Mike Minutes Mastermind 01/24/2023

Hey, everyone. Hope you're doing super well. Let's go and get things kicked off. Happy Tuesday. Let me go ahead and drop this YouTube link real quick into Facebook group. Speaking of which, Connor has recently started posting kind of a text summary or minutes of the Masterminds. So if he continues to do that or if other people help him do that, we will eventually have a database of which you can search the.

Search the Facebook group, and you'd be able to see kind of like all the masterminds we always discussed. So whether Connor keeps doing it or someone else wants to hop in and help him, it'd be super cool. Even if he's just mentioning the topics of whatever we were talking about in the Mastermind, making it as a comment. And then that way down the road, you could just search the Facebook group, and anytime we talked about a certain topic in a mastermind, it would pop up. So kind of cool. We'll see if it's helpful, but appreciate Connor for coming up with that idea.

Yeah, let's go ahead and jump in. There's some questions that came in. Oh, this is funny. Here. I'll show you guys this.

See if I can share. Share present. Share screen. I think this is a mistake. I think. I think this is a mistake on the Facebook group. I think this is. See here.

Iota is angry. I think you might be clicking this accidentally. Iota, if you're mad about something, let me know. But consistently on the masterminds, you have. You have the angry face on the masterminds. So I think it just might be your most. It might be the furthest one on your reaction button thing. But if you're something you're mad about, definitely let me know. All right, let's go ahead and jump in. You got some questions. Not that one. Stop screen. Present Share screen. All right, let's jump in.

Kyle, what are your thoughts on Ford Ranger trucks? We get them Fairly cheap for 4 to 6k. Yeah, I like them. You know, ramp rack on one of those bad boys, small lawns, you know, under three, 4,000 square feet of lawn. I think they'd be killer. It's just whether or not you have full routes that can do that. And I don't want to be skipping over 20, 30% of my lots, my lawns, because they're too big for that setup.

Oh, by the way, right after this call, the reason I'm early is because right after this call, I have a very fun, interesting conversation with some of the executives at another software company. It'll be very interesting Anyways, Kyle Tarvin, are we allowed to use a P.O. box for our location on Google Maps? If we don't have an address in our territory, what should we do? So I would not recommend a P.O. box at a post office. Those are usually picked up when the word PO box is used. However, suite is sometimes not being picked up. And it's weird. It used to be allowed, then went through a period where it wasn't allowed. And now all of a sudden I'm seeing a lot of people getting through just fine with verifying through a suite. And you can use like a UPS box. So if you go to UPS store, you get a box for like 10, 15, $20 a month and you get a mail address with a suite number and that seems to be able to be verified pretty simply. So that would be my 2 cents on that one.

Okay, this is a blank. This is. What's it called?

I forget the word. I know it starts with an H. All right, hypothetically.

I have. Hypothetically, I have a Buddy that has $65,000 to invest a new location with me. Okay, that sounds funny. Okay. And that 65k he needs to write off because he received a big sum of money. This is like one of those emails you get from like a Nairobi prince or something like that. If we were going to go in as partners on location and he fronted the money to start with, how could we be sure to not show income? And how can he write that money off as an owner's investment even though they're not There are two owners. Oh mercy. First off, make sure you're not trying to do tax evasion. You have to start a business in the, in the pursuit of profit, not the pursuit of evading taxes. So be careful about that. And you're doing this partnership. So secondly.

What you could potentially do if this is a big deal is he could be the sole owner of the, of the entity. He, he takes the write off this year. And again, the 65k, the quote unquote write off would be section 179 of buying equipment and other fees associated with starting location. It would not be just him investing owner's investment. You can't just write off owner's investment. That's a balance sheet item. So just be careful with that. It's actually, you'd have to be buying things that you could write off in this calendar year. And then what you could do is next, next year, like January. You could then become a partner on the thing for like $1. And then he would essentially not have A taxable event. That's how he could do it. I do not need any income from this location as my first one is pumping out good profits. He doesn't and can't have any profit or income as he cannot defer this lump sum. The 65k is a small portion of what he got. His goal is to have an investment that will pump him money out in the future. He is offering this opportunity much like the copilot gig. It's a little different. He knows he can't make it work by himself and that I can help him in a big way. I don't necessarily have the money to outlay the cash right now, but will by the end of this year we would both be working on the field, in the field at the new location. He would likely be part time and will definitely be full time there and I will definitely be full time there. My main question is maybe to make sure that he can write this investment off on his income and how this kind of works. My second question is how do we ensure no profit in the business since either of us need money from this location for at least the first year and he really needs the write off. Can you maybe break down where the money would be spent if the location were to do 300k year one with zero profit? Yeah. So if that is the goal, let me follow the rabbit trail for a second. That would be what I would say is have him own the entity so he can get the 65k in write offs again. He's not gonna get that for last year. This is all for 2023. You're past January 1st, so you really can't do anything for 2022 anymore. But if you bought a bunch of equipment and trucks and all the rest of it got started this year, he could take the write off. If you're growing really quick like the 300,000 a year, you're not going to have any profits anyways because you'll be growing, expanding, buying more stuff, marketing, etc.

I personally would not do this. Especially by the end of this year you're going to be able to afford to do this by yourself anyways. There's really no benefit or upside to you at all. You're like, well, we can get started sooner. You're going to be joining. If you, if you just take a step back and take off the personal side for a second, you're going to be joining an entity next year that is making zero profit and you are going to own a percentage of and now you have a partner oh, and by the way, you're going to be working full time and they're working part time.

I think this person's trying to evade taxes and that's the only reason they're getting into this business, which is fine. Like you can start businesses to slow down how much you have to pay in taxes. My concern is for year two, three, four and beyond. He is now your partner and you are going to have to quote unquote live together as business partners. So I would highly recommend not doing this. Based upon this information, there's a short term someone going after a short term bone. If you're trying to save 20, $25,000 in taxes and so you're going to start a 10 year business with a partner, you're literally taking a short term gain for a very long term commitment. Like after that $65,000 is quote unquote protected with by him. Is he really going to be invested in the business? I don't know. Doesn't seem like he's really super into this. Besides the fact that you're going to be doing it and running it for him, that's gonna be a whole lot, it's gonna be worth a whole lot more than $20,000 of your time. So unless he's getting like 10% of this entity and year two or 20% maybe for the fact that you saved him 20 grand. If your first location is pumping out profits in your word, as you said in your words, any time spen this year is bad news, you're gonna save him 20 grand. You're gonna have no profit in this new business and yet you're gonna work there full time, likely tearing down your first location that's pumping out profits. So I don't know who this is, so I can't give super detailed advice. But based upon this information.

I wouldn't touch it with a 10 foot pole. That would be my recommendation. So.

Kyle Tarvin, I think we are about to let be let out of our lease for our trust race. Let's go. I found another company that will sign for the space. I'm just waiting for them to make the deposit. Then we should be good to go. What is needed to legally terminate a lease? My landlord is a little slimy so I want to make sure we get out clean and not forget some piece of documentation to where she can come back a few years later and say we illegally broke the lease. So if you actually believe she would do that, you should go talk to an attorney. You should talk to a lawyer. You should even if it's just a general attorney and you'd be like, hey, can you please look over this contract? Our lease is ending. That being said, it's illegal for someone to take payment for something on a lease they have signed with someone else. So they cannot collect rent from like both of you, for example. So if the other person starts paying rent, they can't take money from you. So just keep that in mind. There's like legal protections around for you as a tenant. But if you're really, really concerned about that, I'd probably go talk to an attorney. Is worth the extra. You know, it's 500 bucks that you feel like you're gonna waste. Yes. But if you feel like there's 20, 30 grand on the line might be good. Just talk to an attorney. Trying to write. I'm trying to write up my 12 month projections plan before the coaching call, but I'm having trouble. I already have an existing client base for one guy. 8, 10k a month, a truck and setup done leftover. I have 14k starting this month. Not taking any salary this year, I wanted to put 20k into marketing. Ooh, that'd be careful with that. Oh, and grow to 30.370k. That's a huge step. That's huge. Your first year. I'm not saying it's not possible. I'm just saying it's a big step. I don't think you'll need 20,000 in marketing to do it because you already are doing 120, 130k a year, but okay. Doing so I'll end up with about a 10% profit margin. Okay, so you make like 40 grand take home. Okay. The problem is, even though I'll finish this year about 50k in the bank, midway through the year, I'd have to be going to debt to get another truck. Is this normal or is my growth rate too fast? What I have starting out so you nailed this is a matter of. Okay, great. This is why you do projections, everybody. This is why you do projections. Because everyone figures out the first part. Oh, I'm going to put 20 into marketing and get $370,000 business. And then they forget to run the math and realize that, oh, in the middle of the year I'm going to be negative bank balance because of this growth rate. So great awareness. Fantastic job. Landon. This the. The question is simply determined by what is your risk tolerance and how, how much risk are you willing to take? Right. If you want to get 370, if that's really what you're trying to do and you're going to need that capital infusion. That's a question that you're going to have to answer. What I potentially might do if I was you is going to the spring rush with a little bit less of a rigidity in terms of, oh, I've got to grow this dollar amount and just see what happens in terms of capacity with employees. If that's doing well and you're getting rushed with leads, then maybe you go and your only capacity constraint is assets, then you go buy a truck, right? That's going to be one of the biggest expenses. If you struggle finding employees though, now you're not left having a bunch of trucks sitting around or even one or two that you aren't using very much and you're restraining leads and constricting the work that can come in. Yet there's tons of leads and a bunch of trucks. So in my opinion, when you're asset constrained, you want asset based capacity to be the constraint. All right? When you have not when you don't have a lot of money, you want asset based capacity to be the thing that you're hitting up against. Because the other things you can solve, personal capacity and late based capacity, you can solve without a lot of capital infusion. So what I'm saying here is don't buy the truck too soon. It's okay if you buy a truck for a little bit more because you need it really quickly, but you're in the middle of spring rush, you have a couple employees you just hired that are really good and you got tons of leads coming in and you have the capacity and labor and personal capacity to then buy an asset and jump forward. What I don't want you to do is go into debt, get in the second truck and you're still doing 10, 12,000amonth in revenue and that truck is sitting there for five days out of the week. That's what that would be. My recommendation is just, just make sure in this case that your layer, your asset based capacity is your constraining factor and then go buy the truck. Alright? So max out everything else. And then when you're like, man, I got plenty of employees, I got tons of leads coming in, I just don't have enough trucks. Then go buy the truck. At that point you could finance that. If you feel confident in that moment that labor capacity and personal capacity is not going to nip you in the butt when you try to start growing the asset based capacity of your business. I hope that made sense.

Kyle Tarvin, what does this mean attachment included. I followed your Max metric guide but got this low add strength warning. Yeah, this is going to happen.

So impressions are low. So the only thing I can think of that potentially would cause this is if you went really detailed on your targeting.

Because I have not seen this one based upon using a what. So you might as well widen your radius or what who you're targeting. If you went really, really narrow on like age, income and your area, it might literally be like trying to go after like 2000 people of which maybe one will click on it a day. So it'll warn you like, hey, this is too narrow of an audience. You guys have to remember that when you target go from just the US to your market, you are literally cutting out 99.9999% of the market on Google. And so you're already going after a very narrow audience. So if then you start to get more detail like, oh, I only want the top 10% of income and I only want people 60 and up. You might get one click a day even across all platforms on Google. So just keep that in mind. You might have accidentally changed your top demographic of income to like just the top 10%. You might have accidentally changed the age and you might have accidentally moved the radius of the areas differently to where there's just not enough radius. So you might just want to increase that radius, increase the age, increase the income demographic and just make sure you didn't accidentally put a filter on that's limiting the amount of impressions that people could potentially see. The ad.

Jeff from North Wilmington. I'm looking to hire my first employee this spring. I am wondering if I should hire a more experienced team member, which would most likely require higher base pay to attract or hire a less experienced member person and spend more time on training. This one person I'm interested in hiring I've known for years and he has a lot of experience being a crew leader at another larger company. He could run the whole route by himself if needed and would grow a lot within the company. But in order to get him, I think I would have to increase base pay. What's your recommendation? Pay for the more experienced team member, the first team member, or less experienced, and focus on training them because they would be in the truck with me anyways. Thanks, Mike. Okay, so I understand the temptation to want to hire experienced people. Trust me, I know. But if you're going to move base pay, just realize you are changing your business model for this individual and when you're hiring your first second employee, the business will look very differently in a couple years. So don't think like, oh, they're, I'm going to build a business around them. They're going to be my gm. They're your first employee. The business will look completely different when you have five, six employees and you're out of the field and no longer having interaction with them. And they really like you, but they don't really like you as a boss. They like you as someone working with them out in the field. So I know this from experience. I hired one of my best friends as my first employee and all that went down a few years later when I was no longer working in the field and I was quote unquote, you know, out of, you know, out of operations. And he didn't like that. He liked, we were great friends, great people in the field, but not great when. Now I moved into more of a management position. So keep that in mind. If you're gonna hire someone, I would recommend if they are so good and they are so experienced on P4P they should be able to make more. So my high, my biggest recommendation is make sure your base pay is at or below what you expect base pay to be when you switch to P4P. If you're not doing P4P from day one, if you're doing P4P from day one and he's really experienced, he should be able to make more money on P4P compared to base pay. You're have to sell it. You're going to have to sell P4P to him and you have to make sure you are confident enough that those numbers are actually true. That when you run the math on your routes that you're currently doing, that you would make X amount of dollars per hour. And show him the math. Right. So what I would recommend doing is like print off a few of your routes. Okay. This day we made 650. This day I made 700. This day I made 550. Here's how much you would have earned as an employee if you would have done this route, you know, divided by three. And I worked X amount of hours. So technically you would have made 23, 24, whatever it is, per hour. And again, if he's efficient and experienced, if someone's experienced, it should lead them to being more efficient, making more money. Alright? So keep that in mind. Next question is from Edward Washington. How can you sleep at night running so many businesses at once? I lose my sleep over small things in my super small business. And I see you always positive and excited about Opening copilot and continue to improve your other six business. You already have. Yeah, but you don't see, I don't livestream at 2 and 3 in the morning. Like last night was. I was, I'm very concerned about copilot launch.

Yeah, it's just a lot. We have a ton of work still get done and I was looking at stuff last night, I was like, dude, I don't know if we're gonna be able to get it done and I don't want to disappoint. So like, no, like just, just remember that when people are videoing and making videos, they are typically smiling and have a pretty good face on. You're not seeing them at night also worrying and being concerned about their bigger problems. Small business has small problems. Bigger business have bigger problems. If you care about your business, you're going to be caring about it regardless. And having a little more money in the bank definitely helps with the small stuff. But when you're using bigger, having bigger risks, it's now bigger problems. So like, yeah, like, you know, copilot is a, could be a massive million dollar plus failure. But you say, well, if you have money in the bank, it's fine. Well, no, like a million dollars means something. So it's definitely still something. I lose sleep over all the time. I lose sleep over it all the time. So like, literally that's why sometimes I don't sleep because like I got to make sure that when I go lay down that I'm actually tired enough to like crash because I'm stressed out. So yeah, just don't, don't think that you're the only one or that because you're, you know, you're a small business and you're just getting started that you're somehow in. The things that you're dealing with or stressed out about are inconsequential. As you grow the muscle of the business, you'll get better and better. Like as building a muscle in the gym, you get stronger and stronger and it becomes less and less.

Taxing to bear the same weight. However, if you're trying to grow the muscle, you have to continually upping the weight, right? So if you want to have a little more balance in life and less stress, you're probably going to stop increasing the weight, right? So you're going to stop adding new locations, you're going to stop adding growth to the business. You know, growth sucks cash. It also creates chaos. Well, chaos also comes in the form of heavier weights that you have to bear as the owner and that means, like, you're going to lose sleep sometimes. You're going to be worried about the money. You're going to be worried about a customer that says something negative about you. So, like now if I get a one star review, literally, do not lose more than 10 seconds of my life. Like, I have the whole like, heart drop thing and punch in the stomach and 10 seconds, seconds later it's gone. You know, rewind back to my first year to in business. That would have kept me up for nights and I would have been freaking out about it and I would have been thinking about what I did wrong, how I should respond, and like, I would have been wrapped up in it for at least an hour or two and then probably like for a couple days. Just like, we're thinking about it, worried about it. Think of it. The whole city is going to like, think about how bad I am. Like, I was talking with an owner the other day and they're like, so concerned about what happens if they raise price and everyone in their city starts to talk bad about them. Like, dude, no one even knows who you are. You're 300,000 in revenue. You've 50 customers in the community. It's not going to be a big deal. So don't let small things become big things and realize that when big things happen, if you've grown the business a sustainable way, you'll have the muscle and the, the aptitude to deal with it, right? So if you're, if you're running constant growth and growing and growth of a muscle, you need to keep constantly be improving and increasing the weight. And so do not think that somehow I or anyone else is immune to being extremely stressed about what's going on the companies. And the copilot launch is definitely taxing my sleep right now.

All right, that's all I got.

Hope you all have a fantastic day. And I'm gonna go talk to the CEO of service autopilot. I almost called it copilot. All right, guys, have a great day. Take care.