Mike Minutes Mastermind 01/02/2023

Happy Monday, everybody. Hope you're doing super well. Gonna get things kicked off. I saw there was, like, nine questions that came on the weekend, so we're gonna have a fun one today. Let me go ahead and drop this into Facebook for all the folks that you can't see. All right. YouTube link. All right, well, it's Monday, the Monday before conference.

I'm excited. Mondays in general, I like, but this week, it's gonna be fun. Over the weekend, I finished all my slide stuff. I'm ready to go. So now it's like one of those things where you're 100% ready, you could do it tomorrow, and now you have to wait, and it stinks. So I'm excited. A lot of fun.

It's fun because mostly I'm looking forward to telling you guys some stuff that I've been holding back on for a long time. And so I am horrible at keeping secrets when it comes to developments in the business. So, yeah, I'm really looking forward to it. And this is the first conference where I will not have any notes. I'm doing no notes. And so you really have to remember your slides and all your keynote stuff really well. So put a lot of work into it this year in terms of just memorizing my stuff. Not really memorizing, just kind of making sure. I'm, like, speaking from the heart and I know it all, and I'm not going to, like, look at his slide. Like, what was this one about? So, yeah, I'm looking forward to it. The more work you put into something, typically look forward to it more. So it's a lot of fun. And we'll see if the no notes thing works. I'm going to force us to put, like, probably the podium off to the side so that the speakers don't use their notes as much. I just hate when speakers stand behind a podium and look at notes. I just. So disconnected. So I kind of tested myself a little bit at Spencer Lawn Care's event and then Brian Fullerton's event, and then equip X1, like having no notes. And it worked good. I felt like I connect with the audience better. And there's a couple times where it's like, okay, what am I supposed to say next? And, you know, you figure it out. So it'll be fun. Yeah, really, really looking forward to it. I know some of you are already. Already in town. I know some people are flying in tomorrow, but looking forward to seeing you all Wednesday evening. For those of you who do get in early, do not feel Offended that we're not going to be super communicative on Wednesday. We have a short window of time to get things set up inside the conference center and so we all have to have a pretty on task schedule for that Wednesday and leading up to it tomorrow with meetings and all the rest of it. So. But looking forward to seeing all Wednesday evening at the what's called B Town restaurant which is right downstairs inside the hotel and the conference center. It's going to be great. I've also got to see the slide decks of the speakers and what's cool is they especially Corey Ballard for example, he doesn't usually get a speak for an hour. He usually gets like 1015 minute segments like equip Expo or Brian's event or whatever. And what's cool is because like for example he's we've been a lot more together at these events and then even just texting and emailing more he's up to his game and I'm really looking forward to his keynotes because I've never heard him do a keynote like the ones I've seen. I see his on his slides. I think part of that is he's seen what I put into mine over the last couple times that he's seen me do my keynotes and he's like okay, we're gonna. It's time for to step up my game. So I'm happy about that because I think Corey actually has a wealth of knowledge and if you would actually be in the forum of giving an hour, hour and a half keynote, it'd be killer. So I'm hoping to give him that opportunity. I think he's gonna crush it. So really looking forward to it and it's gonna be great. I'm also looking forward to four of our owners of augustination on the Thursday. On the Thursday to as well to us. I've seen all their, their slide decks. They're gonna be great. They're gonna be awesome. So let's go ahead and jump. In case you missed it, I'm pretty excited about conference. Okay.

Yeah. Nine. Let's go. What a busy weekend. All right, here we go.

Nick. Hey Mike. I know conference is just around the corner but Marcus and I were talking about this and it cannot wait. Why is the percentage of base pay not to exceed 25 of your hourly rate to client? Why is it. Why is it that specific number? Also my project and mowing rate is 80 to 90 seem to be 90 90. Shouldn't your base be 25 off the higher hourly rate?

Okay. So first off, it should be 25 off of your lower rate in my opinion, if at all possible. There is no right or wrong here. This is a benchmark, um, and just something I consistently see when I run the, the numbers. Um, and it depends also on what your percentage is that you're giving to the employees. So if you're giving your employees 40% of labor revenue, yeah, you could do probably 26, 27, 28% of their of the hourly rate going to them on base pay. But the reason That I say 25 or below is because if you're giving 33% away, you need there to be enough meat on the bone for your employees to actually hit above base pay and be incentivized by it. So another thing is consistently just across the board, P4P are not. When I see people that are their base pays is less than 25% of what their hourly is, I see much more profitable companies. And honestly I want that under 20. The businesses that I have seen in long term landscaping that have a, a percentage of base pay being under 20% and more even specifically if you get under 18 or 17%, almost every single one of them are the most profitable companies because they figured out how to make labor work well for them. And other Companies struggle at 35 and 40% of their of their hourly rate is base pay. And those are the ones that can never implement P4P effectively and therefore usually run much less profitable firms.

The way it is right now at 8080 for project my base pay exactly 25% because you're at $20 base pay and it's nearly impossible to make consistent PPP unless an individual is highly skilled. Just throwing that last part out there because I never paid too much attention to the project rate. My main focus was the mowing rate. They will both be the same next year. But to make PPP more consistent and give me the flexibility to move guys wherever I need them and still trust them, they will get interest. They will get people for you. My base pay is 22% of my milling rate, which I think is perfect. Yeah. So what you can do, remember these numbers can all be manipulated by your estimator. So if your estimator just puts more budget hours on a project, it's going to be easier for them to hit base above base pay. Right. So what I would recommend in this case is, you know, by raising your project rate to 90, that's going to put already kind of correct the numbers of P4P already down the road. What I want to be able to do is where you can track your closing ratio for projects versus your closing ratio for recurring jobs. Because what I would be doing then is adjusting this number based upon that. Unfortunately, this is a manual thing that you'd be doing right now. And you know, if you have, you know, 50, 60 estimates in a month, it's still not going to take you but maybe five or ten minutes to calculate this. But what I would do is track your close ratio for project based work versus mowing jobs and then you can determine, okay, should I raise prices on projects in this case versus my mowing? If your close ratio is 60% for projects and 30% for mowing, it'd be like all signals be telling you to go to 90 90. Right. And why would you be giving that the lower rate? Right. So typically the reason why I see season people doing their project based rate.

Lower than their mowing is simply due to the fact that there's less downtime. And so the guys actually do make more on P4P on projects because there's less stopping. There's not. You don't have to start and stop 20 times in a day. You go to one project and you stay there the whole day. Less waste. Right. So if it's consistent and it's not your budget hours being inaccurate on, on projects, I would say track your close ratio even for the past like three months, hey, what's my close ratio for projects? What's my close ratio for mowing jobs? And then come up to the conclusion then also remember that the problem, the kind of the monkey wrench into that, is the fact that mowing estimates are done over the phone. So you eliminate all ties to the quote, which is enormous. Right. So expect sometimes your mowing to be a little bit higher and it can be because simply you can do over the phone estimates.

Kyle. Coming back to Brian Connors question about the S Corp, how do you set that up?

Can you just turn one of your existing LLCs into S Corp to own the rest of your LLCs? Or would you want to set up a new company for your S Corp when we start a third location, Would you suggest going the S Corp route to own all my locations? Yeah, if you're doing three. This is just my personal thing. If you're doing three or less locations, I would. And that's like your end goal. I'd just do LLCs and then when they get profitable, turn them and do a form 1120s and so their taxes and S Corp, that's. Miss me personally, if you're going to go above that, I would then make an actual S corp that has articles of incorporation, minutes with an attorney, the whole nine yards. And then I'd put your LLCs underneath that. And that would be something that is quote unquote, separate from the others. You can't just Write a Form 1120s and then be like, okay, now I have articles.

A form 1120s. You get taxed like an S corp, but it doesn't really change your entity structure. You need to, if you actually want to be a real, like, abide by the law. Like the legal side of an S corp, not just the tax side. You need to go get articles of a corporation, go meet with an attorney. Every single year, you need to meet with the attorney, even if it's over the phone and go over changes to the business. It's like my minutes with an attorney for my corporations for 2020 was all about COVID what we were going to do to mitigate risk, what we were doing financially to mitigate risk, the likelihood of bankruptcy. Like all of that was covered in the minutes with the attorney. So if they're a good attorney, they'll ask a question during the minutes.

And I have no plan to start home service legal. That's not happening.

Never say never, I guess. But the amount I spent on legal fees, if I could get a good attorney that knew everything about law, like franchise and everything, that'd be cool. But we'll see. How do you set up your resources tab in sa? Currently, each of your our crews is labeled a color. Inside that color code, you have one team member that runs the crew. I was asking, I was talking along the other day, and she said you guys put employees names at the crew instead. Can you explain more how exactly that works? I have added attachments to give more context. Okay, let's open up the attachments, which is a pain in the butt to do here. Give me a second.

Stop that. Screen share. Open up a new screen share, window, chrome, picture there. Okay, so resource name. Okay, gotcha. And I have to close this one out and I have to open this other one up. Present share, screen, window, chrome, other picture.

Gotcha. These are teams. Yeah. So we don't assign to cruise. That's what she's saying. So at the employee level, you can change the colors that they're showing on their. Their little things on the map. We don't assign to crews. We just assigned to multiple individuals. So if there's two people on a crew, we would just select both of them and who the job is assigned to. The Reason for that is because our crews don't. Our crews can change. Like two people go out tomorrow. Well, tomorrow, the next day there was someone else. Right. So instead of creating crews and teams, we simply just have it where when you assign it to people, you assign it to two different employees. So it's the easiest way to do it when you. When you don't have governed crews. If you have governed crews, then do what you're doing. I think that's the best route. But it's just when people call out, when you got to move things around, it's just easier to be able to assign them to multiple employees. And those employees have an individual color attached to each of them.

So, yeah, we don't use teams or crews just because we do. We do allow people to. People do end up being in different trucks and things like that. Okay, I hope that answer your question. What is the download code for one click estimates on the marketplace in servers? Autopilot. Yeah, it is. Augusta, 1, 2, 3 with a capital A. Here, I'll put it in the comment section. Augusta123. Damn.

In a few months that code will change.

That might not have gone to Facebook. Sick. Here, I'll put in Facebook just in case. Augustine, 1, 2, 3. Yeah, that's the download code.

Cool. Yeah. Lee, thank you. Lee says for the resource question about dispatching jobs for the coaching. Call with me, Lee, and we can go over this method together. Thank you. I appreciate it.

That is what the coaching calls are good for. They can screen share exactly inside of your account and.

Literally walk you through it. Matt, Adela. Canadians. Let's go. All right. Hey, Mike. Just wondering where's the best place to find all the past Mastermind videos? So far I've been going to the Facebook group and scrolling through to find the videos. It's gotta be a better way. Thanks. Yep. So go to the Academy, go to Franchise Updates and. And then you'll see.

A playlist. So let me show you real quick just for those who are new. If I go to let me share my screen. Boom, share. Stop Screen, Share screen, Chrome tab.

We do not want to show everyone my login information. Thank you. Okay. And boom, share. Okay, so yeah, once you're here, go to Academy, go to Franchise Updates and this playlist right here gets updated every single time I make a new mastermind.

Within 24 hours. Sometimes I forget to put to this, change it to this playlist. But if you go here, you can literally see every single one.

It's great. So.

Yeah.

Send Window, Chrome, window. There we go. Okay, number six.

Hey Mike. My question relates to PPP and base pay. We are transitioning our company to Augusta and a few employees are coming along for the ride. These guys have been paid hourly and will switch to P4P. We're concerned about setting base pay too low for them and having them sour on the idea of P2P before they see the benefits of the new system. Yes, I remember at training we went over this. We have three or four guys that make 26 to 28 per hour. Now we also have three guys making 21 to $22 per hour. Can we. And should we have two different pay base pay levels? One for the current higher paid guys that say 23 and 24 and then another lower level for higher new hires and the lower paid guys which he over at around 22 to 23. More info. I think we can attract new talent with $22 base pay. Last restart guys at 21 and had no trouble, trouble hiring. We plan to raise our charge out rate to 95 to 100. Let's go. That'll get you around under that 25 level. That's good. We can afford to lose a couple of the higher paid guys and still get the work done. This is due to expected efficiency gain with Peter P. And my business partner Andrew and myself stepping back in the field a bit more to act as working gyms. At least to start this year. Thanks for your help. So you've made your decision. You know it's right for the business and that is to put the base pay at what you know it needs to be at and let let the things fall where they may. You, you, you literally just explained why that is the case. And I understand that the emotion of potentially losing them or like, hey, should we have sex? Is like if you do this, you'll kick yourself so hard in six to 12 months. Because now it's like you now just created a quote unquote objective system that gives subjectivity around which tier they're in. Because guess What? Every single 21 to $22 per hour base pay is gonna kind of want. They're gonna want the base pay at 26 or 24 or 25. Right. And so highly recommend you just pull the band aid off. Especially because you literally just said you could handle losing some of the top end guys. Okay. And then just they got to really understand if they're top end guys, they either going to deserve it or B they're going to have project management bonuses and they are able to make more. Right. Because they do bigger projects or whatever it might be. So it sounds like you've really talked yourself one, talked yourself through this one already and you're just trying to, you're second guessing yourself. Just pull the band aid off, you know what to do. And you already had the downside of them leaving covered. So just make the decision, roll with it. And I would say do the $22 base pay, let the chips fall where they may, knowing that few of your 21 guys, 21 guys are gonna be thrilled out of their mind. The guys who are currently at 21, 22, they're gonna be thrilled. There's no downside for them. You know you'll have them. You already have the downside of your other guys leaving by you and Matt, you and Andrew stepping back in a little bit. So I think you've made your decision and just question yourself. So just pull the band aid off and you will be happy you did after about a week or two after they leave, if they don't leave. Keep in mind, when we, when we switched, I had a couple guys that were one, one that was really high paid and he did better on P2P and literally never got under 26 per hour, not a single pay period I can remember. And so it's not necessarily to say it just it is disconcerting for them, their base pay to go down.

How do you feel? Do you feel your GM should have the place to succeed or fail? Or would you want to ensure the location success by any means necessary, including replacing them early on if needed? I'm just thinking about how you said 1 in 4 GMs will most likely fail and want to be prepared in case we have a location crash and burn early on. Yeah. And honestly, when I say 1 in 4, I would probably say it's 1 in 2 when you're first getting started. Because your GM senses are not going to be as good.

Like if you have a bad employee out in the field. Right. Or employee that starts to sour, or an employee that's not pulling their weight, you can replace them relatively easily without affecting the business. When you have to switch out a gm, it literally is like pulling teeth. It's horrible. And so the thing is, at the beginning, you're not going to know what makes a good GM or not. And we're trying to create systems and frameworks for you all to use in the hiring process and, and attracting good talent, et cetera, what to look for, et cetera. And you're still going to have, you're not going to do well at managing them. At the beginning, you're going to have to come to peace with the fact that you're probably going to lose one or two of your first five GMs, like, almost guaranteed. And so in terms of when you step in, you step in when they have proven that they do not have the capability to turn it around. And so I like to give chances, I like to give warnings. I like to say by this time, we must hit this number. And if they don't hit it, then it's like, sorry, we're out. So I would say once the trajectory of the location is in a negative light, give them a deadline, give them a number, and say, if we hit this, you're good. If we don't hit this, we're changing you up. Just make it really black and white. Don't be opaque. Don't be too opaque with it.

Just be super transparent. Like, hey, this is the numbers we have to hit. You're not hitting them. You know, hit. By this date, we're gonna switch you out. So. And typically the GM will know, like, they see the handwriting on the wall if the location isn't doing good. What you just gotta be careful of is people that, because they're on salary, they just try to stack the clock. Basically, like, basically do as little as possible because they're on salary. But again, like, it's gonna catch up to those in a matter of three to six months. Even for a location that's in profit mode, if you have a GM that's disconnected, it'll quickly deteriorate. Very quickly.

Thoughts on holding crypto versus putting that money into the business? This isn't even a question, honestly, you're going to hear me talk about as a conference. I have a few thousand sitting in crypto that I haven't touched since last year. And I kind of want to pull it out to put into my locations. Okay, here's the deal. Let's just say you're in bitcoin. Right now it's at 16,000. What's the chance of it getting halved in value? I would say it's like 30%, 40% that it goes under $10,000 per Bitcoin. It's there, It's a chance. All it would take is something like.

Let'S see here, would it take. It would take the likes of a crypto exchange that's publicly traded, such as, oh, what's the name?

Let's see your publicly, publicly traded.

Crypto. It's on the tip of my tongues. It is coinbase let's say Coinbase. Coinbase goes belly up. Guarantee you bitcoin goes under 10,000. Do I think it's gonna happen? No, they're SEC regulated and they're a little bit more regulated than FTX and stuff, but something like that could happen very, very easily in the next 12 months. Now, what's the chance of your, let's just call it four grand being halved in value in your business? That's what it comes down to. Like it's probably 5 or 10%. Like the fact that you spend, let's say you spend $4,000 in a marketing campaign and get no leads. It's possible. What's the likelihood that you get, let's just call it 20 leads. That would assume what, like a $200 customer lead acquisition cost? Horrible. Let's assume that happens and you get 10 customers, but those 10 customers have a $2,000 per year lifetime value. That's $20,000 in revenue. Let's say now you're 20% profitable. That's $4,000 in profit. You literally just had 100% return in the first year and you did a really bad job of marketing. Right. So the math is on your side. Spending on your business, your core competency, the thing that you're better at than the average mean in the market is going to be your business, not crypto. That's speculation.

I wish I would have read that earlier because if you would have taken that last year, you could have taken that as a.

Capital gains loss. If you. What's cool about crypto is you don't have to. The wash sale doesn't apply, so you can, you can sell it, buy it 10 seconds later and claim the loss. So I did have a little bit of crypto, not going to lie. So I sold it and I bought it 10 seconds later. But I'm able to take that as a capital loss, which unfortunately you can only do $3,000 a year if you don't have actual things against it. Like if you don't have capital gains to move against it and have any capital gains. Because I 1031 exchange my real estate and I didn't sell any stocks besides the ones I wanted to, you know, make losses on anyways. Is it possible get an SBA loan for your. For each new location you open up. We could potentially open up multiple locations per year if we had access to the SBA funding for each one. Talk to a bank. This is when, knowing your banker, I talk about this MBA for entrepreneurs course. A banker is your best Friend, if they're good. This is. When you go to a bank, you say, here's my business plan and this is what I want to do and what can you do for me? And see if they can't figure something out for you. 504, they can do some sort of renewal on it. They're not going to do a line of credit. You can't do that. You can do. It's like $50,000 or less. You can do a micro loan, the SBA that's easier to get, faster turnaround time. I'd probably say you're probably looking more like a 7A though, and then figure out, like, can you somehow get the funds over the next three years? Can you.

Pay it down and get back? Like, they're not going to do lines of credit. So keep that in mind. But this is where knowing a good banker is like, the SBA is simply like, almost like an insurance company. It's the government being like, hey, I will insure that loan. And so they don't put 100% of the capital towards your loan, the bank still does a majority, just depending on which bank you're in. A bunch of the funds still come from the bank. So get to know a good banker.

Having said that, would it be, would it be a bad idea to do that? I haven't had a problem with risk wise taking out the debt. I know it could quickly get the location up and running. We would pay off the debt service. I would recommend Kyle run inside of Augusta a little bit longer before you start doing this. I need you to see like a full year of your second location. You got to understand how that all works before you go get a 7A loan where you're going to sign on the entire principal of that debt. Personally, I would not recommend anyone go out and get a bunch of debt on their second, third, fourth locations that they could not finance with their first location. Right. So just a risk analysis is like, okay, if I'm, if I'm horrible at managing GMs, if I'm horrible at trying to juggle multiple locations, what's the downside risk? Well, the downside risk is that your first location better be able to finance that debt. Right? So, Kyle, I know you've jumped your second location pretty quickly. I. If I was you, I would probably wait one more year, really figure out your Augusta systems, really figure out how a second location is like a completely different business. You're in the business of managing a manager instead of managing frontline team members. Totally different ballgame, totally different position, total different skill set. Make sure you're good at it before you take a bunch of debt out. Just my personal opinion.

If I have my customers in Zooper should it link with QuickBooks and download their information to QuickBooks? The simplest way to do this is going to be to export your customers out of QuickBooks and then import them into Zooper. So the import process is relatively it's on the academy. I show how to import them into Zooper. Feel free if you wanted to YouTube how to export your customer list from QuickBooks that's what I would do. But just know that whenever you're transferring information across CRMs they make it as hard as possible to get information out and then everyone makes it easy to get it in. So it is pretty painful. And like someone mentioned I think Cameron on the weekend just do it one by one. If you have under 500 customers I would personally do it one by one. Spend a weekend and just knock it all out so you know it's done right and just do it manually. I wouldn't trust like a man an automatic thing to move my customers over.

I had a bunch of people get credit card decline automations. Is there a glitch in SA?

Let me see one second. Let me jump into who this is. One second. This is Andy Burleson.

It's the 2nd of January.

I would have to touch basic command center. I'll ask them if everyone's getting those but it could be a glitch in there. I know last year when we hit the first of january they had a bunch of stuff stop on tickets so maybe I'm just not privy to this yet. Even commercial customers when they pay the check I've been getting cut. Yeah. So okay, I would imagine it's something with sa. It doesn't sound like this has anything to do with being past due or like due upon receipt. All our open invoices that are rent. Oh mercy.

I'll make a post if this is across the board Andy. Otherwise it sounds like it's a glitch in service autopilot. If you have not changed unless you've changed your.

When you're. When your invoices are due like with their due upon receipt now versus due in net 15. You know service autopilot really Well I know you haven't done that so I imagine this is a glitch in service autopilot. But if in general for people listening if people open up their invoice and it says overdue or past due on them already, it's likely that your invoicing settings have the billing at due upon receipt, which means as soon as the first hits, they're overdue.

So you can change that. However, I know Andy, you haven't changed that and you know serves all cloud really well so I'm imagining this is a glitch in your case. I have not heard this across the board, but I'll check in with the invoicing department and see what's going on if they see this happen elsewhere. All right everyone, hope you have a fantastic Monday. Safe travels on your way here. Seems like snow storms and the airlines all settled down just in time for conference, so everyone should have a good time flying in. Looking forward to seeing you guys on Wednesday. I'll at least have a mastermind tomorrow. But Wednesday, Thursday, Friday. Might have to skip this year. This week. We'll stay in touch. All right guys, have a great day.