How to Hit $1M Without Hiring (Raise Prices, Not Headcount)

We're going to be talking about GM+ versus multiple locations. This has come up already multiple times in the Q&A. So I want to talk about this specifically and give much more clarity as to should you grow to that $3 million size using the GM+ model, or should we do multiple locations and copy and paste the G— the working GM model? That's what we're going to be talking about right now. So this is the org chart for the solo operator. This is someone doing between usually $0 and $250,000 in annual revenue. The solo operator is going to do all 3 aspects of the business because there is no one else. They're going to do sales, they can do operations, and they're going to be doing admin. Now for the working GM, the GM is at the top of the org. We could also put slash owner, but I label this as GM because that's the role the GM is— the owner is playing potentially as the operator is the GM. The GM's gonna do sales. The GM is gonna do operations, but they're gonna try to delegate as much as possible on the admin side. But I don't want to go get a fancy shop space and a full-time office admin person, 'cause immediately at this size, if I do that, I will barely break even. If you're doing $500,000 a month, sorry, $500,000 a year, and you hire a full-time office manager and go get a shop space for $3,000 or $4,000 a month, All of your profit is gone. And so at this size, I am, as the owner, in sales, doing all the sales. I am also doing operations out in the field, doing the work. I am trying to spend as much time as possible actually producing revenue. The determining factor of whether or not you're profitable at this stage of business, at this leadership hat of the working GM, comes down to How much revenue you produce in the field yourself. And that's not fun because especially to get to $500,000, $600,000, you're like, "Man, I just want to get out of the field. I want to get off the truck. I'm tired. I'm done working out." I understand. But if you go from producing $150,000 in annual revenue in operations, doing the work, and then you become overhead, you can wipe out your profits immediately. You gotta be very careful with the size to make sure that you stay in operations as long as possible. Okay, and then this is when you start hiring. As a working GM on the operational side doing the work, you're gonna hire technicians. Okay, full-time GM. This is now where you're gonna do full-time sales. This is when you are, quote, off the truck. You no longer are doing operations and you're usually gonna have to hire an operations manager. Okay, so now I've hired someone in the office doing admin. I've hired someone in operations to help train the crew. They're responsible for big projects, et cetera. And then I am mostly just doing the sales. All right? Now, as you pass $1.5 and $2, $3 million in annual revenue, this is generally what an org chart looks like in home services. We've got sales, operations, and admin, but not all three have a manager. Now those green, the ones that are labeled green there, like estimators under sales, a mechanic or an assistant operations manager in operations and office assistants. Those start becoming a real reality once you get close to $3 million and beyond. That's what starts to grow. Like, if you really start like $10 million business, it's like, okay, I have a sales manager with 3 or 4 estimators. I have an operations manager with the operations assistant. Some would call them like crew leaders. Other— there's more hierarchy that starts to get built out here. And inside the book, even on the admin side, you have office assistants and then you start actually would silo people as you get to like $5, $10 million. And start really scaling the business up, you just silo out your office assistants. Okay, so at this point, the GM is on the top of the org. They're not actually doing anything in the business. This is when you are out of daily operations, quote unquote. You could leave and your sales manager would get the work, your operations manager would do the work, and your admin would make sure, admin manager would make sure that the work gets paid for. So this is when you are out of operations. Alright, so the big hairy question is, should I stay in growth mode and continue to go to become a GM+? Like, I wanna go $1.5, $3 million in annual revenue, or do I take the working GM model where I'm at $750,000, $800,000, I'm going to profit, my raised price at $850,000, $900,000, $1 million in revenue, I have 6 to 8 employees. Like, which way should I go? Should I copy and paste multiple locations around that $800,000 to $1 million, or should I be more going the GM+ route, which is up to $3 million at one location, getting middle management involved. So let's go over the determining factors. Number 1, this is when it makes sense to stay GM+. So growing one size out more. If you have a lot of one-time projects and no recurring revenue, it's just better to stay in one location because the ups and the downs, the amount of skilled labor that's required, your oversight, is required more, movement of materials and equipment is more often. You gotta stay more centralized. This is why like HVAC, et cetera, where there's very highly technical, that's why usually these companies will grow much larger and they're willing to travel 2, 3, 4 hours driving because you gotta stay centralized. Every job is custom and complex. Remember, that's the opposite of simple and standardized. When we talk about the grid of creating systems, I'm trying to simplify and standardize everything. I'm trying to avoid complex and custom. But if every job you do is custom, changes, it's ever always different, and it's complex, very skilled labor, hard to train, you probably just wanna do the GM+ model. If you struggle to manage managers, this is a real skill, and the cool thing about knowing that it's a skill is that it can be taught. And you can learn this skill. However, it is going to be a difficult skill to learn for many. It's very hard to learn how to manage managers. It's a very different skill than learning how to manage technicians. So just because you've managed 8 or 10 employees as technicians does not mean you're going to be able to manage managers. Very different, because as a manager, I'm gonna be thinking very differently about my role. I want autonomy, I want to be able to manage my team, and I don't want you micromanaging me as the owner. So if you struggle to manage managers, this is another reason why maybe just staying centralized, 'cause it's harder once you split up your team, once you have diversification of location and you can't be in both spots, you need management. And they need to be able to run without you around. And so I see two different problems with this. One, a very strong owner, very strong presence and personality that is very difficult to work with as a manager. I see the other side where they can't even get technicians to stay with them long enough to be able to move into that GM side, like into management. So they struggle with retention of technicians that can move into that operational GM role. And they struggle with once they have a GM managing them without that manager feeling micromanaged or people blow up over stuff. They make a big deal out of everything. No one wants to work for you. You're not gonna be able to have multiple locations. It's going to require you to be in one location, in the business all the time. And you might grow it to the point where you have managers that can fill in while you're gone, but because of your personality and the lack of skill in leadership, that will keep you from ever having a manager that operates the business 100% without you. All of the time. And so if you have the personality where like, I have to be involved in hiring, I have to be involved in if projects go wrong, I get really mad or agitated when someone does something that I try to train them not to do that. And you start to micromanage people when they're trying to sell and their close rate drops for a week and you jump in and you try to tell them what to do. Like, trust me, this is the hardest thing in growing a business. So the thing I hated most about this title is it sounds easy. Copy and paste is an easy function on a keyboard. Very difficult to do in practice because of this one thing. You'll have to become a better leader. And a lot of poor leaders, a lot of poor leaders in home services skate by, by having one location because they're such strong personalities and they micromanage so well. They juggle things so well. And they are so good at their job, they can build a $3 to $5 million business being a micromanaging manager and never delegating fully, always having their hand in everything, knowing every little thing in the business, looking over everyone's shoulder, not being able to retain managers for more than a few years because everyone gets burnt out working for them. That happens. And it's a mask. It's like, $4 or $5 million. How could you say that they're not successful? Ultimately, it's because their lack of leadership that doesn't allow them to be able to do the copy and paste method and potentially groom managers up, be able to give them places to be able to succeed inside the organization and not lose management because people just feel like you're just doing their job for them. And they feel like every little thing that you see in the business is a big deal. And so managing managers is a very different skill. It takes a lot. Of time, longer than anyone thinks. Like, well, I got a very successful business. I'll just, like, put this manager in place. As soon as you leave and they actually are the general manager, the dynamic between you and that employee will change. And that's not a bad thing. They are now responsible for your business. You will have to treat them differently. I see this mistake all the time, and that will be the biggest hurdle to doing the copy and paste method. Is the ability to manage managers. All right, another reason why you should just stay one location and grow it up massively is the business struggles when you are gone for 2 weeks. So one really quick way to test this is go on vacation for 2 weeks and see if your business actually is systematized enough, is simplified enough, is standardized enough, and see what breaks and just keep fixing that every few months. So go 6 months, leave for 2 weeks. Okay, we had these jobs went bad, This service did not work out well. So-and-so didn't show up to work. Okay, great. Let's just cut that service out 'cause we're never profitable on it. And that was the one thing I got text about while I was on my trip. Okay, great. Cut out that service. Oh man, that means it cuts out 15% of revenue. Okay, great. Let's spend a little bit of time on developing our lead system and our sales process to be able to make up for that 15%. Okay, great. Now let's go on a vacation again. What breaks? Oh, all of a sudden the transmission keeps breaking on this one certain type of truck. Get rid of the truck. Okay, we're gonna upgrade the trucks now to make sure it's more simple for someone to be able to dispatch without me getting involved. And having a bunch of breakdowns. These are the type of things you will tweak to make multiple locations and someone else running your business a lot easier. It's time to lock in before the spring rush. And when it comes to locking in, you want to be able to rely on something to hold your business strong, just like this chain. That's why at HomeWorks we have the logo of the chain because the three links in every home service business: sales, operations, and admin. So before the spring rush gets super hot and you have leads coming in like crazy, make sure you're set up inside of a software like HomeWorks that can take your business to the next next level and allow you to scale this spring. Go check it out today. Go to home.works. All right, if you have an expensive office lease or mortgage, just stay with one location. You're paying $3,000, $4,000, $5,000, $6,000. I've seen people that $8,000, $9,000, $10,000, $11,000 a lot of point in copy and pasting because you just double a very large expense by copying the location. So if you immediately are going to go at $5,000 a month, lease for 5 years on a property and you already have one of those, you probably should just stay at one location. So for reference, my location was at a farm and I think they paid $500 to $600 per month for rent, 'cause they had the trucks parked there and a storage container. Just parked at a farm, $500, $600 a month. That you can copy and paste. You can find them easier. You're not locked in long-term leases typically. If you can do that, copy and paste starts to make more sense. If you already have an office team or your spouse is in person doing all the admin side, another reason why the GM+ makes sense. Because if you have a very strong person in admin, like your spouse, who has inherent equity in the business, they're gonna run it amazingly. And so why split that up? Like, just keep growing that one location. I think that there are inherent risks involved with doing that. Am I having a key person risk of having one admin person being the reason you build the whole business model around? And so that's what I wanna be careful of. 'Cause if you're like, well, we're good, great, we're gonna grow to $3 million, I have my solid, my spouse is there with an assistant, awesome. You better make sure that assistant knows everything in the admin. They're gonna be a little expensive, but you better make sure they know everything. Because if something like, if you go on a vacation and your office manager's now going, And now what happens when phone calls come in and that person calls out sick? Like, we would start creating redundancy just to make sure that if your spouse is out, that we can cover. But if you have a spouse, like, it's just so much easier to grow. It's like having a partner in the business doing the admin side. And so that's a huge hack. And if you already have an office team, why split them up? The alternative to this, though, if you wanted to copy and paste, is you could make that your hub and then the spokes be the smaller locations. So if you already have an expensive shop space and you're like, hey, I'm tapping out this current space, I would rather just have satellite locations and I have GMs over them. Maybe this location is already doing $2-3 million. I would rather just as I break off sections of my service area and they grow to $800,000, $1 million, one GM that's operationally driven. I automate the sales. I have admin being held at my hub. And then operational GMs just do those service locations in smaller shop spaces. They don't need an office because the hub of the hub and spoke model is doing the command center stuff. Very cool. So when, when copy and paste the working GM model makes sense. Now, the working GM model is between $250,000 and $750,000 in annual revenue. Some people will get confused when I say $800,000 to $1 million when I reference this. The reason I say that is because if you're growing between $250,000 to $750,000, you're in that range of working GM. But at $700,000, you're past the $500,000 marker, which is where we talk about going into profit mode. And when you go into profit mode, you raise prices. You hit capacity, you raise prices. You hit capacity, you raise prices. And so when we raise prices, inherently, we will start sliding past $800,000, $900,000, $1 million. My location, both of my locations that I had this year and my current one location will do over $1 million in revenue, but we didn't buy more trucks or hire more people. We simply just raised prices to the point where now what we would have been doing a few years ago at like $600,000 or $700,000 is now $1 million 'cause we've been raising prices. And so assuming that you keep optimizing your website, optimizing your sales process, you should be increasing the number of leads that are coming in and the number of customers that want your service. And if that happens, that means you have demand is higher than supply. And if demand is higher than supply, you can raise prices and continue to grow past $750,000 and become very profitable. And that is what I would love for every— almost every home service business owner is a business that does $750,000. They put that thing into profit mode and that same sized business makes $1 million in 2 to 3 years. Not hiring more people, not buying more trucks, Just doing $1 million based upon raising prices. That's a 25%, 20 to 25% profit margin business that runs without you. And that's what the whole book is about. So if the majority of your revenue is recurring or reoccurring, then you can do the copy and paste Working GM model. Okay? The reason is, is because if you have recurring revenue, I don't need a superstar salesperson to sell big jobs. If it's reoccurring, so recurring is it's on a weekly, biweekly, monthly cadence. It's scheduled. Reoccurring means it happens more than once and periodically, but it's not on a schedule. For example, fall cleanups, Christmas lights. These are reoccurring services that I don't schedule necessarily. Your bush trimming for the next 3 years. I'm putting, okay, we're gonna come monthly. But you know generally that someone's gonna have you trim the bushes 3 to 4 times a year. I'm just gonna use an example. If the majority of a revenue, i.e., over 50%, is this type of revenue and not one-time jobs, I would give you the plus, the go-ahead. Does that mean you grow slower? Yes. I could grow a million-dollar business in one year, no problem, if I did projects and commercial work. I also know that commercial work will prevent me from going into profit mode 'cause they're not gonna take a 25% price increase. They're more price sensitive. And I also know that big projects are going to keep me from having recurring revenue that allows me to leave the business and not need a superstar general manager or salesperson. So that's why I'm looking for the majority of my revenue to be recurring or reoccurring. Second thing, copy and paste working GM model makes sense if every job is simple and standardized and the business can run without you for 2 weeks. So sales, I'm trying to automate as much as possible. Instant quotes, I'm trying to get as close as possible to automated. Operations, that's what my GM focuses on. I try to create systems for them for hiring, training, onboarding, et cetera. Admin, completely handled outside of the GM. The GM is not responsible to answer the phone. The GM is not responsible to run payroll. Everything on an admin perspective is either handled by my command center in the hub and spoke model where I'm doing a whole bunch of multiple locations down the road. On your first and second location, especially, just have someone remotely doing this for you. So you don't need a big shot fancy office space. You're not locked into salaries during the off-season. Like, if you have a great office person, you pay them during the winter to stick around and do nothing, 'cause you don't want to have to retrain someone during the spring. Crushes you financially. Crushes you. So, third one, you have a great employee that you want to promote. This is the most fulfilling thing I have ever done in my career. Is see technicians become general managers, and then at Augusta, we allow the general managers to become owners. The most fulfilling thing I've ever done. It's also the best attraction tool for talent. To be able to put, look at people on the wall and say, oh yeah, that GM, he started exactly where you're at 6 years ago, worked in the field for a few years, and now he's a general manager. And Augusta, we say like, oh yeah, and then these are all the pictures of people that now start their own location and went from general manager to owner. But even if you just had, hey, that person moved into the estimator role, that person moved into the general manager role, like we're all moving up here. Like that's the best talent attraction tool you'll ever have. And if you have a great employee and you know you'll lose them if you don't do multiple locations, because if you as the owner are there, it doesn't make sense to now have another person involved, another body, another overhead person. You're like, hey, great. This person likes being in the field. They're excellent. They may be getting a little older. Maybe they would like to be able to spend some of their time doing sales or some of their time doing the maintenance on the equipment or some of their time hiring, or they really care about the team. Great candidate for a general manager. Okay, next, you want to create upward mobility for your team. We talked about that. You enjoy sales more than management. So as you scale past the working GM, most of your time will be spent on managing people. If you're in daily operations, most of your time is hiring, creating systems for your team, training them up. There's gonna be some churn. If you start going to $3 million, you have 20, 30 employees, every week someone's quitting or someone needs to be retrained, et cetera. That's just how it is. If you enjoy sales and you would rather go do door knocking and door hangers and run ads, and that's your specialty, then copy and paste makes a lot of sense. Because the hardest part is like getting it up to profit mode. Like get it past $500,000, find a GM, put them in place, and then you walk away from that operational and that management side and you focus on selling. So if you love sales, if you love the hunt, if you just love doing follow-up phone calls and the chase of a new job is the thing that turns you on, you might just want to stick with doing copy and paste so you don't get wrapped up in daily operations as the GM at a facility that's now growing to $1.5, $2 million. You're trying to train up your sales manager, trying to train up people in the office, create systems for an operations manager, just get 2.5, 3 million, like you might rather just not deal with that. Automate sales, delegate admin, and then find a GM that can run 6 to 8 employees at one location just doing operations. They don't have to be unicorn, know how to sell, how to do a whole bunch of other things, how to be able to do QuickBooks and how to answer the phones. You don't need them to do those things. You just need a great technician that cares about the team, is self-motivated, is money motivated. And knows how to manage their schedule. Okay. Last one, when copy and paste working GM makes sense. If you're able to create a remote command center for admin. So when I say that, you don't necessarily have to do it yourself. This also means you could, like I said before, on one of the calls or callers that came in is you could take your accounting, your taxes, your payroll, and go get Home Service CPA to do it. You could contact, there's lots of companies like Jill's Office, Ruby, what's the other couple? Call Boss. There's a whole bunch of other companies that will just take your calls at like $2 a minute. Like, that's so expensive, that's $120 an hour. No, you know what's a whole lot more expensive? Is paying someone $20 an hour where I know that 75% of their day is not actually doing work. It's just all the time in between when they do work. 20 calls a day, average call time 4 minutes. That's 80 minutes. What are you doing for the other 6 hours? What, 7 hours and 40 minutes? No, sorry, 6 hours and 40 minutes. Like, that's like 15% of your day is actually spent on the phone. What are you doing with the other time? Like, and it's hard to, you know, tell them what to do when you're like, it's off-season, there's no calls coming in, and I've finished the inbox. And you're still paying them. And so I do not think that having someone remote charging by the minute is a bad move until you get to $1.5, $1.6, $1.8 million revenue and you can actually keep someone busy full-time, all the time, year-round. That's when I would give the okay to actually go get an in-person office person or pay someone full-time. I'm willing to take the hit on the off-season because I wanna keep them during the spring. But if you have a remote command center, i.e., your admin is being handled by someone that is, Remote, you don't have to get a fancy office space. You don't have to pay someone on salary. They're remote. Then I would give you even more, far more, far more latitude to go ahead and copy and paste your model. That's the hardest part. I talk about automating sales as much as possible. Instant quotes, we'll talk about this more later today. Like instant quotes, I want to automate sales as much as possible. I want to get over-the-phone estimates as much as possible. Admin, I'm trying to get remote. I'm trying to get, per-minute rates, I'm trying to delegate to specialists like an accountant or a bookkeeper, I'm trying to get rid of all that stuff so that I can narrow the focus of my general manager to just hire good team members and make sure they get the work done efficiently.