Mike Minutes Mastermind 02/10/2025

Welcome, ladies and gentlemen, to their Mike Minutes Mastermind. Happy marathon Monday. We're going to start off with an announcement. I just confirmed this with Liz and we'll be making more announcements later in the spring. But we have decided that every other year we'll do a public conference, at least for now. But for now, next year, 2026 in January, we're gonna have an Augusta only conference. So two full days of just Augusta instead of having just the kind of abbreviated half day with just us and then doing the public thing, we're gonna, we're gonna do every other year where we do the big public thing. But then every other year, including 2026 next year being where it's just Augusta Nation. So it's gonna allow us to spend a lot more time on the content and all of you instead of just all the things that go along with a public conference. Everything from speakers to sponsors to huge amounts of costs, rooms, etc. So that's really what we're going to focus on. It also takes like six months of planning or more when we do the big public one just simply because of all those other moving parts. So we're going to simplify it, really focus on Augusta Nation for the two full days. So we'll come up with dates, etc. But we think this will allow us to be able to just to kind of alternate, make it different each year. So I'm not a huge fan of doing the same thing every single year. I like kind of mixing things up just so it's interesting. But we're gonna try it out, see everyone likes it. There'll be more details on this coming out later. So.

I think it'll be nice to have every two years we do the public one and then we can really make it good, really invest time and energy into it, really get some really great speakers. Otherwise we just burn the team out. Honestly, it just, it's a massive amount of work for six to eight months of planning and like, it's just. I'd rather take the full, two full days every other year was all just you. So information will be coming out on that later.

But that is going to be the plan for January 2026 and be a two day event just for guest nation. We'll be able to do a lot more before and after in terms of meals, etc. Roundtables, more things in the evening together because there'll be less of us in terms of compared to the public and because we're all in the same system and in industry, etc. So I think It'll be very, very good. As soon as you have dates and venue stuff, we will let you all know. But I'm looking forward to that. All right, let's go ahead and jump right into questions. Let's see what we got today.

We got a five questions submitted today. Let's get started. We have another training week starting tomorrow with new members of Augusta Nation in here for training. I think there's only about 15 people or so, which because smaller groups that we can do all the recording. So we have three. Three cameras. The team has set up a really cool setup. It'll be much more organized and professional looking in terms of the recordings, those will go up probably a week after next on the dashboard. Again, all of those videos have transcripts that are searchable, and that's really why we're trying to dial this one in. And we'll try to do one every single spring as training gets updated, things get added, etc. So I think it'd be a really, really good thing. All right, David from Modesto, can you explain distributable cash? I've been having trouble comprehending it, even after watching the videos about GM compensation on the dashboard. This is what I got off the video. Distributable cash equals one month of revenue, that being an average of rolling three months. So let's say there's month one, 90,000, month two, 110,000, month three, 100,000 average would be 100,000 revenue. Does this mean that out of this 100k, a percentage is given to the GM? I've also heard talking of distributable cash being based on having a certain amount of money in the bank and cutting a percentage based on everything above that. For example, 80,000 in the bank as the amount to operate with. And at the end of a quarter, there's 90,000. So $10,000.

Is distributed with the prearranged percentage go in the GM. Let me know what I'm missing here. Thank you. Yeah, so your second part is right. It is not to the. You know, out of the hundred thousand dollars in your first example, a percentage does not go to the GM. Your second example, with 80,000 being the threshold or the average of the last three months revenue, that becomes the threshold by which any working capital above that becomes distributable cash. So in your first example, if there was $120,000 in the bank account and your average monthly revenue the past three months was 100,000, you would have $20,000 of distributable cash. And the GM will get a percentage of that. So there is more training we've added to the new owner training and even this past weekend I even added more that will be coming again in the recordings. And so I would in the future be able to just refer you to the academy to be able to search that in the top bar and you'll. It'll pull up immediately. I've refined it a little bit more. Even more specification basically now how, how I kind of think about it is like if you had to ask me like which of the three types of of profit sharing would you recommend for gm? I actually have it break it down a little bit easier now. Now it's a matter of if you're growing more than 50% year over year you probably need to do revenue incentives. So top of the line incentives. If you are growing under 25%, sorry under under 50% year over year, that's when profit sharing starts to make sense. If you have debt on the business, profit sharing being based upon the P and L. So bottom line on the P and L distributable cash in my opinion is anything under 25% year over year growth is really what we're looking for. And so yeah, that's all that's, that's good. One thing I'll add to that.

And made a comment on the multi owners chat the other day because it come up and that is okay, so what happens if you're five years in six years in you're in profit mode, you're crushing it and trucks are kind of getting old, right? You're like hey, let's go upgrade the trucks. So the challenging part with that is if you go out and buy a few trucks, you could really put distributable cash in the hole for like 6 to 12 months by buying a few trucks if you're going to buy them with cash. So one way you could get around this is simply making a loan to yourself. So you might. I don't want to take out debt. I agree with you. So you can do is make a loan from yourself to the business and have it on a term sheet. Have ChatGPT write you up a term sheet at a certain percentage interest rate, certain monthly fixed payment to you over the course of say five years. And this makes it really easy because now it might be costing the business 1500 or $2000 a month and that makes it easier to not to kind of like balance out the fact that you don't want 100 grand of expenses coming out of the bank account and now all of a sudden the general manager gets no distributable cash because like the bank balance is so low. So what you can do is just write yourself a loan say you know, from Augusta Lawn Care. You know they, the corporation, the entity owns this amount. They're going to pay X amount of interest. They're going to pay this monthly fee for the next five years every single and put it on autopay from your bank account where it just transfers money over and it's marked as you know interest expense and then obviously the money coming out of your bank account. Now if you're on distributable cash it's fine because the entire thing is affecting the business is affecting profit sharing. So I like this a lot because you're not paying interest to the bank rather you're paying interest to yourself. You as the owner would have to pay taxes on the interest expense but not the principal. So again talk to your accountant and they can set this up. But I've done this before with my entities and as I give them a loan to prevent having to do affecting the profit sharing team massively based because of distributable cash. So that's what we talked about with the the multi unit operators because you might have a location in profit over five, six years. Everyone's making good money. But anyone upgrade the trucks and if you went and just paid all with cash you would have no distributable cash like 6 to 12 months. So instead of going again loan which is actually the easiest way to make sure that distribute CA stays relatively the same. And as long as you tie in a a price increase with that, you know, go out and get several trucks and you say $2,000 a month or so is coming out in payments now to you as the owner I. E. As a loan from the loan it evens things out a little more. Makes UBL pay for over 10 years. And if a general manager leaves the new one coming in just assumes that debt to the owner. So obviously you could also get if you needed the cash you'd go out to a bank and get and get the loan. Same same thing would apply the payments are coming out. It'd be looked at as you know breaking that payments over the course of four, three, four, five years.

East Springfield, MISSOURI what do you look for in a bank? I'm switching from bank of America with the new LLC and hoping to find one I can get decent lending terms from any business credit advice would be appreciated. Yeah, I think this whole business Credit thing is just so overblown. I think too many of us have seen stuff on social media about it.

I don't think people play out like what this looks like. Okay, so let's assume your business goes under. Everything's into your business credit.

You're gonna go bankrupt if like all of your assets are getting seized. So I just, I rarely have seen small businesses be able to evade this in terms of like personal stuff getting infected anyways because they pierce the corporate veil too often.

So everyone gets so tied up in this whole business credit thing and because of that they're paying way more in interest. Their terms are way worse because they're not willing to sign personal guarantees.

So I would first off, just like as an asterisk, I don't stress out about my business credit. I don't. I just know that whenever I personally sign on the debt, I am going to get way better terms. And if I just took that extra benefit of those terms and put it back in the business, the likelihood of succeeding is higher. So I think people way overblow this. The vast majority of banks are going to want you to do a personal guarantee at least which, you know, business credit or not, you're on the hook. So that'd be my first thing. Bank of America's decent, from what I have experienced, they have a really good credit card for personal a 4% cash back if assuming you put a hundred thousand dollars into their savings account. But 4% is insane amount of cash back. And so.

That'S pretty cool. But in terms of their business, the thing I shy away from like Chase and these other ones, the big banks is they do have a lot of fees typically as you start doing a lot of processing of, of transactions and a lot of, a lot of their, their branches are simply like, I don't know what you call them in person, customer service. Because you get there and they just call in. Like I could never get someone to actually just help me do something. They were always just calling into their, their call center. And so it was very frustrating when I worked with these bigger banks. So I like smaller banks, yes, it was a scare for a lot of smaller credit unions, etc. Couple of years back when smaller banks were having insolvency issues because of the interest rates going up. So that was a bit of a scare. However, you can split it up between different accounts so you're still FDIC insured. But even when you look at FDIC insurance, like the amount of money reserves they have set aside does not cover the amount of money people have in FDIC insured bank accounts. So that's interesting. But the government did step in for a smaller bank that went down and backed it all. So it's just tough all that to say. I'd like personally I like small credit unions that are local. I don't like them too small. So I'm looking for certain amount of money usually under management. I want them to have a diversity of loan products that usually stabilizes them. So in terms of if they have home, home loans, if they have auto loans, they have credit cards and all of those are like very competitive especially if it's a non profit. I like that they usually have less fees for a business owner. So it's difficult to to do to suggest it because like you're also giving up. If you're not one of the four major banks in the US that are like quote unquote too big to fail, you are giving up some security potentially of a bank going under. But that bank will usually go under if their business is not good. So I'm looking like, I'm actually looking like look at their assets, look at their balance sheet, what kind of like what kind of leverage they use. You can look at this if you look at you know most banks will publicize this.

So Kyle Tyrone from Moore, Oklahoma. Since we are going to have our have to take our billing invoicing over in the next few months I have a few questions. Number one, if we need help with billing from time to time are we able to ask CC for help with billing out customers or will we no longer be able to have them help us with the billing since the department is going away? Yeah, there won't be a dedicated department but like we, you know anyone on the phone is going to have to do send an invoice so they're going to have to take payment etc. We can absolutely still help with that. I ask because sometimes we have customers cards come back non sufficient funds and have to constantly follow up with the customer for payment. Would be nice just to ask this task on CC instead of me having to call everyone for payment. Yeah, you can absolutely do that. That's what the connecteam chat is there for. It's just a matter of the regular billing and invoicing billing side of things obviously. Honestly can a lot of it can be automated with inside of copilot and so by taking these apartments away I think there's going to be more people actually start using utilizing the features of automatic billing and invoicing inside copilot but also if there's one off cases like this. Yes ask command center, they'll take care of you. Everyone will know how to do that since there's it's that sort of thing is done on the phone quite often. Number two, will the collections team be active and automatically reaching out to customers that have invoices overdue, sending them to collections with when the time comes or is that task on us? And yeah collections team is still in place. I think it's one a really good strong department. A lot of people valued that in the surveys mostly because you know that there's someone behind you, beside you that has to kind of pick up the slack when a customer's not paying. So really the only the only invoices that should be going there project based jobs that you got the 50% down but for some reason they're not paying the second payment. And so there's ways around this too like if you're smaller, if you're a solo operator and every dollar counts I'd be trying to collect on that last day. When you're doing a walkthrough this prevents any sort of collections them having to do any sort of payment and usually you have a high likelihood of getting a check which is sometimes helpful.

So I know I've had general managers where they just know on big projects with their 50% still owed to them they're going to go do the walkthrough with the customer and they're going to collect a payment on site. So but all that say yes the collections team is still in place and can help prevent hopefully it going to Empire and you know you losing 25% out. Bill Thomas from Nocatee, Florida Good morning Mike. There's been a lot of talk in the Facebook about Google reviews going missing. I know some have been because of franchisees leaving reviews for other franchisees using their Augusta email and I can see how the algorithm would pick those out. There's been quite a few being removed that are real customer reviews. Have you seen or heard of a reason for that? I lost eight last week and others have seen way more. Thanks for any insight. Yeah, so couple things.

First off, I'm not a huge fan of getting reviews from other owners that are outside of your local area. If I as a customer clicked into your Google reviews and saw that a whole bunch of reviews came from A other people inside of the brand and B people that were not inside of your state, I would be now doubting every other good review on your account.

So like you can game the system really easily. And so I also kind of go into this knowing that most customers are not educated on Google reviews as much as like I look at them, but like I see all along web designs, home service designs, and all of Augusta's. And so I know I can actually see which locations are gaming. This one you go, you can go buy reviews. You literally just go ask people to go make accounts and they make them for you. It's going to cost you anywhere between 10 and $50. So you can absolutely do that. Um, I can sniff them out pretty easily. If someone has one review on their account and they're leaving a review on your account, your Google account, very low likelihood that that person's legit. And so most, most customers don't see that. They just see number of reviews and number of stars. So that's why most people will game the system and they're happy with it. Now, I believe Google's gonna get smarter and smarter about this. For example, I don't think the first three reviews of a Google account should show up. I think until someone's consistently leaving reviews and giving feedback to the algorithm and we know they're legit and they're doing reviews in a local area and they're not all over the country, I think those reviews eventually should go away. And again, I am mostly, I think about legitimacy. The same way that Google local service is a pain in the butt to get certified for. Sometimes it's a legitimacy. I want legitimacy. And so I think it's a positive thing. I know it's frustrating to lose reviews over this. That being said, the whole thing on the weekend, most of it was an algorithm, a bug inside of Google. If they're aware of it, they're trying to fix it. And so I think all those reviews will come back. But in, in general, I'd be very careful about buying reviews. I'd be very careful about getting reviews from other owners inside of Augusta. I just be careful about that. I do think that their algorithm is going to get better and better. I think they're going to weed this stuff out and I think people will have a lot of reviews disappearing from their account.

Like.

The.

Level of skill that these engineers have at places like Google and there's thousands of them working on problems like this, they're going to be able to figure this out. Like if you're out of state and you're making a review for a local service and this is your first review, there's no reason why that Google review should even show up.

So I Think they're just going to improve this algorithm much better. I would just really encourage you, instead of spending time on going and getting reviews from out of state people, focus on your local area. If you need to give a free service away, if you've got to give a promotion, if you got to do a drawing, if you got to, you know, talk to people locally, do whatever you can to get the reviews locally, that'd be my strong encouragement. And if they have an existing Google account, they've been on Google using that Google account for years. They've left other reviews that I believe Google's going to start to weight that more and more against. Like, accounts have 100 views and they all are accounts that are out of state and have one review or two reviews. And you can see like when people farm Google reviews because they'll have like, they'll have like 100 reviews and you'll click through the people leaving their views and they all have like two or three reviews for other companies. And they're all the same companies. Those are usually farmed accounts that people will create account, go, leave two or three reviews, go do it, and they'll use it for other businesses. So there's a whole business behind this. I think they're going to shut this down over the course of time. And I do believe, like, for example, there's been two or three suspensions in the past week, last week of Augusta locations. I do believe it could be because of this. I don't know that because they're usually just going to say certain guidelines or whatever and then you got to go through the whole submission process. But I do believe this is going to become more of a thing. So I just highly recommend do it the right way. Go all in, get reviews, it's so important. But don't try to game the system. I just don't believe it's going to work. I think it's going to hurt people in the long term. It's a. I know it's a slow grind. I know you got to give away actual value to get the review. But having legitimate people that have like the local guide badge next to them, they have 20, 30 other local reviews in that area. There's just so much value to it. Also, people will click on their reviews of other local businesses that are helpful and then they'll see your, your name in there. So there's many times if you go and click on a review and say Google and you read the review and the next one is like, this person's left 30 other reviews they you click on it and then you see all these other reviews they've made in your local area. That's super valuable too. It's this network effect that will start happening between local businesses in your area based upon your your reputation.

Chad and from from Londonderry, London Barry, New Hampshire We've been getting slammed with snow this month and billing after every storm has taken quite a bit of time and I can only see it getting worse as we scale. For context we plow and salt 20 commercial and 100 residential per storm.

I'm sure I can do more to streamline the billing and admin work and don't want to blame everything on the lack of snow. Quick Dispatch support from Cot. Talk to Josh at conference and know they are working on it. Partner and I have discussed moving Ren Residential to a prepay contract type agreement but we find it a tough sell question is this something we should wait on when the business is in profit mode? We surveyed some customers and they don't. And they don't. I think you mean like they don't like the idea but I feel it would simplify the service significantly if I can just sell a prepaid package and make the business more profit sellable and leaveable. Would appreciate your thoughts. Yeah so couple things. First off there are a few things that they're they're collecting data on before next winter to see if we can get them in. There's a really good software called Yeti. It's just really expensive and just built just for snow snow services I think it's like 60 or no 99 per user. This is pretty expensive but they have some cool stuff in there around making this a little more streamlined around quick dispatch. I also think the waiting list is going to help with this anyways all that to say.

Instead of just sometimes when you survey customers and they have one way they're going to be assuming they're happy with their service they're going to be predisposed to think that that way is better. So what I would recommend Chad is give people options on pricing. So when you go into next season like hey here's your per service price, here's your contract price where you prepay for the whole year and then see what that where the chips land then because when you actually do that you might find that 505050 it's 50 50. You might find that 80% of people are willing to take the just pay one time because someone like me I just want to pay one time and leave the problem alone. This is not Going to be coming out in February as version of the customer port. But it's something we've really been thinking about is like giving the customer the option to pay the entire bill up front instead of paying a deposit and just having a one button where they could just click over and just pay the whole invoice before you start the job. We have a huge amount of data that people just choose that because the type of customer going after just wants to get rid. They don't want another invoice, they don't want to be charged every time you come and do snow service. So instead of just surveying the current customers that are happy with your current service, I would actually split test this with pricing and then based upon next year you say okay, 60, 70% of people took the annual one. Okay, we're just going to make it a policy now going forward. Anyone else coming in, that's what, that's what we're going to do. And then you simplify the business. So yeah, because as much as you hate doing all the extra billing every single service and you're on top of the extra massive workload of actually performing the work, just as much as you hate that the customer hates getting in, you know, three invoices one week and then not getting it for four weeks like most people just like hey, I just want to pay one time and just fix this problem for the whole year. There are people that are like that. And until you actually split test and actually see who how many accept each one, I think the serving of existing customers is going to skew data.

Hey Mike, I have a question. Oh, this is Travis from Jonesboro. Hey Mike, I have a question about future expansion context. I have a current commute of one hour to my office. I don't mind the driving. However, this two hours of drive time really does cut into time available to spend with my family. The goal has always been start another location in a major town halfway between my house and current location. Now with our first kid due in April, we are doubling down on trying to make this happen. My question since I have since I take mowers home every weekend. Oh anyway, from my yard. Anyway from my yard. Would it make sense to expand my service here to include the new locations territory and start filling up a couple days in preparation for buying the territory hopefully next year. We finished out 2024 at 3:60 on track for 500k run rate by June 1st and then switched to profit mode and crank on that for the next year or so. Yeah, this is I, I love your Logic. Do not rush into getting another location. You're at 360. Get into profit mode. Unless you have significant capital, you do not want to be starting another location until the other one's in profit mode. The only reason to start multiple locations.

Without them being in profit mode is you have plenty of capital that you are trying to deploy. But assuming that you do exactly, you say, I think I like this. You're passing one territory, driving an hour, going to your current territory on every Friday afternoon. When you have five lawns in between, you're gonna leave a little early and you're gonna knock them out. All of a sudden it's gonna be okay. It's an entire Friday. Basically you get your crew started on Friday morning and then go knock out those jobs, 15, 20 of them in the middle way, and then you're heading back home for the weekend. Or maybe you can do some of them on Saturday. They roll over on a Saturday, do them off, all those, those ones in that area in between. And then when you launch this thing, you got one location that you crank on in terms of profitability. It does 600, 650,000 is actually really profitable. And the other location is you starting it with 15, 20, 30 lawns already in that area. Highly recommend this. So make sure you put on Lee's radar that this is what you're thinking. Just so that way he can, he can make sure that this is ready for you and there's not someone else available. Because an hour long drive could be 70 miles and he might not be thinking that, that you're one thing at wanting that spot. So keep it on his radar. Just because if you're literally a year around the corner, you want to make sure that.

No one else is going to get that, that territory.

Alrighty everyone, I think that is it for today. I hope you all have a fantastic Monday. I will be doing masterminds throughout the week. We do have training, so sometimes the timing will be a little different. But I look forward to seeing you all appreciate it tremendously. Take care and have an awesome Monday.