Mike Minutes Mastermind 04/18/2022

Good morning guest nation. Hope you are doing great this Monday morning. Go ahead and hop into things. A couple updates real quick. Zach just notified me this morning that the all the designs inside of the Pro shop have been updated. So as we talked about last week we added the secondary address label for every door direct mail. So that should have no more questions whatsoever in terms of issues with every door direct mail. Also we've revamped like most of the designs so all of them are improved dramatically. Looking really good. Should be done. If not today, tomorrow and then we'll get updated on the Canadian side. Usually it takes them about a week or two at Pro Shop or at the Vistaprint to get that all converted over. Those should be all updated here in the next few days. So that will be good. Let's go ahead and hop into. I thought I saw at least one question that was new.

On here. Boom. Share screen.

Okay. Boom. All right. So Andy in Medford, Oregon. That was a long one. Okay, let me read through this. Would it ever make sense for a business to no longer service the small properties in residential recurring services versus commercial HOA apartment type jobs? I find our larger properties are more spot on to our man hour rates and profitability with less drive drive time. Mostly because we split everything up into a mix of both with a two man crew which could be why residential is not profitable. Maybe the solution is to add another truck and have all the residential stuff, a one man crew split up more throughout the week to accommodate only being a one man crew. We are starting to get spread thin now. I think I just answered the solution to my problem by hiring and adding another crew. And I'm about to submit a bid for an apartment comic. Six to six, $7,000 per month that would take a two man crew a full day to complete. I think about how, I think about how on earth I'm going to schedule all this and fit everything into our schedule. I love not to be forced to work in the field to help them out. It's tempting to cut out the prop small properties and small properties. Please help. What you think? Yeah, so I think it's a matter of remembering that commercial maintenance is literally a different business in my mind than residential maintenance. And so if you start to get and I know Andy specifically you have some massive hoas that you do a big chunk of your revenue just in a few contracts there. If you start building your business model around that, that's what starts to be why it's tempting to push out the smaller stuff because it starts to become where you've built the business for the larger properties. So your crew gets used to those. Your crew is used to working with another person. They start getting used to parking their truck and working in one spot all day. You start getting your equipment to accommodate those larger propert instead of the smaller ones. So all that starts to kind of move the change dynamics. But what you said is extremely important and 100% right. And that is, I feel like you could, if you want to keep those smaller residential and be profitable on them, you could have a solo mowing, mowing route with this one person that would do the smaller properties and then still be able to accommodate those larger properties of hoas etc by having a two man cruise where they park the truck and go all day. And that that crew would have the larger, larger equipment, the larger truck, potentially a trailer. I don't think you have trailers. But the, the one man crew, they would have the smaller truck, the smaller equipment and probably would make good money on P4P. And so I would actually put one of your higher performers on that one because you know they're not going to stop at gas stations 10 times a day if they're parked in one spot in HOA versus the person that does residential needs to have the accountability of P4P dramatically in order to stay efficient. And so I really do believe that a lot of times reason larger companies go towards commercial work is because it actually is a way of band aid of not having to have P4P because.

Performance drops dramatically when someone has to drive a bunch multiple times throughout the day. Getting out of the truck every single time is added waste. And that's what people helps. Same as passing, you know, going to every single gas station. All the stops that are made throughout the day are increased on residential routes versus commercial routes where it's like you said, you park in one spot, it's not like there's less to distract them. And so I really do believe that sometimes larger companies that are not on P4P they go to commercial because it's more efficient. But really it's just a matter of they're not on P4P and therefore their residential mowing crews are not efficient because they have so many more distractions every single time they stop and start a job in their opportunity to waste time. And on a commercial property where they're expected to be us mowing all day, that's harder to do. So I would say number one, making sure that P4P is implemented in order to make those residential routes efficient. And then secondarily if you have a solo operator, a solo crew member doing those routes, it's going to make them make more on P4P as well and be more efficient and make those jobs. Like, hey, I'll take them. Like, I like those. And it's not a bad idea, especially if you have a pretty dense area to have some big contracts like you're talking about and then have one guy. So you'd have a solo guy in one truck. You have two people in another truck. The two people go to the HOA or the big, you know, commercial property, start working all day long. This other guy does all the properties around it that are small, like all the little residential ones that are nearby, and at the end of the day just goes and helps these guys finish up. Like that's a really good theory too. He can be really efficient, make good P4P and then you'll help the other crew on the rest of the day.

Hey Mike, Dustin here in Bloomington, need another truck bed. Oh, need another truck bad. I just finished scheduling into week four. Thoughts on getting a loan on a truck to keep the extra money for marketing and just keep the engine going. Yeah, so last week was a really good week for overall this number of sales across the destination. I feel like some of it's the economy, the gas prices coming, coming back down. But I also feel like, honestly, part of it is command center getting estimates out within minutes now. It's going to help our close ratios and so. But in terms of getting a truck, Last month the CPI, the consumer price index for used vehicles, went down 3.4%, which is great. It's still up 40% year over year. So I do believe that's going to continue trickling down. I don't think it's. We're not going to go back down to where we were before because of the chip shortage, but more importantly because companies like Ford and GM have said that they're not going to increase production, they're going to actually limit production because they're now able to charge higher prices. So why make more trucks if by doing so we're just going to have to lower the prices on the trucks? We'd rather, as GM and Ford, produce less trucks and be able to charge 5, 10, $15,000 more sticker price because there's no trucks to be had. So that's going to create a bit of a bottleneck. But I feel like supply and demand will always fix that problem. You'll always have someone that will eventually produce more trucks. They'll bring price Down. So, like, supply and demand will always equalize out. So that's what's bringing those prices down. And so.

In terms of getting a loan, I do believe that getting a loan on a truck or equipment is a good idea, especially if you're spending what otherwise would be your marketing dollars if you had $15,000. I'm gonna go buy a truck. I would much rather you spend $5,000 down on a truck, go get a loan and spend the other 10,000 on hiring and marketing. That will do much more for your business than just buying a $15,000 truck with cash and saving that one 20, $130 a month on interest. That's the real expense of a loan. It's not the loan payment, it's the interest. So when you're growing as fast as you are, Dustin, I would definitely say getting a loan is gonna be much better than spending all of your cash on the truck, because what happens is people buy the truck and they have capacity now because they have another truck. That's great. But now they don't have the work to actually keep that truck busy. And that would have been brought about by having marketing dollars. So.

Also never had a vehicle loan before, but have. But have also never tried to gain this kind of revenue in a year. Yeah. So I would definitely talk to your local credit union. Honestly, if you're buying it from a dealer, they're going to have, like, the lowest interest rates. But typically you're going to pay for that in the dollar, the sticker price of the vehicle. But I would definitely look at a local credit union first in terms of lowest rates. Those rates are going up dramatically along with everything else. So even a few months ago, you could have got 2 and a half, 3% on a truck. Now you're probably looking more at 4 to 5%. But again, think of it as a matter of, okay, if I. For next year or two, I get a loan and I pay $150 in interest a month. Right. Literally, you're going to be looking at a premium of about $2,000 to push down that paying for that truck a year or two down the road. And so if you're growing at the clip you are, Dustin, with your ambition, like, I think that's fine.

I know for a fact that CC closed a couple of deals for me because of speed. Great. Yes. That's the goal. So in case. In case anyone hadn't seen it, there was a video I posted this morning on the Facebook group. It was actually an internal meeting that I had had with the command center last night and I made a video for them. So feel free to look at that. You can kind of see what we've been talking about, that three stage process that we've talked about in terms of turning things around. One was plugging the holes, making sure no one was leaving. The constant exodus was stopping. Secondarily was a matter of working through the backlog. And like I said, we're going to finish that this week and then next week we're going to start really revamping training and retraining people and then analyzing calls, analyzing customer interactions, doing group think on them. And we've already started that somewhat and it's very helpful for people even just to listen themselves, listen to recorded calls and they pick apart their own calls and other people's and see what's good, what works, what doesn't work. So that's the type of thing that we just have not had time because we were so far behind. Again, we had to work through the backlog and now we're making steps in that direction. But this week we're still working through the backlog. Next week we'll start the training. And that video was an internal one for all of command. Let me see if there's any more questions that came in. There was from Nick, but then he answered his own question. Nick Rio is asking about payroll, but I think he answered his own question. Let me just double check.

Let me see here. Okay, I'll show it to you because it's a good question. Nick from Mary's will ask paid time off and sick leaves. How much is allotted for employees and what is the rate at which they acquire leave? It does not show anything on their pay stubs. Yep. So this is something that is determined when you're setting up payroll with Lisa and the team. Payrollgustalongrageservices.com Again, this is only for full service and growth model. And so paid time off is something that you can offer in some states. Now it will allow you to get around things like sick leave that are being regulated. So in our state, we actually instituted this as a way to get around sick leave because with sick leave in Washington state, it has to accrue at 0.02 hours per hour, which basically leads to about a week of sick leave per year. But the way you can get around it is by offering more paid time off. So we offered twice as much. So basically two weeks of paid time off per year, which accrues at 0.04 hours per worked hour. And so you just got to govern that with payroll and make sure it's in your handbook as well. And it's clear to when they're setting up your payroll if they, if you're going to have paid time off. But this is important because Washington state's kind of pretty progressive in terms of their hiring practices. But it's going to continue to go around the US and that is paid sick leave being regulated. And the challenging part was paid sick leave is one, employees don't look at it as a benefit because they can't cash it out. And then secondarily it's negative because they can just call out sick and then five minutes before work and then ask for sick leave. So with paid time off you can regulate it more. Like for example, you can say you need to give us two weeks heads up before you cash in. And then you can also say is a benefit because you can cash it in without using it. So it's an actual benefit. It's not like a government regulated program. So that's what we ended up doing. It costs us a lot more, but it allows us to have more flexibility as well as control. Someone that just like calls out the day of and asks for sick leave because they're sick, we can deny that if we want to. Only we ever have. Honestly, if someone was abusing it, you could though. So that's that.

See here if there a way is. Is there a way to play with or in zooper to see and make suggestions for features? Because like now I wanted to move a bi mode which I have to go and intermediate which would be better if I could just. Yeah, so which would be better if I could just see those right on the dispatch board versus the weekly modes. So there's a new feature for recurring modes to switch it. So if you're trying to switch weekly to bi weekly or something, go to jobs and then go to recurring jobs and then you can edit the ent recurring job from there. So that was just added last week. And in terms of suggestion of features like next year that will become something we think about. We have a pretty good plan this year of things that we were trying to work on and most of it is stuff that we're trying to get that will make the transition from service autopilot to super easier.

Because I know it's not going to be easy. I know it's going to be very difficult to transition everyone over into super. So we're trying to make that transition as easy as possible and making all the features that are in Service opaque inside of super. Things like wiki pages and just even certain types of automations and where no email links, things like that that are not in super that we are trying to merge over into Zooper prior to the end of this year when we're going to switch everyone over in January.

And honestly like there's a lot of functionality that some of you are finding out throughout Zooper that is not unlocked right now and is why we're switching to Zooper for the long run. Things like when a job is accepted, can automatically schedule it based upon certain parameters you give it based upon who's going to be assigned to that job, the skill sets of each person and then automatically notify customer what day of the week they're scheduled. Like there's a lot of automated scheduling. That's actually what super is known for, is their automated scheduling. So if you actually look on Zooper's site like the thing that separates them apart from everyone else and what their like claim to fame is is their automated scheduling where you set certain parameters of service area. Like hey, if it's in this area of my town, this is gonna be on Wednesday, this is gonna be on Thursday, it's gonna be on Friday. And then when a job is accepted it immediately knows where to schedule them. Email the customer what day they're scheduled. That's all the stuff that down the road we can work with right now. My our really our main focus is making sure that this transition from service auto over to.

Zooper is gonna be a little smoother for the growth models that are coming over in January.

What's a reasonable request for a line of credit on your business? Tim? I'm guessing this is from Tim. Let me just jump into the Facebook group because I can't see unless you give permissions to Streamyard, I can't see your name. Give me one second here. Log into the group just to make sure. This is actually coming from. I'm guessing this is from Tim. I would say your business line of credit is. This is like a break glass thing. Oh, it's this. Give me one second here. There we go. Cool. All right. Yeah. Tim. So reasonable size, honestly, as long as it's being used constructively, the bigger the better theoretically. But you should not be using it for regular growth and expansion. I would not use a revolving line of credit for growth and expansion because it's a variable line of credit. It's a variable interest rate which is typically going to be prime which is like the 10 year treasury plus a percent. Usually 1 or 2 points, 1 or 2%. So the problem with that is if interest rates spike, you could literally go from 10 spending $300 a month in interest to 1000 or 1500 just very, very quickly. So I don't like using line of credit for growth and expansion. I'd rather get a fixed loan on a piece of equipment. I'd rather have that than using my line of credit as for growth and expansion. So even like you know, as we, as all you know, I'm taking loans out to keep growing the franchise and so that we have don't have to do any equity raise and all of that is backed by fixed mortgages against real estate. I'm not taking lines of credit on that because like literally it would be tripling my interest payments over the past month. So you don't want that. So when it comes to business lines of credit, you use that as like break glass. The worst scenario or massive opportunities. A company comes along is wanting to sell them, sell you their business. They're a half a million dollar company and they're willing to give you all their customers for 30 grand. You don't have the cash. Use your line of credit because it's just such a great deal. But never ever would I use a business line of credit for growth and expansion. I'd rather get fixed interest rates on things like equipment trucks. You get all of that financed at a fixed rate. So what about collateral on paid off vehicles? Yeah, so again a line of credit, you can get lower interest rates etc. If you have collateral on your trucks. But it's still going to be a variable rate of interest. And remember that every single time you ever sell that truck down the road you will have to get a, you have to talk to the bank. Even though you haven't used the line of credit, for example, you will still have to get them to waive their right to that title and a release, title release every single time you try to sell that equipment or trailers or trucks, whatever. So you can absolutely increase the limit that they're willing to give you and reduce your interest rate by having collateral because obviously just reduces the cost or the risk of the line of credit to them. But again, I would still not use a business line of credit for growth and expansion. You want to use fixed interest rate for growth and expansion. You only want to use a business line of credit if there's a very, very good opportunity like acquisition or potentially.

Like very short term emergencies. I look at business lines of credit as insurance. I'm willing to pay you know, their 1% initiation fees or whatever, origination fees just for an insurance policy of having money in the bank. So all my. All my real estate in the past few months, I have had them all put underneath home equity lines of credit, even though I'm not using them all. And that's all break glass. I do not want to touch them. I don't want to ever use them. Like, if I'm using them, it's a bad thing. Like something bad is happening. But it's the cheapest form of insurance. And so I look at the business line of credit the same way. It's variable. I don't want to use it. In the time of recession, those are going to get locked up as well as their interest rates will spike. And so you want to. If you're trying to grow and expand. I'd much rather be doing fixed interest. Fixed interest rate loans against equipment, land. Those are the type of things I do. Trying to lock in longer term fixed interest. It has. Has the collateral already there. The last thing you want to do going into a recession is having a business line of credit that you're expected to pay off in five years, which is possible. But going into recession, if that bank freezes that line of credit and then you have collateral against it, that means they could literally come pick up your trucks. And that's why there's a lower interest rate, is because they know in the time when they. If they ever need to call that loan, they could literally just come pick up all your trucks. And so there's a reason why there's a lower interest rate. There's. That reduces the risk for them. So. Cool. Let me make sure there's no more questions have been submitted on the forms. Cool. All right, thanks everyone. Hope you have a great day. We'll see you tomorrow morning. And I don't know where. Where you guys are at, it's raining here, but I think everyone's basically kicked off into their spring rush and there's only a couple more locations that haven't started their mowing season. And so, yeah, it's gonna be a great week and I look forward to it.