Is Starting Multiple Locations the Next Best Step? (Coaching with Mike Andes)

Hey, everyone, it's Mike Andes. And today we're going to be talking to a landscaper that started his business about five years ago from zero as a school teacher. And now today, they're knocking on the.

Door of a million dollars in annual revenue.

But he's wondering, what should he do next? She starts a second location, a third location. How should he have a general manager? What about his admin team? How should he create incentive packages for his managers to be able to succeed in their new roles? These are the questions we're talking about today in this coaching call. And if you want to learn more, go to mikeannies.com coaching and you can.

Book your own call. Long time no see.

Yeah, it's been a little while. Essentially, the reason why I'm reaching out is just because we're close to hitting that million, we might hit it this year. So I've never expanded my mind beyond that, to be honest. It's just that's been the epitome of the business. Right. So now I'm at a point where I have to decide if I want to stop there, get more profitable or just expand, maybe with another location or just expand this location revenue wise. I think a lot of it too is my exposure has been a lot of your content. So my mind automatically goes to second location because that's a lot of what I see your content on. But what are your thoughts in terms of pros and cons of just growing a single location versus duplicating with multiple smaller locations?

Yeah, it really comes down to what you're looking to do in the future for yourself.

Right.

If you want to make it more passive down the road where you have general managers running it and you're not involved, it's just going to be easier to find the type of general manager that can do that. I would also say that once you start getting. Getting above 800,000, you start requiring two people at the top of the org. So right now I feel like almost a blend between you, Charlie and Mike. And if you want to keep it where it's more of a general manager, when it gets above 800,000, they need someone else's support. And so it's one thing, like even one of my locations right now, we might actually scale it back by 10 to 15% because we felt like the personal capacity of the general manager is being pushed so much so that they would need another person. But if I need to put another person, I've got to grow the business another four or five hundred thousand dollars.

Okay.

So I would determine what business model you want to build and then just either copy and paste that or if you're like, hey, I just enjoy growing and I like to be involved with the crew, et cetera, then just one is fine as well. It really depends, like what are you trying to build it for? Is really the thing to think about.

Perfect. So the next question is financially. I've heard you mention 75,000 startup costs for a new location and part of what I wanted to cover was like possible projections on what to expect because I need a bigger vision for myself but also my team. And Charlie, he's very capable. He can go out and start his own business and do well. If I can create like a three year path for him or something, that's what I hope to get out of this conversation as well. So again, just pushing the next steps from this conversation.

So do you know what he wants?

I don't know, he just made a comment. He said, I do feel like this next year I need to shake things up, you know, So I don't think he wants more of the same. So if we're going to just maximize profitability, he'll probably be bored and start his own business. But if I were like, and I just told him a couple days ago, I said, hey, would you be open to being a GM in a new location? I'm just figuring out what you would even be open to. He seemed excited about it, but he also was being thoughtful about the team and he's what's going to be harder to hire for someone to replace him as an ops manager or find a gm because we have two other shoe ins which that I have in mind but they're not as strong as Charlie. One is not as great of a writer, not as good on the computer. So can we supplement that with our main hub and have Michael or somebody in the office help with some of that. And then the other is a young kid. He may have a lot of potential, just hasn't been able to demonstrate a lot of leadership. But meeting a lot of those expectations, we would think a GM potentially could have. So I don't know like where we should shift Charlie because he seems somewhat open, but he was also clear that he doesn't want to make less money.

Right.

So if going to GM is going to mean less money, then he's made up. He's going to make about 10,000 in profits this year or profit shares plus $24 an hour. So what's the potential that we could pay out to a gm?

Yeah, Like I'd be looking at, for example, if you ran your current location and I would probably say to be safe, you wouldn't grow it anymore. You'd be able to kick off more profit. It would cover his extra costs. The cost of him. Right, like $24 an hour, just not going to great general manager that can run a million dollar location. And so I would probably put him on salary. I would then give him a, a profit percentage that would be very attractive because essentially what you're doing in this case is you are preventing him from going and starting his own thing that would take three to five years to replace the income that he's making with you. And if you see the ramp that you're actually being able to give him over the past few years and then this big step up, it's okay, I'm not going to worry about trying to sacrifice my head down for three years, make nothing. I'm just going to go all in on this. And so he'd burn the boats and just jump all in, I feel. But it has to be a significant step up. But I think you can afford that. If you say, hey, next year we're going to 850, maybe 900,000, we're going to increase prices, we're not going to buy any more trucks, we're not going to hire any more people. Like it is simply a matter of profit maximization. Taking that money and throwing that towards your general manager and giving him a really good pay package that looks very attractive to him. And I think he is right that it'd be harder to replace him currently than find you just go start a second location. For example.

Sorry, I was a little bit lost here. So you're saying potentially keep Charlie where he's at as ops manager, go into profit mode on a salary and then with additional profit shares. Correct. That'll shrink the top line of our business because we're raising prices. And that was actually going to be one of my questions. So just be okay with that because I don't want to keep buying trucks for this current location and then the profit. So what money would be, what does that payout look like for him? Like a reasonable for our size business or profits? What would a reasonable salary plus the profit share percentage and then what would the pay be for GM opening a new location? Because I've heard you mention before, like maybe because it's not very profitable. New locations pay it more on like revenue per month, like goals and targets. I want to get all that hashed out. If we can in the next 30 minutes or so.

Yeah, to find that person that is going to grow the scale that you're trying to get to 40,000 within a matter of a few months. Like they're going to be a savage salesperson. Savage. And so if Charlie's not the salesperson, it's probably going to be you that would have to do that or you're going to go find somebody. I would agree with Charlie. It's harder to find that person than just for him to move into the op side of this current location and you become the salesperson for the second one. Because the person that you would go find, for example, that would start a location from scratch and grow it to 40,000 in the next three months, is not going to stay with you long term. We've just seen this over and over again. They'll grow it very quickly and then they'll get completely bored of their mind once it goes, which is from sales driven to operations driven. And so I would recommend, and this is what we consistently see, grow the thing to 30 or 40,000amonth and then go find yourself a general manager or bring someone from the existing team up into that role. But if you're the salesperson to get it to that 30 or 40,000, that's usually the safest route.

So would I be doing sales or actually jumping back in the field at.

That point you could really just focus on sales. Going from 0 to 40,000 like you have in your projections for over the course of a few months will require you full time sales. And so for example, like in my brain it makes the sense of, hey, I can now pay Charlie what he's worth, put him over the whole location for the existing one. I would probably do some sort of profit sharing based upon how much you're involved in the business. You could also tie it based upon roles. Hey, hiring, marketing, like what are the things that he takes off your plate that unlocks more profit sharing for him? And then that would give you the time to go focus on selling and like scaling the second location to its peak, call it 40,000amonth. And then you'd go find a general manager that is more operationally driven. And it's likely going to be from your first crew that has actually been with you now for a solid year. And you've actually seen and developed some of that talent.

Okay, so I'm there reporting at the new location pretty much daily in the new city, going out like you did your 30 day challenge thing, like door hangers, whatever I got to do to Sell, putting out, marketing. And then I recruit just a couple one or two guys pretty quickly to just do the work. I'm just full time sales.

Yeah. And the reason I say that is because it's harder to find that person than to currently just take Charlie and plug him into what he's currently doing. Because you have both skills. You have the operations and you have the sales. So you have to ask what's hard to find. It is the salesperson. And then we've just seen over and over where people start new locations and put like an operational gm, I. E. Someone like a Charlie in that role. And they do not get to 30, 40,000 that fast. It'll take them a whole year and a half.

Yeah, okay. But Charlie's a beast. Let me tell you.

Operationally, like I genuinely believe, like you put that same person, hey, you gotta go to door hangers and you gotta make the marketing campaigns and make the ads and manage these ads and then go out, get leads and follow up calls. From what I remember, at least he didn't like doing calls and talking to the customers a ton.

He's a unicorn, I'm telling you. So it's just crazy. That's why it's like versatile. But I'm not opposed to hitting it hard and doing the sales piece and having him be more like running operations. Honestly, I feel like we're very dialed in. I could probably go there once or twice a week at the main location and they got it.

We'd run with that because that's the more surefire way. Now if Charlie's like, hey, I want to go start the new one and he's very opposed to it, I would probably go along with it. But the thing is this, the likelihood of the success of that second location will come down to the ability of the person to sell. He has not proven that he has done that in the past. You have you built urban routes?

Yeah, yeah.

And so I think the likelihood of success when the owner goes into the second location, I've just seen way higher. Not because anything is true. He just never done zero to 40,000 before. You have.

Cool. Yeah. So much of this is like logistically how to roll it out. This is helping for sure. If I can visualize what my days would look like, that's going to help me a lot. So I would be at location, be posting and we're doing the office work as well. Am I just setting up separate email? That's the main thing. Logistically, are we splitting everything? New website, new Google, new business license, New everything, like treat it like a brand new business.

If you want to do the multi location operation. Now if you're only going to do two locations, I would probably just keep everything more or less together. Someone like Michael taking the calls and he can just determine where the leads go, for example. But if you're trying to make multiple locations, like I'm saying three or four or five down the road, you want them as separate as possible. So your GMs do have full ownership. Because if you have it where now everyone just blames Michael for mistakes, blames Michael for scheduling problems, blames him for billing, blames him for the fact that shared resource starts to become very murky in terms of costs as well. Because now they're getting a piece of profit sharing. They're going to have a real stake in what are the shared costs of the business.

That's how I've always been introduced through your videos and stuff is just keeping it all separate. So I'm just trying to wrap my head around like compensation and profit sharing and how that would look different with the gm because if I'm going to go on this path to start second, I would probably want to start a third. So then ask is that enough to justify just separating everything and just keeping it that way?

Yeah, like I would say if you're going to do three, I won separate. And it's literally just for the fact that I can tell my general manager like you're getting a piece of the profits and you, you're basically running this location because when you do it as a corporate like if you do one blended and just hey, now they really just become divisional managers. Hey, you're over this area, you're over this area and you're over this area versus being like you're in charge of hiring, firing, marketing, advertising, sales and we're going to track all these numbers separately, your close ratio is going to be different. You're going have a different login for copilot or whatever service autopilot. Like you're going to have a different login for everything. It makes them feel like they actually own the thing. And I've just seen more buy in over it.

I like that model. Yeah, so that's what I'm leaning towards. Okay, so based on our numbers, what do you see as like a salary if someone's taking like majority of leadership, like if Charlie's running my main location, what are you seeing salaries at?

Yeah, like I would see in your area, minimum 70, 75. Just in terms of cost of living, assuming they're running that size. That's going to be your base and then you're going to do a, a profit sharing on top of that. You have to be over 58,000 as of last September in Seattle for this role. Like it's actually mandated if you're on salary.

Okay.

You get all, all the front of all these laws. Let's go. Yeah.

So plus, what percentage do you just. With the salary increase, you think that's enough to keep it at 5% profit.

Shares or I would do a sliding scale. I would probably do like an 812 and then 15, depending on how much he's taking off your plate.

Okay.

Dylan, I would slide that higher. If he basically makes it where you're an absentee owner, because now we're talking about, let's just call it 70 plus. If you gave him 20% 40, now he's 110, that would probably take him a couple years to get there. But if he can run that location basically without you being there and you're making the other 150, that's not a bad deal.

All right. I was supposed to stick to the script.

You're good. Go ahead.

This is helpful. So gm, when does the GM come into play? If I'm the salesperson, it's not a full gm. It's like me being the GM in a way at the new location. And then I would just have basically P4P employees. And then the promotion there would be like, hey, once I train you up to run this on your own with one or two employees, I'm going to bounce. And then I'll give you more of the GM benefits and salary and stuff.

I'd be shooting for. If you're trying to get to 30, 40,000amonth in revenue, think about like this. It took you a year and a half to get there. You're not trying to do that in three to four months. To find someone that is going to be able to do that is either A, going to be you or B, someone that is literally five times more skilled than you were when you first started Urban Roots, that's extremely expensive. You're talking a six figure person. And so that's why I think it's like you get it ramped up and your whole goal is to get to that 40,000 plus level. If you get an annual revenue of a location to 500,000, in my opinion, you, you, you hit profit mode, you increase prices and you slowly, over the course of three years, dial it from 500,000 to 800,000 without getting any more trucks or any more employees, that's like going from say $80 per hour to $110 per hour. If you do that, you'll take it from $500,000 per year to 800,000 and you're extremely profitable.

Okay, cool.

So with my mouth location, you're literally.

Making 300,000 with same assets and everything.

Yeah. If you take $80 per hour is your labor rate and you're able to move that over the course of three years at hitting at capacity, you just keep dialing the price up to 110. You're right there.

All right, so I'm liking this. In terms of new location market research. I know like you all up is a little bit like east of us. I could go Northeast Tacoma, which we don't go up there. I know it's the same city, but it's 20 minutes around the port side. Probably like northeast Tacoma Federal Way. So what do you do when you're picking a new location in terms of market research and what's the furthest away and the closest you would do in terms of just keeping it a separate location?

Yeah, like I'm a big fan of being close, especially because your first one, like I usually say, within driving distance ever someone's second location. Unless you have a hundred plus thousand to get started. Like if you're trying to start with 75, it's going to be a little bit squeaky. But if you're putting the labor in of the GM essentially, then you'll be fine. I would probably go the 20 minute route first and then I would start a urbanroots landscaping.com northeast Tacoma or whatever, have a new phone number, have a new Google listing and then tie all those separately to that website. So new Google listing, go to the new site, not like a new website URL, but just a slash that territory name. And so what you're going to end up doing is essentially just like mimicking what we do as Augusta. So it's augustalongerservice.com territory name. You're going to do urban routes, landscaping. Change that site to be much more corporate feeling and then you're going to have slash Tacoma and you're slash, I'm guessing Northeast Tacoma or Puyallup. So I'd probably go Puyallup just so it's not confusing. But I would just make it like the slash of those two separate territory names and then the main corporate site, urbanroots landscaping.com being the one where people would come to and then they find your location and they go from there.

Okay. All right. That'd be so weird to start another location without me being on a.