and it's just not even worth fighting at that point. So before even getting to that point, I would be trying to use again a professional response that's basically trying to smoke them out from their empty threats. And then number two, using the legal system of contractor liens to be able to try to force them to pay their bill. Ultimately, if you as a business owner are paying your taxes, paying your employees and doing everything above board, there are laws in place to protect you. And that's why we have a legal system to take people that throw around empty threats like this and expose them. And so I hope this video does that. Because honestly, I think so many of the times contractors and vendors, we get reviewed, we get ranked, people can say all sorts of negative things about us, but yet there's no way for us to be able to communicate as contractors, to be able to tell about these type of customers that will say empty threats just to be able to get out of their invoice. They don't pay their invoices, they mistreat employees. These are the type of things that I don't like and this is why I make this.

Being a landscaping business owner means navigating difficult situations with your customers. You can actually protect yourself ahead of time with knowledge. Get prepared for anything with landscape businesscourse.com this is a step by step resource showing you how to grow your monthly revenue to over 100,000 in just three years, including over 30 plus lectures and tons of bonuses to dive into. You can find out more@landscapebusinesscourse.com Next up, Mike explains why he still sleeps in the closet regardless of how many properties are in his real estate portfolio.

This is house number one, right next to the gym inside this office. It's here that I record the podcast. This is recording for the courses. This is where we do franchisee training. And then this is actually where I sleep here in the mattress on the floor. This actually used to be a Curves, which was a women's gym. And so we painted the wall, put some soundboard, and made this a facility that we can actually use to train the franchisees. So this is where we're at right now next to the gym and this is where my first house is. Right next door to the gym, up in a place called Blaine. Now in Ferndale is where the headquarters is for Augusta nation, as well as command center and the media team. Now, Bellingham and Mount Vernon are the Augusta lawn care locations that I own. And I go there on Thursday and there on Mondays. So just once a week do I have to go to those locations? But this is why I positioned my second place that I live right here.

So that way I either am staying.

Up here close to the gym as well as my family lives up in Blaine, but then also the fact that I go here daily, here once a week, and here once a week as well. So it really allows me to have a 30 minute sort of differential in terms of space on the north side of the county, the south side of the county, and then I'm relatively close, only a 30 minute drive down to Mount Vernon, where I go on Monday mornings. Now, some people don't believe me when I say this is 6ft by 6ft, pardon the bed not being made, but literally from here to there, six feet. The reason I know it is exactly six feet is because I'm five and a half feet. And if I extend my toes out, I can reach from one wall to the other wall, which you can hardly see because there's no contact. It's a white wall. Literally just have my jackets here and that's it. It's really, really simple. I've made the conscious decision to not spend my money on luxury, whether it be nice cars or new clothes, etc. But rather SPE, I feel, is the most valuable asset or thing that I have, and that is time. Now, keep in mind, if you're optimizing for time, it's not actually the most frugal thing to have two homes. The most frugal thing would be to have just the one house. And then take all of that money and invest into the business. However, it's not about frugality. It's about taking the one thing that I have a very limited resource of, which is time. And unfortunately, so often the times when we are young, we do not realize the true value of time until we are much older. And so now there might actually come a day where it will make financial sense for me to have a plane. And yes, that, that is a plane right there. Because if that plane gives me more time than the money that I spend, that would be a transaction where time in my mind would actually win out. Theoretically, this has been proven to be about where you make $12 million per year before actually getting a private jet makes any sort of sense whatsoever. Or flying private. Instead of just telling you that this is where I record my course lectures and material and videos, et cetera, I'm actually going to go ahead and let you see behind the scenes. This is the video I am recording for landscapebusinesscourse.com and I'm talking about hiring, finding new applicants, and sort of the system that you create in your hiring process. All right, so I have a pretty smooth kind of setup here. This is a Steinhauser clip on mic and it is plugged directly into the audio source of this relatively cheap Canon camera. And then this is dummy batteried. All I have to do is turn this on and then I flip the camera out like this. Now notice here, see that little, little glare on the whiteboard that's being caused from the lights that are currently still on inside of my studio here. So ideally I go here, turn off these lights, and every single time I turn up this light, you hear this.

Okay, so now we're back in business.

We got our mic on. Up, up top, our camera's back on. We do not have any sort of issues. We are in auto focus. There we go. Then all we need to do is go ahead and put the clip on mic on. All right, we're all set up now. Let's go ahead and press record. Red light starts to flash, we're good to go. How I do my notes for these. The course material sometimes changes, but right now I use my remarkable, which is just a digital e reader tablet, to make my notes. And I just pop it here on this chair. This chair is just below where you can actually see in the camera.

The shot ends about right here.

What makes that nice is I can wear whatever I want in terms of my lower body. I can see my notes and I can look at the screen the other part of the equation is sometimes what I'll do is I'll actually use this screen which is below the camera, so I can actually put my notes here. And that is connected to my computer. I can plug in the back on that table. Okay, so when we talk about finding employees, there's a few things I want you to think about. I really don't care what you use.

To get people in the front, the.

Top of the funnel. Finding employees is literally marketing and advertising the same way you would find a customer. Well, if I can't find anyone to come work for me, I can't get them to show up for interviews, can't get them to actually, you know, want.

To work for me.

You either A, get to remove filters or B, you, you're going to have to increase compensation. And in the templates and download sections, there is a document that lists off all the questions. It makes it feel very systematized. They don't feel as awkward because you're.

Not making up the questions on the fly.

So check that in the templates and download section. And in the bonus section, check out the PPP module as well as 30 creative ways to hire when it's very.

Difficult to find anybody that even wants to work.

So this is house number two. It's actually a part of a 10 unit apartment complex that I purchased last year and we've turned a couple of the units into Airbnbs. The rest I rent out. And so it's a one bedroom apartment. I have not cleaned it up, so it's probably still a mess.

This is the newest addition.

This is the set. So there's four sets at the first house in Blaine where we do the training. I also have the whiteboard set and the podcast set. Here I have the live show set. So this has the camera. And one thing you'll notice on all of my sets is it's really built around functionality and quick delivery. So I turn on those two lights, I go around here, the back, and I turn on this right here. That light is going to light up purple on the back wall and turn on my microphone and then really turn on the camera and we're basically ready to roll. I will literally come around here, bring up my fader microphone. I'm talking to that bad boy right there. So this is the live show and how I set it up here. So this is the, the living room. This is also where I want to do podcast interviews here with the likes of Lee and Liz, Lonnie Marcus, etc, have them here. Here is the Kitchen. This is my only kitchen. Got this little stove and a little fridge. Look through the fridge. So let's see here. I'm relatively healthy. So in here we got juices, green juices, lots of green juices. And I got.

Salad stuff. So leafy greens, spinach, eggs and cheese. That makes up omelets. Got hummus, carrots. Just a good bunch of good stuff. I don't do a ton of cooking, but it's mostly just grab and go stuff. Best thing to do though, for me is just grabbing the salad and then I really like to get good salad dressings. This one's amazing at Whole Foods. There's another one that's pretty good. And then this is technically my bedroom, but it's also where we have the other set. So this set is where I will do some podcast interviews. Here again, same thing. It's all about functionality and how quickly I can get this set up. So it's one light here and one light here. And my backlight is going to be the purple boom. This back wall is dependent on this screen being pulled up. If I had a better camera, I would probably not need the screen because it just fade out. But all that to that's the tight shot that you might see occasionally. Again, same thing here. Turn this on. We are live. So it's all really built around speed of recording. There's nothing that I do in terms of the sets that take a long time. It's always about two, three buttons, a couple lights, and I'm off. Without that, I would not record half as much as I do most sound like right now it is 1:14. And so I'll start recording here now. And partly why I actually started this set out here in the living room is because that bedroom set is adjacent to to the bedrooms of the Airbnbs. And so I don't want to be talking in them hearing me while they're trying to go to sleep. So at least with this one, I can be talking out here. There's not bedrooms on the other side of that wall. It's just another living room for the next door apartment. So that is both houses. And you can see how it's just really optimized for speed of recording to get the content done. I spend such little time on recording that when I have the time to do it, it needs to be very quick. I do not spend a lot of time setting up lights, cameras. It's all like plug and play. There cannot be moving lights. There cannot be. Well, I've got adjust the camera, change the Lens out there would not chance in the world. It's all plug and play. So just trying to optimize for getting the recording done without making it an interference and a big chunk of my day being spent on it every single day. So that's about all I got.

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Okay, 9:30 interview showing up at 9:32. They're not gonna get no interview.

How's it going?

Are you serious? Caleb's out here mowing the shop for the very last time last week here.

At the Mount Vernon shop.

And we're off the new place.

That is what you love to see on P4P, rolling out within a few minutes after the meeting. So I don't typically do interviews, but this specific location we had to start literally in a matter of 48 hours. And the GM that is currently here actually was just a fuel worker at the Bellingham shop for a couple years and then basically was super loyal, super awesome. And when the opportunity arose, he became the GM literally overnight. It was like I just called him up, I was like, hey, do you want to take the GM position? And he's like, sure. Because of that though, he hasn't been able to beat the training. My general managers go to franchisee training as any other franchisee would. And so he hasn't been to training yet. He's going to be there in a few more weeks. So I try, I've been trying when I come down here on Mondays to take something off of his plate just because it's not really fair to him. He hasn't even been trained as a GM yet and he's really assumed that role and have a step into shoes that he has not been trained fully for. So in a few weeks though, he'll be trained up and he'll be able to take a lot of those things off my plate.

So the place that I did work for a little while, that was roof cleaning, did that for a little bit, ended up getting fired there. He set me off on a job that I wasn't qualified to do and it didn't end up going well.

So I'll call him the day. What do you think he'll say in terms of your overall performance there?

I think he'll say they did a pretty great job.

Okay, cool. And then you just leave there because of seasonality, and then you went the other plate.

The main reason I ended up leaving was because one of my other bosses kind of got on my nerves a little bit. What he would do is he would basically undercut our jobs because we're based on commission. He would cut a little bit of that out and throw it towards the sales side of things so he could buff out his payment.

Got it.

Because you get basic disc commission on it all.

Yep, got it.

So when you do interviews, a couple takeaways from that one was if they talk badly about their previous places of employment, really good chance they're going to be talking negatively about you in the future. It's not like things randomly change. I listen to why they left, and if they're badmouthing other employees or their manager, sometimes there are legitimate reasons, like, I'm not taking that off the table, but it's usually going to follow them and they're going to end up doing the same thing. So if she was talking about feeling undercut or sound like there's quite a bit of drama with him and another employee, and then also the previous job where he's at, again, he was putting a lot of blame on the owner.

And it's not to say that those.

Things don't happen and there's horrible bosses and horrible managers out there, but it's likely if someone is complaining about their last manager in an interview, that they're going to do the same thing to you.

I did like the fact they just.

Owned that he was fired on the last job.

That is a big red flag.

But it's something that I do value. If they actually own up to it and they talk about why, if I would call a reference and they said, oh, no, they didn't just leave, they were fired. That is like an immediate no, no go for that employee. So the fact that he was fired, there's reasons why people get fired and it's not just or right. But the fact that he owned that. I did appreciate that. Now, some of you might have looked at my posture in the way I was Sitting and thought I was a little bit unprofessional. What you probably didn't see in the video is the beginning. He was very, very nervous. He wouldn't look at me in the eye and he was just. It wasn't because he was being sketchy. He was just not comfortable. Notice after I crossed my leg and leaned back and took a much more casual approach is when he leaned back and started opening up and talking about Pratic's past experiences and being able to have eye contact and actually communicate very well. All right. And then I don't know how much you kind of saw on our job posting, but any question you had for me in terms of kind of what we do here or anything like that.

I did have a question. Actually it was about the pre employment drug test. So I did unfortunately smoke weed like a week or two ago.

Okay.

So I won't be able to pass that to me.

Cool. All right.

Another non verbal that I picked up on is when he talked about the drugs, he did cross his arms, which typically if people draw things into themselves or cross their arms, they're usually restricting something or hiding something. And so there's a very good chance that he is actually an avid drug user and uses it normally. And so even though he said it was, he used it like a couple weeks back, I can almost guarantee you use it every single day because the way that he presented that information was not in a very open manner. If you're trying to communicate something very sensitive, it's a really good idea to open up your palms and open up your hands as soon as you do this and cross your arms immediately. People just have that sense that you are hiding things from them or withholding information. Very good chance what was happening there too.

You got to give credit where credit. Credit is due. And I just gotta say Facebook, you're doing good things. Updating the mobile app, updating the interface of the desktop version. The ads platform is starting to perform pretty good. I gotta say, Mr. Zuckerberg, I'm very happy. Keep it up. You might be able to stay up with TikTok if you keep doing this. And while I'm on this kick of free promotion for companies, this is definitely my favorite business credit card.

They don't.

I don't get paid to say this. This is Spark business from Capital One and it's a great cash back card. Very simple for small business owners to get new employee cards set up. I've used Chase, American Express, local banks, and honestly, this is still the easiest way I've Ever had to get employee cards set up. So little hack there. And again, not sponsored. I don't get a penny for this, but I would recommend them. Okay, 9:30 interview. Showing up a 9:32. They're not gonna get no interview.

How's it going?

Are you serious? Look, I understand that some people think I'm probably too harsh because he's two minutes late, but let me be very clear. If someone can't show up to their interview early, they will never show up on time to work, ever. And there's always an excuse. I hit a truck, I hit a train, my cat died. Whatever it is, they all sound plausible, but there will be more. Except excuses to come if you let them on the team. And ultimately, there are two things that get me very, very unhappy. Number one is abandoning the team. Number two is being late. And if I had to add a third, it'd be drama. Those three things I just have absolutely no tolerance for. And we just recently hired two new people at this location, and sure enough, they were both early, 10 to 15 minutes early to their interview. Look, if you're on your best behavior and interview and you can't show up on time, what's gonna happen when you're not feeling good after a long day's worth of work? Are you gonna abandon your team? And literally I have to have a conversation next week with some team members that abandoned the team. That is the highest degree of horribleness in my mind. Abandoning the team during a job, during the day, walking off a job site is unexcusable.

Gotta give a deposit for the contractor who is actually working on the property right now.

This is what we're working with out here. This is where the Airbnb is going to be. The tiny house. That'll be a nice pad of gravel there. And you can see here, he is bringing in a whole bunch of five, eight minus gravel. Probably going to do three to six inches here. So it'll, you know, obviously lump out, but we don't want to scrape this entire thing. To scrape all this and haul it out of here. This with a headache. So we'll deal with a few potholes here, here and there. But all of this will be nice gravel compacted. That will be for the Airbnb. You can see the paint lines here is where the fence is going to be for privacy. And then there will be the driveway all along that fence to the main road. So looks like they had some sort of like a playground, the wood chips in here. And then around the perimeter they had these railroad Ties. Things are beast, man. These things are massive. So we're gonna get rid of them, use them somewhere maybe. But look at this place, man, this is gorgeous. Absolutely gorgeous. Looking forward to it. This will be a three day project and we'll get out of here.

Now it has been said and people have been quoted saying that mowing lawns is for stupid people. A lot of you lawn guys are just, you're just playing stupid. Like, let's be honest, majority of the lawn people, the mo lawns are just dumb, stupid people. But this guy you're looking at right now mows lawns. And he also 10 months ago made a video about how the stock market.

Was going to crash.

Interest rates were going to go up and the cost of renting real estate.

Was going to go up as well.

Mark my words, it's not in two months, it's now. We are going to have a recession in the next 12 to 18 months.

Mortgage rates have gone through the roof.

Consumers are going to start struggling to pay these inflated prices. With the commodities and oil and everything going up, we are in for a really rude awakening. Now, I would say I told you.

So, but even a blind squirrel gets a nut occasionally.

As you all know, we've been really working hard on the SBA loan for our headquarters, but I'm also working on a backup plan. And the backup plan is, do I have enough equity in all of my properties to build the headquarters without even getting an SB SBA loan? So this property behind me is one of my larger properties. It's a 10 unit apartment complex. When I bought it, it was a distressed property. It was probably, it was doing like 8 to $9,000 a month in rental income. Now this property with 2 Airbnbs and 7 rentals will easily, easily do $18,000 per month in rental income. So just that alone. The valuation of the property on a commercial real estate deal goes up dramatically because most of the valuation mechanism of a commercial loan is based upon the rental income. Not so much comps, because it's hard to get comps for a 10 year apartment complex, especially in a residential area. I'm literally right now seeing if there's enough equity. I don't know If I have $3 million worth of equity to pull out from all my properties because they're only going to give you a line of credit on usually between 60 and 80% of the value of the property. So I'm actually looking to it now though, just seeing like, hey, how close could we get? And is that actually a better option? Than even trying to go this whole SBA route where I've got to explain so much them which we're doing both. I'm gonna do both. But I'm gonna. I'm just seeing my options right now. I don't know if I have that.

Much equity because I would need about.

Four and a half million dollars worth of equity in order to make this work. If I was able to pull. To pull out $3 million worth of line of credit, I don't know if I have that much, but if I even get close, then I just get of a bunch bridge alone on the rest of it. That might work.

Well, well, well. What do we have here? Let's go.

And so it begins. The metal building just showed up and it's being delivered. If you watched last week, we mowed this for the first time, the front acre or so of five acres that we own back into the back of the property. We do not have the building permit quite yet, but we ordered the actual structure, all the metal building components here, like six months ago, just because of everything being backlogged so much. So it's just getting delivered today. Kind of an exciting moment. It'll be more exciting when we actually start digging and get the building permit and get the loan secured. But definitely a cool step. Some crazy amounts of metal steel right here. I was almost right. This is the front corner of the building. I'd said I'd kind of cut out the shape last time. You can see just back into the grass here. I'll walk this off. That's basically 100ft long, 70ft wide, 75ft wide, I should say. So I didn't cut it out quite perfectly. I should have cut a little bit further out this direction and then a little bit more that direction. So a little bit bigger than I anticipated, but it's gonna be a great once it's actually rolling here. Look how thick this is, man. That's just straight metal. It's crazy. This one beam is a thousand pounds. It's nuts.

This has been the Mike Andes podcast. I hope that you learned something interesting today. If you enjoyed this podcast. We have tons of lectures, interviews, and more over on the Mike Andy's YouTube channel. That'll be right up your alley. Anyways, that's all we got for you today. We'll see you next time. 17.