Mike Minutes Mastermind 03/17/2025

Ladies and gentlemen, welcome to Mike Knits Mastermind. First off, very sorry about the audio. I listened to yesterday's. It was brutal. Some reason I hear on my Streamyard it sounds decent, but once you go on YouTube, it's trash. So sorry about the background noise I have. I will make sure that in the future when I'm on the road, I will bring a studio mic and I'll have a nice and close right here and it will not be as much background there. So I know it's horrible. You're probably hearing TVs and people talking and everything. So I apologize. But it is that or nothing when I'm on the road. So I try to put these in where I can when I am not actively moving on the road. So let's try. And there we go. Cool. All right, let's jump right in.

First question is from Pasquale Mendoza. Follow up on investment application. I hope you're doing well. I wanted to follow up on the investment application. It's been over three to four weeks since I filed it. I appreciate any updates on the status. I have fun sitting in my saving account. I like to invest, whether with Augusta or elsewhere. If you could provide an update on the progress, that would be great. Looking forward to your response. Yeah, I have one final approval I'm waiting on from the state and we thought it was gonna be done three or four weeks ago. We're just waiting on them. So it could. It could be any day. But yeah, sorry about that. It's just a matter of we're waiting on the state for a specific document that has to be done in order for this to be able to finalize everything legally. And we thought it was a disaster. So any day. It could be any day. So I apologize for that. I do have record. Everyone is obviously submitting and submitting interest in the investment round and so we are definitely keeping track of that. But it could be next week. That'd probably be the earliest, I would say, by the time it gets in. Then we file everything with Carta and then you're able to submit. So as soon as you get your information in there, we can process it on our end and basically have it ready for Carta. And then literally as soon as you get that, that the legal docs done to them, within 24 hours, you'd be putting money in. So I would just put that information like you did on the Excel or in the Google form, and then we can process everything on our end, which is usually a week or two, and then Carta can Once they have everything legally tied and tied up, they'll be able to allow you to fund that right away. So as soon as I know I will give you updates. But we are waiting right now on this state document from the governments. Mr. Nanos, in regards to owners draws, at what revenue should you consider taking? Owners draws. The thing is this, ultimately you want your, you'd rather have your or the money you're taking from the business be an owner draw. And compared to a salary there's essentially two ways to take out money from a business. One is you take a salary if there's a W.2 and secondly is you're gonna have an owner's draw. If you do an owner's draw underneath an S Corp you're going to be filed, you're going to pay tab income taxes on that but you're not going to have to pay the.

Self employment tax. So that's why you typically go in S Corp so you can have that benefit. And so most of your money you want to be as owners draws but legally speaking you need to have from what they would sell you is like a reasonable salary for the position you play in the business. Now for example I'm switching to a C corp since we are having more shareholders inside the holding company. I no longer am able to take advantage of the S Corp which allows you to have a pass through entity and avoid double taxation. Like I will have to take a salary because I can't take money out of the business otherwise without it being my payroll. Without like I can't take money.

Out of the corporation without being coined as profit in the corporation and paying corporate taxes and then personal taxes that's like double taxation. So in the S Corp you're allowed to flow through the corporations are able to flow through money to the business owner. So that's really nice about S Corp. So take advantage of it. And most people should not be C corps. So that's what I would say. Like when should you start doing it? When you have money in the bank that's in excess of one month of revenue, that's when I would start taking distributions.

And just set that as like the threshold. Whether you are giving a general manager a piece of that as part of like product quote unquote profit sharing and that's a piece of owner distributions or if you are simply just taking owners draw I'd get in the habit of like anything. Like if you look at the the.

Quadrant for cash flow that we have inside of the dashboard, if you look at that, that system Anything above a month's worth of revenue in the bank, I would keep that.

As a distribution.

The only time you would not do that is if you have really bad Q4 collapse and big bad pseudonitis and revenue drops way down. And as you in a spring rush, you don't want to be taking out money more than last month's revenue or even the past three months average because it could be too low. You could be taking out too much cash in the business. But again that's more a problem with solving Q4 collapse, not so much. You know whether or not your distributions be a month or more. Mr. Anonymous, I've been thinking about my net worth and been trying to value my business. While doing that I noticed that the Loop Augusta locations for sale are going for 0.3 to 0.5 times revenue whereas other landscape business online appear to sell in close to a 1 times multiple if any thoughts on why these multiples might be lower And I'm missing our interpreting misinterpreting company. Yeah, so typically any business less than 500,000 is massively under priced because it is going to require the owner to be there. So if you look on this Buy sell for example, I happen to know a lot of the numbers about this because we actually started lawn care business for sale.com what people list business for versus very very different. And so someone for example has a $500,000 business, they go into bid buy sell offering 500,000 end up selling business for 50 grand. Happens all the time. This is actually how I bought one of my businesses. A guy was trying to sell it for 1.2 million, I end up buying it for correct me if I'm wrong, I think it was $75,000 cash and maybe $10,000 on top of something like that. He was running 1.2 million at the beginning and that legitimately was like I took off 90 of his valuation by saying hey, I don't want any of your trucks, I don't want any of your equipment, I don't want your brand, I don't want your website. They stripped it down. So most time though locations are for sale. For Gus for example, they're almost. No, not almost, they're all under 500,000. And so it's requiring an owner to actually step in and be day and daily operations. Those businesses just rarely sell. The positive part about those instead of gusta is a lot of times other owners will pick them up because they know how to pick them up and plug in a gm. So they've had decent.

Progress. I think there's only two locations right now that haven't sold over like three months because you get picked up pretty quickly. And so just smaller businesses, once you get to above 5, 6, 7, 800,000, that business starts to become more of something because you can put a general management place and not have a job. And then the valuation is something other than just basically the cost of acquisition. And that's usually what you'd be trying to sell for. If you try to sell a business, you're trying to get rid of it, you're just like, I'm just out of it. You're selling based upon customer acquisition cost. If you are trying to get the highest multiple possible, you're willing to wait a year, two years, three years to sell the business and find the perfect buyer. Then you're going to go based upon a multiple of profit plus all your equipment. And you're usually going to get like a much better valuation. But if you're trying to get rid of it something quickly, you're like, okay, I know I got these customers for, you know, 60, $100 per. I'm willing to now sell them for 200, 300 per. I'm willing to make this a much better deal than trying to get a thousand or $2,000 per customer, which would.

Be based upon someone buying the entire business.

Anonymous. I've been thinking about using a generic Facebook ad for branding during the year. We have a picture of a truck or their crew in their uniforms. What are your thoughts about that? Or would you better do a direct response ad where you're looking for lead signups? I don't have much experience using Facebook, so wanting this to be as simple as possible for me. So honestly, I would recommend. Here, I'll just show you real quick. You guys have to give me a second. I wasn't planning this. I didn't. I don't look at the questions beforehand.

Business.

Facebook.

Ads. There you go. Actually, so I'm running some ads for the franchise for the first time in a long time. We're just testing several things out and I actually get a lot of data from this on new stuff that Facebook is rolling out because I have. I will scale this budget up and they usually will let me see.

Stuff first before it comes down to businesses. So it's kind of an advantage there. However, let me show you one thing. We started running this the other day and it's kind of what you're talking about. It's like, hey, I don't need exact, like conversions on this. I Need but I do want to see traffic. So for example, let me show you this. These are just two that were warming up this audience. Give me one second, I'm going to share this to.

Boom settings. This is a. The franchise.

Share. Let me show you what I'm talking about because this is the only ones I have access to right now. My managers do the local, local locations.

Share screen. There we go. All right, so inside of here for example, this is the Australia franchise ads. So this is the campaign. So you have a campaign then you have an ad set, then you have ads, right? So inside of the campaign you have multiple ad sets. Inside of an ad set you can have multiple ads. So.

Let me go ahead and open this. So by the way, on the left hand side here you can see this is probably helpful for someone look inside to easy edit. You can see history and you can see charts. A lot of times you're like, well mine looks like this for example. Like I started these ads literally less than 24 hours ago. So I see this usually. Okay, great. You just need to click the little edit button and immediately go to the edit. So again you got campaign or sorry, campaign ad sets. Ads. Same thing up top here. See this campaign ad set, ad now inside of your, when you're setting up your campaign it's going to ask you did I do it on this one? Australia has some different, different rules. Give me one second.

Yeah, this one doesn't allow it. So what you can do.

Give me one second. So on your advantage campaign budget, essentially what this is going to do, this one has a little bit less customization. It's going to, if you turn this on, it's basically going to spread it out according to the ad sets that you have. So it's gonna be like, hey, what let's say you have four assets. It's going to basically put the money whichever one's performing the best. Now if you only have one ad set that doesn't do it doesn't really do anything. Okay. By having Advantage campaign plus on it doesn't optimize your money against ad sets. That's why I'll go back here in a second. You'll see I will do back. So let's go back to the August, the U.S. canada when I got here, inside of here I have two ad sets. I have videos and then I have pictures. The videos are here. That's an ad set, see ad set. And this is another ad set for pictures. So pictures only, videos only. And what I do because I have two different ad Sets, it will then take this campaign and because it has the Advantage campaign plus on, it'll spread this across different ad sets to get better results. All right, so it's going to distribute it based upon which one is making the most money or make highest performing. And I just want clicks because we're trying to warm this audience out.

This is also where you can create split tests. If you test for example, just two different ads with two different creatives, this is where we go to do this. We test two different lines, two different headlines, or two different creatives or two different hooks. This is where you create an A B test. Another way to do an a B test though is simply to have the advantage campaign budget on and then create different ad sets. So that way you're able to know that the money's gonna be distributed between these differently. So for example, if I go into the view charts, you can see here.

Let's go add sets.

Okay. Oh, it's just one day set. Okay, one second, let me see. I can see here. One second. So then this one has that errors in it. So I have to go into this one. See why there's an error. Because last 24 hours. But typically I'd be looking for. Here is what's the chart in terms of performance for the video testimonials ad set versus the pictures ad set. Right. So click through. Rate of 7%. Pretty good. This is going to a relatively warm audience which is my Facebook like my Facebook page. I have the advantage of having 70,000 people that like my page. So it creates an a reasonably good lookalike audience. I would not recommend using that as an audience for a local business. So I never do that on my local business. My local businesses. Because people like your.

Like your page from all over the country. You don't want to be doing a lookalike audience based upon that. You want to do it based upon either. Especially if it wasn't about like 1500, 2000 emails. Then you could do a lookalike audience and up import your an Excel spreadsheet from copilot of all your customer email addresses. Not a bad idea. That's going to be people all inside your service area. But usually it's just based upon area. Like you do your service area and you know, three or five mile radius. That's usually the best for local businesses. But all of that to say all I was trying to say there is you got your, your campaign, you have your ad sets and you have your ads. When you're in setting up your ad underneath edit here. If you have the advanced campaign budget on it splits money between your ad sets. The reason I say that I've seen some people do one ad set with like 10 different ads. It doesn't do a good as good a job splitting money between the ads as it does between ad sets. You can see here distribute your ads across ad sets to get more results.

So just.

Hopefully it's something for someone. And I keep this open because obviously I need to fix something on that one ad. There's a lot of compliance stuff around it.

Perfect. All right, everyone, I hope you have a fantastic Monday. I will see you all tomorrow. Take care.