Mike Minutes Mastermind 01/13/2025

Ladies and gentlemen, boys and girls, welcome to another Mike Minutes mastermind. Well, that microphone is loud. Sorry.

Let's get started.

This will be the last Mic Minutes Mastermind of this week, given that we are going into conference in the next few days. I know a bunch of people are flying today and tomorrow and Wednesday, So we will not be doing any Mic Minutes masterminds after today. So I will see you in one week after this. Also, you probably got an email yesterday about bringing profit and loss statements into the workshop on Friday. I realized that some of the calculations are going to need a calculator. So people will be allowed to bring their phones in, but we're not. We don't want people using them for like pictures and videos and stuff like that. So all of that to say, you do need to bring a couple things to the Friday workshop. A printed off copy of your P L from 2024 as well as monthly PNLs for all of 2024. So technically you have 13 documents. A monthly P L for all of 24 months, and then also a annual profit and loss statement should be accrual. Should it be cash? Choose one and stick to it. Either one will work as long as you're consistent.

And make sure those are printed off because you're not going to have laptops and iPads and phones out on that day.

All right, let's jump in. I think we've got a few questions about four questions today. Let's go ahead and get started.

Present. No, I don't want that present. Okay.

Boom, we're in business. First question is from Mr. Anonymous. Being a few months old, out from spring rush, is there any plans on doing new door hangers, design layouts, etc. We are planning to buy 40 to 50,000 door hangers to kick off our spring rush and want to make sure we don't miss something new coming out. Yeah, don't order them yet. We are going to have new ones. Those will be shown at conference.

Joel from Lafayette, do you have CC call metrics that you can share, perhaps share at conference. Average time to answer a call, percentage of missed calls is a zero. Now with max client satisfaction scores from the survey, CC sends out any other key metrics you think would be good to share? Ask, because I want to try some ads that focus on our call responsiveness with specific facts beyond the 24. 7 service. Okay, so it's this last part. There'll be some stuff coming out conference about this in terms of average time to call. To your point, max picks up within like 1 1/2 seconds, usually 2 seconds if it doesn't. If you're having where an agent picks up all the time, it's usually less than eight seconds. That's kind of like the target. They have a new way they're doing the the round robin of calls. But usually eight seconds is kind of like the two rings essentially for that one in terms of the client satisfaction scores. I was talking actually with Liz this morning about this. The text message that we're going out and getting the CSATs rating from them. Most of the time what customers were doing were giving surveys of the crew and the work being done. So it was really, really skewed all over the place. Like literally most of the time the customer would just respond back like oh, they didn't show up to their estimate or the price was too high so it really weren't leaving feedback about the calls and so that was the part. Or they would just give feedback based upon what they didn't like that the agent told them like the price was too high or I don't have to pay my bill, stuff like that. So it kind of skews it from actually like what's the actual satisfaction of Command Center? It comes to the call itself. So there's some stuff we're doing around this again I'll be talking about this at conference and then you'll be seeing stuff rolled out in regards to this in 2025.

So hopefully that is helpful.

But yeah, there'll be some more like measurable metric stuff to be able to talk about in terms of advertising down the road. So just give me till conference so we'll announce some of the stuff. Mr. Anonymous, curious on your thoughts for when pleasure starts playing into the equation? I have a rather expensive hobby that could get a lot more expensive by making larger purchases. I don't want any bias in your answer, so I will leave it pretty vague. But at what point do you justify not as great of returns on invested capital? There would still be some returns but they not be realized for 10 to 15 years. A purchase of this caliber would not would likely not allow for a new location for a couple years, thus delaying the business growth unless we were to continue building our current business. Just curious when you would advise someone to say enough is enough. Enjoy the growth of your business and the profit from it.

So this is difficult because it comes down to what your goals are and so.

There is pain associated with not reaching your goals and there is pain associated with not having the hobby or the pleasure that you're seeking. And so the question is, which pain is greater? And as you become more successful, that is closer to the goals you have, the pain that you have for those goals may become less. And this is usually where people start to top out in their career once they get comfortable. And it's because their goals are low enough to where once they are achieved, there's not enough pain. And therefore the pain of working harder is less than or is greater than the pain of having less money. And so if you're reaching that point, then you know, that's fine, that's great. Just like knowing what your goals are is important and realizing it comes in a with exchange. And so if you stop putting in the work, if you stop paying attention to the business, if you stop paying attention to your career, etc, you will make less money. Like so, you know, as long as you, you are very keenly aware of that, which it sounds like you are, just don't expect both. Don't expect to be like, well, I'm gonna like spend all this money, time and energy on this hobby thing so I can derive more pleasure, quote from life, but then I'm also going to expect to make more money. Like, you're talking about both sides of your mouth here. And so people that point to someone like Jeff Bezos and like, well, he's like on a yacht and vacationing all the time and yet he's making billions of dollars. What they fail to realize is that he did something that the vast majority of people would never do and everyone was betting against him, and he did it for 20 to 30 years straight without any returns. And so it was only once, you know, now in the past 10 years, it becomes more.

You know, socially acceptable to say something about like him being successful. But Amazon was founded in 1994, so they've been around for exactly 30 years. So if you're willing to hold your breath for 20 years and not have the expensive hobby and the yacht and everything else that he now has, then maybe you'll be able to achieve that level of success. And so what I find though many times is people that say they want that and they do three to four or five years of pain and somehow realize, and somehow, somehow failed to, to realize that the 20 years was required for the past 10 years to happen. And if you would have gone to the five year and the ten year marker of.

Of Amazon, most people would have been telling him to quit and there was no evidence of success. And it would have been much easier for him to be like, okay, I'm just Going to go ahead and cash in some of my chips, take a 5, $10 million buyout, move on, sell books only situation, not invest back in the infrastructure and software into retail centers and distribution centers, etc. So, you know, he could have done that and even once it was worse, even like 10 years ago. If you look at the, the quarterly financials from Amazon, even up until like last year, they have net losses on some of their, their PNLs. And yet it's because they've constantly just invested back into growth, that is, they haven't cashed in the chips of quote, pleasure yet. And so because of that they continue to scale and grow. And so the size and magnitude of Amazon is because they've done that for 30 straight years. And so for many small business owners, the reason they don't hit their goals and success in terms of dollars and cents is because they simply don't hold their breath long enough and they don't apply themselves to the one thing for long enough. Then they reach a certain level of success and they're like, they're okay with it making 100 grand. And they're like, okay, this is fine, 150, 200 grand, like, this is fine. And if that is fine for you, that is awesome. That's fantastic. In my opinion, success is contentment. And so if you're content at 100, 150,000 and you've hit that awesome, fantastic, you spending a big chunk of cash on a hobby and deriving more pleasure from that, awesome. Because the pleasure that you derive from it today will be of higher quality than the pleasure you derive from it in 20 or 30 years when you're older. So the thing that you're personally, I'm always judging is, okay, like I'm in my peak of health and mental acuity, et cetera. The pleasure that I have today, is it worth having it today or in when I'm like, I don't wanna wait until I'm 75 years old to travel. I don't wanna wait until I'm 80 years old to have children and have a family. Cause the pleasure I can derive from that is much less than at that age. And so there's always that trade off of time versus holding your breath and allowing things to compound in terms of the businesses. And so every dollar you spend the day on this, on this, you know, expensive hobby is a dollar not only outside the business, but also the return of that money. And so if you can take $100,000 and put it into, say, a new location for Example, and if you're able to over the course of three years, not like a single penny, but then after three years you're able to just say, let's take, you're able to take $50,000 of distributions, relatively modest, that's a 50% return. The cash that you put in. Now obviously there's a couple years of, they're not having you're making any money. Most people can't hold their breath for three years and not make money on an investment. But then the fact that you can make 50% return means that the $100,000 you spend the day is actually not costing you $100,000 today, it's actually costing you $100,000 plus the $50,000 of return that come in the next 10, 20, 30 years as that business begins to mature. Also that you can raise prices with inflation. So the thing that you buy in terms of a hobby typically depreciates just traditionally, whether it be a vacation, depreciating over the course of a couple weeks, whether that be a piece of clothing that depreciates over the course of several years, whether that be a new car that appreciates over the course of a decade. And so it's rare that you can build, buy an asset and then get returning cash flow and then it build and grow in value. And furthermore, it's inflation hedged, which means as long as you raise prices by more than 2 to 5% a year on average, you will beat inflation. And so that's the power of small business. And so that's the trade off that you're making. The pleasure of today is costing you not only the cost of the money of today, but it is what would otherwise turn into, since you're likely buying a depreciating asset versus an appreciating asset. Now again, keep very in mind, I don't know who this is, I don't know your age or anything like that, but I would be giving very different advice to someone in their 20s versus someone in their 40s, someone in their 40s. Like, look, you do not want to wait 10, 20 years because you're, you might not have a good knee. And so it might not be a, it might not be a, it might be, not be a bad idea to take some chips off the table, slow down the growth of the business, spend some more time with family, et cetera, while you have the capability to. And that's always the balance that you're playing with.

And so yeah, what you, what you take from tomorrow, what you spend the day you're taking from tomorrow, you're robbing from tomorrow. And that's okay, especially if tomorrow there is. We have no, we have no guarantee of tomorrow and we definitely don't have a guarantee of 10, 20 or 30 years. And so it's just like the risk adjusted returns that you would talk about. An investment comes to true when it comes to the value of the time and energy you get and derive pleasure from is usually skews when you're younger. So the younger you are typically you will enjoy the travel more, you will enjoy the nicer car more, you will enjoy time with the family more because they're younger, the kids are with you at home versus them being on the other side of the country. So it's always a trade off and there's no right or wrong, wrong answer here. It's just like being, knowing that you are making a trade off and then deciding which one you know you value more. Mr. Anonymous, can you explain the thought process behind After 5 years we will receive our initial franchise fee or OB or can be put towards a new location. With that in mind, how does this look for current franchisees with our our numbers being at 170 owners in 5 years I assume we'd be close to 600 owners or just north of that. You've stated you want 1,000 locations and to end new locations there. I wouldn't say we end new locations there. What I mean is like we'll probably top out around there because the amount of territories available and what ends up happening is all the good territories are purchased and then the valuation of the territories continue to go up and then there's not really a whole lot of new incoming territories. You basically sell enough to get past the like the level, the amount of locations open. So just to be clear there, how does it affect new owners down the line when they want, they want to take action on this offer, will this there be a cutoff on how you no longer offer this as a benefit? With the price increase for territories this year, is there a year over year increase? If so, do you have a certain number you want to make that increase by? Okay, a bunch of questions here. So first off explaining this part, several reasons. Number one, if someone's been with us for five years, we consistently see those are the people that start to be in the coaching program, be in the franchise advisory council, they supporting other owners even if they're not in those roles. They are talking with other people helping them and they're engaged in the Facebook group and so it's Our way of kind of giving back and supporting those people that have been in the system. Many times the franchise, the vast majority of the resources go to new owners and that's normal. It's very normal. They're learning the systems, they're getting integrated. But once someone's been in the systems for several years, this is a way to be able to reward the people that consistently are giving back to the community and not just taking, which it's very normal for the first year or two you have to take, you're growing, expanding, you're getting new general managers, you start your second location, you need more help, like there's more hands on. As that time goes past, we want to make sure we reward members of the community that are on the opposite of that, which is they are. Even though they're deriving non monetary value in terms of giving and being part of a community. That's awesome. Like I also want to make it clear that like I appreciate that and so that's why we give the money back. Also usually around five years when someone wants to start a second location and it's easier for us to support a second location because I don't have to train them on, you know, what good business looks like. I already know they're doing good. I've had five years of track record. They're going to do well in their second location. And so that's why that makes a lot of sense. The 10 year one is like if you've been, if you've been in this for 10 years, you're giving a huge amount back to the community. You've implemented the three systems of P4P, the trucks being wrapped and open book management. We want to just give you the money back. And so assuming someone has done that for 10 years, we can afford it financially. And secondly, they have been a member of the community in that period of time. I know if they've been in the community that long, they have given a lot. And so that's why we do that.

In terms of your statement here is like, hey, like so what happens if we get all these locations and then like I get, I can I earn my five years and I don't want a location in that point. Like let's just say like fast forward 10 years from now, there's 800 locations, there's no territories you really want around you. Then you probably just are going to wait till the 10 year marker. So the five year one might become a little blurry but we're talking like quite ways down the road. Also the valuation of your, of your, of your license is going to go way up when this happens. Like even though like the value of this I'm talking about here, the five year refund will probably come slightly down as you hit like 800, 900,000 locations because there's just less territories. What will also happen as that's happening is that the value of each license will Google go up like exponentially. The same way I've seen at any time fitness, because no one can buy locations or buy new territories. So the existing territories, the valuations have all gone up between 50 and 100% in the past like three to four years. So I believe that will happen around that time. So. But yeah, there's a likelihood, especially when you hit like 7, 800 locations it would be hard to get like an adjacent territory. So then just be like, hey, I'll just wait for the 10 years knowing that in those extra five the license gets more valuable. So you could even sell at a really good valuation if you actually want it out. So like my goal is like also use this as a way to make exit strategies like if someone wants to do Augusta for 10 years and move on to something else, that there is systems in place for them to either create chains like an executive model and sell it off to something like private equity or company or an owner that wants to come in and take over a whole territory and have like 6, 7, 8, 10 locations around each other or be able to have the liquidity that comes back to them after 10 years, that is a good event for them. If you've bought 10 locations over the course of time, then you get that back to you in a chunk. That's a nice chunk of change and maybe you don't have to take as many chips off the table, etc. So.

Will there be a benefit when you offer no longer? This is a benefit. I don't believe so. Because yeah, I believe there'd be any time we would cut off the benefit of like the five year rebate thing. I don't, I don't see that ever happening.

Yeah, because it would just be natural supply and demand. Eventually if there's less territory to buy up around you, you'd probably just wait for the 10 year one. But I don't think anyone's going to be complaining at that point because you're going to start getting value, you're going to start getting people offering you to buy. Because the only way to get inside Augusta in your area, if that's happening to you would be to Buy you out.

So I think it'll like, kind of like the benefit of the rebate will kind of diminish. But at the exact same time that means that you're kind of landlocked, which means the, the territory license gets very expensive and like valuable to you.

With the price increase for territories this year, is there a year over year increase? If so, do you have a certain number you want to make that increase by? Not really. I usually actually increase the initial dollar amount mostly to prove the value of the license. Because if you go and sell your location and you join, you know, the first 10 locations, we're getting the licenses for 10 grand or less. And so like that license for them has gone up dramatically. And so if we can continue to show the value of that license when you go to do go to, you know, buy. Have someone buy you out again, I'm thinking about your balance sheet and the value of that license. When I bought my license, my territory or my Anytime Fitness, for example, on my balance sheet, I think he assigned $35,000. He had got it for about $14,000. He assigned it was $35,000. Now that same license, I could easily get $99,000 for, what is it, six years later or whatever. And the reason for that is because you can't get this license like it, we're locked by territories around us. And so if someone wants to join Anytime Fitness, they would have to buy me out. So.

There'S not really a target I have in terms of how much we want to increase that. I just want to show that that value goes up. So when you go to sell, you can tell your potential owner, hey, by the way, over the course of the past five years, it's doubled and this is an asset and therefore your valuation is increased. So.

Fantastic. All right, everyone, I hope you have a fantastic Monday. I look forward to seeing everyone in just a few days on Thursday.

Again, keep in mind about The P and Ls being printed off for Friday, but there will be no more mic minutes for this week. But we will see everyone in person in Seattle on Thursday. We are recording the entire Thursday Augusta Nation conference part and that will get posted hopefully a couple weeks after. So just be patient. If you are not coming to Summit, there's gonna be a lot of updates and things that are rolled out and you're going to feel a little bit in the dark next week just because we got to get that up for you all to see what's going on. Just know we'll get up as quickly as we can. The media team is very well aware that that needs to get up, but they have to compile all the footage, edit everything down, put audio and video together, et cetera. And so they'll be working on that next week. And then we'll get that out to you. But just know that you might feel a little bit like out of the loop, especially if you're seeing stuff on Facebook group and people are going to mention stuff and talking about stuff. Just know that we will have the recordings out as soon as we possibly can the following week. So I appreciate you all. Hope you have a fantastic week. Look forward to seeing on Thursday. We'll talk soon. Take care.