Mike Interviewed on Landscape Lighting Secrets

Welcome to the show, Mr. Mike Andes. What's up, Mike?

What's up, Brian? How you doing, brother?

Thanks for coming on the show, man. I'm doing great. Thanks for asking. Well, I'm excited to have you on, man. You've had quite the journey. I don't know, I found out about you, I guess, a few years ago, and I've been following you ever since, and it's been pretty cool to see.

See what you've done. I mean, you know, you've done some things that most people dream of, and honestly, most people are never going to be able to do for maybe a variety of different reasons. But excited to have you on and kind of hear your story and hopefully you can share some good tips with us.

Awesome, man. Thanks for having me on. I really appreciate it.

Now, this will be cool. We've got kind of a mutual love for the green industry and excited to hear about how you. So Mike, by the way, is the founder of Augusta Lawn Care. But Mike, maybe could you just do a quick introduction on yourself and what you're doing now and then maybe how you got started into lawn care?

Yes, I started mowing grass when I was 11 years old. My brother and I started Andy's Lawn Care back in the day, just pushing our lawn mow around the neighborhood. I think a lot, like a lot of people in the home service industry started really young. And I did so because I went to college when I was really young. I was 13 years old when I started college, and I did that because I thought I was gonna become a doctor, a surgeon. And so I was like, you know what? I'm get this out of the way as fast as possible. And so that's how I kind of paid my way through college, was mowing grass using Andy's lawn care. And then at the end of all that, I was going to go to medical school and I went to Africa for a couple months and volunteered over there in orphanages and hospitals. And I was able to do a lot of really cool stuff in terms of like birthing, surgeries, injections. I did a lot of stuff at the burn units in the pediatric side, so it was really cool. But then came back to the US and realized that I was not going to be able to see as many patients. There's a lot more paperwork and bureaucracy stuff around insurance. And more importantly, like, I didn't want to do the same four or five procedures the rest of my career if I was going to go really deep into surgery. And so I decided, you know what? I'M going to drop out. I'm just going to do the only thing I really knew how to do, and that's mow grass. That's when I started Augusta Long Care, and that was about 11 years ago now.

That's cool. So I think it's funny because, like, you know, growing up, I'm not sure how old you are, but I remember thinking, like, yeah, you had to go get, like, a corporate job or be a doctor, an attorney, like, if you wanted to be rich, you know, if you wanted to make money. And here you are, like, yeah, I don't. I don't want to just do the same surgery over and over to make money. Like, I want to do something that's fulfilling.

Yeah. Yeah. And it was just a function of, like. Honestly, it wasn't like, I love mowing grass. I had a lot of allergies to lawn care, like grass in general. So it was not necessarily anything beyond this only way I knew how to make money, and I needed to make money. So there was nothing really noble or grand about it. And I spent the first few years really not knowing what I was doing and not really building the business with systems. And for that reason, a few years into the business ended up getting a workplace accident because I was out on a job site. I got sucked up into the PTO of a dump truck and kind of on that rehab cycle and just in the hospital and stuff, realizing my business didn't have systems, it didn't have procedures, and it needed that. And so coming back is when I started actually making content, just like, walking through all the stuff I was changing in the business, creating systems around estimate videos, creating systems around compensation and paid performance, and just systematically just kind of sharing everything I was doing in the business. And. Yeah, so that was kind of the evolution of it all.

That's very cool. So you were doing that, like, you didn't have the vision of getting it to where it is now yet, or you were just doing that for your, like, one. One location, just by one location.

And then I started sharing it because I realized, like, if I would have had kids or dependents or family at the time, I would have gone bankrupt during that accident. And so very thankful I didn't and was able to, you know, get bounced back from it. But I know there's a lot of other people in home services that if that sort of thing would have happened and they didn't have systems and procedures, like, it would have impacted a lot of people negatively. So my hope was just to be able to Share the content and kind of walk through what I did in the next 12 months. We basically went from making really no profit. I was working 80, 90 hours a week to like the next year, year and a half we did, I did 280,000 distributions from that same location. And so it was the same business, just with systems, simplified services, really nailed down the operating procedures for the business. And then shortly after that, a year or two later, that's when we franchised.

So when did, when did you have that epiphany and vision of like, hey, we have something here that we could franchise or take multi location.

I really was, I didn't want to franchise. If I could have achieved the goal without franchising, I would have preferred that. And so I was sharing the content, talking about paper performance, had created the software around it and everything made the book available and just really like when you make content, people just had look at you as a content creator versus if I'm, if a franchisee and franchise or relationship. I wear the same brand, we have the same uniform. When I say something, they know that it's in their best interest because them winning equals me winning as well as the fact that I consistently saw people didn't really pay attention to the content until I competed with them. And it's like in my local market people were really paying attention and following the systems. And so I figured, hey, if we want to actually change the level of professionalism in the landscape industry, which is the goal, then I should just compete with every single landscaper and they'll be forced to kind of adopt things we talk about like answering your phone and having a great website and having compensation plan for your team. So that's really the North Star. The route to get there most effectively is through franchising.

That's actually pretty genius. I've thought about that like, because I don't have an active lighting company right now and I'm like, man, what if I, what if I just opened up a location in all of these? Like, I think people would be like, oh shit, okay, we gotta, we gotta get on our toes. We'll start implementing what we're hearing.

Yeah, 100%.

That's awesome. So how many, how big is Augusta Lawn care now?

About 187 locations now.

And so yeah, it's kind of more or less steady growth, you know, 40 locations or so a year. We're kind of just starting now to think about really scaling it up and just making sure that the, the back end infrastructure and systems in place can facilitate the Thousand location marker.

Wow. Congrats, man. That's way cool. So 187 on the way to a thousand.

Yeah, we think we kind of need to get there just to kind of like, get the full penetration of the map. And so by doing that, again, the goal is to compete with every landscaper. Not because I don't want them to lose, just because I want to change the level of professionalism. And if we answer our calls, the customer now expects that. And if the customer is going to choose based upon who's doing the most efficient and communication, their team is the most professional. That's kind of how we, you know, rising tide will float all those boats.

Okay, very cool. So on the. On a Augusta Lawn care, on an average location, what's like the average revenue profit goal for each location?

Yeah, so I think this year, you know, we have to disclose all this stuff. So I think this year it was 519,000.

And, you know, we've got ranging everyone from just starting out to 2 million plus. So it's a wide range for the average, I think it's like 519. And our goal is always to get them to $500,000 in revenue as fast as possible, and then to switch them into what we call profit mode, which is raise your prices over the next few years as you hit capacity instead of getting more trucks and hiring more people. So we really, like. Our sort of, like, location goal is between 700, 800,000 annual revenue, six to eight employees during peak season. One general manager that was working out in the field with the crew, and then command center, which is behind me here, doing all the admin and backend work, doing sales online. And so that's kind of like our perfect kind of picture. And our kind of target is 200,000 on that 800,000 revenues, 200,000 profit. So it's kind of like the Augusta model.

Sweet.

No?

That's awesome. What's the average ticket for a franchise.

For, like, their services they provide to the customer? Yeah, yeah. So our regular mowing service probably average around $55 per service. And then our annual kind of customer value, ACV would be right around $2,000. Because other ancillary stuff that we add, whether it be Christmas lights or winter services or mulch installation or all those other services.

Man, that's freaking epic. I mean, in the landscape lighting world, in my group, we just did like, an informal poll. So, you know, don't. Don't come after me. Everybody in our group, it was like the average ticket was like $13,000 and some are you know, doing $4,000 jobs and some are doing multi, several hundred thousand dollars jobs. But just on average like I feel like landscape, lighting and average jobs like 10 grand. And so I'm like man, you know an average ticket of $55, you know an average your ACV was 2000. Like we have like the ability to do five times that, you know. So when I hear people like saying and coming up with excuses, I'm like no, these guys are doing it with like low average tickets. There's so much, so much potential out there.

Yeah. The big focus for us is recurring revenue, right. So like if you go project based you can build a million dollar business pretty quickly even if you focus on landscaping and hardscaping. But really our goal is that the location run without the owner and to do that having recurring revenue where I know the revenue forecasted throughout this whole year based upon what's already been sold. I don't need to depend on new, I don't need to be running ads, I don't need to be running any sort of new sales. I'm simply just taking my current customers, raising prices on them as time goes. That's really the model. And so recurring revenue in general is slower upfront ticket, slower growth, lower average ticket, but the long term enterprise value is much higher. And so if you look at any sort of sale or acquisition or mergers, roll ups, et cetera, your valuation is just so much higher when you have recurring revenue. And so that's really our focus. Like generate a recurring revenue business that can run without the owner. And if people, you know, have five, 10, 15 locations and roll that up, the valuation will be two or three times higher than if they were to do one time project based work where there is no guarantee that it's going to be there in six months from now. And so that's kind of, that's kind of the ethos.

Yeah, I like that. I appreciate you sharing too. Kind of your model of like let's get people up to 500k in revenue and then we can focus on profit. I'm the show's called Lighting for Profits. I'm always talking about profit. But I think people do get confused every once in a while. Cause I'm like raise your price, raise your price. And I believe in that. Like if you don't start pricing like who you want to be, then you're never going to get there. You can't, you know, you can't. If you're just a solo guy today, you can, you can charge Whatever you want. It's just you're going to stay stuck there unless you raise your price. But some people I think kind of like cut off their own leg and not realize, like, no, you just need to go get jobs, you just need to get customers, you just need to get in front of people. You do have to worry about profit enough to stay in business. But like I would reinvest a lot of those profits back into growth, into advertising and marketing, and land the deal with the front neighborhood clients to get the rest of the neighborhood and stuff like that. So we align heavily there, like focus on revenue first. Once you get to that 500, 700k, that's when you start focusing on profit. Because I see a lot of people at that point trying to scale. They hire two more installers or whatever and then they're like, well, I'm broke, I don't have enough money to advertise. I'm like, oh, because you didn't focus on profit?

Yeah, 100%.

So when you did your first location, I guess what was the biggest bottleneck that you had to solve to get Augusta past that first $1 million in revenue?

Most of the time to get past a million, you really just have to be good at sales. And so at that time, Facebook ads was kind of like the arbitrage in terms of advertising, but really as long as you can sell, as long as you know how to get on a customer's property, identify the problem, show the solution and then get them to a sale. Kind of like we were talking about prior to the interview, just about like, you know, just figure out how to sell this thing. If you can sell really good, you can build a million dollar business. What kind of differentiates a good million dollar business versus a business that is pretty lousy to operate is whether or not you can be a good leader. And so I've always said like, you know, grow up to 500,000 using off the back of you, you literally could just knock on doors and talk to people and sell 500,000 revenue. But the business that goes to 500,000 to a million, 2 million, 3 million is a leader. Someone who can actually attract great talent, have great team meetings, train people correctly, create systems and procedures and work vicariously through their team and be effective without them having to be on the property every single time. And so that's a very different business. I've seen businesses that are doing a million or 2 million and the business owner still runs ragged. And I've seen businesses that do 5, 600,000 annual revenue the business owner hardly has to think about it and it prints money, very high profit margins and I'd just rather have the second business. And so, you know, focusing on leadership is usually the thing that gets you to that million dollar marker and beyond.

Is that the business owner like reading a leadership book and becoming a good leader or is that them recognizing like I'm not a good leader, I'm going to hire one?

It could be a little bit of both. I think if you're a hands off owner and you're kind of like you're hiring an operations person or a general manager, that could certainly be an option. Like you just go out and hire someone that's really good at it. I think that for the vast majority of us the business is not profitable enough to sustain. Hiring a high level person that could just like hire, fire, train, recruit and basically build the business for you. Most small businesses can't afford that person. And so if you're not going to be able to afford them, you're going to have to have systems in place in order to make that happen. And so a lot of times it's like a sale, sales, systems and leadership. You sell and get the jobs, prove demand for your product or service, but then create systems in place that you can hand leadership off down the road or that you, it makes it easier to lead when things are simplified, when things are standardized, when you have systems in place. And so that can be a great intermediary if you're like I'm good at sales, I got recruit the business, now I need to move in this leadership thing that I stink at. Great. Why don't we systematize the business so it's easier to become a leader instead of you juggling a bazillion different weird one off systems inside the business.

Yeah, that makes sense. I like that. So sales system then leadership. So let's talk about systems. I mean sales. I just already talked about it. I'm going to talk about it every day the rest of my life. I feel like I love it. I feel like it solves a lot of problems to get you to that point where the next problem is systems. What's that one system that you think every service business should have or maybe build first? If they're like I don't know, where do I start? What, how do I get into these systems that you talk about?

Instead of how to create system? I like to think about in which conditions do systems exist. I think whenever I think about systems it's like, well what's the opposite of an environment where systems thrive. And I would say it's complex and custom. So anything that's complex, hard to do, custom is different. Every single time is the exact opposite of what a system is. And. Well, what's the opposite of custom and complex? It's simple and standardized. And so if you're like, oh, I want to create a system for my sales process. Process. I want to create a system for how I answer the phone. I want to create a system for how I answer emails. Great, let's make sure it's simple and standardized, which means it's simple, easy, and then second is standardized. We do the same way. The same way every single time. And so I would just encourage people to use that as the framework instead of, like, what is a good system? Because, like, for example, we use a system called estimate videos, where once you're at the project, the estimator takes a video of the project, Even if they. They are not talking to the customer. We're gonna take a video of the project. It's attached to that job, and that estimator will never come back to that project to do an orientation of the project, et cetera. And this is a direct result of me being out on a job site and getting in that accident was like, I should never have been there because there should have been a video attached to the job to where the crew did not have to ask me what was going on. And so that's an example of a system that will prevent you from being out in the field with the crew and crew, preventing a bottleneck from happening. And so many times the system is put in place just wherever there's a bottleneck in the business. And many times when you're switching from sales and trying to grow the organization, it's like the handoff from sales to operations gets really, really.

Bottlenecked there. And so that's where something like estimate videos is the system that allows the estimator to hand things off to operations much easier. So I'm looking for bottlenecks, and then I'm looking for how do I simplify it and standardize this process?

Yeah, I love it. Well, and I like how it relates to, like, now all of a sudden, you're a better leader because there's less chaos in the company, and now people want to stay there longer because they're not like, holy cow, if this guy could ever get his crap together, it might be a decent place to work.

Yeah, it's easier to be a leader, too, when, you know, jobs are standardized and you're doing the simple, you know, same, same few things over and over. Not every single job is different. Every single is custom. Like in that environment, it's so difficult to get employees, train them, and actually have them do a good job, that you spend most of your time just trying to be a good operations person and just like trying to get the jobs done right and the customers happy versus stepping back and actually leading and training them, thinking about their future as members of the team. And so certainly having systems that has so many downstream effects.

Yeah. Love it, man. That's cool. All right, put you on the spot a little bit here. What's in terms of leadership? What, what's maybe a leadership mistake that you've made in the past that can learn from?

Yeah, like I think.

I think the biggest thing we can do that's wrong as leaders is being a leader that the business does not need. And what I mean by that is like the role of a leader in the business and the role of the owner changes as the business grows. So as a solo operator, you're out in the field, you're doing admin, you're doing sales, you're doing operating, you're doing everything. Well as the business grows, you can't do that. And you got to stop leading by example and start actually leading through leadership and through systems and through procedures. And so I kind of think it's like you have a solo operator and then you kind of go into a working gm. Even if you're the owner operator, you're kind of working as a working gm, you're doing some management. You're also kind of in the field with the crew and it looks very different. You're leading through example many times. And then as you become Even larger, usually 6, 7, 8, 9 employees, now we're moving into the, you know, full time gm. You're quote off the truck, you're quote out of the field, and you're full time usually doing sales. You have an admin person. So the leadership hat that you have to put on is very different because now you're not. You can't actually just go show your crew how to do the work. And then as time goes on, you actually have a leadership team underneath you. We call this the GM plus model. Now we actually have, you know, a manager for the office, we have a manager for operations, we have a manager for sales. And then I'm above all of that. And now this business looks very much like a 1.5 to $3 million company. And the leadership that I have there is very different because now I actually don't even have interaction with my frontline team members. Rather, I have to vicariously through my leadership management team, make changes happen. And so very different. Leadership is required at different sizes of business. And for that reason, many of us get led astray because we listen to people that have a billion dollar business or $100 million business talk about leadership, and to them they are saying what's correct. But that size of business won't reflect over to your $200,000 year business. And so I do believe that one of the biggest misconceptions and problem mistakes I've made is trying to apply the wrong leadership advice to the wrong size of business that I'm at.

That's gold. I love that. That's well said. I know you listen to like the Dan Martells and stuff and it's like, oh, yeah, of course. But it's like, I, I don't have time to do that. How am I gonna. I literally have to go do the job. I have to be there. I have to lead by example, you know, like, I'm stuck on the truck. So how do you decide when you're at that phase? Because I think most of our listeners are, they're sub a million dollars in revenue. They've been, they've been frustrated, they're stuck. They have a couple people that help with the installs, but they're still doing most of the sales things like that. How do you decide what to delegate and what to like, it's hard to let go. You know that, right? So how do you decide what. What to delegate and what to personally obsess over?

Yeah. Like, I think first off, if you sell really hard, it basically puts more pressure on all the systems of the business and it usually becomes pretty easy to identify where the constraints are. And so a lot of times when people get ahead of themselves, they're like, I'm going to fix this thing in my business or I'm going to like delegate. It's wait, wait, let's just like double the input of leads. Let's double the amount of sales. Let's put your backlog so far out, all of a sudden you will find where the problems in the business are and then you can identify them pretty quickly. It's like caveat number one for the people who overthink. Because if you're in that camp, you'll hear what I'm about to say and be like, I'm going to like delegate everything in my business. Like, whoa, Whoa. You do 100,000 in revenue, there's no reason for you to start delegating. And so the second thing I would say though, like in terms of what to delegate, it's usually the things that you are not good at or you do not enjoy doing typically because if you enjoy doing it, you'll do more of it. And if you're not good at it, the more you do it, the worse the business is off. And so I'm usually trying to either fill in a gap in my skill set, I'm not good at it, or I'm trying to have someone else do a task that I do not enjoy doing so that I can focus on what I am good at and what I do enjoy doing. And usually that's where you have outsized returns. And so if I can get someone else to do like 80% of the job that I'm not that great at or I don't enjoy doing, but then I go focus on something I have like a 10x on everyone else on in terms of my returns, then like my time should be focused most on that higher leverage task. And as like a broad rule of thumb for people that are under a million, I kind of like look at each of the business departments as sales, operations and admin. So sales, I get the work operations, I do the work admin, I kind of grease the gears, payroll, email, phone calls, et cetera. And I think as you move from zero to a million, what you want to be doing is focusing more on the higher leverage task of sales and less on operations and nothing on admin. And so usually the first thing that we delegate as you're growing from zero to a million is your admin. So phone calls, emails, create systems in place for all that stuff to be handled. Invoicing, billing, automations, follow up, etc. As time goes on, you step out of operations. This is when you get off the truck. And then you actually hire someone to do operations management for you is usually your operations manager and they're responsible for that. And so you can spend the vast majority of your time in the highest leverage task, which is generally sales. Now the only way I see this usually flipping in terms of sequence is if the, the owner is not good at sales and they love operations. Again, you love it, you're good at it, great, you stick with it. But then you got to go find someone to go do sales, to go scale the business past a million. And so usually that's the sequence I see most owners following though is delegate your admin, then delegate your operations as you near that million dollar plus marker, then you're going to go delegate sales.

Yeah, well said. I completely agree with it. What's kind of crazy is when I got my start in the lighting business.

We hired two installers pretty quick because I was like, dude, I do not want to be trenching wire in the Texas heat. I was in Texas at the time and I was like, this sucks. And I knew I was good at sales and I wanted to do sales. So I'm like, we're doing that. But it took me a couple years to hire an admin because I made excuses about, well, where are they going to work? I mean if I get an admin then I still, then I have to get a. Can't work out a storage unit. We got to get a warehouse and that's another, you know, fifteen hundred dollars a month or whatever. And, and I just made all these excuses. I'm like, plus we're not that busy. I can just answer the phone here and there. And I, I found that almost everyone in the lighting industry is the. They followed my exact same path, even though they're not. They didn't know. It was just like that's what we all do. How important is it to replace that admin?

You only have so many hours in a day. It's a finite resource. And so if you're using all of your current hours to their highest output, the only thing to cut is.

The least valuable thing in your day. Now so we have to actually quantify what's the most valuable and how do we actually quantify those values? Usually our replacement. What's our hourly rate to replace this? And so to replace an estimator, someone has experience out in the field or can even do operations and install the work is usually a much higher skilled, valuable task compared to someone that can answer a phone or send an email or do these other tasks. Now can they do it? Well, maybe not, you know, maybe not get the best of the best. But I'm okay with 80% so that I can go focus on higher leverage tasks. Are they going to answer every single thing the way you would? Are they going to know all everything about the wire and the lights over the phone to the customer upsell them? Probably not. But the focus is that I spend now, let's go. 30% of my day goes from admin to now sales. And that extra 30% and the discretionary effort that happens when I'm in the shower, et cetera, is all falling on a much higher leverage task. So that 30% extra time spent on sales doesn't lead to a 30% increase in business. It results in a double or a triple in the business because now I fully focus on it. And so you got to convince yourself of that sometimes to make the jump to actually go allow someone else to do 80% of what you're currently doing and take the potential hit on. Yes. The extra cost of admin is a straight overhead position position. So is hiring a general manager, an operations manager that doesn't actually produce work out in the field. And so that's why we have to work backwards from what do we want the business to look like? What is the end goal of this? And then work backwards like, okay, if you don't want to work on the field, okay, you're going to have to have an operations manager, you're going to have to have an office manager. Okay, great. How big of a business do I need to build in order for this to be able to actually sustain these other roles? And so working like, I think the biggest thing we want to focus on is like how do we work backwards from the goal that we have for the business and then figure out what roles will we have to build and then building the business to a size that actually sustains those roles.

Yeah, I love it. Well, I think, you know, we say admin is a, is an overhead like non revenue generating position. But at the same time I was, I was having a chat with one of my clients the other day. It's like, well, you're not able to be focused like you can't be a game salesman material when you just got off the phone with an irate customer. Like how are you going to go from like, oh man, like this person hates me and they're going to give us a one star review to like, hey, we're awesome, whatever. Like you have to separate this role. So while that position, while it is true that they're going to be an overhead position, it frees you up to be in your unique like it allows you to be your number one and be the best at it. So it, and that's not going to show up on a P and L, you know, but the fact that you are going to be able to close better, you're going to be able to perform better. I mean there's a lot of value in that, you know.

Yeah, for sure.

Okay. So actually I want to do something, I've got, I'm starting a new segment today, so. Lucky you. I'm gonna, we're gonna do this thing, it's called, it's really fast. It only takes like 30 seconds. Is called quick hit Controversials. Are you down?

Yes.

Quick hit controversials. It's like a lightning round. We're just gonna ask you, like, what is it, six or seven questions, straight up answers. If you want to make an explanation, you can. If you don't, then don't. All right, so hiring family. Smart or stupid?

I'm gonna go with smart.

Okay.

Should solo operators even try to scale or should they just stay lean and profitable?

Depends on their goal.

Better to take a low margin. Big job or high margin? Small one.

Depends on your goal.

But if you had to choose one.

Probably small and large margin.

All right, cool. VAs for service businesses. Useful or overhyped?

Definitely overhyped, but useful if you have the management in place to track their performance.

Is profit more important than growth?

Really depends on your goal. Because if you're going to try to take a company public or do a merger and acquisition with a PE firm, they could care less about your profit. They just want to see massive growth.

Nice. And last one. Should you take out a loan to scale faster?

As long as your confidence in the return on that investment is significantly higher than the interest rate. Theoretically you should. But I think as a broad stroke for the vast majority of people, since we know that 80% of people will not make their business successful, I would probably say don't take out debt.

Nice. All right, that was awesome. That was. Quick hit Controversials with Mike Andes. Our very first ever. Thanks, Mike.

Very controversial.

So controversial it's probably going to make us get 200,000 subscribers on YouTube. We'll find out.

Well, now it's good stuff, I think, you know, on the last one, the loan one, I think like you said, like on paper, like, if the loan's going to cost you 8%, but you can make 20%, then why would you not just leverage the debt? But the reality is most people suck with money.

Risk adjusted returns.

Exactly. Oh, if only it was that easy. All right, we'll get back to my regular kind of outline. I want to ask about growth. You know, that's what we're. We're always talking about. Like, I mean, I'm like, yeah, you want to make more money so that you can grow, so that you can get whatever it is that you want in life. You know, if you want. Want more freedom or you want to have a legacy or whatever it is. Right. But people don't necessarily know when to grow. I've been talking lately about, like the, you know, kind of ready, fire, aim movement, where's the line between growth and chaos. Like how is there too early to grow?

I think.

I think growth became, becomes chaos when you.

Are above your, your max capacity in one of three areas. The first being your labor capacity. So if you're overworking your crew, eventually they burn out. Eventually, you know, people revolt. People don't want to work seven days a week. They don't want to work 14 hours out in the blazing heat. I think if you're, if you are over capacity your assets. So if your trucks and equipment are being used way too much, you're not able to get maintenance in, they are breaking down, et cetera. And then I think the last one is your personal capacity. If you're above that now in the short term, whether it be asset capacity, your personal capacity or your labor capacity in the short term, if you extend past them, you will make more money and you will be rewarded in the short term. But in the long term you eventually burn out. And the biggest reason for business failure is not because of lack of capital, but actually just burnout personally, especially in a market where you have usually you are supply constrained. Is a demand constrained? We have plenty of people that want the work, but it is a supply of the labor that is actually the difficult part. And so I think it becomes chaotic when you go above your, your capacity. And I think the vast majority of us, it's our personal capacity to actually extend past. You are capable of building a hundred thousand dollar per month business, but your business starts to grow so fast that now it's $150,000 per month. And you do not have the skills to be able to actually run the business efficiently or effectively. And in that gap between what you are capable of and you have the skills for and what the business is actually doing can be very detrimental and usually cause chaos. And that's where I see a lot of struggle when people start growing too quickly.

Yeah, that's great, Great perspective. Have you ever regretted growing too fast?

I think I have gotten out of sequence on like I, I, I really like having gross spurts and then leveling for a second and creating infrastructure. So I kind of think it like when you build a high rise building and you want to do concrete all the way up you go, you know, story by story, you pour the concrete, you let it set. You pour the concrete, you let it set. You pour the concrete, you let it set. So there's actually points in time where you need forms just to keep the thing together. Because if you didn't you'll just, just be A sloppy mess. And so I kind of like going through periods of growth and I'm pouring the forms, I'm pouring more concrete, but then I gotta let it set for a second. And I usually see that as like, usually sales, like increase revenue. And then I'll go, okay, I got systems, I gotta hire talent, I've gotta have procedures, I've got infrastructure. I've got to make sure things are done legally. I've got to, you know, now don't do accounting, create more processes, create another department. And so I look at it as kind of like, usually as not a linear growth, but more like their steps. And I might go through a year, two years where we don't grow a lot of revenue. But like, I know that systematically we have gone through and made the business more structurally better by adding infrastructure. And so there's certainly times where I think we have grown too quickly. The biggest example is Copilot CRM. A year and a half ago, we tripled in like a matter of like 30 to 60 days, the amount of people inside the system. And I was relatively new to software and didn't have the talent pool, the team at the time to really navigate that. And so in theory, like tripling in 30 days. Great. Yes, this is software. Let's go. All of a sudden you have spammers, you have people hacking the system. We had a lot of problems. It led to a lot of bugs, downtime for our members. And so that was definitely a time because we grew too quickly. Now it took me 12 months of level setting and like, okay, we are going to hire people, we are going to completely rebuild the stack and change the code base. There's periods of time where then once you step back from a period of growth, you say, okay, let's actually take some time and let this set. And I think that's, I've become more comfortable with that. Less of a rush is really important to allow things to set and realize like, okay, like we are going to grow this thing, but like, I don't need to do the next six months, I don't need to do in the next 12 months. And if it means like, for example, we have not really like promoted joining Augusta outside of just my content vicariously for people seeing my shirt usually for years. But now it's like, okay, we're at the point now where the infrastructure, we can handle this. We could double or triple and we could, we could make it work. And so now we're going to pour gasoline on it. And you know, but, but I think I think so many of us are in a rush. We pour gasoline on, on a spark instead of building the fire pit, instead of building the safety mechanisms around it. That could potentially take years. Having the talent pool in place to be able to make sure that when that growth comes, you can absorb it, be profitable in it and thrive and serve your customers. And I think I've become more comfortable with that as time goes on. Realizing that like flashes in the pan and growing really fast isn't but all that it's made out to be.

Yeah. Love it. In your book P4P, you just mentioned like labor capacity. I know you talk about like efficiency ratio. I think it's funny because when we start our business, like if we're paying someone for 40 hours a week, 60 hours a week, like why would they not produce 40 hours a week, 60 hours A week we're paying them. But in reality, I can't remember what number you said, but I was shocked how low you said it was. What's a good efficiency ratio for someone that's trying to start to measure their capacity and, and how much they're paying for their guys and trying to job costs and things like that.

Yeah, so like we usually compare budget hours versus actual hours. So it's, it's, it's, it. That way you can translate across different industries because if you use as a function of revenue and you have a whole bunch of material involved, usually you're gonna have much lower percentage of your revenue going out the door to direct labor. But when it comes to labor itself, I like budget hours. So how long the job should be taking and, or how much you're actually charging for divided by clocked hours. And if you, if you look at that efficiency score, anything above 70, I'm okay with anything under 70, no bueno. I'm usually not going to see a profitable business. I'm ideally shooting for 90% or above. If I have a business that is 90% efficient labor, I've rarely seen them be unprofitable and so. But anything above 70 is usually when our crew starts making like extra bonuses on paper performance. The culture is decent. There's not a ton of training and newbies in the team and that basically accounts for drive time, unload and load time. And that number should be much higher. If you're a project based company where you go to the job site and just stop all day long. When you have a route and you're stopping 10, 20 different visits in a day, that's when that number will creep up higher or Creep up. Like more waste creeps in the more stops you have in a day.

Well, when people get to this phase of their business, when, you know, we always talk about working on your business versus working in it, this is one of those things where you, like, take a step back, you spend Thursday afternoon to start measuring your numbers and analyzing them and see what they say or whatever it is. This is when they can realize, wow, I do need to charge more, because I thought this was going to take us a day. And, you know, it's not a big deal. We had to go back the next day for two hours. But the next day, two hours was also drive time there and back, and three guys on the truck. And then they didn't have another job after that, so they wasted a whole day's overhead. I mean, can you talk a little bit about how important it is to know your numbers and what are some tips that you have to help, you know, formulate your own pricing strategy and get to know how much it costs to run your business?

Yeah, like, if you want to be really.

Vicious about it, pay your employees based upon your budgeted hours. Because now all of a sudden they will be. They will not be so thrilled about the two hours you have to go back to a job site or the extra drive time because you forgot a tool or you miss mismanaging the hours or not charging enough. And so the ultimate way to make sure that you charge enough is give a percentage of it to your employees, because they will then keep you accountable for every single job, every single mistake, every single thing in the business. And so that's like the ultimate form of making sure you have a good pricing system is just give a percentage of it to your team. And all of a sudden you will get very accurate. And if you don't, you will have a revolt on your hands. And you also start to realize that the team has an extra 30% inside of them simply because they can be more efficient. They can remember to get all the tools for the day. If you forget a couple light bulbs and you're 30 minutes or 40 minutes or an hour away from a job site, that could reduce their efficiency that day by 20 to 30% just because they forgot a couple of light bulbs. And so the forgetting of the light bulbs comes from you not incentivizing them to actually remember the light bulbs you're incentivizing based upon time you're based on. Like, them driving in an AC vehicle is much better for them than being out in 100 degree heat. And so you Wonder why there's so much drive time. People forget stuff and they make mistakes and they would go back to the property and there's back and forth because you've incentivize them to. The longer you work, the more money you make versus getting this job done efficiently, profitably and to the satisfaction of the customer, you make more money. And so I always just look at our incentives. Like if the output isn't what I'm wanting, like Charlie Munger says, you show me your incentive, I will show you your outcome. And so if your outcome is lackluster or not what you want, just look at your incentives. And so if you don't have a good outcome of profitable jobs, customers aren't happy. Lots of inefficiencies, like what's the incentive for the crew? What's the incentives for the team member to actually make sure that's profitable, done efficiently? We don't forget stuff, the customer is happy when we leave. And so I'd really just like look at it more deeper than just like pricing. But like what are the incentives of your team to make sure we don't miss these jobs and we don't go way over budget hours?

Yeah, very cool. And what percentage, I mean how does a company figure out? Okay, I'm gonna, I'm gonna allocate 20% of revenue here toward, toward these to my install crew. How do they come up with that?

Couple things. So I have a, what I call the golden rule. It is 25 rule. It's very, very broad. So I think in your industry this would be way too high. But I use it nonetheless in all home services because it has applied and is across the board. When I look at home services, any industry, if their base pay to pay employees is more than 25% of the rate they charge customers, I almost never see that business make money.

So if you're paying 35, 40%, let's say you're paying your employees 25 bucks an hour and you're charging the customer $75 an hour, that's 33%. I can almost guarantee you will not make money. You just won't. And so that's the first like very, very dirty rule. The reason I say it's dirty because especially like lighting, chemical applications and some of our higher margin services, you spend most of your stuff on things like acquisition and less on direct direct labor. And so but as a, as a, to answer your question more specifically is I would look at last year's direct labor, that is the revenue or the wages you to Spend on employees that were actually doing the work. I would take that as a function of the labor revenue they earned last year. So, for example, let's say you did a million dollar business. 200,000 of that was supply markup, material markup, et cetera, fees, etc. But it was $800,000 of labor revenue. This is $100 an hour, whatever you're charging the customer. But you made 800,000 in labor revenue. I'm going to take that and I'm going to say, okay.

800,000 in labor revenue. I had $200,000 in direct labor expense. Well, 200,000 divided by 800,000 is 25%. So I could assume that about 25% of my labor revenue goes to my employees. And that would be a good benchmark to start pay for performance at. So when an employee walks, hey, you're making 25% of this job, regardless if it takes you five hours, 10 hours, or 20 hours, you're making X amount. And so that would be a good way to benchmark it. And I would say if you're like, man, I'm really struggling. I'm hardly making any money. We're struggling the business, okay, maybe you make the threshold 20%, so you make the extra little spread there. And that's how the business can move forward and be profitable. And if you're like, well, actually, I'm really profitable. I don't really like. I just want to give back more to my team. Great, then don't change the percentage. Keep it at 25%. Give more back to your team. And now just have a culture of accountability. And it's a culture that attracts a talent. Instead of everyone just sliding the lowest common denominator of effort that's put towards the job.

Yeah, that's awesome, man. I love it. By the way, guys, if you have not checked out Mike's book, P4P, go get it. Because people have been talking about it for like the last couple years. I'm like, just go get his book. He tells you everything. So it's all in there. When it comes to pricing, how are you. How do you build trust with customers? When you're. You're trying to charge more than the just average guy with a truck.

You're on mute.

Sorry, my thing went on mute. My bad. Yeah, like, the bottom line is prices. Pricing return by value. And that's really how we always want to be. Pricing is based upon value. And so I, you know, a transactional always take place as long as value is higher than price. And so what that means is if I value this, this water bottle at $3 and it's on sale for 10, I'm not going to buy it because the value is lower than the price. Now if you put me in the middle of a desert, all of a sudden I think it's worth a hundred dollars because it's full of water. To me, if it's priced at $10, I'm going to buy it every single day. And so the thing with that, that ratio is like value being higher than price is there. You can always lower price to get the transaction to go through. And so if we're going to price ourselves based upon the competition, based upon all these other random factors, then we will always lower price versus the harder thing to do is increase value. So how do I make the, how do I make the customer more thirsty? How do I make the value that they prescribe to and ascribe to my service be higher? Well, I answer the phone on time. I have professionally wrapped trucks, I have uniforms. I have a great looking website. They can get their pricing immediately from that website. There's a host of things we can do to improve the value of the experience to the customer and thereby be able to charge more on price. But the slippery slope we all fall into in home services or any entry.

Low barrier to entry industry is you can always lower price in order to make the transaction go through. And that's a slippery slope.

It's the easy way out and everyone takes it. I took it. Until you learn that there's no money left for your mortgage. So at some point you'll learn those things of answer the phone, wrap your truck, uniforms. And that's what's crazy. You mentioned it. You're like, no, I'm just going to start competing with these people so they'll start answering the phone. A lot of these things are basic. It's not like hidden in some super secret book in a super secret vault. Like if you just do what you say you're gonna do and do things that you would want as a customer, it's not hard to differentiate yourself still in this world.

I agree.

What's. I guess the last question we can wrap up. I've got about 400,000 more for you, but I was planning on talking to you about YouTube and Facebook and all the, all that stuff. So we'll have to have you come back on because I kind of have some other things I want to talk to you about. But, but what's a, what's a habit or routine.

That you Credit for helping you really outwork out. Think your competition.

Yeah, I think.

If someone's just getting started, or I would say, like, the one thing we all have is, is the ability to work more hours. And I think that.

Although it is fancy and cool to say work less and get more output, most people do not have the skill. And I would wrap myself into the same, the same group. Most people do not have the skill to work less and have a higher output. They do not have the skill. And the people that are saying that have usually been in the game so long, have so much experience and have so much skill that they can leverage less time, make one or two good decisions a year. That's like the famous quote from, like, Bezos, Warren Buffett, like, make one or two good picks a year. And I'm good, right? After 80 years for Warren Buffett, after, after 40 years of building Amazon, working his brains out, yes, you can go and rent Venice for a weekend for your wedding, but that is not the thing that gets you there. Yeah, it's not the thing that gets you there. And so I think that the thing is, the vast majority, 98% of people would be better served simply figuring out prioritization of the hours in their day so they can deploy more time and energy towards the business they have. Because the number one thing I know is if you just deploy 25% more time to your business, you will have at least, at least a 25% higher output from the business. What I can't guarantee is whether or not you have good skills and all the rest of it that's actually going to make wise decisions, et cetera. But if you just spend more time, you will have a higher output. And so I would say that the first, lowest hanging fruit for the vast majority of us is just more time and energy deployed against your goal. Like, if your goal is to have an XYZ business, the question just becomes, is your goal to have an XYZ business greater than your goal to also have a great weekend, to be a great gamer, to drink on the weekend every. To get plastered every evening? Like, these are the goals that you have to determine and prioritize them. And your time, your schedule, your calendar, determines your priorities far more than whatever comes out of your mouth. And so I would say the first thing, and then as time goes on and you gain skills, you do have more leverage with your time. Then it is less about outworking and working hard and hustling and much more a matter of how do I take a limited supply and resource and extrapolate it much greater so that I can have leverage usually through things like code content as well as the people around me. So that one good decision for my leadership team then trickles down to 50, 100, a thousand people and I have a great impact. And so as you grow the business, your time becomes more levered and, and if you build the business in a certain way, in, in, in a profitable way, your leverage of an hour spent, well, usually as the business grows, you simply are just reciting the vision of the company. That's actually the main objective of the CEO and the founder is like, recite, recite, recite. So that then your lieutenants and captains below you are actually the ones that go out and put foot soldiers on things. And so it's a very different mentality as the business grows. But I think for the vast majority of people, just putting more time towards their goal would actually be the unlock that they're looking for.

Man, that is such a great answer. You're the real deal. I feel like.

Most people are not going to. I hope people pause and rewind this and understand that like the average person spends like over two hours a day on social media because a lot of people are like, well Mike, I can't do that. I'm already putting in so much time, there's no more time. It's like when you do the math, 365 days a year times two hours, that's over 720 hours. That's 7210 hour work days. That's 7210 hour work Days. We all have more time. It's just that we decide to not have focused time. If people get intentional on what they're doing and not just going through the motions and letting their business run them, but if they will just dedicate more time, embrace the suck a little bit more than their former self or their competition or whatever else. I mean, that truly is it. When I look back at my life, it's the same thing. I'm like, no, I'm just willing to suffer more than anyone I know. Like, maybe not more than Mike Andy's, but I'm willing to suffer a lot. You know, that's, that's great advice.

And to be clear, I don't think it's a prescription that everyone should, should adhere to. It's simply a function of if what's coming out of your mouth has a huge gap between that and what your actual reality is, then you should expect to work extreme amounts of time and to say, I'm going to build this Massive business and do all these things, but then your calendar speaks otherwise and you spend more time on gaming and hanging out with your, you know, friends who have absolutely no goals in life and are not adding to your goals, then you're lying. And so I think the thing that the blunt advice I would give myself 10 years ago is make sure that your actions and the amount of time you deploy towards this goal is an adherence to what comes out of your mouth. And so if you just want to build a lifestyle business, I say just being in terms of size, not in terms of success. If you want to build a $200,000 a year business, have 70, 80% profit margins and never have an employee in your life, and that's your definition of success, then you do not need to work a lot of hours. After a year or two of putting the time, getting sales like you probably don't need to do that. But if you're also going to say, I wanted to build a $10 million business and you are currently at 200,000, you better be ready to put in huge amounts of effort and work and either a, take 50 years to build it, or B, try to compress that into five or 10 years and put in extraordinary amounts of effort, time and energy. And the vast majority of people that got to where you want to be at today are simply the people who do not give up at where give up where 99% of people did. And so if you want to have a 1% outcome, you simply have to endure what 99% of people give up on. And so if you don't expect it to be a hundred times harder and 100 times more difficult than what everyone else is willing to endure, then you're delusional. And it's not to say anything about the person that has lower goals. It's simply a function of if your goals are that big, just expect the sacrifice that you must give in order to get that much, much higher.

That's so good. Love it, Mike. All right, guys, I highly, highly recommend you check out Mike andy's you got YouTube channel. How do you want people to stay in touch with you? What's the best way to stay connected?

YouTube is fine. The website has a bunch of free courses, so they can check those out if they want. Yeah, go to.

What is that, Mike? Andes.com?

Yep.

All right, guys, well, thanks. Thanks so much, Mike. I really appreciate. I know we went long. Thanks for coming on the show and sharing all your insights. Congratulations again on what you've done so far. I know you got big things ahead, and you're. You're a high achiever, so looking forward to seeing what you produce over the next few years as well.

Thanks, Ryan. I appreciate you having me on.

All right, guys, now the hard part. Go implement. Don't just take notes. Don't just get inspired. Go dominate. Take some notes and go implement this stuff, guys. We'll see you next week.