I Told My Employees How Much $$ I Made

Hey everyone, it's Mike Andes and today we're talking about how you can open up your books and share all the numbers of your business with your team. Now, I talk a lot about this in my turnaround videos and some people are like, well, how and why would I want to open up the books to my employees, my frontline team members? Why would I want to share how much I'm spending on things, how much the business is making, how much we charge customers? Here's why. In my opinion, I think that in order for someone to think like an owner, they need two things. They need the information of an owner and they need the compensation of an owner. And a lot of people have figured out how to do bonuses, pay for performance, and comp plans to be able to pay people based upon their performance. If you haven't figured that part out, go to pppsoftware.com and there's free training on there how to implement the pay part of people thinking like an owner, which is the harder you work, the more money you make. The other part is what I see most business owners not doing, and that is giving all the information to their employees the same way that they do. The reason that you're so much more efficient and profitable and you care about the business so much is because you're paid like an owner and you know everything about the business. You know how much things cost, you know how much money you're making, you know where the profit really is. And, and that's why you're able to act like an owner. So if you're tired of your crew not working hard enough and you're always micromanaging because they're lazy and all these other things. Ask yourself if it's taking them 30, 40% longer to do the same job you're doing. Maybe it's because they're not the owner. And if you're not going to give them equity, you've got to give them two other things. Pay for performance, and you've got to give them open book management where you give them all the information. Now, the problem is that ultimately we want to be able to make more money in our business. And the way that I believe you do that is you get people to trust you. Why? Because I believe that if someone is hiding something from me, I will not trust them. And if I do not trust them, I am not going to work harder for them. And so if you want people to work harder for you, just work the logic backwards, okay? I want them to like me. If, if, if I want Them to like me, let's not hide things from them and let's share all the information inside the business. And if I do that, they'll probably like me more. And if given the choice, if you have a boss that you hate and a boss that you like, which one are you going to work harder for? Which one are you going to plan their demise versus actually figuring out how you can improve their business? That's ultimately what open book management comes down to. Will your employees trust you more if you share everything instead of hiding things from them? Yes. Yes. Will they? If they like you more, will they work harder for you and work in the best interest of the business? I believe the answer to that is yes. There will be a one off occasional time it'll be used against you. And for that reason, people will run away and start hiding information yet again from their employees. Now I want to bring up an example today. And yes, I brought a bunch of cash. Share an example of how I opened up the books for my team the very first time. And so we have all this cash here and why are we doing this? Well, this is what I did the very first time I opened up the books because I realized that my frontline team members probably didn't like math, didn't like seeing spreadsheets, and never saw a profit and loss statement in their life. So me just showing up and being like, hey, here's all the profit and loss statement, here's all the numbers, I'm going to open up the books. It would not mean very much to them. So this is what we did. I printed off the profit and loss statement here and I made sure that there was less than 20 categories represented on the P L. By the way, if you have 50, 60 categories in your profit and loss statement, reconcile them, put them together, categorize them a little better so it's simpler to read and understand not only for your employees, but for yourself. But what I did is I then took a big wad of cash just like this. I had a $1 bill for every $10,000 in the business, just like this is right here. Because at the time we were doing about $1.1 million in annual revenue. And like here is 110 $1 bills, okay? And so what I did is I said, hey guys, let's go through the profit and loss statement. Let's start with the very first line item which is our revenue. And that was a hundred $1.1 million. Every one of these $1 bills represents $10,000. So I said okay, that's what we earned for the year. That was our revenue, $1.1 million. Each of these representing $10,000. And then we started going through the profit and loss statement. The first one, let's just say, for example, was fuel. They go, all right, 1, 2, 3, 4. All right, $40,000. There's the fuel expense, and I give that to one person. All right, what's up the next one? Oh, equipment and maintenance. Okay, well, that's seven. Two, three, four, five, six. All right, that's equipment, maintenance. Okay, great. What's up next? Insurance. Okay, all right, that's $50,000. 1, 2, 3, 4, 5. All right, insurance. There you go. And I went through every single line item on the profit and loss statement, giving. Giving each line item to each person on the team. And of course, when it came to wages, it was literally like, okay, there's all of that, like, half of the money gone. Wages. And everyone's like, whoa. They just realized that almost half the revenue went out the door to wages every day, single year. And they, they, of course, when you say $1.1 million, like, whoa, that's a lot of money. And then by the end, I gave each line item to one team member inside of the meeting. And by the end, there's just a few dollars left over. At the time, I hadn't opened up my books. At the time, I hadn't instituted pay for performance. And so we were running very, very thin profit margins. I said, guys, this is the. This is the profit from the business. We work really hard every single year, and this is what we're left over with. This is what we got left. And I want to pay you more. I want to be able to compensate you better. I want to be able to offer health care benefits. I want to offer paid time off. I want to be able to do all of this for you. But ultimately, the business can't afford it. And so what can we do to get all this money that we passed out to the fuel and the insurance and the equipment maintenance and the wages? And how can we somehow get that back into the profit pile? And so what we did is, okay, put all the cash back. At the next team meeting, you're going to come back with an idea of how you can reduce and save money in your specific line item. So if your expense line item was fuel, you've got to call some ideas to save us on fuel. And if you're going to be insurance, how can we reduce our insurance premiums? And so this was really good exercise. It made it really, really easy for them to understand. Like, seeing things tangibly now at the next team meeting, it shocked me. They all came back with good ideas. We had over 15 really good ideas that came back, and there was a lot of them. One of them was, hey, let's keep fuel on site so that for small little bits of fuel, we don't have to go down to the gas station. Great. Another one was, let's put a spray bottle and a rag in every single truck, and everyone's responsible to wipe out their truck at the end of every single day, including the dashboard and the seats, so that we don't have to pay someone to clean out the trucks, usually on overtime. Furthermore, another one that they came up with was, hey, instead of us, Instead of us cleaning the trucks at the end of each day, what we should be doing is having a high schooler come, cheap labor, come on the weekends and clean the trucks when they're all here at the shop. That way we're not in overtime. And that was the person that was the labor, the wages. They were like, hey, we can cut back on overtime if we don't have to have all of us cleaning the trucks. Instead, we have someone cheap come in on the weekends and clean everything at the. At the same time. So we came up with all these different ideas. They came up with a better way to sharpen the blades and save a couple minutes. Every time they sharpen the blades, a whole bunch of ideas came in. And then what we did is we voted on the best one. And now, remember, I had all this cash sitting on the table. I said, okay, going to vote and see what the best idea is. And that idea is going to get implemented along with all the others. But whichever one's the best, you're going to win all of this money. And that was like, whoa. They actually had some sort of incentive. It just seems more, you know, it's. It's 100, 110. It wasn't a ton, but it was really cool to see everyone actually come up with ideas. And it was kind of nice for the first time for me as the owner, not to be the only one coming up with ways to improve the business. If you want to make a business better, have 15 people that think like, owners are looking for waste, looking for areas of improvement, looking for efficiency. And here's what was crazy. The idea that actually got voted the highest was this. It was that the estimator, which at the time was me back in the day, should not be driving a truck. They should be driving A car because it's much more fuel efficient. And so from that day, I got rid of my truck. It went to the crew so they could be pulling trailers and doing heavy work. And I was relegated to a Honda Civic. And that's still the car that I drive today. And that was because of that meeting. They came up with ideas and did I like driving the car? At first, not really. But you know what, I was just thrilled that my team was thinking about how do we make the business better? And they were right. I didn't need to have a big truck. For the vast majority of my day, I would be driving around doing estimates. And if I need someone forgot something small, I could fit it in a car. I put down the back seat, I could fit a shovel. I got blowers and weed whackers. I could fit quite a bit inside of the car. And it worked just fine. And it probably saved us 50 to 100 per month on just fuel. And so this is how I expect my team to be able to think, because this is the main thing, in my opinion, getting the money back into the profit for the business. Yes, in the short term, it will help the business be more profitable. And yes, in the medium term, it will allow them to make more money. The employees, because we did, within a year, become more profitable. We were able to institute paid time off, increase wages, and offer paid medical benefits to our team. All of that because we became more. We had more money. But in the long term, I actually believe the biggest benefit to your team is, is the mentality of trying to find waste inside the business and get it back into the profit pile. That skill will serve them very well. Whether they stay at your organization and continually have that mindset, or if they go onto some other business or some other industry and they leave your place of work, it will serve them well. They'll get a better job, a better promotion. They'll probably become a manager if they can come up with ideas and solutions instead of just seeing problems and never doing anything about it. So if you feel lonely, if you feel like you're the only one bearing the brunt of how to make this business work, open up your books. Share the numbers. Share how much you're spending on things. Share what your hourly rate is. Don't, don't try to hide the invoices or hide the estimates. Eventually they're going to find out. And the last thing I, as an employee would want is someone hiding things from me in the business. And so would you want your boss hiding things from you? Not letting you see the invoices, not letting you see the estimates, not letting you see the route, not seeing, letting you see how much money in the bank account, if you're hiding things all of the time, is a good chance your team is going to hide from you what they could really do in the business. And that is be more efficient. That is cope with ideas and solutions. And the bottom line is like, well, what if I'm making a bunch of money? What if I don't just have a little bit of cash at the end of the day? In fact, I have a whole bunch of profit. I'm really, really profitable. Great. Open up the books and give them a piece of the piece of. Give them a piece of the action and watch their same creativity get unlocked. Give them a piece, some profit sharing. Give them the ability to say, hey, look, if we're able to hit this benchmark, we can do more for you as the team. We can be able to afford these benefits. We can afford to be able to raise, pay and make the benchmarks and align your incentives with theirs. If you need to make more money, if you want to make the business profitable, then give them a piece of that pie. Incentivize the thing that you want. And if you want to make more profit, give them a piece of what you're making. And then say, hey guys, I want like, never say no to your crew. This is my opinion. If they want more equipment, fantastic. We will get more equipment. Here's the benchmarks we will need to hit in order to be able to get more equipment. Because this is what I always ran into beforehand. Not only were people asking for raises when I was not profitable, not only were they always asking for more equipment and they always wanted better trucks and all that. I'm like, I don't have the money. Whereas now because the books are open and they see everything, it's like, look, yes, we're profitable. Do we want to have get more trucks? Okay, great. If we're getting going to get more trucks, we're not going to have as much profit sharing this year. Do we want more profit sharing or do we want more trucks? Okay, looks like everyone wants more trucks. Let's go get some better equipment, let's get some better trucks. And ultimately if you're like, well, if we hit this profit margin, if it this much cash in the bank, then we will buy the trucks or if we pay off the debts. And this is what I've seen people do before when they open up their books, they put a big thermometer on the wall they to pay off their debt and then there's a big bonus or there's a prize or some sort of promotion or some sort of incentive for the team when they pay off all the debt. And so whether you have a bunch of debt you're doing a thermometer on the wall just to get that debt down. Opening the books will get that underdog mentality of people behind you the entire team rallying around the common goal of getting that debt down and you're struggling and you're trying to get profit back into the profit pile there's not much there. Or if you're really, really profitable give them a piece of the action and stop hiding things from them. It'll help your culture. It'll allow them to make more money and ultimately it'll set them up for their future to be able to advance in their career. I'm Mike Andes founder of co Pilot CRM and Augusta Lawn Care. We'll see you time next.