I Helped 4 Owners With Their $1M+ Home Service Businesses

It's tough because there's no immediate pain. The only thing you can lean into is the fact that their contract is coming up.

Yes, although I think I might be sabotaging him just because we also lost a tech, so then he's the only person available to fill in for that.

The reason is, is because you're gonna lose $200K for the first 2 years doing franchising, at least, like minimum. I think I lost $480,000 the first year. You gotta go get the 10 People that are ready to go sign up. And the number one thing you can do is risk reversal for them because they have no confidence in your longevity. If you asked your guys right now, how much did you make on P4P, or are you going to make it this month? It'd be hard for them to quantify when there's all these variables. Today I'm going to be doing private coaching with several home service millionaires. These members are part of the Home Service Boardroom. This is a school community that I recently started for 7-figure home service entrepreneurs. So if you're interested in joining these calls, in the description there's a link you can join today, and I look forward to seeing you inside the boardroom.

This year my business will be making $1 million in revenue. I need help with selling snow removal services in August.

Okay. And right now, how much are you doing in snow out of the million?

Probably around $300,000. It can vary. You know, way down to 2, up to 4, depending on how much it snows that season.

Okay. And right now, is it mostly residential or is it all commercial for the snowplowing?

We're probably 40% commercial, 60% residential.

Okay. And so I assume a lot of the commercial stuff is more secure in terms of the locking in that contracting. Is that correct?

Correct.

Okay.

So really, it's the residential is where the opportunity is if we package this correctly and try to sell it. Is that what you're trying to think about?

Well, I guess what I was trying to think about is best ways to sell it in August, whether I should really be focusing on commercial in August versus residential at more of a pain point, or, you know, which route I should go in some of that.

In your market, do most of your commercial contracts renew in December?

No, I would say 50% of them are between August and beginning of October. And then the other half, the folks that are just— don't think about it ahead of time, October to December.

Like, if I was only looking at snow, I would probably be saying like, we just double down on actually trying to lock in more commercial because it's steady revenue. It's also usually going to be more from a month— like, it's gonna— the revenue is gonna come in usually regardless of whether or not it snows as much as residential, which is like boom or bust. And the problem with that is it's more of a business decision. Like, do you even want to be doing that much commercial, or is residential where you want to be going?

Well, we— I want to make sure to have enough funds to cover, you know, a team of 6 or so guys all winter long, whether it snows a lot or not.

Yeah, then I would probably go the commercial route. Um, my question though becomes, when you have to take on other aspects of the contract like mowing, bush maintenance, etc., does that become operationally difficult? If you also, like, do you have to do those other things outside of just the snow on those contracts?

Generally not.

Oh, really? So you can just, just for the snow contract?

And certain ones, if we're talking about like an apartment complex or something, that's kind of a full service all the way around. But there's a lot of the businesses, they're just looking for snow removal. Okay.

And if you had to, Have you tried any sort of a specific offer to activate these commercial contracts during the summer or not? Have you not tried anything in the past?

Just cold calling in August.

Okay.

Hmm.

Yeah, it's tough because there's no immediate pain. The only thing you can lean into is the fact that their contract is coming up.

Right.

And so of your commercial, how many, how many of those commercial are coming from a couple of property managers or is it pretty distributed?

Pretty distributed.

Okay.

Mostly commercial, like property managers, or is it individual landlords and owners of like buildings?

More so individual.

Really?

Okay.

I'd be really interested to see, like, this would be a pretty hands-on way of doing things, but either scraping a list or individually going through the county assessor's office and looking for the owners, because usually if you can see the property owner's information, and even if it's their LLC, you'll get their mailing. information, and it might only be like, let's just call it 200 addresses, but you start putting them into a mail sequence, but you're targeting specifically like likely going to be small commercial, multifamily, and you're actually going after landlords. And so I would be targeting their pain points, which is like they do not want to be called in the middle of the night when it's snowing. They do not want insurance claims. So around icing, for example, like putting down salt, and you're going to target them slightly different or message them slightly different than a property manager because property managers just like what you handle everything. They, they are much more like just get it done kind of thing. Your owners, if they own like a 10-unit apartment complex or a small strip mall, they are going to want to be more involved in this process. I think if you warm them up like with a 3 or 4 mailing sequence to maybe 200 or 300 addresses. Your actual cost here is not going to be the print or the stamps. It's going to be getting the right information and the data to go after this audience.

Right. And what would be your suggestion on pricing in August, September versus something like October, November, December?

Yeah, so like I would say trying to activate them prior to that with either an offer or just some sort of a discount if they do buy a certain date. So for example, a lot of times priority is one thing you can use with commercials like, hey, if you sign up before October 1st, you get priority on, on the route. And so we're going to service you before everyone else on our commercial route. Therefore, you're going to have better service and just sell the fact that you're going to get it done sooner if they sign up sooner. And if, you know, worst case scenario is you fill up your schedule and now we're going into the time when most people are calling you anyways, October, November, December, and you're left with the decision of either raising prices or extending capacity by getting another plow truck.

Got it.

But I think in this case, which, which is unique to me, is most of the time for snow they require all the other services. Uh, if that's not the case, awesome. Also, in this case, usually when I say snow, I think that commercial changes the whole way that you do it versus residential. It sounds like you're doing small commercial, which is like a niche that you could potentially have 200 to 300 people you're actually trying to target. And so it's, it's just simply going to come down to getting that information. You could use AI a little bit for this, but I also think, again, it's, it's very hand-to-hand, but you could very much go in the property assessor's office, look for all the properties that are over a certain number of units, or a certain value and are commercial, and then just hit that list of 300 to 500 people. And the actual cost of doing that's going to be less than $500 to print. And I would do 4 different types. So like every 3 weeks I'd be sending them something else hitting a different pain point. So it might be insurance, like slip and falls, what the cost of an insurance claim is. Then it might be the fact that they're going to get priority in terms of the Uh, the way you do your routing. And then I'd be going after the pain point of like, hey, we have 30 more days to get on the schedule. Like, you'll get creative with, with ways to hit them. But I think this is mostly— most people will not do this because getting the 500 addresses and names is a bit of a pain in the butt.

Yep, yep. Once you got them, you got them.

Yeah, 100%, right? And you might be able to put an agent on this. So if you have like Claude Cowork, or, or if you, if you have played with AI at all, you could open up the Counter-Assessor's Office, give it access to your browser, and then just give it the parameters that you want it to search for, and it might take it a day or two, and you might eat up some tokens. But the alternative is, and I'm not against this option either, which is literally set the parameters for someone to sit down and say, hey, anything over this number of units or this property value that is commercial or is multifamily. So like, I would come up with what the— in your— the conventions of your codes, like the zoning in your area, and filter by those, and then property value, and then come up with that and scrape that data.

Okay.

Awesome. Hopefully that was like directionally something you can actually take action on. It is going to either crush or it's going to fall flat. But I think if that would be what I would go after first before residential, which is going to be very difficult because residential people don't usually think about something until there's pain. And so until the snow flies, like they'll call you in December when it snows.

Correct.

And my hope is that we fill the capacity with the commercial so when they do call in December, and you have to have your guys work overtime, you're charging an enormous amount of a premium to the residential customer.

I have a residential pool service business doing about $1.2 million in sales probably this year. Did about $1.1 last year. And my problem is keeping up quality in our pool cleans division. We have pool cleans and repairs separate.

Mm-hmm.

As I've been sort of cycling through team leads or just ops managers sort of for that division. So we lost a couple of good people earlier this year. One quit, one got fired. So we've had a little bit of turnover and I'm struggling to have my team lead own the standard and make that his whole thing. I still get calls from his team and I probably need to because quality is not good and I'm struggling to get him to own that.

Has he worked with you for— as a technician in the past?

Yeah, he's been a tech for 3 years.

Okay. And did you promote him once the last person left or got fired?

Yes.

Okay. And does he have—

He was sort of interim filling the role.

Oh, it's more of an interim position.

Sorry, he was interimly— he was sort of filling the role even though he was—

I got you.

Not given the title until a couple weeks ago. Okay.

And is he clear that it's his job responsibility to be taking care of quality on the maintenance side?

Yes. Although I think I might be sabotaging him just because we also lost a tech. So then he's the only person available to fill in for that. So I feel bad for not giving him enough time to solve the problem.

And is it clearly defined that you are responsible for hiring?

Um, no, I've kept that.

Okay.

Oh, that's fine that you kept it. My, my point is he might be thinking that you are quote unquote sabotaging him because you're not hiring enough, if that's your responsibility. And so generally, I try not to expect a manager to take full accountability or ownership of a role if one of the ingredients that they need to be successful in their role depends on me doing my job. And so if he feels like he's understaffed, I really can't judge him if I'm the one that has to hire for the technician role.

Okay. I've just hired a guy.

Okay.

So he's currently training the new guy. So the capacity problem will be done, well, should be solved in 2 to 3 weeks of training.

Mm-hmm.

Um, I guess I just, I, I, uh, I think I asked this group in the community the other day, but I Struggle to communicate my expectations and then hold them to it because I feel like I've not given them enough training. You know, how much training is enough training before it's like it's his fault and everything that happens? If my phone rings, you're not doing your job. I struggle to like have that level of clarity until I've given them what I think is everything that they need to succeed.

No, 100%. And this is very common when you have churn of any sort in a manager position is The person that gets put in their place, they're either A, like you said, in this case, he's been on the team, he's kind of vicariously been doing these tasks before, and now he just kind of assumes that role. And so there's no real change in what they're doing because they kind of were doing it already. Or the other side, which does not happen in this case, is you bring someone in really fast that's outside the organization and don't properly set them up for success because you're just in a rush to fill the role. And so I would be, I, I, I bet if, I wonder if you talked to him or someone else talked to him and asked him, what do you do differently now than you did 6 months ago? He might not have a great answer for that because we haven't been clear about these are the things you must do and here's how you win. And for him, he might know he's responsible for maintenance, but does his compensation change or any of his bonuses or anything change based upon I have not.

I would do P4P.

Okay.

And I gave him a separate quarterly bonus in relation to being a team lead versus a tech, but I have not clearly defined what is the level of standard, what is the quality, which I think part of that comes from, like you said, the churn, where I'm like, at what point is it no longer the last guy's fault that these tools are all broken? Right. At what point is it your fault and it's your problem and it's your bonus that, like, I, I would feel bad being like, and you didn't get the bonus this quarter, although your first 2 months was sucking the last guy's problems and now it's on you, but it's been a whole quarter.

That's great.

So, so what you said, I'm like, where's the cutoff?

Totally. What you said to me is what you say to him. You say, hey, look, I know that there's quality problems because of the last hire. How long do you think we can, it's gonna take for us to get it up to standard? And then starting from there, I'm gonna make sure I align bonuses and compensation or their goals, which usually have something to do with making more money. I'm gonna do a good job of making it clear between them making more money and their goals being accomplished. And I'm gonna say, I will give you more money once these certain standards are met, but how long do you think it's gonna take for us just to get it up to standard? Right? 'Cause like if, if, if, if he consciously knows that the pools—

Right.

He knows this current standard, he knows the last person, I'm going to assume He thinks that that last person did a poor job. He'll be like, hey, I need a solid month, so give me till the end of August, and after that, I think we'll get it up to standard. And you say, great, starting September 1st is when these bonuses will apply. And I would probably do it based on a grid system, which is efficiency on the y-axis, x-axis would be the number of callbacks or percentage of callbacks. And so he's sort of— Balance between quality and quantity.

Okay. This may be the wrong follow-up question, but I struggle to let him run meetings and also struggle to let him give me solutions. I end up giving him a lot of solutions because he doesn't talk and I talk too much. So I'm like, I hand him a meeting. I'm like, all right, you're running the first half of the meeting based on quality and efficiency. I'm running the second half on values and just general problems with equipment. And he'll say like 7 words and then throw it back to me. I've not had one-on-ones with him yet, so I haven't exactly addressed this with him directly, but I'm like, all right, so what are your ideas? I'm not sure. And then I'll talk for 20 minutes and be like, okay, let's go do this.

Yeah.

So I'm sure, yeah, I don't know how to get him to talk more or if that's just like a genetic trait or something. I don't know.

Yeah, like some people just don't like to talk, so that's one thing. Like they're just inherently more introverted. You put 'em in front of a team meeting, they kind of fall flat on their face. So it has to be very clear as to why them talking in front of the team allows them to hit certain metrics and allows them to hit their goals. Right now he doesn't really understand. And if there are no metrics that he's trying to hit or bonuses that he's trying to achieve, it's very hard to convince him to change behavior.

Yeah.

Because he's like, look, this is working. I'm getting paid the same no matter what. I don't need to change anyone's behavior.

Cool.

But, but now all of a sudden, if, if maintenance, that department needs to improve their quality and he's responsible to teach the team about quality and his compensation is tied to that quality metric, now I can actually expect his behavior to change because there is an, there's an incentive alignment.

Makes sense. And so what I, I would probably do is have his pay has not gone up or down.

Yeah. Like that's a great, that's a great place to start. 'Cause in his mind now it's like, I am taking all this extra responsibility. Boss wants me to all of a sudden talk in a team meeting. And I haven't got a single extra penny in my compensation, that's not fair. And if he's thinking that, he's not going to deploy any discretionary effort towards any of these new tasks you're putting on his plate. What I would say is, in your mind, you're like, well, I can't really give him a fair comp because the previous person's quality is so bad. Great. Have that conversation with him and be like, I understand we're behind. I understand that you've been unequipped in terms of number of team members. I understand that there's jobs pools that were way behind in terms of quality and it's up to our standards. How long do you think it'll take for us to get there? And then when he says a date, you use that date as the time when his bonus and compensation changes. And if you do that, he might be like, well, I might be able to do it in the next 2 weeks, right? And get things back up to standard. Because you're gonna, you're gonna want to definitely change his base if he's changed his role title and you're expecting him to do— I would change his base to some degree, but then definitely making sure that He has incentives around the quality of the maintenance department. He has incentives around the efficiency of the team. Otherwise, if you don't align the incentives, you are betting on this person being these unicorns that will work hard no matter what.

Lawn landscaping business. This year we'll probably do just over $1 million, so probably $1.1, $1.2 million in revenue. Question being, currently have a foreman that's— when I say foreman, like he's kind of just running landscape. I would say I'm out of the field, but I still, I guess, coordinate some things as far as jobs go. So looking to make him more of a general manager. So I wouldn't really say I'm doing operations. I guess I'm still one foot in a little bit, but he's kind of just running landscape. So question being, as far as making him a general manager where I kind of want him to kind of run the majority of it, what do you think the process should be? Kind of like 30, 60, 90-day? I guess, process for that. And second thing would be, I'm planning to start another location next, um, next season. So where do you think, like, I should fit in as far as, like, what roles I need to do for that second location? The second location's probably only going to have, like, one crew, obviously, to start out, and as it grows, get a little bit bigger. But, like, where do you think I should kind of fit in, and where should I kind of fit him in, the guy that I'm trying to make a general manager? Um, and then kind of like, what roles should each of us have so we're not stepping on toes and Whatever else, if that makes sense.

Totally. So I'm going to assume that this location that you're currently at, $1.2 million, you're not necessarily trying to grow that to $2 million. Like, you kind of have hit a place you're putting in profit mode. No, no, you're handing it off to the GM, correct?

Yeah, I don't want— yeah, right now it's 3 crews. 2 crews are maintenance, so those are kind of running like by themselves, obviously, like spring and whatever else, selling stuff. Like, it's hectic. But then after that, really, this guy only really has to sell like Just the landscape. So 2 crews maintenance, 1 crew landscape. And I, yeah, don't want to add another crew to this location kind of yet. Like you said, profit mode and not growing bigger for sure.

And right now, is he involved at all in maintenance or pretty much exclusively on the landscape side?

Only landscape. And he's kind of just running the landscape. I'm kind of doing all sales. I don't really have— I don't have anybody in admin, so I'm kind of doing admin as well, um, which I know you're, you're going to tell me like I need to get someone in admin for sure. So he's just doing landscape maintenance. I'm kind of dealing with it. And I mean, the maintenance goes like, there's not really much to do, obviously. I mean, if something breaks or whatever else, I mean, I'll go out there and get on a mower, make sure they're good. But for the most part, it kind of runs itself. I have 2 foremen doing that. So they're kind of just— when I say foreman, they're kind of just running it through, making sure everything's done right. But as far as— it doesn't really take much for the maintenance to oversee. As far as obviously landscape, there's a lot more involved with materials and everything else, obviously, and just get everything scheduled. So he hasn't had anything to do with the maintenance crews.

And how many technicians total do you have? So outside of you and him, how many technicians are there?

Um, 7. So it's 2 maintenance, 2 maintenance, and then 3 on the landscape, including him. So then me would be—

what is that?

8. Yeah.

Yeah, that's solid.

Okay, cool.

Yeah.

So I do believe he can run this as a GM. I think my biggest concern is the sales side on landscape. Do you think he can sell the landscape jobs?

Yeah, which he hasn't done yet.

Okay.

I think he can for sure. I think he can. Yeah, I mean, whenever he's talking to customers just about like a job or whatever else, I mean, like there's been a lot of like upsell opportunities that he's already like taken and Google reviews are obviously huge and like he's gotten a crapload of Google reviews this year. So I think he definitely like can talk to customers well and can do it. Has he like went out and worked with quotes on me yet? No, which I'm like, I'm thinking I need to start doing. And obviously I don't want to just throw them and be like, all right, your new job is to sell. Like, you know what I mean? That's what I'm kind of thinking. Like 30, 60, 90 day. Like, what would the process be if like you were in my shoes just to, you know, not just throw them out there and if it works, it works. If it doesn't, it doesn't. You know what I mean? So he has not sold yet, but I am confident that he can, like obviously with some time.

Yep. So before you even do a 30, 60, 90 for him, which is basically 30, 60, 90 is he does it with you, you do it with him, and then he's on his own. Like that's the 30, 60, 90. Before you even start that though, I really want a 30-60-90 for the overall business to get it ready to actually do this. And so the, like—

Okay.

There are 3 levers I would be pulling before I even pull him in. The first is simplification. And that is, I want to ask yourself which jobs when it comes to landscaping are the hardest to bid, the ones that you know Every time you give him, like, you're kind of going to get pulled into it. Like, strip those out. Because before I even bring him into training around sales for projects, I need to make sure I've simplified the 20% of jobs that cause 80% of the headache. And so I don't even want to train him on those.

Yeah.

Like, it just, it makes the training process annoying. They don't like it. They feel like a failure because, like, it's just a tough thing to learn. So I would first be looking at, okay, what are the 10 services we do in landscape installs? Cut 2 to 3 of them that you know are just always one-off, or maybe you do them once every 3, 4 months. And so you're not even going to get one of them underneath your belt with him under in the 30-60-90 that you do with him. I just want them removed. And I do believe that if you just—

I kind of actually did that like this year.

Okay, very good.

Like last year we were doing like some walls and drainage and everything else. And like, yeah, I mean, like you said, I mean, I was at every single one of those. So we're not taking on like any of that. So right now, I mean, when I say landscape, I mean, it's cleanups, it's mulch, it's like grading. Like, it's very— like, he can do all of it and like it's not anything super, super complicated.

Yeah.

So I mean, for— I would say the most complicated thing is we're having like a lot of new yard installs going, like new construction builds, and we're doing some of those. I would say that that would be the only thing that's kind of like iffy. I mean, it's, it's not hard, it's just obviously like bigger scale with grading and landscape. But again, I mean, it's just beds and dirt, you know what I mean? So it's not like— but no, I did, I did take out everything else. So I would say that's like the only thing that might be like on the chopping block. But everything else is pretty, pretty freaking simple. So, okay.

And in terms, in terms of how far are you booked out with projects right now?

Like 6 weeks, probably. Okay, give or take. It was a little bit more. Summer slowed down a little bit.

But are you spending much on marketing?

Nothing now. Okay, just website.

Okay, fantastic. So after simplification, which it sounds like you've already done, that's why you've kind of like the revenue is not like skyrocketing right now. That's great. Then I'd be looking at price. And I don't need you to like raise prices a ton, but I'd be seeing if I can optimize it.

Yeah.

To be able to squeeze out enough to cover admin. Because if you need to go get someone to work for you part-time to cover all the admin work that you're doing, 'cause I'm trying to do 2 things, right? I'm trying to make his role easier for him to step into, and I'm trying to make sure you have enough time to go start this next location. And so you've done the simplification part. The next thing I'm trying to do is optimize price Because right now you only need to increase prices by about 5% in order to be able to cover your admin person.

Yeah.

If you're, if you're making $100,000, that's easy.

Yeah.

Like you could literally, you could literally push a button, raise everything by 5%, probably not hurt your bottom line or like at all, and go hire an admin person and pay them a few thousand bucks a month to work part-time doing emails, phone calls, payroll, all the rest of it.

Yeah.

And now, now if you do—

Okay.

That makes sense for sure. And I mean, I hadn't even like, I know. Go ahead.

Sorry.

I was gonna say, if you do those things, then, then I think you're in a really good spot. Because now when you're training him, you're not worried about admin throughout the day. You're not worried about the price of that admin person. It's all been covered. And you can just focus on, okay, the, the simple services that we are going to do, I'm going to make sure they're really, really good at. And I don't have to worry about admin throughout the day.

Then it would just be me and him basically selling, would you say? And like making sure like operations-wise, like, I mean, I think he's like fine with that. When I say operations, just like making sure the jobs are going smoothly. So like Evan taking off the plate. So then like I'm just looking at like, like my job, I guess my role versus his role next year. Is it just like me and him selling and like he's kind of— or where would you like see me to fit in?

I guess.

When are you trying to make sure the next location—

when do you, when do you want to start the second location? Next year?

It'd probably be like next spring.

Okay, so my hope is that by that time you can not be at this location. And to do that is going to require all these things and getting him trained up, etc. And we'll talk about his 30, 60, 90 in a second. But the reason is because I want you fully focused on sales when you go to that next location. Like, you're just going to go there and just be able to scale the thing up because finding that person that will do that for you, like start that location from zero, very hard to find. You're going to be that person. But in order to be able to have your time and attention over there, Yeah. I need admin taken off your plate. I need him to know the sales process like the back of his hand and be able to handle all of operations. And so this is quite, quite the load you're putting on him. And I think it's possible if you have admin dialed in by then and if you have completely simplified sales for him to be able to handle it because he's not going to be as good at sales as you are.

Yeah.

And so his—

and I probably shouldn't even need to start that like this year. So we're not just like next spring, oh, here you go. Like, now you're just set. Like, I should probably start doing some of that like this.

Yep.

Yeah, later summer, fall.

So what I would do—

And then, and we can even like recoup in the winter and then kind of what went good, what went bad and—

Yeah, if we're confident that the only thing that he's going to really struggle with or like the new task he has to take on is sales of projects, I would just change your schedule. Once you've handled handoff admin, change your daily schedule to be where in the afternoon from 2 to 5 is when you do all your sales estimates. And then he needs to get off of his job sites and come be with you for those few hours. And so you're going to take a little bit of a financial hit—

Mm-hmm.

For the month or two this summer and fall when he's getting off early and just literally going to shadow you doing the estimates. And then once he's confident enough, you're like, okay, great, we're swapping roles. I'm going to follow you. You're still going to get off at 2 o'clock, but now you're doing the estimate and I will just be along for the ride. And after each estimate, we'll go over what you did well and what you didn't do so well. I'm going to record them. So you're going to get like one of those little Osmo things that stick onto your chest. or even the glasses, record the estimate and then watch it back with him. And so you have this really, really nice thing. You have like 8 to 9, no, like 9 months before you need to be outta the business. And so the first thing is like delegate admin.

Yeah.

Then I'm gonna take a very slow role of, you know, him following me, then me following him. And then once, once you've done this role-playing stuff enough, which you're following him and you're watching the game tape, you're, you're going over what worked and what didn't work well in the sales call. That's when, you know, you'll be very confident in his abilities.

When you say follow me, like follow him, I know you said like the recording stuff. I mean, in the beginning, like, should both of us physically go to the customer? Or do you think like I should just like record everything I do and then we watch it back? Then I'll like 2 people like on the job saying, oh, like this is a new guy I'm training them. Like as a, like from a customer's perspective, should we both physically be there? Or do you think we should just like each record it and then we kind of work through it that way?

Oh, you just 100% say he's my apprentice. We're working together on the project.

Yeah, okay, we just bring him in first, yeah.

Yeah, like there's nothing to replace, 'cause like otherwise him watching your recordings or you giving instruction like a training session for him on how to do estimates, very hard for him to feel the same nerves that it is when you're in front of a customer and they're asking you a question about a very specific thing.

Yeah, yeah, yeah, okay.

And then you're going to find over the course of time when you get back in the vehicle, he's going to be picking up on things, etc. And then after 30 days, you determine, hey, after 30 days, You're doing it and I'm going to be watching. And so that way he takes the training.

Then we talk about it after. Exactly.

Yep.

Okay, that makes sense. That's what I thought. I just want to make sure. Um, okay, so I mean, yeah, for sure starting that this year just so, yeah, he's not getting thrown to the wolves next year. Um, which I think is still good. As far as— I guess one question, obviously I can just figure this out, but we're on like full P3P, like good. If he's getting off early, I guess like I mean, I can figure it out, but as far as like the other guys go, I'm just trying to think like how we can like still make sure like, or no, I guess that, that's not a big deal. As far as pay goes, like for him, obviously like it's not like budget hours or whatever else like during those times. So do you think I should just pay him like a set? Like how, what, what should I, what should pay be as far as like the training goes? Like a set, like per quote you'll get this much for training or how, how should that work? 'Cause right now it's like all P for P.

Mm-hmm.

And all we care about is like budget hours and everything else. But obviously that's different when we're outta the field and doing So how do you think pay should be structured?

I would have the conversation with him about what you want to happen over the next 9 months and just be very clear that, hey, I understand this is going to impact your P4P. What do you think is a fair hourly rate that you would be excited about that after that 2 PM rolls around and you're with me, what do you want to be paid per hour? And I would make sure it's on the top end of his P4P. So if he's been making between, let's just say, $20 and $30 an hour, I'm going to be trying to probably push that $27, $28 to make sure he's looking forward to that time in the afternoon and not resenting it.

Not like, yeah, oh no, here we go, like I'm making no money.

Yeah, exactly.

Um, but you think just hourly, obviously, because it's obviously very hard to— like one call could take 10 minutes, another call could be an hour. Like, so you think just hourly during that time?

Yeah, because once you set him up, once he's running a $1.2 million location as GM, he's gonna have a base salary. And so I need him to get out— I need to retrain his brain a little bit on like, it's not all about just getting things done. Now I need to be efficient with how I schedule my my estimates at the end of the day. I need to be scared. I need to be thinking about how I set up my team so they can work the last 2 to 3 hours of the day and close out the job. He's going to have to think about all this stuff. And so I would just make it hourly, make it simple, make it high enough of a base pay, use it as a manual adjustment. So if you work 3 hours and it's $28 a pop, that's $54 that he's going to get added to his base pay as a payroll bonus. It's not white, it can't get removed.

Yeah.

Have him opt into that. Like, he needs to be excited about it and just have that conversation with him and be like, hey, once this is all done and I've started the second location, you're taking over full-time. Here's what your salary is going to be. But in the meantime, you're going to be kind of between jobs and learning sales with me. And so we need to figure out what your hourly rate is going to be when you're with me. And I want you to be excited about it.

Yeah.

Yeah.

Okay.

That makes sense. That's good. I know you're saying like 30, 60, 90 for that. I think we're already good with that for him. And then next year, just put on a full-time, get the second location. I mean, I'm thinking kind of same things, very simple, obviously services. We're just very similar location. My house is kind of right in the middle of the 2 service areas, kind of. So I mean, it's not like we're going hours away or anything, very close. So you think just selling that and just getting that started? Because obviously, new location, like I'm going to obviously basically start with zero customers. So you think that's like just full time for me then next, next spring after this is kind of handed off to him?

And the hardest part, honestly, for you is going to be not needed at the first location. That's the hardest part because there's going to be this weird few weeks when you're starting the first location and you're like trying to like do marketing. You're getting like a lead or 2 a day. Your first location is just crushing. Like it's busy. Your guy's going to— your general manager is going to be having some problems. You're going to be tempted to jump back in. But I would just say the same way that I just talked about with the sales, I need to do the same thing with admin now. Then you can do it with sales. So that way when you start your next location, you're going to feel a few months of like, I should be helping them, I should be jumping back in. And you got to like avoid that because you're just going to handicap them and they won't take ownership of those roles if you're constantly jumping back in. And furthermore, even like early next spring as things start to pick up, you're going to want to help. You're going to feel like useless for a few months. Before you start the new location.

Yeah.

Okay.

But just, yeah, stay out because obviously they're not learning if I'm just taking over everything.

Yeah, they're learning.

They're learning. Like, quote unquote, slower.

Yeah, 100%. Because they're going to learn that you step in every time there's a problem versus here's the training, here's the 30-60-90, and then you're done. Like, you're off and we will talk once a week. We'll be on this cadence. Here's your metrics. Here's your bonuses. Here's your incentives. But as soon as you step back in, because you're on your perspective, you're just bored. But from their perspective, every time I have a problem, he steps back in and solves it like the genius.

Yeah. Okay, that makes sense. Yeah, I think that was the main thing. I don't know, do you think of anything else that'd be useful as far as like that goes? I mean, that's like the majority of it.

The unsexy part is going to be getting the admin off your plate, right? And because that part you've juggled yourself. And so figuring out like what's the part-time cadence going to be? What are the tasks you need them to complete? What are the videos you're going to record for that admin person? What do you need to prioritize? What are the 30 things you're currently doing in admin? Like everything from running payroll to approving automations to checking the inbox to sending out blast texts. Whatever you're doing has got to be systematized for the admin person. And I would spend all of your time and discretionary effort once he's good to go, refining your admin so that he never gets dragged into admin. That's my concern because that's what you've done in the past. You've done sales and admin. Is a lot of times it's very difficult to now hand sales off because you've always done admin. I need— that's why I need you to like separate admin first, get it off of your plate so that you're just training him on sales because you don't want him to also have to learn admin. It's good. That usually falls apart.

I know obviously sales and admin should be kind of last question. You're good. Get out of here. But I know obviously sales and admin obviously keep separate. But as far as like landscaping jobs go, and if you're given— obviously as a sales guy, you write up the quote and everything else, you send it off. Say they have questions about that and they want to talk Well, in that case, I just say me, but then an admin person is the one answering the phone and answering the emails. Like, how should that work? Because the admin person's probably not going to know every little thing about like the landscape, so they want to talk to the guy that they were talking to. Like, how should that work without like stepping on toes? Like, should the admin just like say, hey, like you need to answer this one email, or like how should that work?

Yeah, this handoff forces systematization because in the past, because you did both roles, you, without knowing it, get sloppy on the sales side.

Yeah, I could see that.

So, for example, in the past, you'd just maybe make a shorter estimate description knowing that if they have any questions, they'll call me and I'll clarify it with them. Whereas now, you might say, okay, it's going to be difficult for this admin person. They're not going to be able to answer your questions. They're literally just going to be like, okay, I'll get back to the estimator and I'll get back to you if the customer calls them. What you're going to want to do now as an estimator is ask yourself, how do I prevent that from happening? And one of those things might be taking a video for the customer that is also shared with the crew when they get to the project. But now the customer has notes and a video.

We do that for every project.

Do you share with the customer?

I think the other thing is like, so we share, I take video every single quote and then that's given to the crew. I don't share it with the customer. It's just kind of like, oh, I guess the bigger thing is like changes. Like say, hey, we're going to install this bed. And then now, now like it's, this is exactly what we do. And then obviously, you know, customers like obviously, oh, I only want 3 shrubs instead of this. So not like, There's just changes in the estimate, not like a whole new whatever, you know what I'm saying? Like, how would that go?

Yeah, so do you use HomeWorks or what software are you using?

Yeah, HomeWorks, yep.

So we just do it as a to-do and then that to-do is going to trigger a text message to the estimator. And so the admin person just knows if there's a work order change, they do WOC and then they say this customer is wanting this change, they can assign that to-do to a customer. So then I just get a text message as the salesperson saying, oh, so-and-so needs a work order change, here's what they need. you can bring the merge tag of the notes in directly and immediately get back to the admin person who would then convey that to the customer. Now, that is an extra step, and so you're always looking for how do I prevent those steps. And a lot of times that, like, a video or better explanation inside the estimate can prevent those. But to your point, work order changes are going to happen no matter what. It doesn't matter how much they— like, they're going to change their mind and stuff, right?

Yeah.

And so I would just make it, okay, if you get a call or an email, Here's what you do. You create a to-do, you assign it to the estimator, and then I have an automation that's going to fire that off to the estimator. They're going to know what they need. It's going to go on their dispatch board, and then they can either make notes back to the admin under dispatch notes, or they can record a video that gets sent to the, the customer, or they can say, hey, yes, change that, take $1,000 off, add 4 bushes, whatever it might be. If you have a home service business and you're doing over $1 million in annual revenue or $80,000 per month, I would like to invite you to join Home Service Boardroom. That's where all these callers are coming from, and that's just one part of what is valuable inside of the community. We also have a monthly course, we have a monthly Q&A, and you're able to be part of a community of other home service businesses that are already doing over $1 million in annual revenue and trying to get to $10 million. The thing that gets you to $1 million is working hard, figuring out how to advertise, figure out how to hire your first few employees. But what gets you to $10 million is going to be the skill of leadership. How to be able to manage, how do you attract great talent, how to be able to lead your team. That's what gets you to $10 million, and that's our focus inside of Home Service Boardroom. So if that's of interest to you, click the link down in the description and you can apply today to join. And we have 12 months. Every single month has a challenge and we tackle one topic. And then we hold each other accountable to making sure we actually deliver and execute on that specific topic. So if that's of interest to you, click the link in the description. I look forward to seeing you inside the boardroom.

We'll be right around the million-dollar mark this year, and we need help with franchising. I really liked the first caller and how it went down. You know, talk about getting the first location going. We only have one location right now. I'm wondering how many locations you get established before you franchise. You mentioned in some prior talks about needing to justify the fees and whatnot, and wasn't sure a little bit more in detail what all that entails in trying to get the ball rolling with franchising, some of the steps that were taken along the way, and for you to have success in opening, I think it's 200+ locations now.

Yeah, totally. So what's your goal in franchising? Just so I can Clearly articulate the strategy?

Yeah, great question. Yeah, so our goal is, um, for 50 locations. Um, so it's, yeah, that we want to start there. But I think it's the first step is to start with getting the first location right, getting the GM implemented, you know, stepping away from sales and all those things that were talked about on the first call. So I don't want to waste your time to go back over all those things. But, you know, next steps after you get the GM, you, you know, you get that one location going, you maybe start a second or third location? You know, what are the, you know, the further steps along the way that you took? You know, how do you scale it? Maybe some insights on some of the different steps you took to succeed in getting to 200. Obviously, our goal is only 50, but— Right.

So the first thing I would say is what I did is I would recommend to everyone else, and that is I would not franchise until I was pretty confident I could get 8 to 10 locations. Because I see so many people franchise, they get like one location the first year, another 2 or 3 the next year, one the next year, and then it just fizzles out because you have no momentum. And because let's just say you're taking 5% of revenue from a new location. If you get 10 locations, you're still only making 50% of revenue compared to your $1 million location. And so it's very, very hard to focus on something when you have 1, 2 locations that literally are gonna be $50,000 to $100,000 of annual revenue, and yet they will still demand or require the same attention and support that you, they will expect at 100 locations. And so I would highly recommend, and this is like kind of the 2.0 part of your question before we jump into the, the, the— the ABCs, but like, I would highly recommend building a following, a community, a social media group to where you would kind of know you have 10 people that are interested in joining a franchise. Now, you cannot advertise that you are franchising and say, hey, who wants to buy my franchise if I franchise? You actually can't say that. But what you can do is like, hey, I have considered franchising and I'm, I'm just, there's a survey. Would you be interested in joining the brand? That would be like more of just like a casual survey. Obviously, survey versus actually signing a franchise agreement and going through all the legal loopholes, very different. So I would not be like, oh, 10 people said they're going to. I would maybe look for 20 or 30 people that said, yes, I would be interested in joining this brand if you were to franchise. Just be very careful because from a legal perspective, you cannot advertise a franchise until you have finished all the legal documents. I would just not worry about the fran— like everyone gets hung up on the legal documents and getting like the franchise agreement and the operations manual and the FDD. That is literally a problem that can be solved with $100,000 in 6 to 8 weeks. I wouldn't worry about that.

Okay.

I would be worrying about what can I do to provide value to somebody that has an existing or a new business that is going to be hard for them to replicate or do on their own. And whether that be web building, a website, marketing collateral, getting them leads, running ads for them, coaching, there has to be a value proposition. And for those first 10 locations, they're the hardest ones to convince because you have no track record. And they don't have anyone to talk to.

Got it. That was great. Appreciate you answering that in a nutshell. That was, that was awesome.

Like a lot of times people will think that if you get your FDD, your franchise disclosure documents, your operations manual and your franchise agreement, that like people are going to be lining up, but they— it doesn't happen that way. Like very, very few franchises ever get past 20 locations, let alone 100 locations where most of the time that's where they become profitable. And so I would just have a very, very clear path to at least 10 locations before I launch. And to do that, you're probably going to want to create content, create a community, share what you're doing, share all the secrets, all the secret sauce, how you do your pricing, how you get leads, all of that that they would be getting as— because like the reason a franchisee is going to join you is because they see that what you're doing is working and they're like, oh, I could definitely build this myself. He's giving me the roadmap. I would rather just pay him and get the execution done. It gets done for me. I can save myself time. That's what a franchisee is buying ultimately, is this could— I could do this in 5 years, or I could just buy a part of the system and save myself 3 or 4 of those years and jump forward. And so you're basically giving them a ticket to jump a bunch of steps that otherwise they would have to figure out on their own. Now, when I—

I'm trying to note, but that all makes sense.

You're fine. When I say all of that, because that's kind of like more heady for you specifically, where does your head go? How can I make sure, like, If your goal is to get the first 10, where's your first few questions once I say that?

That's a— that was a good question.

Hmm.

I need to think about it. I don't want to hold my husband on silent, but— You're good for questions. Yeah, that's a really good question.

Yeah.

How to get the first 10? And it sounds like you gave them away. You know, you, you kind of, you know, you definitely practiced delayed gratification. You gave the first 10 away. You, you, you gained recognition, credibility in the community, you know, in the, in your area, you know, franchising, and then you kind of scaled from there. Do you recommend the same game plan, I suppose, like, you know, kind of giving the first 10 away, or do you have a way to be profitable while getting those first 10? I guess that'd be my question.

Like most franchises have private equity, they're going to spend a lot of money on brokers. So brokers are typically companies that are, you know, I'm interested in joining, starting a business, I go to a broker, And then they're going to tell me, here's the 5 franchises that we recommend for you. The broker usually gets between $10,000 and $30,000 to broker the deal between prospective franchisee and the franchisor. That being said, the franchisee is usually not going to sign up for a franchisor that's completely brand new if they're going through a broker. Usually they're going to a broker because they want to have established brands that they know have a predictable financial return. And so usually brokers won't even take you, or if they do, they're going to sell you on the dream of what they can do for you and then make you pay them outside of a commission. So I would never go that route. We have never sold via, via brokers. But to get over that, you're still going to have to sell and that's going to come from your content. And I would be very careful to think that any consultant that pitches you that they're going to get you leads, I would not listen to them at all. I went down that route at the beginning. It's— they're trash leads. We have not sold a single one from them ever. And don't worry about getting your legal docs. Getting legal docs is not going to get you leads. You need the leads and people, you know, people want to join your franchise. Then you'll get the legal docs and you'll have more confidence to spend extra and make sure the legal documents are solid. Like the person that's going to do it for $40 grand or $50 grand and go through some like Random templatized documents. You don't want to be doing that anyways. So go get the confidence that you're going to get 10 or 15 locations opened up pretty quick and then go spend $100,000 plus, get the right consultants, the right legal team. I can hook you up with my attorney group and like, that's easy. That's the easy part. Anyone will take your $100,000 and create franchise agreements for you. You got to go get the 10 people that are ready to go sign up. And the number one thing you can do is risk reversal for them. Because they have no confidence in your longevity. So my first 10 locations and every location afterwards, they can leave at any time. And so for these first 10 locations, their risk to joining was $5,000 to $10,000. Because if they gave me a management fee and then all of a sudden they didn't like me or they didn't like it, they didn't think I was doing a good job, they could leave with their customers. And so think about risk reversal. And we also allowed like 6 to 12 months of free, like no monthly fees for the first 10 locations. It was literally $5,000 to $10,000 of risk capital because they could leave at any time and they didn't have any monthly fees for the first 10 months. Now, I was in a very good, great position where my first location was spinning off $300,000 to $400,000 in distributions so I could float this boat. And that's where it comes back to what you said before, which is like, I'm glad you acknowledged like, hey, I'm still optimizing this thing and making it really profitable. Because if you do that well, then you can survive the couple first year or two where you're not making much money. Like our first year in franchising, I think we made $80,000 of revenue.

Yeah.

So like, that stinks. And it took 3 and a half, almost 4 years for the franchise to make more money than the one location that I had.

Wow.

So I would just— to your point—

Was it worth it? Would you do it over again?

Well, it would— it was worth it because my goal is I need the scale. I need 1,000 locations. If I did one by one by one by myself, I might be at 20 or 30 right now. But we're only at 200 because we've been able to do franchising. And I need that level of number of locations to have the impact that I want to have in the industry. If that's not of interest to you, then I would say optimize what you currently have. Do it once, twice, 3 times, and then you're like, okay, now I want to pass this along to someone else. I've refined the systems more. Then you can go franchise. But until this location can spit off so much cash. that you literally are doing franchising for a tax perspective, I would not touch it. I would optimize this first location, whether that be getting it to $3 million and making it $400,000 or $500,000 of annual profit. That's closer to like what I did for my first location, or start a second and a third location that all do $1 million.

Mm-hmm.

That again, spit off a bunch of cash. And instead of spending that money on real estate or trying to divest or do investments in the stock market, just take that $400,000 or $500,000 of free cash flow And float the first year or two of losses at the franchise, because that will happen if you're allowing risk reversal. You've brought the initial fee way down, so you're eating all legal costs, and then you're going to have to front the amount of money that is required to support the owners. You're going to have to go get someone to do coaching. You're going to have to get someone to build out website. You have to do someone pay someone to do SEO, and you're going to have to pay for all of that as if you had 100 locations, but you only got 10. But if you make that first location super profitable. or get 2 or 3 of them being really profitable, then you can float the franchise for the first 2 to 3 years, which is going to be required unless you get private equity and a big— or a big loan.

That was super valuable. Really appreciate you going in detail and explaining all that.

Means a lot.

Yeah, man. Well, hey, as you— as you're— I know, like, right now you've acknowledged, hey, I need to optimize the current thing. I'll give you an exact target to hit for now. It's like step 1. Step 1 is I want a quarter million to $250,000 of net free cash flow coming out of this location. Whether that be this one location, just optimizing it, you could definitely get there. That's 25% margin. Or starting a second location that does a million and spending a year or 2 building that up to be able to get $250,000 in net free cash flow. The reason is, is because you're going to lose $200K for the first 2 years doing franchising. At least, like minimum. I think I lost $480,000 the first year.

Is that why most people don't take that route then, due to the risk and not knowing that stuff, and you don't have enough cash? So you're saying, you know, get the first location in, you know, maybe get to $3 to $4 million, $250K net before you even entertain this idea of franchising. And, you know, it's, you know, there's a beast in itself. There's a lot of learning, there's a lot of money that's gonna be involved. Don't worry about the documentation. You know, get the 10 people that, you know, you think are gonna possibly buy, you know, buy, you know, invest in your, your brand. But, you know, get, get that, that first, get that cash flow going before you even entertain it.

Exactly.

It sounds to be like that's, that's super wise. Otherwise you could probably go bankrupt.

Yeah. Oh yeah. Like the, like the legal documents is kind of like equipment, right? It's kind of like, it's like, like your franchise agreement. It's kind of like going and buying a truck. If you want to go buy a truck, you can go down the street right now and buy one. No, there's no competitive advantage. What's hard is get customers. The same thing is true in franchising. Like, franchisees are hard to get. Like, winning their trust, showing your value, showing that there's not— there's less risk with you than doing it themselves. That's way harder than going out and getting legal docs. When you need your legal docs done, Derek, you give me a call. I'll give you my attorney's name and he will do it. Like, he's phenomenal. He's great, the best attorney we've ever had. And that is not the hard part though. The hard part is finding the franchisees, building up the brand, building the value proposition for them, making it clearly identifiable as to why joining your brand is better than doing it themselves. And the thing that we saw as we went through franchising is we started off with a whole bunch of people that wanted to get started with lawn care to where now the value proposition is strong enough to where a lot of it's actually people that have their existing business But they realize the value of swapping their brand. But at the beginning, you're probably gonna be speaking more to the entry-level person that's just getting started, and that's why you have to go so cheap. Now, to your point, yes, you could do this one way, which is the cash flow way, which in my opinion is the most— is the best way. The alternative, which some people do, is they'll go—

Mm-hmm.

They'll go out and get private equity involved, but usually you're going to require connections or collateral. of some sort or experience in the industry to where they would actually back you. Because this sunk cost in those first couple of years is either coming out of your pocket, the business's distributions, or private equity.

Perfect. And it sounds like you recommend trying to do it yourself, have the cash flow behind you rather than getting the private equity.

Then I do that mostly because I care about this industry and I don't want to see anyone else bring private equity into franchising because I see what it's done to the franchisees. But if you can convince someone, private equity, to give you money, awesome. They didn't start knocking on my door until I had 50 locations. Once I got 50, that's when all of a sudden you have proof of concept. And yeah, they were ready to start giving me money and I already saw the path to 100 where we could actually be profitable. And that's when we were— we started being profitable, our 100 locations. But that's because we have the flat fee model. Everyone told me not to do it and they did it. They told me that because they knew I wouldn't be profitable until I got 100 locations. And they were right, and it stunk for the first few years. And so you just got to ask yourself, like, okay, if you're only doing 50 locations, a flat fee model is probably not going to work. You're going to have to take a royalty, and then you're going to have to have certain requirements on how much they have to spend on advertising so that you can make sure that they have enough revenue. And so that's a perverse incentive that you're going to have to be very open with them about, but you've got to show the value that you offer for that. For example, if you can get a lead For $30 and they can't get a lead for under $100, then all of a sudden paying you 5% or 6% doesn't sound so bad. And if it's— you're talking to the smaller operators just getting started at the very beginning, their 5% of $100 grand is not very much. And so it's pretty easy to say like, hey, I will give you this secret sauce that I've showed how to do it, but I will do it for you now. I will do the execution part. If you join the franchise.

There you go.

That makes sense.

So yeah, if I was you, I would do some follow-up questions. Yeah, go ahead.

Go ahead.

Yeah, we got, we got, we got 9 more minutes.

I might send some follow-up questions in the chat. I don't want to, uh, to hold you up, so I might send some more in the chat. But if you have more info, I'd love to keep hearing it.

Yeah, go ahead. We got 9 more minutes and you're the last caller, so go for it.

No, you're good. Um, but yeah, so you were mentioning, I think you said something along the lines of Justifying $10K to $20K, um, the fee. So this was from like a few days ago. You mentioned, oh, you need to be able to justify the fee. Were you, um, referring to the $10K to $20K fee, um, what's it called, that, that it takes to, to, you know, start the location or franchise? Is that what you're talking about? And you need to say, hey, here's the value by joining us. You know, it's $10K to $20K fee, and, and you need to explain or share enough value that justifies them spending that $10K to $20K is out otherwise.

Yeah, like anytime you have an initial franchise fee, you've got to show that you are making up for that in training and then brand value. So for example, if they join your franchise and go to the first page of Google in 2 months instead of 2 years, that's valuable. They're buying time. Anytime you join a franchise, like for example Anytime Fitness, it's like $40,000 or $50,000 now. It's because When you join the franchise, they tell you what color to paint everything. They tell you all the equipment you should buy. They give you preferred vendor relationships where you save more than $40,000 when you've got to buy $300,000 worth of equipment because they're preferred vendors. So if you start hooking things up to where you can make sense of asking for $10,000, $20,000, $30,000, that's when you can actually start selling with confidence. If you can't and you don't have the preferred vendors, you don't have the systems, you don't have the website, the brand awareness, you don't have the marketing collateral, and you're expecting them to to sign a 10-year agreement that literally unless they die, they're going to have to keep paying you. That's hard to sell. And so just giving them as much risk reversal as possible is going to be your advantage at the beginning. And that's why we just said, hey, look, you can leave at any time. And then we reduce the initial fees for the first 6 months and then 12 months because our goal is that by the time they hit where they're actually paying their full monthly fees, it's already like, oh, this is mind-blowingly above the value of the monthly fee. I got to stay in. Now it's my job to make sure that in that year, year and a half, I am juicing their support and making sure that they've grown their business to the point where they're like, it would be crazy to leave.

Okay, sweet.

No, thanks for running that down. I guess to pivot to, I guess, a couple other questions if you're down is the P4P is something that's been really big throughout multiple industries, something that people have implemented. What, what has been your best way of implementing that? Do you have a software? How do you break things down? What's maybe a good way to dumb it down for, you know, someone that's not super familiar with P4P?

Yeah, is this for your technicians not understanding it, or have you just not really explored it too much?

Yeah, so we've implemented pay for performance in a minor way. We do end of— we do once a month evals with each guy on the team. If they score an A, then they get their full incentive. If they had some issues where they had a callback or they showed up late or they weren't in uniform and they're at a B, then it'll impact their performance. So it's scaled on, I have to look back, if there's safety, performance, efficiency, professionalism, and a bunch of these different things that it's all weighed in. And so depending how they do in safety and all those different things, and depending on their score, they may or may not get their full incentive that month. And our goal is to, you know, for everybody to get their full incentive. And if they're not, then we need to sit down and say, hey, are they really the right fit for this, you know, our company? They're not an A player, they're B. You might have a B that's, you know, an apprentice that's first starting off, but if they don't work their way up to an A within, you know, maybe a couple months, you know, then, you know, maybe they're not the right fit for the company. But so we've done some minor, you know, paid-for-performance type things, but really looking to dial that in, get more strategic with it. I think it might require, you know, maybe a software that that tracks the numbers, the metrics, analytics, you name it, and wasn't sure how we walk before we run on the pay for performance stuff. It seems a little bit complex in how it's done and wasn't sure how do we better introduce it outside of just doing the 1-month eval.

Yeah. The way you're doing it right now is theoretically pay for performance. The performance is you have just layered in other elements of quality, professionalism, uniforms, attendance. You've kind of bundled a lot of things into what performance is. P4P in how we do it in like p4psoftware.com is strictly looking at their efficiency. Meaning if you did good work and you did it fast and the customer's happy, you make more money. Now there's yellow slips, but yellow slips inherently mean they're going and fixing the job without getting paid for it. So it brings their dollars they earn down. But what you're doing right now, the reason I did not use this path when I wanted to do P4P The way you do it is it's too— if you asked your guys right now, how much did you make on P4P, or how much did you make on pay for performance last month, or are you going to make it this month? It'd be hard for them to quantify when there's all these variables, and it's hard for them to change behavior because there's so many things that are impacting it.

Mm-hmm.

My attendance, my uniform, my professionalism, my safety, all of these things, and those things are all important. The thing is, when you make it one number and one thing they're getting tracked on, it's easier for them to wrap their head around. For example, when I say you get 30% of every dollar you make for the business, and they, they know that today they made $1,000, they know today they made $300 of base pay. I'm sorry, $300 on P4P. And they know that their base pay would usually be, let's just call it $20 an hour, $200. So they made an extra $100 today. Because they work their butt off. And usually the, the closer you can get compensation to performance and the reward to performance, the faster that feedback loop is, the more reinforcing of the behavior. And so if you're waiting a whole month to dock someone for a tardy that happened 25 days ago, they forgot about them being late. They forgot about that safety breach. They forgot about that customer. Whereas when every single day they get a report of how much they made on base pay versus P4P, And what that difference was, that starts to really motivate them. And so the only way, the only real difference is we only look at efficiency score and the quality element is brought into with yellow slips. That's a callback, as well as the fact that eventually if you get enough yellow slips, you get kicked off the team. And so it's more quantifiable and more measurable for them versus more of an ambiguity around quality and all these other factors that might tie into this grade that again feels very arbitrary if I'm an employee versus I know that today that because I worked hard I made an extra $80. This week I made an extra $650 because I've— I kicked butt. Okay, I hit base pay last week because I had a yellow slip, I had to go back and fix the job for half the day, ruined my base pay, ruined my P4P for the week. Like that close, tight feedback loop is the advantage of using it in a more singular way around efficiency.

That was awesome. So yeah, it sounds like, yeah, we might be doing 10 things. You guys focused on one thing and you said like, you know, example, 30% of $1. And you guys are just— you guys are strictly focusing on efficiency and with, you know, with the exception of some quality with the yellow slips. And that's all you guys track it. So how do you guys track it? And You know, get all those numbers together on a daily basis through a software then?

Yeah, Homework syncs up with P4P software, so it brings in all their revenue, brings in their hourly rate, their clock-in times. They can see live while they're completing their jobs throughout the day on a thermometer of like, as they complete jobs, it fills in how much they're making per hour. So they start to notice, oh, like I complete my first few jobs of the day and I'm making like, okay, money. But it's when I'm completing jobs at the end of the day My hourly rate starts jumping up because I've been way more efficient with less drive time. And so they start thinking more like a business owner. They start getting into their truck and like, oh man, I only have to do these 6 jobs and then I'm gonna make X amount today. Fantastic, let's go. Like, it just gets more of a mindset of an owner. And that is when you get in a truck, you know exactly how many jobs, you know how much revenue you're gonna make, you know which jobs you make more money on. You're constantly looking for areas To improve the, the route. You're looking for areas to upsell the customer, get reviews. And so you bake those things into P4P. So for example, if they get an upsell, $50. If they get a Google review, $50. You start just baking that into P4P. So it's like, hey, number one, you gotta be efficient. And then we're gonna make sure that you are absolutely doing a good quality job. If you don't, you get docked and/or you're going to lose your job after X amount of yellow slips per month. Right, so like if you have a threshold of number of mistakes or damage cases that happen, you can just like, that person you want out of the team. And honestly, your team will not want that person around because it's impacting their paycheck. What you're currently doing is very individualized, which is like, if you show up on time, if you get your uniform. And so what this can cause is low performers to fly under the radar, but because they're doing all these other things that you've baked into the system, They kind of skate by. When you just say, hey, you guys got to be efficient, and that— now guess what? My paycheck is affected by someone else's performance. So I'm going to very quickly rat out and smoke out low performers if it's affecting my paycheck because you're slacking off all day long.

That makes sense. And what's the P4P software? Is there a name for it? Is that all?

Yeah, just p4psoftware.com. And then on there, there's a free course and you can try it out for a month for free. So you could just like watch the course. It'll answer a lot of all the little questions like, what about shop time? What about maintenance? What about if someone else has to go back and fix someone's mistake? All that gets answered in the course. It's free. And then you get a free month of using the software. And I do, even if you don't implement it right away, just use that month to run the numbers and see what, what's going on in the business. Because you'll really quickly understand that like, oh, so-and-so is getting paid the same amount as someone else, but making twice as much money for the business. And so just running the numbers in P4P a lot of times will start showing a lot of really cool stuff around efficiencies of the crew.

And do your franchises use HomeWorks, or are they required to? Do all of them use it? How does that work? They're not— works with the P4P software?

Yeah, they're not required to use HomeWorks, but Command Center only uses HomeWorks because like we have to have one system, and so pretty much all of them use it. Um, but P4P software that was actually built originally for Augusta. And so they got all access to that for free. But again, you get the first month free. I would try it out, see if it's even working. A lot of times, like, if you have really simple services, you can just take principles of P4P and probably make it inside an Excel spreadsheet. It's when— where it gets complicated is when you have like 3 people on a crew, 1 person left halfway throughout the day and started a one-time project. And then like, that's when having the sync with HomeWorks is really nice because it just knows where the employees are at, how much revenue they made. They start— it starts starts to just pull that data in. But if you're really simple and you keep your crews completely on like the same route all the time, there's no mixing and matching, you might be able to get away with just doing spreadsheets. And I talk about that in the course.

Um, so I guess the reason why I'm asking these questions is we're currently using Jobber. Um, I don't know if Jobber syncs with P4P software. Initially we talked about, hey, one large location at $10 mil, but if the, if the franchise, you know, steps to get to the target of 50 locations is Hey, you need to get to a 3 million location. If HomeWorks can get us to 3 million, maybe it does make sense to implement HomeWorks with P4P software to get us to the 3 million and then build locations from then. So that's kind of trying to discern what's the best software to have to implement the P4P and to create the foundation to ultimately grow off of. And so, yeah, that's why I was asking, what are the different franchisees that are using the HomeWorks and all that kind of stuff?

Yeah, and like, I don't— I wouldn't switch over, you know, switch my CRM, which is, I think, the most important software for the business. I wouldn't switch that over just one thing. But if you did P4P, and then you start to— you'd be able to calculate, okay, how much time am I spending every day looking through my budget hours, which I think in Jobber you have to use custom fields to be able to put your budget hours, then just add those up at the end of each day. Like, there's a manual task, but honestly, it's going to take you like maybe 1 minute per day per employee. And so is that really worth switching software? I don't think at the beginning, but as you begin to scale, maybe it does. But I wouldn't switch over just that one thing. Like, there should be, there should be other reasons as to why you're switching a CRM. It's just so, so important for the business.

Really appreciate your honesty with that. I can definitely, um, would love to hear more about that and, you know, homeworks and maybe how you built that, um, at a later date. There's a basic question that came to mind was With, uh, with checks and credit cards. Obviously credit card is ideal, you know, it automatically enters into the system. You don't have to have someone enter it, you know, you get payment quickly. But you have to pay that processing fee of, you know, maybe 3%. And sometimes for larger jobs, that can be a turnoff for people. And I wasn't sure if you guys completely nixed the idea of checks and cash and you guys only do ACH and check and card. Um, wasn't sure how you guys handled processing and You know, if you have any recommendations on, hey, get rid of checks or keep them, you know, because that hasn't been a thing for sales in the past. Like, hey, you know, you know, here's what our price is, but hey, and we default to card. We're like, you know, if someone's really trying to push us or, hey, we got a competitor, this and that, our way of being able to work with them is, hey, what if we, you know, take out processing fee, pay by check, save you X amount of dollars? And they're like, ah, you know, appreciate that they're trying to work with me. Let's do that. And so then we've been defaulting to check and I'm not a big fan of the check. Wasn't sure your thoughts.

I'm not a huge fan of check either because it puts more stress on my admin team and I have to create a whole system around taking things to the bank and like getting the mail. I also take way longer to get my money. So if instead of 2 days, it takes me 2 weeks, 3 weeks, like cash flow starts getting hurt. So like personally, I only want credit cards. In terms of the hit, you can check a box and pass that fee along if you want to, to the customer. I don't do that. Other owners do, and they have no problem. They have literally no one bats an eye. I just personally look at it as more of a long-term brand play. It's a— I don't want that little mark against me. I just want to cover that. I want to make it as easy as possible for people to give me money. And so I eat the fee, and I'd rather raise my prices by 5 or 10% on the next increase than trying to get 2 or 3%. But I know a lot of owners check that box in HomeWorks and get no cancellations and people just roll with it. So it's a matter of just like, it's more of a brand play of like, are you going to charge fuel surcharges? Are you going to charge credit card processing fees? Are you going to start nickel and diming the customer or just have a premium product that makes it really easy for them to check out? You put a card on file, you never think about it again. And personally, that's the way I've gone. But it's not like there are hundreds, if not thousands of owners inside of HomeWorks that check one box And as soon as someone puts a card on file, it's charging 2.9%. And if you want to do that, that's fine.