Mike Minutes Mastermind 03/19/2025

Ladies and gentlemen, boys and girls, welcome to another mic minutes Mastermind yet again in an airport. Very good, very good. Tomorrow we're back in the office, back to a better microphone. I will secure a better studio mic for when I am on the road. So again I apologize for the background noise. Let's go ahead and jump in.

Alrighty, a couple quick things. First off.

Looking like this weekend we are going to be able to get everything live on the version modern estimates inside the customer portal. It's really, really good. And so the team's working right now like getting all the training, etc. Done. There's not a whole lot of changes really at all for the Augusta systems of how we do things.

There's going to be a lot more optionality around follow like one thing that we've never done in the past but we will now have the option to do if you want to is do you want to follow up with customers if their price, if they say that they decline and that's because of price because they decline based on scheduling, et cetera. So this would be something that for now that that data is going to come back into the estimates section of the CRM. Down the road we will build in trigger for automations but that doesn't exist right now. So it's not like you based upon price send them a certain offer back immediately. I actually almost would be hesitant to do that anyways because it seems a little bit weird if I'm like decline based on price and immediately I'm getting within 10 seconds an email or text message like hey by the way you want it cheaper. However if it's a actual phone call like hey now you mentioned scheduling. We can go ahead and do that for a week or whatever same thing as price. I feel like it comes across a little more authentic. So that's really the major, only major thing I see to the workflow if you have not already once the feature comes out. I do recommend this weekend going ahead and looking at the new Copilot University. It's completely changed from top to bottom. It used to be 11 hours, we moved down to five hours. Every video is redone and it's much more showing the workflows. So I do recommend going through that inside of there. They will have the new training for the estimates, new modern estimates. There's a lot of stuff inside this, this release honestly that will not be seen by members inside Copilot. That is still super important around how we do stripe, how we handle stripe payments and so the overall just dependability Will increase, but just security perspective, a whole bunch of other stuff that how we're connecting with Stripe is really, really good. So you don't really see that part yet. But that's what is allowing the functionality of like Apple Pay, Google Pay. The deposit workflow being super, super streamlined with deposit thresholds as well as credit compile being super streamlined is really. It was rebuilding the entire backend infrastructure connecting payments. So that's actually the biggest lift. And what's led to a little bit of the delay on it is making sure that has been like airtight. So even tonight and tomorrow, like there's tons of testing. You're testing every single edge case. Hey, what happens if an ACH payment goes through? What if it does not go through if their bank gets declined? What if the price declines it? There's a security, security issue with their cdd. Like all the little tiny things around. Like, okay, what happens to Google Pay, Apple Pay? Like all these little things have to be tested. So that's really the big lift on this one. So anyway, it's coming this weekend. We're looking forward to it. And I think as soon as we start seeing a week or two of of members using.

We will see if Augusta needs to make any sort of change in our workflows. The major thing though is really the estimate declined being able to have that information. But you know, estimate deposits or deposit thresholds, credit card file will just be smoother. It won't change your workflow at all. They just won't have to go back into the estimate, accept it anymore. It'll all be streamlined. So looking forward to that.

I was talking with Dustin Bearden yesterday. We were out in Illinois. We had four, three turnarounds and then one business breakthrough with Dustin. So Dustin has two locations. He's considering a third. But really I encourage him to take the two and put them both into profit mode before going the third one. But also if you know locations are super profitable, one of the reasons you actually start another location Is to avoid 20 or 30 tax. And so, you know, if both of his locations get into profit mode this year, that'd be a different story. But realistically is like, hey, take this year. Get your first location to get to 300 recurring customers. Throw that thing into profit mode. Now one thing I've heard not from Dustin, but from other people was like, well, I don't want to, I don't want to keep growing and go more locations. I don't want to go into profit mode. Going into profit mode opens up the optionality to do a lot of things inside the business. And so one thing I was talking with Dustin the other day is or actually this morning was.

If you want to profit mode, let's just say one location and for example him, he had 325 recurring mowing customers as the his capacity and so if he can get there and if you can raise prices and he was going to do an $8 weekly 12 bi weekly increase that's $10 per on average per customer. Let's just call that 3,000. He's at 10,000. Let's consider and say $8,000 extra profit you would make by, by increasing the prices $8000 a month. Assume you have no cash in the bank, you can, you can really get started another location very quickly. And so some people will say well if I, if I go into profit mode I'm going to hurt my growth prospects. Well alternatively you can think of like this outside a truck and equipment you can finance and that's the biggest cost of starting another location. The only other cost that you would need to finance is, would be advertising and the franchise fee if you have. This is actually in part why we did the give back program at five years because that's I feel like if you start from 03 years gaming it, getting it up two to three years, getting in profit mode then you're eligible for that give back program to be able to start the next location without a franchise fee. Now I know that people are starting to come up in their five year give back program so the reason I'm talking about this is that gets wiped out. So really the only cost you're going to have to foot is miscellaneous stuff like gloves, little stuff and advertising. Now here's the thing. If I'm able to have a 20 or $30,000 credit card for example and yes, let's just say 20% interest on paying on this thing. If I'm able to get the franchise fee waived, if I'm able to get my truck and equipment financed which is relatively easy, getting a truck financed or leased, getting equipment etc, then what I can do is like let's just say I on trucks I'm paying, let's call it 700amonth, brand new, right? 700amonth. Then I get two of those. So that's $1400 a month. Then I'm looking at equipment and I get a couple mowers. Etc. Let's just to be conservative, let's say $3,000 a month is the payments on trucks and equipment. Let's see you Got some you need to want to get a trailer and really hit the ground running is 3, $500 a month you have to pay in payments on the equipment and the truck as long as you can finance the marketing side of things with a credit card. Let's just say you spend $20,000 market because you really hit the ground running. Have two trucks from the beginning, get an employee from the beginning, the whole nine yards. You get your first location in profit mode with the GM, you raise the prices, you get that extra $8,000 a month in profit. You then have $8,000 which will absolutely cover the $3,500 of financing. And so if you look at going into profit mode as a way to finance the debt on a second location, that's the very pro growth move. Now this is very like this is the way to reduce your taxes to be able to second location. But more importantly I now have a location that is in profit mode that is simplified services, mostly recurring, able to put a general manager in place of it because they don't, they aren't required to sell a lot. They're not, they're doing maybe 20, 30 of their revenue is coming from projects. The vast majority of it should be instant pricing. The vast majority of it should be over the phone estimates. And so I don't need them to be doing a whole bunch of stuff and projects. If they can run a location with 300 customers, three to four employees and be running at seven to $800,000 annual revenue, that's possible. And so the reason I say this is because I've heard a couple people say like I don't want to go in, I need to go to the GM plus model and I need to keep growing this location. And they forego raising their prices and going to profit mode. The reason I I, I'm hesitant on that is because as soon as you go into that million plus marker you're having a million five, a million million three at one location. It's very difficult to find that GM that is going to just be able to run operations and everything else being systematized. And so that's why I like the model of have a finish line for the Augusta business model. You pass 500000 annual revenue, you raise your prices and you raise your prices multiple times until you're in that 7,800,000 dollar world. You're very profitable and you can take the cash flow from those price increases and justify moving into another location. And so for example I was talking with us the other day from a Tax perspective. That's really the only reason I started multiple locations. And the reason he'd think about a third location down the road is, okay, end of the year I can go get the debt. Let's just say the trucks, equipment, et cetera is $70,000. You finance it all. Even if you finance the equipment, the trucks, you can still write it off as long as you put into use before January 1st. And so you could theoretically, okay, I've got my give back program, my five years, bam. I put this thing into profit mode in years three and four. Boom. And now I am going to, I have a lot of cash, I have a lot of, of debt or sorry, a lot of taxes that I have to pay money on. Technically, if you don't want to touch the cash, for example, some people are like, hey, I'm staying up for a house. Great, leave that, avoid the tax bill by getting the debt. But you say, how do I make sense of that? Great, go raise your prices. Like go into profit mode. If you have 200, 300 customers. Going into profit mode is a matter of adjusting 5 to $10,000 of straight profit to your bottom line. And that covers all financing charges. Now this is a very gross minded mind like growth mindset, like I'm going to grow, grow, grow. Do I think that's for everyone? No, I think a lot of people, two locations, you managing both of them with a GM looks really, really good. But if you're trying to minimize taxes and you're trying to maximize the growth that you have and then copying and pasting the model, it looks very appealing to get to 500,000 as quickly as possible, throw it into profit mode. And when you throw it into profit mode, that extra cash flow that you get immediately by focusing on the recurring services, the extra cash flow is then used to finance the next location. That's the most pro growth way to be able to grow because you take that, that big jump in extra cash flow and you look at it as, instead of I need to do that for two years, I can then take that cash flow and use it to finance the next location. So just as a side note, because I've heard a couple people say like I have to do the GM plus model because you know, I, I can't, I'm just gonna stay, keep growing, growing, growing. It's like, look, throw this into profit mode and immediately have $8,000 $9,000 in extra cash and you could go finance the second, second trucks, equipment, etc and be in a better cash flow position on, on the location. One, instead of trying to go from 800, 000 all the way up to 1.5 and for another three or four years keeping your prices lower and slowly growing and chipping away and keeping cash flow. 4. And so instead of raising prices, like raising prices a massive impact.

I just consistently see inside the locations of Augusta Nation that there are locations being 6, 700,000 making far more cash flow. Actual net profits distributions than locations are much, much larger. And so.

I just, I just encourage everyone have, have like even after like the more turnarounds. I do see this more and more. It's like the reason we have the Augusta business model is you hit a certain threshold and you raise prices by raising prices $8,000 a month, multiply, that's cost eight months out of the year. The extra $70,000 is straight profit. That's what usually would be the profit for the whole business. And I rarely see people beating the returns on going from 800,000 to 1.5 making that big jump. I rarely see them make more profit. I rarely do. So a location that's doing 7,800,000 with one one overhead position, the GM person still doing out in the field a little bit after two to three years of raising prices, lots of recurring revenue. I see them making more money. I also see it being way less. Finally the owner spending time in the business. And so that's why we geared it that way. And I say that only because I've heard a couple people mention that they have to do the GM plus model and they have to keep growing for the next few years. When in my mind I'm just like, if you just threw this into Profit mode at 700,000, you already have a good GM that could run 4 or 5 employees, use them and then you'd be able to stay in growth a second location and the first one doesn't need you. The whole goal here is why people criticize all the time in the comments around like why in the world would you have a six or seven $800,000 business and do two or three of those? Why don't you do 2 million? Like the reason is because I don't want to be there. Like we build our businesses to operate as a machine to work without us having to be there 24, 7 without us having to be there at all. And when I look at the reason the Augusta model is actually built around anytime fitness. And like me looking at all the gyms and seeing like how much revenue doing how much involvement of the owner and consistently seeing like I don't want to have a whole bunch of trainers. I don't have five, six, seven trainers constantly doing promotions. I'm involved in training the trainers, doing sales scripts, sales meetings. I want the business to run without me. What is that? That is recurring revenue. That is going to be gym memberships. And I'm going to focus on my gym membership. I'm going to make it really, really good. I'm going to focus on training my staff around gym memberships because it's revenue that happens regardless if I'm there or not. And so.

Can I make more top line revenue by added training? Absolutely. I've done it before. We've had multiple trainers. We were in like the top. What would be 2% of all the anytime businesses. And like, yeah, top line revenue is great. Right now I have zero trainers and I make just as much profit. And so the reason for that is because you slowly build the recurring. I'm able to raise my prices like I did last year by a dollar and 50 cent or $2 every two weeks, which is $4 a month on 800 people. And all of a sudden it's drawing extra $4,000 of profit to the bottom line and not doing anything. That $4,000 in profit is more than what I made on the $15,000 in training the month that I was doing three trainers. So I look at that model and I, I looked at a lot before we really came with the Augusta model. And that is like how many people can a general manager that does not have ownership chops, how much, how many people can they manage? 5, 6 tops? 7 or 8 is someone who has a lot of experience. So I can see a location doing 800,000 and maybe even going into profit mode and going up to a million. That's probably actually what the Bellingham shop will do because we pared it down so much. It'll probably still do around top 800,000 level keep to be profitable. But Corey has experience, he's been there for a couple years and the likelihood of finding out a GM to be able to replace him more difficult than if it was a 650 or 7, 700,000 and four or five employees. And so I say all of this because I consistently am seeing people not so much inside of Destination but abroad criticizing the model. And the reason that the differentiator between the Augusta model and most companies, quote unquote, is we are building the business to lead the business. We are not building the business to keep running it, keep operating it and keep perfecting it. We are trying to make it as simple as possible so it can be copied and pasted. I want the business, I want you all that in the 10 year term that you first joined Augusta to be able to eventually get a business that runs without you, that is a general manager runs in place and you can go do whatever you want after that. Whether we start a second or third location, going to investments, going and traveling and vacationing and living off of that like you can live very frugally. I was just with a company here living on less than $50,000 a year, living a pretty good life like owned house, et cetera. Like you can do that and not have to be tied to going into the office to quote unquote, office shop every day, dealing with the employees, etc. Assuming you have simplified the business, it's mostly recurring revenue and it's highly profitable and your gross margins are high, how do you increase your gross margins? Be able to get P4P where it's not 30% or it's not 40%, it's not 35%, it's not 30% but like 20, 25%. If you knit your PPP to that, your gross margins get higher. And that's a really interesting business model that runs without you. It runs on mostly recurring revenue and it has higher gross margins. And by moving your percentage on people p say from 40% to 25%, you're like, oh, that's 15%. That is likely going to double your profits because if you're able to get your P for P percentage from fever from 40%, 25%, that's 15% difference. That's a doubling of your profit margin. And so it's also taking your Gross margin from 60% to 75% or sorry, your gross margin like your, your cost extra margin on top of say on top of 40%. Okay, great, we're at 60% gross profit. And for if you can get it down to 25% on P4P now of a sudden 75% of revenue is essentially gross profit because you don't have material costs. Remember, cost of goods sold is just direct labor, our subcontractors and our material cost. And so if the vast majority of it is just simply direct labor and we're able to get that from 40% to 25% because we raise prices so much, we can bring down our PPP percentage. That's how you get a very interesting business. And so, and I just consistently see companies that are in this growth treadmill trying to get to millions of dollars in revenue and never Raising prices and therefore never being very profitable. Now consistently seeing smaller companies that consistently just raise their prices and hitting capacity, printing a lot more money after years 3, 4 and 5. Then the perpetual growth cycle of grow, grow, grow. So the reason I like the copy and paste model is because it's making finish lines for you at every single location, every 5 to 800,000 revenue at the finish line where you become more profitable versus I'm gonna keep growing and growing, growing and one day I'll be profitable. It's difficult anyways. All right, that was my rant. Rant over. Move on to questions.

Question one is from Mr. Anonymous. Happy spring rush. Currently solo leads and accepted jobs are starting to come in. I'm starting to get one off issues such as instead of new customers accepting quotes and turning cards on file, they're emailing back that they want to proceed, possibly trying to backpass cards and file and other scenarios like that. Since I am in the field, is there a way for me to send these to CC to follow up and close out whenever they get a chance? I'm looking forward to getting some long days and a little help with some would be a lifesaver. So you could use connecteam, you could let them know. I would probably screenshot, whatever like that, whatever. However, they're getting back to guessing an email. If you, if you screenshot that and it was clear what the customer's name was, put it on your connect team. They could handle it. So yes, they could do this for you. I would also say sometimes, like I think this will somewhat resolve itself with the better workflow for deposit thresholds and credit card on file after this weekend with the update to estimates. So I think it'll help somewhat. I would say if you need help with things like this, this is why connecteam exists. Screenshot, send it over to them by the end of your day. Hopefully they've taken care of that and you have to deal with it. Mr. Anonymous, we remind when Command center stops doing invoicing for us. It is April 1st, so still, what is it, two more weeks. So that was back in January. We kind of established that there is training on the academy and we've organized that whole section of the academy a lot more, including a video for your office team as to why each department exists even if they're doing it. We use the same training videos at Command center, but we made them available to you. If you're having someone else do it, they can watch those videos too. Can we have a corporate made video for Augusta Walk us to how to set up an automation so invoicing is taken care of in the background, then collections figure out any other collections left. I have had nothing to do with invoicing. I'm feeling pretty uneasy about taking over and not knowing what I'm doing. Yeah. So two things. One, the way that we've always done it in terms of invoicing, which has a little more of that manual aspect to it, that is fully trained, that workflow inside the Academy. Second thing is there is inside of Copilot University, they will walk you through the part of if you want to completely automate it. There's three elements of an invoice. One, creating the invoice. Two, sending the invoice if you, if you do that. Three, third is charging for the invoice. All of that can be 100% automated. As long as you're doing your daily check of your dispatch board and making sure like initial modes are updated, even if you're doing daily or weekly billing, you absolutely can automate your invoicing completely. So I do think that by Command center getting out of it, it's going to push a lot of us to do more of that. I think it's very, very possible to automate it completely. I would ease myself into that. If you have not automated before, because if you mess up or you forget to adjust the invoice after first time or something like that, now all of a sudden you got a bit of a struggle in your hands. But all that to say from how we've done it in the past, go to the Academy or the invoicing. They walk through the entire process that they use for this and it is not very difficult. As long as you're inputting information on a daily basis into the jobs, those are going to be creating drafted invoices and then you're going to create in your settings how you want those to be sent out. It could be daily, weekly, monthly, et cetera. So if you have problems with this also, just feel free to set up ATC Air Traffic Control, a zoom call and they can actually walk you through it too. But I would first start with the Academy and watch how the invoicing department has always done your invoicing. Pick it up from there. As you get more confident with it, you can start automating those elements if you want.

Dylan Wirtz has a question. This is after 4, but couldn't find which mastermind. What are the downsides of automated invoicing? I'm concerned using it now that CC dropped the Invoice department. Yep. So same exact question. Basically the downsides would be you've got to make sure everything is inputted correctly into the job because it's taking that it's creating the draft invoice. And then if you're making where it's going to take draft invoice and immediately charge or immediately send the customer or do it at a certain time even.

You'Re going to want to make sure like the jobs are dialed in. So for example, if you're not on a daily basis going back and looking at initial modes and adjusting them, that'd be a problem. If you're not actively putting work order changes into projects, that could become a problem because the job gets completed end of the week, you forgot. And a $2,000 work order change wasn't added to the invoice, it was only added to the job, for example. So those are some of the downsides. But if you iron those things out and you just get in a habit of daily checking your dispatch forward, making sure that jobs are updated, you could absolutely automate it. And that is personally, if you're doing weekly billing, I would not send the invoice. I would just charge their card. And then if they ever have a question, they can always access their customer portal. So they can always do that. And by the way, in case anyone's new and doesn't remember, you can always add a customer portal link from your website, your page on Augusta, Augusta Longstreet.com your territory name. You can add the customer portal link from there and they can log in through there and see their stuff if they want to. So, and then you just charge them every week money comes out and I don't want to be sending them, quote, paid invoice receipts every single week or every two weeks because I want my one click seals I. E Just any sort of marketing messages opened up. And so that's why I don't want to flood them with just, oh, your invoice was paid. Oh, your invoice is paid. Oh, your invoice was paid. I don't want to be doing that. So I would, I, if I was doing week, daily or weekly billing, I would be inclined to tell them, hey, your card is getting charged, it's credit card is on file, et cetera. And again, after this week's customer portal update, it's going to be even more refined the way they can like choose which card they want and things like that.

Your name or location? Name. Oh, Sorry, this is Mr. Anonymous. We are planning to hire Our first employee next month and start them on door hangers, but move them over to milling once the VH pick up. What is a good P4P percentage? If our target is 70 an hour and our base pay is 18, we would most likely add another truck this year as well. So you pass the 20% rule. Our 25% rule. Not quite. Because technically the 25 rule on 18 per hour is $72 an hour. So what you might have to do is increase your percentage on pqp in order to be able to get them above base pay. Because I would anticipate if you did $18 per hour and $70 per hour, $18 hour base, $70 per hour rate to the customer. Especially when you're first getting started, you don't have a very efficient route. And so it's gonna be hard for them to get above base pay already. As well as the fact that they're at like a 27% of base pay or 27% of the hourly rate is going to base pay. I want that on 25%. So you can fix that by doing two things. One, get your base pay lower. Probably not an option. You probably know you need 18 an hour base pay to stay competitive. Or you get 70 an hour higher, you raise prices. So if you're like, you know, I want to stay aggressive with pricing, so I'm going to keep that there. And I've got to keep the 18 base in order to track talent. Great. What you're going to do is increase the percentage on PvP. Maybe it's 35%, maybe it's 40%. The bottom line is you want them above base pay. So if in the first paycheck no one gets above base pay, you might want to raise it from 33 to 35 or 40. And you can just be honest with the team. Be like, hey, we're inefficient. We're just getting started. We're trying to add to route density. We're gonna get 40% until next spring and June 1, 20, 26, we're gonna move back to 33%. You could absolutely do that. So it's harder to move down than up. So that's why I say do use the numbers for the first week, two weeks, see what the numbers are. And you can always give them more percentage on pvp and they'll be happy. It's harder to bring it down. And if you're going to bring it down, do it with a price increase so that way it doesn't actually affect their pay. So when we moved Bellingham shop down from 33% down to 25%, we did it when we also raised prices by 27. 8. 27 to 28% on to the customer. And we moved from 80%, $80 an hour to $100 an hour. So by doing that, they made the same on P2P. And we were able to lower our cost of goods, sold our cogs from, you know, the 33% on labor to 25.

All right, everyone. That has been another edition of the Mike Minutes Mastermind. I love you all. I'll be back in the office today, assuming these sites don't go haywire again on us. And we'll see you tomorrow. Take care.