Managers, Profits, MISTAKES... Live Q&A w/ Mike Andes

In the very front on your left. Mike.

Jason.

Mike. Jason and Knoxville.

So I believe it was yesterday you.

Were talking about the two different types of GMs needed to run a location. We just started a new location. Maryville bought another Augusta Low franchise out. And I believe that I have incorrectly put the wrong GM in place. Great in operations, but not for sales. And that's my fault. I didn't realize that. But I do see the need and the difference in those two GMs. What should you. What do you feel like we should do now that we have somebody in place? Do we help him grow? Do we make a change? What would you recommend we do?

Does he see the lack in sales?

Yes.

Okay. So that's fantastic. So I would have the humble conversation that you just had with me and say, I made a mistake. There's two different types of general managers, and I want you to be my operational general manager because you're phenomenal in this area. We both agree that from a sales perspective, you have lack of. I'm going to go try to find someone that is good at sales. Would you be willing to train them on the operations because that's what you're amazing at, and then support them? And then once they grow the location past $500,000, I will put you back as a general manager. And when that happens, I'll give you $10,000.

Right in the middle. Hey, Mike. Warren, Pinellas Premium. So we're in Florida. We have more of a level billing model. Our Q4 collapse is right in the middle. When the demand is the highest in the summertime and you know, we go cash negative sometimes and wait, your demand.

Is the highest during that period?

Yeah.

What do you mean by that?

So it costs the most to do.

It because you're level billing? Yes. Gotcha. Yes, I hear you.

So we were thinking about going to a per mo model, and I wanted.

Your feedback on that.

What's your close ratio right now?

50%.

Are you trying to grow the business top line?

So we're kind of splitting. We're gonna one's gonna go into profit mode and we're gonna go into another.

Location and grow that piece of the other location. I would test the new model with per pricing, per cut pricing, and I would. I would test that cash flow because typically people are trying to go the opposite direction. From a cash flow perspective, I would say if you already have that set and established, I wouldn't fix it or change it. Especially if you're closing at 50%, it doesn't seem like a Huge bottleneck. I will say if you then switch over to per cut pricing at 75% and you can raise your prices by 20%, get a 50% close ratio, all of a sudden becomes very profitable. So I would test the new model at the new location. Especially because you're focused on sales at the new location, the current one, you're on profit mode. I would just raise prices, assuming you get enough lead flow and you're at capacity.

Right. Okay, thanks. Direct front, Mike.

Jeff Brand, Ferndale, Washington. So, Mike, let's see. Because of where I'm at, I won't be able to join Augusta. Won't be my best for everyone.

Just so he's a few minutes away from a house.

So for tying in to what you offer, the best way to take that and run with it.

Well, first off, you might be moving to Texas because your wife wants to move there. So when you move to Texas, that's a good market you're moving to. In Tyler, I would say, you know, get in the community. You know, connect with my general manager locally, you know, there's obviously lawn care, web design, home Service, Web Design, P4P Copilot. Like, I'm trying to make it where there's pieces and parts I can help everyone with. And then if you want the whole kit and caboodle, you join Augusta. That's the essence of it. And then I only have a limited time, too. So if I can be like, hey, I need to have. I only have so much time so I can do more for Augusta Nation because there's less people. And so it's more of a constraint of my time. And so I would just focus on those things that aren't inside of Augusta for now. Yeah. And then move to Texas and rock and roll far back left.

Hey, Mike, had a quick question for you regarding the video messages to clients.

Imessage, correct. Okay.

Yep. So I'm wondering if there's a logistically easier way or easy way to do it. If you have, call it three or four CSRs in the office and all of your pricing is over the phone and you don't have any designated salesperson, do you just have a floating iPhone that just stays in the office that they do all the video messages from that, like, I guess the logistic part breaks down in my brain when someone responds to that, but it doesn't go to, like, the customer card or the client portal to respond in one central location for all the CSRs.

Yeah. So first off, how many estimates per day? I know you're a Large location, call it 15. Okay, so in that case if you're doing under 25 or 30 estimates a day, I would probably have one cell phone and I would have one person. It's their job, it's plugged into a certain computer and it's like every day at the end of the day you're going to go through this email address and all the automations flow to that email address and they're going to knock out those videos. I will also say if you're starting to do thousands. So at command center we have several videos that we inside the office will send with every single estimate and then we change them up every so often because we're not going to make a new one for every single estimate. That being said, if you're doing follow up that's when I'm using the imessage and it's going to be saying their name, their ad is going to talk about their estimate and and so if there's 15 or less a day I would be doing them probably myself.

Okay.

Because I believe I could do that in 30 to 40 minutes tops. Okay. Again it's just if you're in the business I would probably put this on my salesperson. The estimator always has the best close ratio when it comes to follow up because they've met the customer. If you're doing in person estimates, if it's over the phone follow up stuff, then your office staff is typically the best because they can say hey I know yesterday you got instant pricing form over our website. I just wanted to follow up, et cetera, et cetera, et cetera.

Okay, so on that if you so say we have 2,500 clients that we want to do an upsell to a, or sorry a cross sell of a service that we don't do, would you still use that imessage function to film all 2500 videos on that and send it out per client?

So imessage is very difficult to scale if you're doing bulk messaging because you are going to have to do one at a time. So I'm usually going to use a mask text feature for that. And so that is the best converting. Now if you did imessage you would increase close ratio but we're also going to spend an entire day or two or three for 2,500. That being said, if you send out for three days wages for someone, let's just call it $400, what if that increases your conversion from 1% to 2% on thousands of customers it starts to actually make sense. But that being said, I would probably go mass unless you were very desperate for work.

And.

And the only thing for the person to do as a CSR would be like, all right, when there's nothing to do, the bottom of your checklist is you're sending out messages to customers. And based upon the month, here's the upsell or cross sell that we're going to be pitching.

Okay, beautiful. Thank you. Direct front Mike.

Hey, Mike.

Jesse Edwards with Edwards Lawn Service, Springfield, Mo.

My question is whenever.

Okay. So you have the winter services.

I've worked really hard on raising my.

Prices for the winter services in the.

Way that I'm doing them. What's the best way to go about swapping it over to the 12 visits?

Because, like, right now we're doing like two big cleanups. One in the fall and one in.

The spring, early spring. But then it's like we're doing snow.

Removal and we're profitable. It's like, it's like, why would I switch that? Am I thinking too much on that? Should I stay where I'm at because I'm established and unprofitable?

Well, the question is, do you have seasonitis? Like, does revenue drop by more than 50% if. No, nothing needs to change. If you don't have negative cash flow and you're profitable during those months, nothing needs to change. So do you have season ice during those months or not?

We do. Okay.

I mean, I think it's getting better.

We swap the prices, like, really late in the season.

Okay.

So I.

Maybe I need to just go through.

Another year, not change it so fast.

Potentially.

Yeah.

Yeah. If you. If you're only losing, say, 2, 3, 4% right now, and you raise prices by 10 or 15%, there's a good chance that just raising prices alone will get you out of, you know, cured seasonitis. Yeah.

Awesome.

All right. Thank you for him. Three, two, one.

To the right. Hey, Mike.

My name is J.J. cracker.

I own Sun Exterior Solutions here in Port Orchard, Washington.

My question was, I would like to implement P4P. But I'm curious, is there anything different that you would do with the kind of business that I'm in? Obviously it's still home services. Would you still go off budgeted hours, you know, and the labor rate and everything like that? I was just kind of curious.

What was the service? I missed that.

Sorry. Exterior cleaning, roof cleaning, gutter cleaning, pressure washing. Yeah.

Yeah. So in my opinion, any sort of labor based job should be using budgeted hours. Otherwise, I cannot effectively calculate the efficiency of my crew, I need to know how long should this job take? Now even if you're using production rates like one story house, two story house, or square footage, it still needs to be linked back to budget hours. Because my crew does not care how many square feet it is. They care how long should this job take. And if you're going to pay them based upon how long it takes, you need to be accurate in that estimate.

Got it. Okay.

So the only way that I've ever seen P4P break down is when people can't accurately estimate how long the job will take. And that usually is a matter of simplification and standardization to be able to come up with decent ranges and get within 10 to 15% of budget hours accuracy.

Okay. And then kind of a second part to it, I guess is that right now I'm by myself, so I am tracking my hours and everything like that. So is there like a rate factor that you would do for when I get like employees? Because like, I know how long it takes me, me. And then let's just say I have two employees. On paper it sounds like it should be, you know, double, you know, as efficient, but obviously that's not always the case and everything like that.

Yeah. In general, an employee across the board, when we look at P4P is 40% less efficient than the owner.

Okay.

And then if you add P4P, they're 20% less efficient.

Okay. Sweet.

As a rule of thumb.

Awesome.

Yep. Far, far left in the back.

Mike. Hey, Mike, it's Isaac with Rockport in Texas.

Yes, yes.

So I'm going to be blown with this. And a lot of people know this is true. The majority of blue collar people in this, the home service industry is Hispanic. They're Latino.

Yep.

And I've talked to multiple people here that they have difficulty explaining the systems and everything inside of Augusta. Yes. To their Spanish speaking people. Is there any plans or thoughts of releasing your content, aka copilot, P4P onboarding, etc. In Spanish?

Yeah. So whenever there is a new feature, whether it be in software or inside of Augusta, I have to first ask myself of my current customer base and the people that this is going to affect. Where is the best allocation of time and resources? And so if I'm going to say, for example, make a Spanish version, I will have help people. And I. And that's. This is the hard part. I know it'll help people and it'll bring an audience in. Let's say it increases the audience by 10%.

If I can make another feature that affects 90% of my current customer base. I need to protect them first. I typically default to how do we protect the base before we go out and think about new customers? And so currently in most of the businesses, we're not expanding and trying to get, like, draw in an extra 10% here and 5% here. I'm just trying to take what we have and make it better. And so we will get to that point. And I also would say, if there are people that are passionate about that, I am happy to say, hey, if someone's willing to translate and do some work, that would definitely be something. Especially on the content side, I'm willing to entertain. The software side becomes extremely expensive, and so I have to allocate those resources toward what's going to be the best good of the community.

Let me know. I can help.

Thank you.

Yep. Very.

Talk to Zach, please. Yeah.

Very friend.

Right to your right.

Exactly in front of me.

Oh, hey.

Hey, Mike. So after the conference, what I'm deciding to do with my business is actually scale down my capacity. The question I have though is If a working GM should be in the field 30 to 35 hours.

My question is, what do I do with my guys the other two days? Because want to keep them around. I don't want them to be like, oh, this just isn't working for me because they're only getting 30 hours.

They're getting 30 budgeted hours of work completed per week, which is going to be 40 clocked hours on average.

Okay.

But that's the general that I'm talking about. The working gm. Now you're talking about your crew members. Is this correct?

So I still have to be with them on the job.

Every job. Okay. Arborist. Yes.

Okay. So what I'm trying to figure out is what can I do to. To either keep them busy on the other one day that they don't do stuff.

Yeah, I hear you. Yes.

Yeah. So, yeah, I'm just trying to figure out how to reduce capacity, keep them with gainful employment.

Yeah. So this is going to come down to project management, because every single job is going to have setup and it's going to have teardown that does not require an arborist on site. And so it's going to come down to, can I get a system in place where my arborist shows up for the. The two hours that's required for them to be on site and do that work? But then the two hours around that for prep and for wrap up is done by people that we do not require that Work to have an arbourst on site. And that will come strictly down to time management and project management.

All right. Because I have right now I have to be on every job in order for anything to get done besides what you said.

Right. So delineating between prep and actually the part where the arborist must be on site. And it will unlock the ability to almost double your production because you'll have one arborist and two crews.

All right, so I'm trying to clarify for the first two hour or so, just have them go and set up.

They drive there, they cut the initial, initial branches, they set up the trucks, everything's ready to go. Arborist needs to show up at within 10, 10, 15 minutes of when they need to be there. And that will all come down to can you perfectly align the two crews together? And that will be difficult, but your, your constraint is finding that arborist. So you want to build everything around the constraint and make sure that their time is efficient. Because what kills your business is having that arborist sitting there and waiting while people that could be paid 20 bucks an hour are hauling branches.

Gotcha. And one more question that I'm trying to wrap my mind around is for project based company, let's call it project based, without recurring or very little reoccurring work. What are some things that I can do that doesn't necessarily conflict with what I'm already doing? Because our ticket price is around 2,200, I just feel as if the smaller, simple services like that I could come up with would conflict with. Whenever we do have work.

I would sell to every one of your customers a $99 per month subscription. That $99 gives them priority when a storm comes. And any dollars they have spent of that $99 goes towards the bill when you show up. So there's actually no cost to the subscription. They pay $99 every single month and it rolls up until there's a storm. And when the storm comes, you service them first and that money that they put into that account is going to then go towards the bill for that storm. So they get priority and there's no real cost to the priority other than that they are giving you the money up front.

Gotcha.

Does that make sense? Because if you can take a $2,200 customer and they're a quote, one time job, $2,200, let's say for a lifetime. And you can convert them now, in addition to the $2200, you then get them on a $99 per month subscription. That's another 1200. You increase lifetime the annual customer value by 50%. If you keep them on average for two years in the subscription, you're going to have doubled your revenue without doing anything.

Gotcha.

Does it make sense how I talk about, like rolling it up?

It does. It's conflicting though. Like whenever storms come in with direct insurance billing, we're able to be double of what we're charging because of the expedite, two to three times what we charge.

So you need seasonal labor for seasonal demand. When you have a massive storm, you need to have a workforce in place that you are pulling from out of state and you're pulling them in and you're paying them way more. But you can because you're going to double and triple for the revenue. But again, I can't depend on one or two events a year to build a sustainable business. I need to have that recurring revenue. And now if we serve, let's just call it 300 customers a year. If we get 150 of them on $100 per month subscription, we now in one year have $15,000 per month of recurring revenue 12 months out of the year. Not 3 or 4x in one month because there's a storm. I would rather have the distribution and lose out on two weeks of a storm, but have that recurring revenue come in year round.

How would you pitch that to them?

I would pitch them like this. I said, Mr. Jones, right now, how much you paying for your home insurance, by the way? You can figure this out on public record. So like, you know, you're paying a couple hundred dollars a month for your insurance. What we do is we actually offer this service. It's a subscription, a membership to Trinity Tree. And I would name it something around Trinity Tree and then I would say it's $99 a month. Now keep in mind, when there's a storm, you get first priority. If we're not on site within 48 hours, we'll refund you all your money. Now, when we come to your property, we're going to take all the money you've put into your account and put it towards your bill. Which means if it's a $2000 bill and they've only put $600 in, you're still going to charge them for 1400. But there's no cost to the membership. It's simply a way for you to go get money on a recurring basis. Makes sense.

Yeah. Far left, Mike. Hey, Mike, Roy here from Washington. Hey, so I want to see if you had any tips or Any ideas of how to fix this? My question is kind of similar to what he had over there are.

Wait, sorry, one second. For Isaac and for Cody. Three, two, one, go.

Okay. I was saying my question is kind of similar to what he asked over there. Our quarter three is probably our. Our first month in quarter three is our lowest profit.

Income, right?

Yep.

And that's due to also level billing that we have throughout the season.

Yeah.

Is there a way that you would say how to fix that? Because obviously that's kind of where our busiest time, where everybody's producing also. But it's the one that's costing us the most.

So I would be doing what we talk about with spring rush and allocating as many time insensitive jobs off of that time. What I would actually do going into that period of time when, you know, it gets crazy and it's the busiest season and you got to allocate more time towards that, I would be actually telling my schedulers, I don't care if jobs are sold, we're not booking anything within that period of time. But you're talking more from a profitability perspective, are you? Right.

Correct.

Okay. Can you just raise prices? Because this is the flaw with level billing. There's going to be times when you make less money or even lose money when. When you're doing a lot of the work for what they are paying throughout the entire year. So it's going to happen. If the question is am I able to make up for that lower profit with a higher profit for the other nine months of the year.

Correct. So we actually. So we do raise prices on any extra work coming in. But I think a lot of that bulk work has to do with the.

Level building work that is scheduled for.

That certain time of year. And that's what's causing our profit that month to kind of go. Because that. And that's for some strange reason that's the only month.

Yeah, yeah. It's simply a function of. That's the flaw of the level building model is that when you need to do the most work on site, you are eating the cost of all that extra cogs direct labor to do the work. But then you make up for it in the off season. I would probably flip to prepayment. So what I would do is just from your cash flow perspective is try, if you can try to move it to where people pay at the beginning of the month for the services in the upcoming month, you'd help your cash flow a lot. So even though you have negative cash flow through throughout that one month you have collected the money already and you'll also wipe out all your past dues.

I would say that for anyone doing 12 month level billing, try to prepayment.

So, so we, we, when we have our 12 month like that, we invoice at the beginning of the month and usually people pay by the 15th at the latest, sometimes into the 10 10th.

Is that kind of what you're saying for that month? Services?

Correct.

Cool. Yes. You're doing prepayment.

Okay. So that is okay.

Yeah, yeah. I think, I think this, this is the, the ultimate flaw with level billing is that there are flip flops. Your busiest, most highest demand month is when you actually lose money. And so it's a function of either A, you know, raise your prices or B switch to a model where the prices increase when with how much work you do.

Would you say that month don't add any more work, just continue. Just do what's scheduled.

Only if it's a scheduling problem. That's what I was trying to get to at the beginning. Is this a scheduling problem or is it a profitability problem?

Profitability.

Right. So that's why I didn't address the scheduling part once I identified that like it's more a matter of pricing and you know, payment terms. Okay. Yeah.

Thank you. Hi, this is Steve.

Oh, wait a second. For Roy. 3, 2, 1.

This is great because we're all trying to figure it out together. So hopefully I can tie it up. So I'm also got a level building question from Pinellas and Roy. So I'm going to go off or. You answered a lot of what I was going to ask. But when we're looking at cross sales and upsells with level building, what I was thinking about in this. Hopefully this makes sense. It sounds like you got a good grasp with winter Services to up that cost we get when we level it. Now should we add a higher cost when we sell? So for example, if we're doing the mowing services and we could do it 10 months out the year, we leveling it out is the same cost. But if we were to add that winter services, maybe that could add the profitability and income throughout the year to buffer for example what he's saying. Because we have a similar situation like Q2 to Q3 once we did the workbook, which I appreciate, I actually did not notice that until I did it that we actually lose money for one month because things are ramping up. But then it levels out so it's not a huge loss. But I was curious with the winter service adding, what's your thought on that? I know you said possibly just raising prices on core services, or would that winner add, you know, adding to that package? Would that also help?

Do you bill. Do you level billing for 10 months out of the year?

No, no, I do it for 12. I'm just saying that we are mowing regularly to 10, four to 10. Yeah, got it. And those other two months, we'll just have like a checklist, you know, going down, trimming same amount of time for winter services. But should we. My thought was like, hey, but we can add a little bit more money there. Pitch it. And I was thinking about the video that you can send to kind of explain to those customers who may not take up on that. I really was blending two things, but hopefully it makes sense.

All right, so I would first say what I would do in this situation is, first off, do you have enough cash on hand? Are you strapped for cash? Yes or no? Are you strapped for cash right now?

Currently, no.

Good. If you have enough cash reserves, I would personally do. To increase the conversion of the service. I would. When you're going into winter services, I would pitch for an additional 20, 30, 40, whatever it is, per month. We will now service these other two months. So you have to. You can avoid a spring cleanup because you only have two months. So I'd be comparing the price of those extra four to five services compared to a spring cleanup. I'd be saying, hey, by the way, it's not like instead of paying $500 for your a la carte spring service, I'm gonna come four times. We're gonna charge you $50 a pop. So it's gonna be $200. You're gonna save $300, but then you're going to increase the amount per month across 12 months. So you're basically going to annualize that cost. The reason I asked about your cash, because if you do that, you're eating a lot of that cost up front. But as long as you get them on the first year, then, like, I believe your conversion will be significantly higher if you do that. If you try to pitch it, like, in spring, they're like, I don't want a price increase. They will look at it as a price increase. If you come at the end of the season, when you're going into winter, you say, hey, we usually don't show up for 20 or 30 or $40 more a month. We will actually now show up for the next two months.

Awesome.

Yeah. In the center, Mike, you're financing that though. Three, two, one.

Mike, it's Marcos. So I asked a question two days ago about is it possible to jump from 400 to 800 if you have the cash reserves you mentioned you need at least 150 to 180 to make that jump in one year, assuming you.

Don'T have the assets already required to get to 800,000.

Okay, so if we have the four trucks already, how much would you say we have to have in cash reserves to make that jump?

Well, first off, I would fill out the the workbook because your asset capacity is almost at 800,000. Four trucks, two employees in each is eight employees. You're going to be right around the $800,000 marker if you're at capacity.

Yeah.

So I generally believe this is more of a capacity capacity problem and you need less cash than I said because you have the assets required. Typically the reason growth sucks cash is because you need to expand asset capacity. Sounds like you don't. You might need one more truck. Likely. More likely would be a estimated estimated vehicle.

Okay.

So you likely don't need that much money to grow to that size.

So how much would you say we would like need to, you know, be safe?

Your constraint is not liquidity, it is leads.

So.

So knowing your customer acquisition cost is what will then determine how much you need to spend to get the number of leads required to get the customers required to fill that revenue.

Got it.

Front, right?

Oh yeah. Well, yeah. Thank you for Marco. 3, 2, 1. Whoever did that.

Thank you.

Hi Mike.

David Willis from Manhattan, Kansas, Augusta location. So as I think a lot of guys probably know. Well, I guess back up a little bit. Obviously you know, it's probably your goal to sell more locations, but for some of us that are in maybe not metropolitan areas, you know, it's probably assumed that there's more than $800,000 in revenue in that market. And you're talking about the $800 model having one manager over that area. Why not have two general managers, same market, have two copilot CRMs running for two different GMs. Why wouldn't that work or why would that not be a possibility?

I would see no problem with that. The alternative to doing that though is just simply go to 1.5. Right. So generally that's what most people will do because inside of a five mile radius, I generally don't see it being worth breaking into two and having two different shop spaces. And I usually recommend if you're going to split it and have two different general managers at the equal amount of power. Having them in different spots is, is viable. Now in your rural area, you're assuming a larger space, Is that what you're saying?

I was assuming working from the same location and then you minimize the cost of another location, minimize the, the hurdles that you have jumping into the 1.5. It just seems like that would make a little more sense instead of trying to go to that 1.5 with just the one GM another model you're talking about.

Yeah, I see just as much complexity with having to split split the business and have two general managers operating from one location serving the same five mile radius. I don't see enough cost savings in a five mile radius to say we should split the location. I would probably just go to the 1.5 or this is my better raise prices and say 800,000. Okay, like if you have enough leads to come in to get 1 to 1.5, why just do 800 and raise prices three times and make an extra 100 grand in profit? Because you make the 100 grand in profit. You will probably make more doing that than growing from 800,000, growing by $700,000 to 1.5 including all this extra infrastructure. I just raised prices like the reason I made. When I analyzed 250 locations, I include locations that are in 2, 3, 4 million dollars in annual revenue. And still the location that had been in profit mode between 500 and 800,000 still made more profit. And so many times that jump includes so much assets, more management, larger shop spaces and fixed expenses go up and all of a sudden we make just as much profit. If we would have just raised prices at 7,800,000 and that money flows straight to the bottom line like 70, 80% profit margin.

Okay, thanks. In the center, Mike.

Oh yeah. Thank you for M3 21 Parker, Danish.

Tennessee so someone who dabbled with the opt out program, just trying to test it out.

For winter services?

No, for just random services as in irrigation or not irrigation, sorry.

Core aeration, stuff like that. So I plan on proposing that to clients in the beginning of the season of like, hey, just so you're aware, we are going to be doing these services in these times. You do have an opt out option.

Now do they accept that estimate already? No, it needs to be on the estimate.

Okay.

Yeah. So even for us, I make sure in my estimate, I'm saying, hey, this is a 12 month service. When you're accepting mowing, you're accepting 12 month service because you want to be careful. If you're just going to assume it, it needs to be somewhere in writing, that'd just be like an asterisk, but go ahead.

So what we did is we just shot out a blast text message. It was just saying like, hey, this is a service that's coming up in two weeks. If you'd like to opt out, just text, no, thank you. I'm thinking about doing the same. Just giving them like a notice of like, hey, this is coming up. But at that time, we'll shoot you a text message as a reminder.

Is the price the same as your other service?

No, it's more.

Yeah. I would really recommend more communication. You could actually get in trouble for this because they haven't assumed, like the reason Winter services works. And I would actually say if you're within 20 to 40%, I would actually make it the same price to make. To reduce friction of this upsell. So I would. I would first off, see, can I round numbers enough to get where I can keep the same price between they're currently getting and I'm trying to upsell them into. And then I would make sure that's in writing when they accept the original proposal, that it is going to happen.

So even, even if, like, if they didn't respond, we made sure to make a phone call. Is that still, like, we could get in trouble for that?

Because, like, we called them and we're.

Like, we just don't want. Did it work here before we get into this? Did this work?

Oh, absolutely. We only saw like 10% of no thank yous. Okay. So. So we would call. We'd either say.

They would say, okay, thank you, and be like, all right. And then we would call like, hey.

Just so you know, you're on the schedule for next Wednesday for aeration.

Cool.

Okay, thanks. And they just. It'd be okay.

It works fantastically. What can I help with? Question wise?

Should I do that in the beginning of the season or just leave it as how I do it?

If it's converting at 90%, keep doing whatever you're doing.

Okay, yeah.

100%. Yeah. There is no constraint in that.

Oh, yeah. Three, two, one.

Jacob with Yellow River Landscaping in Covington, Georgia. I feel like this is mostly just a leadership failure on our part and kind of a just get out and do it kind of problem. But I wonder, what is your procedure for installing and reinforcing your systems? Because I know right now we have. All of our systems are written, documented. We've gone over them with our team and everything. But I know if we sat down, our top guy who's been with us for two years at this point and said, teach me these same systems that we've gone over and we have, he might be able to give me 10%. So we're okay.

So is it a lack of them memorizing and under and knowing them, or is it adherence to these systems that you put in place? Are they not doing what is in these systems?

It's more of a memorization thing.

Why, why is that important?

Why is it important that they memorize it if they're doing it, Are they doing the systems and the protocols and the things that you've outlined?

They do all the common sense stuff. But if we just went through and said, all right, you get to the property, what's the first thing you do? You know, they do a good job on the property. But if we say the first thing you do is start from this point, do it this way. They're slipping up there a little bit. It's more, you know, we don't have a problem with the corporate quality, but it's just our systems, top to bottom, they're not implemented very well.

This is what I'm struggling with. Are they not being implemented well or are they being implemented well and quality is fine?

I said quality is fine. But it's just.

So what's not being implemented? Because I'm not in a debate here. I'm just trying to understand. So right now you're saying they don't memorize them, that's fine. I don't care about that. I'm thinking about what's the output. So the output here is, are they doing a quality job? Are they doing the things that you want them to do?

For some, not all. Okay, so it's like our training processes are. So we'll go through like once a year. Like I said, I feel like this is mostly a failure on our part. So we're not reinforcing them well enough. I just didn't know if you had a procedure in place for you quarterly. Reinforce every system or these specific systems, something like that. Because we have our training procedure will get, you know, spring rush. We're doing a lot of hiring. We tell everybody one time and then we get caught up in the summer with everything else and we're doing more hiring at that time then it's just.

Got it.

We're going to assume you still remember and they really don't.

Okay, I'm tracking. So what I would say is you need to simplify the systems you've created because there's too many things for them to know. And understand. And if you're actually expecting memorization and actually repeatable processes and simplification and standardization of your system itself and your SOP is important. Having a whole bunch of stuff. First off, I'd like nail it down to three or four, right. So for example, at command center, they're doing this whole retraining around phones. I said, we need to know what a 10 out of 10 call is. And it can no less than, no more than three things. So when someone gets off a phone call, I just simply say, was that a 10 out of 10 call? And they know the exact three things right off the rip of what should have happened. So I, I would first take whatever that list of things is and say, can I, can I chunk this down into two, three or four things tops? Because they won't remember anything like that. Even a checklist. Because the checklist now requires them to remember to use the checklist. I want three things. For example, a walkthrough like what Logan was talking about the other day this morning was exactly right for a star employee. He had chunked it down to four things. There's probably 30 things that go into a good cleaning service, but if I can chunk it down to four and they do understand and memorize it, the likelihood of adherence is higher. And then if they're not adhering to it despite the knowledge of it, then you fire to reinforce the standard. Three, two, one.

Connor from Wisconsin, how would you manage? We do snow plowing along with, you know, all the green stuff in the summer. How would you manage the capacity for snow plowing, which is rougher on trucks with the, you know, backup trucks and whatnot? Because the revenue per truck is obviously, you know, what we're reaching for trying to get to that 200 mark or the excellent 250k per truck. But we like to have backups in case things go, go down, which could actually cause more problems not having it, you know, there.

Yeah. So I would be looking at capacity for your snow season and capacity for your green season. So in terms of like the backup trucks, I'm assuming you have excess capacity during the winter when you do snow, or is it the opposite?

I think it's equal capacity just because anything can happen to a truck in either season, I guess pulling dump trailers, pulling, you know, plowing snow, you know, vice versa.

Yeah. So by having, by having, sometimes what you will do is you will actually go ahead and have excess capacity for the sake of peace of mind. So remember, at max capacity, you are most profitable. At max capacity, you Also at risk because if someone leaves now, you're over capacity. If a truck breaks down, you are now over capacity. And remember, that will last. Good for you. In the short term, you'll make more profit. In the long term, you'll eventually fall apart. So I think people overestimate though, how easy it is to increase capacity of a truck. You go buy the truck, like within two days, you can solve this problem. And so I think we overestimate. Like, I need to have a backup truck to my backup truck. It's like, look, wait a second, let's play out worst case scenario. All the trucks are out and one of them goes down. I'll have a truck within a day or two and let's have to pay a few thousand dollars more. I'd rather do that than increase my fixed expenses by $500 a month between insurance, maintenance and storage.

Got it. And so when you're tracking your stats to make sure your business is, know, being effective, maybe you're not on, you know, in the daily operations, would you say within the stats, use the extra backup truck as you know, how do I word this?

Assuming it's being used, you put it.

Like the revenue per truck stat. I guess you're involved, you're involving the backup.

Yes. Okay. Yes. 100%. All right. For Connor. Three, two, one.

Alex, also from Wisconsin, separate business here.

Hit up. Josh, say hi.

My question for you. Our seasonitis happens in the first three months of the year in Q1 with snow removal, we do quite a bit of holiday lights. And typically the industry standard is to just bill all at once once the lights are installed. What is your opinion on billing? 80. 20 on the install and the takedown because it does double how many invoices we have to send out. But then we also get 20% of that revenue during our seasonitis period.

Why would I want to take less money up front?

Because the seasonitis quarter one.

Okay, I would do this. I would say you pay up front and here's the price. Cheaper. Or you pay us 75% now and then when we remove it, you will pay 25%. But that price needs to be higher because just by taking the 25% or 20% and moving it to a different month, you're losing. It might move your numbers around in your P and L, but it's not making you any more money. You're doing the carrying cost of not having the revenue up front and just getting it later in the month. You're just moving revenue to a later month. Never bet, never a Good idea. But I would give the option if this is a problem and give a higher price. Maybe it's 20% higher, but they only have to pay 60, 70% up front.

Hey, Mike. I'm Dakota Bray with Renown Landscaping out of Tucson, Arizona. I struggle with two different business models for our future. And one is I really like the package of like a 500, $800,000 location situation. But I also struggle with potentially just doing one larger location, kind of like the gentleman over there at 1.5 million or so to make that make sense. They would be about 15 miles apart from each other in that case. Or we could end up with like a larger commercial spot spot centrally located to like a million metro. And I just struggle. Like, yeah, it'd be nice and packaged at 800,000 ish with one overhead position. But then also it'd be nice to have everything in one spot and then potentially offer like a tree service to those companies as well. And then it'd be shared between the two locations. Anyways.

Yeah. What's your revenue right now?

600,000.

So I would grow to capacity 750 to 800,000. I would raise prices one time and see what that does to your profit margin. And then one year later make the decision to either a, take all the profit you just got from doing one year of profit mode and throw that into jumping to 1.5 or being like, that was pretty cool. Let's just do it again. Because I have a feeling that if you just raise your prices one more time and brought another $80,000 to the bottom line, you make more money doing that then go into 1.5. But you won't even know what that feels like until you've raised prices one time and been in profit mode for one year.

Okay.

We did have a 27% profit margin.

While growing this year, which I thought.

Was what was last year's revenue. 480. Okay, cool. All right.

And then also have like a really ideal operational instead of like a gm, like an operations manager in mind. And I just feel like long term he probably wouldn't be satisfied with just like coming in and already having a business set up versus I don't want to build it around one person, but I see a lot of potential to have sales office manager. And then because I'm sick of answering the phone, but having me do sales operation manager, really strong one. And then also having an office manager. I know you're kind of pushing away from that. I just, I mean, on my future projection spreadsheets, it Looks really good.

But it comes down to what you're trying to optimize for. If you want the bigger business and have the larger structure, it's not like you can do it and you're profitable in doing so. Your pricing is probably high and I can just tell. So you're probably pricing really good. And so you haven't hit that same profit crunch, which is fantastic. You want to keep growing, you have license. It sounds like you have the people to do that. The question is whether or not you split it off or not. That's a personal decision.

Right.

I think that it's a matter of. I think you're gonna need three people outside of yourself to get to that 1.5 to 2 million dollar marker. Is it easier to find them or is it either let this gentleman, you break it off and you go start another one, et cetera. Like that's just simply a personal decision.

Okay. And then maybe have like a call service or like maybe a central office, even if it's not like a private property or something to answer phones for. All those locations. Yeah.

Once you get over 800,000 and you say you get two locations, it starts to maybe make sense, especially during the spring rush to actually have something in house. So for example, you could do four months of the year where you do have in house full time person, other eight months of the year, you outsource it. So that way you don't have to go get a fancy office. It's temporary. When it's really. They can balance thing out one at a time. But even an $800,000 business during the off season, there's not. They're not being efficient in the office. They can't. There's not enough calls and enough emails and not enough leads. They're getting one or two leads a day, maybe three compared to 10, 15 and 20 during the spring. And so their efficiency just drops down to usually 10 to 15%.

Perfect. Thank you.

Got it. Three, two, one.

Right next to him.

Okay.

Hi, Mike, I'm Jose from Green Flex Landscaping down in San Diego. And my question is most about the franchise. Do you think I will be a good fit, me being all the way in San Diego because it will be the only franchise down there.

Are there other landscapers in San Diego?

Yeah, a bunch.

Yes.

Okay. And even though I cover right now around 30 miles area radius?

Yeah.

Would that be a problem or.

It'd be a problem for your profits in my opinion, especially if you're focusing on recurring services. The route density is so important and I Also believe that you'll get better customer acquisition costs by going after a smaller radius. Some of our largest markets are the slowest growing ones when they start from zero, simply due to the fact they're trying to boil the ocean. They have a million people in their market and in our fastest growing locations are 20, 30, 40,000 people that are zeroed in on a small area. They're taking three or four thousand homes and just pounding them with marketing. And they'll get 100, 200 customers.

Okay. Because at the moment, it's not like I drive from one point 30 miles and then I come back and I'm not driving. I usually go stay in one area and I cover all those customers. That's a day I go to another area different days. It's not. I'm not losing on the drive time.

Yeah, well, the drive is still to that area. Also, you lose out on the fact that when you're that spread apart, the neighbors of your customer base see you once a week. If you go to a narrow area, they will see your trucks all over the place. And so now organic leads start coming in from your trucks and when you go into profit mode, you are. You are. What the unsaid rule is is that you need to be having organic leads coming in. And when you start distributing your brand, that is where your trucks are rolling every day. You start losing the concentration of them seeing the truck every single day. This is how you're able to get the leads, come in organically, go into profit mode and turn off marketing. And so many times a larger service area eventually leads to. They can't turn off their leads and they can't go into profit mode because if they try to turn off their marketing, they would not get enough organic leads simply due to the fact they are trying to boil the ocean instead of a smaller radius.

Okay, makes sense. Thank you. Yes.

Three, two, one.

Sup, Mike?

I'm 20 more minutes.

I'm Sebastian from California. I run a mobile detailing business and have a high volume of lead gen with our cpl being around $5 from metads.

Sorry, can you restart? Can you restart your question? Go ahead.

I'm Sebastian from California. I run a mobile detailing business. So we have a high volume of lead gen. Majority of our leads coming from meta being $5. So with that being said, we have lead submit native meta forms gathering their info. Would you recommend automating the process by directing leads immediately to our instant pricing page or continuing to complet convert leads over the phone with? Obviously the goal of optimizing conversion.

What's your close rate right now on those leads?

So we do all over the phone right now it's like 25%.

Okay. Have you ever tested just sending them to a form with instant pricing?

I have. Not just because we can't track it if we connect it to the meta, but we can automate it by sending it once we gather their information.

So I would do two different ad ad sets, the one that you're doing now. And then I would take the exact same creative and I'd throw it behind a Facebook pixel that's going to the form.

Okay.

And then you'd still be able to track. And I would put that pixel on the thank you page so you know when they actually submitted the quote. And I would be tracking what my cost per lead is. But keep in mind the cost per lead will be higher on the Facebook pixel. So don't track cost per lead. Track your customer acquisition cost, because I have a belief that you will close 90, 80% of the second one.

Okay, Makes sense.

Yep.

Thank you.

Ideally, I would actually make it a checkout process. The way they actually. You have products like from Stripe and then just take the code and they actually buy the product.

Yeah. Oh, sorry. Three, two, one.

Hey, Mike Taylor here from Alaska again.

So can you stand up so everyone can.

Sure, no problem. Yesterday when we went through the workbook and talking about seasonal income and whatnot.

You mentioned something about irrigation and selling insurance policies. Yeah. So currently we charge 200 an hour to more than one hour minimum. To show up and do the startup in the spring takes about 45 minutes to an hour. And that's with two. Two dudes. So we're clocking $100 per man. Per man hour in the fall. Hour, hour and a half. And we charge to 220. And those are for our residential clients. If we do any commercial work, it's all by the hour, period.

I guess my question is, in addition to those service rates, we're 200 an hour plus parts if there are repairs. And again, it takes what it takes. You never know what the issue is until you dig the dig the hole.

What is your opinion on that? Or going back to you, your opinion on the insurance policy of charging, you know, $99 a month or 119amonth.

For the warranty per client. And I'm seeing, you know, 12 months and $100 a month as $1200 could be really worthwhile. And I, I think it'll only really be worthwhile if you can get mass Adoption across the entire.

All your customer base.

All the customer base. And we are the only people in the area. Like, we have a monopoly on the market, and we service 70 people. So if you can get all 70 clients on board with that, or even 75%, it really makes sense. But if you can only get five, then you could lose your ass.

Yeah. So this is what I would do. I have a video coming out on this. Member of copilot asked this question. We record it, it's gonna come out. It's like 15 minutes long. It's the same question. What I would do is I would do cure two and cure four. Cure two being upsell. Tier four being the recurring service. The upsell is this. Mr. Jones, it's going to cost you $2,000 for us to be able to fix this and get it back to just operational. Or we're going to charge you $200 per hour.

Right.

I'm assuming you just usually charge hourly rates.

Yep, just hourly rates. I want to cover my hundred dollars per man. Per man hour. It's best for two people, basically two laborers plus your parts. And we do 100% markup on parts.

Okay. So if I say I want you to fix my irrigation and you come and you start digging around, you're like, hey, this is going to be about four or five grand. Do you say that? Or is it like we just come and regardless of what we charge you, good luck. Like, do you usually give any sort of range?

I show up and give the first hour and usually can diagnose the issue within that first hour. And then I re. Approach the customer and say, this is what I'm estimating it's gonna take to fix it. Just know we're still by the hour, have your approval to proceed.

Let's go. All right, this is great. So this is what I would recommend. So you're gonna do exactly that same process. You're gonna say, hey, this is what I think the problem is.

You.

Here's what's going to cost to fix it. Approximately, we charge $200 per hour, et cetera. And then I'm going to say, by the way, if you want to pay this other fee, which is going to be an inspection, I will do an inspection of your entire property. And not just the one area that we just saw is the problem, But I need to see other areas. I'm going to check other zones. I need to check some of the system parts, etc. I'm going to give you the inspection. That's a cost. But If I do the inspection, I'll know every problem in your system and I'll be able to diagnose the entire thing and fix all these mistakes. And then the upsell to that is if you do that and you fix everything in the system and I get up to my standards, you can then be in my recurring subscription model. You're not gonna say that word. You're calling it something fancy. And it's going to be something of a membership. And if you're in the membership, I then if there's ever a problem, will come back. And you're not going to get this $4000 bill, but you're going to upsell them from the $2000 package to the $4000 package by fixing everything else that you think could potentially break in the next 12 to 24 months. Right. So I need this problem of $2,000 problem fixed today. Mr. Jones is going to be a prior two grand. Ish. Or repairing this one thing is going to cost about X. But if I do an inspection upsell, and then I fix all of those errors, so we get the entire system up to our standards. We. We then have this program where it says 99 bucks a month and then any problem whatsoever and we will fix it. And it's all included. So we can pay the $99 a month as $1,200 per year instead of this random 4, $5,000 repair that will spring up every couple years.

Can I throw a Hail Mary at that?

Yeah.

Okay. So living in Alaska with it being 40 blow in the middle of the winter, you can do as we have found out this last year when we inherited the company, you could do all of your due diligence and be as thorough as possible with winterizing the systems. But water will always find a low point. And we all know what water does when it freezes. And most of the parts inside the irrigation systems are plastic or poly. There were properties that we shadowed the original owners on that I know we did a thorough job. I'm 100% convinced of it. We have educated, we've been to classes. You know, dad was just in Vegas and became a certified installer here couple weeks ago.

Come springtime when we had to go fire those systems up, they had issues. So really good marketing ploy to the customer, hey, we'll take care of that. But again.

Coming into that and not understanding what the issues would be, am I setting myself up for failure? Do you. Do you still feel like that's a good business model? Because 40% of what we Fired up this last spring had issues and we had thousands of dollars of income to repair those. I'm afraid that we'll lose by selling the business model. Knowing what I know about the reliability of the systems in Alaska.

You bake this in like an insurance premium. You bake into the fact that we're going to assume that 30, 40% every year of the subscriptions are going to have this broken issue every single spring. And then you bake that into May. It's not 99, maybe needs to be 149, but I can guarantee you if they had to pay last year and $800 or $1,000 for someone to come fix this, they're actually a prime candidate to say get them this monthly recurring subscription and never worry about it again.

So if anything it just reinforces it.

Yes, 100%. Do you really think that you paying $10 a month on your phone for insurance, do you think they're losing money on that? No, they've done the math to know that only certain amount percentage of people will they have to replace phones on. They're making a killing on it. So you just need to know the numbers enough to what percentage on average each year will we lose money on. And then you bake this into the premium of the insurance plan.

Solid.

Yeah. Three, two, one.

Hey, Mike, My name is Adrian. I own luxury wash on wheels mobile detailing. I recently have been having a couple of issues. So I know we talked yesterday about the gm. You're either going to get operationals or sales and I had a sales manager and you know, our expenses were just too high. So I have my gm but it's kind of hard to have them out in the field and doing sales at the same time. So what would your suggestion be? We went to a virtual assistant where they answer all of our incoming calls, but we still have other call outs that need to be done and we have people that are out in the field at the same time.

But your revenue is high enough to where you're not in a working GM model, you're at what, how much revenue?

We're at like 650 right now.

Yeah, so you're like right in between that working GM model and then you're at the full time GM model which is more on the 800,000 marker. So I'd go one of two ways. A, grow the business so he's full time doing sales or B, I would raise prices, reduce capacity and just make it more profitable so then he can get back in the field. It probably turn off like Are you marketing right now? Yeah, we have you turned off your marketing. He would suddenly have time to go back into the field. But again, you can only do that assuming you have a recurring basis revenue model and B, organic leads coming in to at least fill Churn.

Yeah, so we have a lot of online bookings, but so we have a shop as well. So we're mobile and we have a shop. So it's like, it's like a lot for our gm. So we kind of shut down our shop services because I was like, it's just a lot for them. But I don't want to have two more overhead positions at the same time. Okay, so would you suggest they just be the operations or just do the sales?

You're asking do we grow to 1.5 or do we stay under 8? And that's just. You got to make that decision again. I would come back to you. If we're hurting for cash, I'm probably say be in profit mode and reduce the amount you're spending on marketing and increase prices. And then if, like, I want to grow the business to 1.5, fantastic, you'll need to hire two or three more people. Doesn't sound like you're super thrilled about that.

I want to keep it under 800.

Focus on recurring revenue, make sure you get enough organic leads to replace Churn, and then raise prices as you hit capacity.

Okay.

Which you might need to reduce capacity.

Because you have a lot of hands. I don't want to be. I don't want to go into the business. I like to be hands off and work on the business. So I know that creates two overhead positions. And if I add another salesperson, then it adds three overhead positions. It's not. It's just not enough revenue in there. Yeah. So would you have the gm, my current gm, do both sales and operations?

He'll only be able to handle that because right now he's. He's over his personal capacity. So the reason you're having to hire another position is because he's over his personal capacity. How do I. How do I either A, increase his capacity, training him, getting him some help, coaching, etc. Or B, how do I reduce the amount of leads that he has to service from a sales perspective, which is going into profit mode.

Okay.

By going into profit mode, your gm, it's like a reinforcing loop because by going to profit and turning off your. Your marketing, you get less leads. And by getting less leads, they spend less time on sales and more in production, so it compounds.

Okay. Thank you.

Give him a clap.

Oh yeah. Three, two, one.

Dylan. Hey, Mike. Dylan from Tacoma, Washington with Urban Roots Landscaping. So a couple questions. The first revolving around the website. We're excited. We just joined on with lawn care web design. So my question for you is, is it proprietary? The pricing model, the instant quote with the three pictures, I really like it. I've kind of checked it online. Or if that's proprietary to the Augusta franchisees, what would you suggest is the next best instant pricing option for long term web design? Yeah, I would use Jotform. I would be able to. You can build pretty close to what we have inside of there. We will probably one day allow something around this. The reason we don't is mostly around the fact it takes a ton of service time. Every location is extremely manual. It's a huge amount of support we have, we have dedicated full time people just for Augusta to be changing out instant pricing forms. It's extremely manual pictures, the pricing, all of that. So that's why we have not done it would have to almost double the price. So to keep it affordable, we're not allowing it. I think that down the road with Copilot we'll build it into the custom forms there and be able to take pricing directly from inside of there. But for now I would build it inside Jotform. I would connect with Zapier to the website and they can do that and then, you know, get as close as you possibly can, which you'll get very close. I, I don't believe Jotform integrates with service autopilot so we might be out of luck on that one. Then just do it manually.

Okay?

Yeah, just do it manually. Come into your office. They'll have to type it in and bring it across. Second question is if we. You kind of know our situation with going into a second location next year. We discussed maybe raising prices on our recurring maintenance and projects but I'm kind of unhappy with the rate or I guess the percentage of revenue that comes from recurring services. I want to get a lot more maintenance clients. It's been a slow grow process. Would you recommend only raising on prices to try to switch that on the projects and keep the prices the same or would you just go up on prices for recurring and one time projects? I would first off measure your close ratio between recurring estimates and one time jobs because that's going to be. That is very important to know that answer.

Okay. Yep.

So your close ratio is 50%. Is that 40% for mowing and. And 60% for projects. Because in that case, I would agree with you, but if it's flip flopped, I would not agree. So I would first track that, and then that will eventually give you the answer.

All right, Got it.

Thank you.