How to Prioritize the Chaos at $1M+

Hey everyone, and welcome to the Home Service Millionaire podcast. This is the podcast where we talk to people that are making seven figures or above, hence the name Home Service Millionaire. If you're making between 1 million and $5 million in annual revenue and you're in the home service industry, this is the podcast dedicated to you. I'm going to go deep on things like management, other things that are only experienced once you cross seven figures. And today we're talking about prioritization, your schedule, your manager's schedule, how you keep people on track using things like time management, six week sprints, et cetera. So we're going to jump into the docket. I haven't seen them yet, but the producers got them ready for us. The first question on the docket is why most managers default to urgent instead of important and how that caps your business at 2 million. Okay, interesting. Okay. So urgent are things that usually are loud, they're obnoxious, they're fires, those things are urgent. And you do need to deal with urgent things. If your role, if a manager is the role of an individual or team member is a manager, most of their day is actually dealing with urgent things. Here's the thing. Firefighting and dealing with urgent parts of the business doesn't actually build the systems. And as the business grows and you pass a million, the highest value task is actually creating systems because it de risks the business. So if someone in the organization gets wiped out, they get fired, they leave, et cetera, that you have something in place that someone else can actually duplicate versus it all being based upon skill, experience, tenor, They've been there for a long time. There's a lot of pass down knowledge, there's a lot of things that have been told verbally to people. And so creating systems is the highest leverage use of a manager's time. But most of their day still needs to be spent firefighting and dealing with urgent tasks. So how I think about that is probably 80, 90, 95% of a manager's day is needs to be spent on urgent things. Flat tires, customers are unhappy, complaints, behind on schedule, materials don't show up to a project. That is going to be the urgent thing that they do need to, like you're paying them to do this. As the business gets to 2 million, the owner usually starts acting more as the GM. They're not in sales, they're not in operations, they're not an admin, they are the gm, quote unquote of the organization. Everyone. Those three managers report to them. And what many times happens is because the owner or the general manager gets sucked into these departments, they end up becoming a manager instead of focusing on being an architect. Stepping away from the building, analyzing areas of stress, areas of weakness, and then creating systems to improve those weak areas. And that is the that like when you have sales, operations and admin and you're growing past 1.52 million, like when you start getting that size of 2 million, you have a salesperson, you have an operations person, you have someone, an admin. The role of the owner or the, or the general manager as I call it, needs to be focused most of their day on architect type situation. That's how you get past 2 million to get to 3 million and beyond. You need to have really good systems. You gotta have a really good way of training new talent. You've gotta have really good redundancies in sales, operations and admin. You gotta really nail down checklists, equipment maintenance, all the little things that you expect your managers to do needs to be systematized. Checklists and a way to track it. So metrics and so the challenging part is if you as the general manager or the owner, if you're an owner operator, I still call you the general manager. If you have a $2 million business and have sales, operations, admin managers that are reporting to you, I look to you as the general manager. I want the vast majority of my day focused on the important things which is creating systems and my managers out in the field doing the work. As an operations manager in the office, an office manager, an admin manager doing sales estimate manager, I or sales manager, I am trying to also give them 5, 10, 15% of their week to focus on important tasks. And important tasks are creating systems. How, what do I work on? During my, my systems building, my architect time, I am going to look at all the failures over the past week and fix them using a system. So every single time the project went off track, I need to know, okay, that was a failure. When I get to my architect time, when I get to the time where I get to actually think about important tasks of creating systems, I'm going to solve that problem with a system. Every problem in the business is solved the system. And that might mean simply because what is, what is, what is a system? Well, it's simplification and it's standardization, which means you might actually cut out a service, you might actually cut out a department, you might cut out a team or a crew, because things just keep going wrong. And then you make that decision and you analyze that during your architect time. As a Manager. If I'm a sales manager and I can see that my close ratio on certain types of project is 90% and another service it is 30%. To say that your close ratio is 65% hides a lot of stuff. But if I don't have the time in my week to focus on the important task of actually segmenting my close ratio based upon service at a $2 million sized business, I will make the wrong decisions because I think I have a 60% close ratio when in reality I have a 30% on one service and 90% on another. Meaning the 90% one definitely could use a price increase. And like all this service isn't profitable, we're going to have to cut it. It's like, whoa, whoa, your close ratio is 90%. Increase the prices by 25 or 30% and then let's analyze whether or not it's profitable. And you can only know that by having a sales manager that is given time to focus on important tasks. And in my opinion, for a sales manager of a $2 million company, having some time to think about segmentation by service or zip code or, or even like what area of town, for example, like north, south, east, west, knowing your close ratio based on those, that breakdown is really valuable for them so that we don't make decisions in the business that are incorrect based upon assumptions. Oh, we have a 60% close ratio, therefore we are well priced. Maybe we can increase prices by 10%. No, if you increase prices across the board, the 30% close ratio might drop down to 15 or 20 because you're very close. Like you're very high priced. The 90% one could probably get a 30% price increase. So again, the important task for that sales manager would be segmentation by close ratio. The urgent task is like, oh my word, we got to cut out this service because not profitable. And that could potentially lead to making the wrong decision in the business. All right, next thing on the docket, the whiplash effect. Why shifting owner priorities weakly destroys manager confidence and execution. So this is something I am prone to, this whiplash effect of constantly want to add new changes. Take, you know, just really, really moving quickly. I'm a huge fan of making making decisions very quickly once I have evidence. But what most of the time I and other entrepreneurs are prone to do is we get ideas and then we take action. Ideas are a dime a dozen. Like you can get 50 ideas today. What I recommend is keeping track of all the ideas and then only working on three of them at the same time. And until there's One off of the three. I use six week sprints. But like, even if you just say, hey, I'm only working on these three things, these are my most important things right now. And if I finish one, then I can move one from my to do list into here. But trying to work on 20, 30 things at the same time is going to cause all sorts of confusion for your team. I have seen it time and time again where it's like a new initiative. Okay, we're doing upsells this time and here's how we're gonna change all this. Here's all this verbiage, and here's this 10 page SOP I created on ChatGPT. And then the week after we're adding this new service, we're now doing this new thing. And then like the week after we're cutting everything out, we're changing the truck setup, it's like, whoa, whoa, whoa, this works perfect, perfectly fine, theoretically in your brain as a solo operator, but you're not a solo operator anymore. You've gotta be much more decisive. And only a few changes a quarter are needed to really move the needle massively for the organization. And if you're gonna be changing every single week, you're gonna lose mid level managers because they think you're chaotic and all of your ideas might be good and if executed well on, could lead to great results. But what I have learned as the business have gotten larger is that I do not need to do more initiatives, I need to do a few of them really, really well. And if I do that, here's the thing, you're like, well, what if I really see a huge gap in the business, I need to take action quickly. If you execute really well on the initiatives and you really take your time and you have the evidence and you have the data and you roll it out with video training with systems in place and it's not chaotic and you actually make sure people do it and it's not just an optional thing and you stick to it for three months before making a decision to improve it and change it. And if you do that, you will gain a lot of credibility with your mid level managers because when you do roll something out, they'll know you have thought it through, tested it, made sure it worked, and then created a system to ensure that it actually works in the future. And so I think a lot of times on the weekend we get all inspired, read a book, we listen to a podcast, we see a course, we see someone else's business, like, oh, that's a Great idea. Let's do it tomorrow. I like that. I like fast execution. But a lot of times when you do things tomorrow, it's not well thought out. It's. He doesn't have a system in place, who's going to own this? How are they getting it compensated? How are we going to track and measure whether or not it's actually getting done? How are we going to measure success? Like, we just rolled out a big change at Copilot and we're like, oh, this is going to be great and everything, but we fortunately had all the data before and after the change and it didn't do what we thought. We thought it was going to make a completely different change in terms of user behavior. And it turns out it didn't do exactly what we thought. And we only know that because we actually tracked before and after. We tracked for not a day, not two days, not three days, not a week, a month on both ends to see what actually changed. Then we tracked the year before to actually get good data as to whether or not this change that we wanted to make was good. And here's the thing, when you do a couple times where you really thought it was, you thought it through, you had a system in place, you did a great rollout, and then it still doesn't go according to plan, it really causes you to slow down. Because why would I want to deploy energy and resources and time and the team and all this meetings and everything towards something that actually wasn't the best thing for the customer? It actually didn't turn out the way we thought. And that will force us to slow down before we roll out things that can take tens of thousands of dollars, deploy days or weeks of energy of our management teams towards initiatives that we made up in the shower. So I just think I really recommend having a to do list and then having a priority list of only two to three things and you have to cut. You cannot have 10 different initiatives and you gotta focus on whatever is the two or three top things and that's it. Not dabbling in the other 50 ideas you had last weekend, but just in the top two or three. And if you execute well on those, I've seen time and time again, a few well executed decisions or rollouts or initiatives in a quarter or even a year can have huge impacts on the business. Much more than 50 great ideas implemented each week, but done sporadically. It's hit or miss. You're like, oh, I just need one if I like you're no longer trying to hit, you know, single like if I just swing, swing, swing, swing. No, if you swing and you miss three times, you're out. So I would rather be more calculated and not swing at pitches that are four feet out of the pitching box. Whatever it's called the strike zone. I would rather wait. I would rather be more deliberate. I would rather watch the pitcher. I'd rather be more calculated with what pitches are going to be the highest likelihood of me hitting out of the park. Because if I have a higher propensity to hit the ball out of the park, people want to show up. They will want to support the vision and the mission. Because I have a track record of hitting the ball. If I just keep swinging and swinging every single pitch, I just swing and swing. Guess what? The pitcher just starts to know. If I just like pitch four feet out of this, the strike zone, they'll still swing. And if you get every single idea, you're taking action on every single idea, you're just constantly deploying all your energy towards this. And the next week, it's something else. And then your manager, it's chaos. And your team, you lose credibility and trust with your team. And I have been guilty of this in the past and I am trying to improve. Next thing on the docket, should your managers be prioritizing profit first, growth first or culture first? And how the wrong answer stalls scaling. So I think this alignment, like, are you in profit mode or growth mode? This is the reason why I think it's binary. And I've pushed people to like actually identify which of these are you in? Because the owner and the manager need to speak the same language. Owner or, sorry, manager and manager as co workers also need to speak the same language. Because if no one's clear as to what the goal of the organization is, then sales is always going to have budding in with operations. Operations is always going to be mad at the salesperson who sold the job. And if we're aligned though on the mission, which is the goal is profitability. Oh, that means we need to increase the number of budget hours. That means we're increasing our rates. That means our close ratio is going to be lower. These are the things that we all are aligned on now because the profitability of the organization is important. If growth is important, there might be jobs that budget hours aren't hit. There might be jobs we aren't profitable on because we are trying to close 60, 70% of those jobs. And if we're all aligned on that, operations doesn't go complain to sales. But if we're not aligned. We don't know that growth and close ratio being increased is the main objective of the business. We have a problem. You will have a lot of infighting between sales and operations, between operations and admin, there will be a lot of infighting because admin usually gets the contact from the customer and is back and forth about work change orders, things that they're not unhappy about, complaints on the job site. If that's not well, there's not good communication. Operations and admin, you're also going to have a lot of problems and in fighting inside the team. And so it becomes a cultural problem when you don't have clarity on whether or not the business is trying to optimize for profit or are we trying to optimize for growth. At the mid level manager level, team members out in the field, they're on pay for performance. They're much more based on how well I perform today. If you have a lawn care business and you've considered joining Augusta Lawn Care and converting it into one of the franchise locations, go check out augustalongcareservices.com franchise, which is we can see all the numbers and what the performance is of all of our locations. That determines my paycheck. Let's go. As long as you give me clear instructions. I like my manager and my compensation is fair because I get paid based upon how hard I work on P4P. I'm a happy person. Mid level managers don't want to be infighting all day long and dealing with drama between the organ, between the departments because handoffs are done poorly. Handoffs is I sell a job that's sales. I now hand it off to the admin person to go format it, send it to the customer and do follow up. And then that admin person sets me up for success. So the operations person has all the equipment they need, all the materials are ordered and ready to go. It's on the schedule with all the notes and the videos, et cetera. Now operations got to execute on it. Once they're done, they got to hand it off back to admin, do the invoicing and make sure that the payment is collected, et cetera. These handoffs get really messy. And where balls start to get dropped is when there's not good communication between mid level managers inside of a two, three, four million dollars organization. And so what used to be, hey, clock in and out of your jobs, make sure you punch the app, make sure you clock in and out. That's your team out in the field as technicians. As you become a Much larger organization and you're dealing with mid level managers. The real problem if you're having multiple managers at one location is the connection and the relationship between your managers is so important and so vitally important to the culture of the business. And I've seen clarity around the mission and the direction and the focus of the business and is the thing that most aligns mid level managers. If this is the goal, we all know what we're shooting for. And so if there's times that jobs don't go bad, well, if there are times that an estimate isn't done correctly, we all have clarity as to why that occurred. Cause the mission and the vision and the finish line is the same. We can all be running a marathon, but if we're not clear on the finish line, we'll end up in completely different Cities. You'll run 26 miles this way, I'll run 26 miles this way. Like we both ran a marathon. But there was no clarity around the finish line. So there's not a thing to run through. There's not the shot clock timer thing. There's no audience in a stadium like where I ran a marathon. Where's the finish line? You got to define what the finish line is. Otherwise you have a lot of activity from your general managers or your managers if you have multiple at one location and they'll end up in different spots. And then that's when you have lack of clarity around the vision. All right, number four on the docket. Why most GMs only have capacity for three true priorities and how to identify them without overwhelming. Okay, very good question. So a lot of times managers have all these things that they need to get done and that is good. You want someone to be able to identify problems. A S tier level manager can not only identify problems, they can come up with the solutions. I tend much more to allow someone that is an incredible manager or leader to do their thing as long as they can identify the problem and identify the solution. The challenging part for a lot of times when you are more hands off is that they struggle to prioritize what to do next. And so prioritization is important and you want to be careful because if you prioritize too much, you're basically telling them what to do. And now they've lost the ability to be autonomous. Most S tier people, great in great team members and managers and leaders do not want to be that just a task hitter. Like I was like do these 10 things over the next month. Check, check, check, check, check. It's like okay, what am I doing? I'm just a technician now. Like I'm just going through my job notes. I want to be able to have a manager that identifies a problem, figures out a solution and then executes. Because they get the benefit of being able to point at that and say, I did that. And that is why a lot of times I see mid level managers turn out of an organization of a really strong entrepreneur. Cause the really strong entrepreneur identifies problems, create solutions, and then executes. And so when they get managers, all they do is identify the problem, identify the solution, and hand it off as a to do for their management instead of allowing them to find the problem, allowing them to come up the solution and then allowing them to go execute. If they do that, they can be an intrapreneur, they can flex the entrepreneurial muscle, but still stay an employee inside your organization and you'll lose them to someone else or to them running their own business. So if you want to attract entrepreneurial people inside the organization, I need them to operate like an entrepreneur inside the business, which is more autonomy. And if you're like, well, they have no ability to identify problems, they have no ability to be able to come up with solutions, and they have no ability to execute, then you should fire them. That's the bottom line. They're not a manager that I want to employ and I can pay someone a lot more if they are able to execute on all three, which is identify problem, identify solution, execute. Now there are times where they identify a problem and they identify a solution, but they're not sure what to execute on because they have found so many problems and solutions inside the business. Here's how I look at this. I say, first off, is there a deadline on this task? So deadlines as managers, very important. If you need to get something done by October 1st and it is September, it might be priority just because of the deadline. So first off, I'm looking at deadline. Second question is, if this gets done, what is the benefit? If this does not get done, what is the downside? And usually if you just do those three things, so is there a deadline, what's the upside or the pros of getting this task completed and what are the cons? If you just did that for the 10 different things that they have come up with a problem, a solution for, usually it becomes very clear what the prioritization should be. Because if you have deadlines on two of your tasks, they should be your priority and you got cause we're only focusing on three, then the third one's like, okay, now let me look at these other tasks. Okay, so if I do that, what are all the positive things that will happen if I don't do that? This sprint in the next six weeks, these are all the negative things that will happen. Here's the thing. A lot of times when it comes to do items, the cons are unless there is a deadline, nothing will happen. And so it becomes simply a function of what is the biggest benefit to the business in terms of the pros. So if I don't have a deadline, usually, usually there's not a lot of con to doing nothing. Honestly, that's like the tried and true. Let's just not do anything. So first off, is there a deadline? If yes, very prioritized, it's probably getting moved up to the top of the list. If it's not a deadline in the next six weeks, the question becomes what is the benefit to the organization? What are the pros of getting this task done? And then what are the cons if I do not take action, if I do not do anything, and if the answer to the second one is, well, not much low priority, if there's not a lot of downside to not taking action, usually there's no deadline and it's not going to push the organization forward as much as the other tasks that you are clearly able to identify a deadline or have very clear in positives as to why it's going to increase the business's success. And so if I don't have clarity on those things, then it's not getting done. So those are kind of the prism I look for. Number one, I have all these tasks I know I need to do, but like I don't know which one to start on first. Great. Is there a deadline that they have to get done by? Do I need to prioritize based on, based on the deadline? Okay, that's the first question. Then if I do this, what are the positive things the business that will happen to the business if I do not do this in the next six weeks? What are the downsides? If you ask those three questions is almost really, it's almost always really clear in terms of what should be prioritized. Okay, last one on the docket. Priorities versus values. Why your manager will always default to what you reward, not what you say is important. Okay, so this makes an assumption. The assumption here is that people are money motivated. This is why for me, if someone, a mid level manager is not money motivated, I struggle because like the whole business exists to make money and to accomplish the Mission and the day to day is the metrics and the numbers and the money. The mission as to why this business exists is much more long term. Here's the thing, I need the money in order to be able to stay alive so the mission can be accomplished. And so if someone is. Someone's not money motivated. Very difficult to like tie the metric to the business, to their compensation and then feel motivated. And so I've always struggled with people that have not no money motivation. I would much rather work with people that are money motivated, that just me because numbers I can very easily align with incentive feelings. Very difficult. I don't want to tie people's incentives to like how many people they manage or you know, any random thing. I want to be like, what are the numbers? This like, that's why like I love business is because it's a scoreboard all the time. Your profit loss statement is a scoreboard. Your close ratio, it's a scoreboard. Like we do max metrics at Augusta. That's your scoreboard. Like, like it's always scoreboards. And so it's really easy if I can tie scoreboards to compensation. And so if someone's not money motivated, I actually think that's the biggest hurdle here is because if I'm rewarding the business succeeding and the success of the organization is based on the metrics I am seeing, it's really hard if the person's not money motivated. Let me read this question again. Priorities versus value. Why your manager will always default to what you reward, not what you say is important? Yeah, I think they will default to what you reward assuming. Assuming they are money motivated. And that's why your compensation is like, I'm an absentee owner, so my locations, I haven't been there. I want them to just print cash and have free cash flow. So what do I do? The incentive is aligned with free cash flow. Owner distributions you get, you get a percentage of all that money that I get. Because that's my main focus. That's the main thing. I'm so like, I can talk about culture, I can have all these other things, but the only thing I really care about as an absentee owner is I want distributions. And so then I incentivize that. So it's, it's difficult when like as an owner you're like, I want to, I want cash flow. I'm a passive or I am out of state or I am trying to retire, for example. And so I'm going to incentivize based on revenue growth or close ratio. Or all these random other things and it's like, wait, but what's your goal? Your goal is cash flow. Just make that in the incentive of the, of the manager. So that way you speak the same language, you align incentives. So you know, it's like Charlie Munger says, show me the incentive, I will show you the outcome. And so if the outcome you want is more free cash flow or it is growth, like then you do revenue if you're trying to growth, I want to grow the business. Great. Tie their incentives and their rewards to revenue. You will get more closed estimates, you will get more revenue. So aligned incentives, if they're money motivated, much easier. I think if someone's not money motivated, I have to be much more involved in day to day operations simply because they are not going to see a problem when I see it as a problem. And if we can't speak the same, if we don't look at the same scoreboard and see who's winning and who's losing because they're not money motivated and I am, we have a problem. So first off, I got to first off make sure like the values of seeing numbers is important to them and if so we can look at the scoreboard and both agree we are winning or we are losing. Because I don't want them saying like, well yeah, your revenue's down, but the team's really happy. I'm like, the scoreboard says we're losing because we're losing money. And so that's my opinion. Probably wrong. Maybe it is. Home Service Millionaire podcast. Let me know if you like this sort of content for the million plus dollar business owner. Let me know on Instagram screenshot it tag me on your stories or comment in the comments. But it's difficult sometimes to know if podcasts land. So let me know and if you like it, I will do more of them. So we'll see you next time.