Mike Minutes Mastermind 03/18/2024

Hello, Guess the nation. Hope you're doing amazing. Sorry, your text messages are going to come in a few minutes because I have to.

Get to the next meeting after this so I didn't have time to wait. Let's see here. This put this on Facebook.

All right, couple quick announcements. Facebook.

I sent an email summary out yesterday.

Sunday early early morning.

Kind of an update of some of the updates we've been making over the past few weeks. Just kind of summarized into six bullet points. So make sure you check that out.

Also, quite a few people on last week were asking for the employee handbook that we use. So the template for 30 it's like 30 pages long is inside of the Google Drive for from the dashboard now. So just go to the dashboard templates and downloads go to new hire. The employee handbook is in there is as a Word document. So you can edit it inside of Google Drive, you can download it and edit in Microsoft Word, whichever you prefer.

Fantastic.

All right, let's jump into questions. What do we got here? Share screen six questions.

All right, let's rock and roll. First questions from Brian Connor from Augusta, Georgia. From your recent book recommendation, chop wood, carry water. What your four what your current four important character that you want to embody. Good question. While we're on the topic though, let me just say this book right here is really good. It's an hour long. If you look at this night 2x speed, it'll take you 30 minutes. I listened to it this morning while I was doing my quick workout. Let me just show it here.

This is it.

There you go.

There you go. Exactly what to say. The magic words and influence impact really like this one. It's not, it wasn't like a matter of like using things against people. We're trying to sell them stuff. It was just like here are the phrases that work really well when someone tries to throw a.

When you're trying to do a follow up call and they're like oh no, like I need to wait or like I need to talk to my spouse. Like but it wasn't like I don't know how to, how to describe it. It was the best one I've ever heard because it was more like not, not like word tracks. It was just like these common phrases work really well. For example, like one last thing or before you decide to know to not like what to say was just like really good. I think it was like 15 different phrases. Really quick, easy read. I think it costs five bucks. Well worth it. Highly recommend for follow up calls. Anything to do with sales There's a few in there that are really, really, really good using the word but when not to use it, when to use it, things like that. It's just very simple but I think is worth a couple listens through. So I highly recommend that. Back to your question from your recent book recommendation, Chop wood, Carry water. What your four current four characteristics that you want to embody. Oh Marcy, you asked me on the spot. I would say the number one most important characteristic I want to embody is.

Humility but being like powerful. I know it sounds really weird but like I've just seen people that like I really respect, they typically they don't talk a lot in terms of telling people what they should do. They don't express their opinions a ton. They're usually the last one to talk but like they have so much depth and sustenance to what they say and their advice is usually sought out because they do not give it out freely and they don't just like willy nilly tell people what they should do and share their opinions. And a lot of times when I see someone like that is because they think so highly of themselves and their opinions they feel like they should share it with everyone. And, and that's someone that I don't want to be. So to, to, to a good point though. Yes. I heard in Chop would carry water that he that literally specifically says is humility is not about thinking less of yourself but thinking of yourself less. That kind of hit home for me a little bit. And so yeah that would be the number one and I don't know about the other three so I'll give you the top one there Brian. Mr. Anonymous, USA give back program. This is very generous. So thank you. Will you consider having this program prorated instead of having to wait the full five years for another location? I was planning on adding a location December this year but due to this I am tempted to wait two to three more years to hit my five years and get it for free or at least a huge discount. Thanks for considering this. No, so it's not going to be prorated and I we specifically decided on this because I think that most owners they would be better served waiting a couple extra years and if they did they'd actually be able to open up more faster from years five to 10. I think a lot of people jump into second location in their second or third year. If they wait a few couple more years, waited till 5, they'd then start like having the profit from their first location that would be spinning off. They could Actually open up more locations in the long term and they'd be ran smoother. They would have figured out a lot more more. So definitely note it's a. It's a hard five years and a hard 10 years. And that was intentionally done. But thank you for the question nonetheless. Mr. Anonymous, can you direct me to the most updated YouTube Google Facebook ads builder?

I think you mean like done for you ads. If you go to the academy, go to done for you ads. They're all there and they're all listed. I'm assuming you're talking about done few ads. If you're talking about the actual done ads builder, feel free to look it up on Google. But like for example, Google is like ads Google or Facebook. I think it's business.facebook.com like the actual back end, it's a little more complicated than the front end.

Where you see more analytics and things. So feel free to clarify that question if you need me to.

Mr. Normous, in your give back program announcement, you mentioned something about the execs model. Will you tell me more about that? That. What is it, the benefits of it, et cetera? Yeah, so the, the executive model is essentially six locations getting started at the same time. You gotta start them within one year. We've had several people kind of show interest in it, and a couple of recent owners almost went with the executive model. But we really do it like when someone starts as a growth model and then they can really learn, make sure they understand the systems, understand the model, and then scale from there. The executive model is essentially built to be able to do six locations in one year. There's a very heavy discount in terms of your initial fee, but you require you to start them all within one year. And this will, this will go to people that down the road they're considering opening up, say, you know, a. They're like, oh, should I open up a Taco Bell? That's $3 million. Okay, well, I could go open up six locations of Augusta Lawn Care for less than a million. And I believe that the return on capital is significantly better than a lot of these other big franchises like even Anytime Fitness. Now we need $800,000 to get started. I just looked at the FTD last night. $800,000 for us to build out a new location. And I just don't see the return of my location, which we are in the top few percent of the. Of their franchise in terms of revenue. And I just don't see how that makes any Sense to spend $800,000 and it's going to take me five, six years and a good location to get my money back.

So the executive models built for that, we didn't really anticipate it to like get a bunch of people right off the bat when we started it last year. But it's. People are interested, people are watching. And I think down the road there'll be people that want to. When they're seriously considering other franchises where they need 800 to a million, $, 800,000 to a million dollars, they'll start an executive model instead. Which means you start with a regional manager. And so your regional manager and your GMs come to training and you're really more hands off. Like you're not going to be doing estimates as the owner. You're not going to be doing those things. You're just going to be basically deploying capital.

Coach Connor, when a team member has a yellow stuff that they are personally unable to fix and another team member has to go fix the callback, do you deduct from the guilty team member at base or at your hourly rate? If so, for either one and why so typically based upon the 22 page handout, it is at base pay. However, it is the base pay of the person that's going back to the property. So if you have like very different tiers of levels of like someone can't do this and someone can, their base pay is probably going to be higher. So it's going to be a manual adjustment on the person, the guilty person, based upon the base pay of the person who goes back and fixes the problem. If someone's continually doing this and they're like a repeat offender, that's when I'd start thinking about charging significantly more and I might charge them the hourly rate. So for example, 80 or 100 bucks an hour, even if it's a 20 minute fix, I'm going to charge that, not the hourly rate. I would probably already charge them at the base pay for their drive time of the other team member. But again, as someone who becomes more and more of a repeat offender, that's when you start ratcheting up yellow slips in terms of like what rate are you going to charge if it's like a one off thing, they broke a sprinkler head and they don't know how to pick a sprinkler head. I'm not going to charge them 150 bucks an hour. I'm just not. I'm going to charge them for the sprinkler head. I'm going to charge them for Someone who knows what they're doing to drive to Home Depot, drive to the customer's property and fix it maybe an hour, right? But if they keep doing things like that and they break a fence panel and they put a hole through someone's, you know, car, then a window like they keep doing that, I'm going to start charging at the hourly rate I'm charging the customer. Dustin from Champaign, can you go over the liquidity cash portion of the 4L framework at conference? I believe you guys, I believe you gave us options as far as slow and fast growth of cash in each of their positives and negatives. I can see this being our biggest constraint in a few weeks. I want to prepare and know my options and their disadvantages before we get to that spot. Hopefully that question is somewhat clear. Yeah, that makes sense. I was actually talking to some, some of the owners this past weekend that are big and it's like this is still the worst time of year for cash flow for all of us.

Because you've invested in hiring, training, buying equipment, getting everything ready for spring rush and you're still waiting on money to get collected for your first month of, of mowing or projects that have been done and you're still waiting on them, but yet you're all this outflow of revenue. Our outflow of costs are going out the door to wages and setting up for spring rush. So this is the worst time of the year for cash flow. And so when it comes to 40 framework, I always have looked at as if you have less than one month of revenue in the bank, you have a liquidity problem. Now, am I willing to have a liquidity problem if I'm in growth mode? Yes, because I know I am sacrificing the benefit of having a little bit more cushion and cash in the bank for the sake of being able to deploy capital faster and be a, being able to grow faster. If someone is in profit mode, I very frequently see someone get two or even three times their month's revenue in the bank. But they're in profit mode and they're not trying to grow. So they don't need to be running that line as closely as possible. But that's also why liquidity will not be a problem for them. Usually what becomes for profit mode location, the biggest problem usually becomes the last two. The last two, either labor or leadership. Usually leadership is the one that they'll usually bump up against kind of continually because if they're not trying to grow, the cycle doesn't keep going. What usually happen is they'll figure out liquidity. They're not in growth mode. So, like, leads are not really a problem. They figure out upsells and one click, estimate emails. Labor becomes easier because you have an established brand. You can afford to pay people a little bit more. It's usually leadership, assuming that the owner doesn't want to be there every single day. Daily operations, that's the one you'll always kind of bump up against, even if you're not constantly cycling through the growth engine of the 4L framework. But in terms of liquidity, anytime you have less than a month's worth of revenue in the bank, I consider that a liquidity problem. It's just a easy rule of thumb because we always can look back at last month and know what our revenue was. And so that's kind of how I think about it. And that will scale up. So as your business grows, that amount of capital is still in the bank. Some people like to do it based upon paychecks or like their how much payroll costs and how many payrolls do they have in the bank? I like that too. Usually involves more math in terms like, okay, well, is it two and a half times payroll? Because, you know, two weeks aren't technically a whole month. It gets a little more convoluted. I just like, what was, what was your revenue last month? Most people know that that's how much money should be in the bank. I'm willing to go lower that. And if you're asking like, do you go, yes, all my businesses, I go lower than one month of revenue in the bank because I'm redlining all of them. I'm throttling them all. And the only time for me, a big red flag goes off is if I have to move money around to hit a payroll, then in my mind that's too low. And usually I don't have to get there. But anything less than one month of revenue, you're going to be watching it. Like I watch my bank accounts every single day. I'm redlining all the businesses. And so it's just what level of risk, what level of pain and annoyance Are you willing to take more cash in the bank? You'll feel better.

And so that would be my 2 cents. But that's the general rule of thumb in terms of metric that I use. But like, you know, I would be a hypocrite to say that, you know, never go less than one month. I'm okay with that. Just realize you're in growth mode and if you're not growing and you're less than one month of revenue in the bank. You're running an unprofitable business.

And one thing I was, I shared with someone this morning was sometimes it's difficult when you have, you're not seeing a lot of profit in the bank. It's a little bit cash tap. You're a little tapped on cash. You're like, is it really worth growing? One thing I would, I always did to kind of keep my, my head in the game when I was growing quickly and didn't have a lot of cash in the bank, and it was very stressful. One thing I did to keep my head in the game was, okay, how much did I grow in revenue last year? Just say you grew $300,000 in annual revenue. You went from 300,000 to 600,000. You're like, I'm still stressed out of mine the same way I was a year ago. I'm making more money in terms of revenue, but I don't see the cash in the bank. Here's how to kind of reconcile that in your brain. If someone was to offer you a $300,000 business with all the equipment necessary to fulfill on the work and all the employees and structure and systems to be able to sustain a $300,000 business, what, what would you be willing to pay for that? You're like, well, I'd pay 100 grand easy for that business. I'd pay 150,000. Great. You just added that much net worth to yourself. You did not see the cash, but you basically got that business quote, unquote, for free by having the ability to grow the business to that size. So if you went from 300,000 to 600,000, you're like, man, I don't see, like, it's still stressful. I don't have a lot of money in the bank. You just added 150, $200,000 asset in one year. That cannot go understated. And, and if you run the business correctly and scale it correctly, it's probably worth a lot more than that. You know, if you, you know, this is how I keep my head in the game on a lot of things is like, okay, if I can add a couple million dollars in revenue, what would I be willing to pay for that business? Oh, I'd be willing to pay $5 billion for that. Okay, yes, it's stressful financially, but I didn't get any debt and I own this business 100%. And so therefore it's a good move for me to not take any cash out of the business and make and build a $5 million asset. Right? So this is somewhat how to keep your head in the game. This is how I had to think of the first five, six years of, of Augusta, especially when, like, there was no distributions, but I was like, okay, first year, I think I made like, part time. I did 30,000. Then it was like 180, 400, 750, a 1.1, 1.4. Like every one of those years, we weren't making a lot of Money until about 1.4 is when we started doing P4P open book management. But, like, until then, the only way I kept my head in the game was like, okay, if I would have made an extra, if I would have bought a business, when I purchased a business that was only 300, 400, $500,000 in annual revenue, what would I have paid? Great. I earned that. And it went to my net worth. And what's really cool, I didn't have to pay anything on taxes on that. Like, you don't have to pay taxes on the, on your net worth. And that's building an asset. Like, until you sell a stock, until you sell a piece of real estate, until you sell your business, you don't pay any taxes on that asset. And that's the beautiful thing about business. So that's one way to keep your head in the game, because that's the only thing that kept me in it for the first five years. I just didn't see anything in my bank account that could tell me otherwise, and that was positive. So. All right, everyone, have a fantastic Monday and we'll see you tomorrow. Take care.