Mike Minutes Mastermind 05/09/2023

Hey everyone, hope you're doing super well. Let's go get things kicked off. Let me just refresh this, put this in the Facebook quick announcement.

We had a.

We had a vote on the franchise advisory council and it was unanimous. So we working on the results of that. Give me a second here.

All right, so we are going to go ahead and digitize the coaching call. Coaching call scorecard and we're going to add a whole bunch to it. So by next week we should have it out. I got to run it by the coaches. We got to create some backend systems to make sure it's going to work well. And then next week we should roll out, it'll be digitized and we're going to make it more of a PDF filler fillable form that you can fill out prior to the call it gets sent to your coach. So that way you can spend less time just asking for numbers back and forth. And then we're going to have potentially some grading on subjective things like leadership, time management, sales ability, scheduling and dispatch whether or not you're doing that correctly. So I think it'll be helpful. And.

It was a resounding yes from the coaches and the financial advisor council. So I'll be working on that with the design team and making sure that the PDF fillable format going back and to forth to you and the coach is pretty cool. It's not just going to be like a regular form PDF, it'll be like where you can fill out, you send it to them, they add to it, they send it back and then both of it can get filed, et cetera. So we're working on that again next week. We should have that rolling out. Bye. Next up, we got some questions. Let's see what we got.

Devin Sheridan from Red Deer. What do you guys do gym reimbursement and do you pay for at your anytime? Also, if they get fired or quit, what happens at your gym membership? I want my gyms to be healthy and work out, I think New Year team members. But yeah, so we do it after three months, they're eligible for either health benefits or a gym reimbursement. And the gym reimbursement is a reimbursement. So if they want to get a membership, it's on them to fulfill that regardless of whether or not they work for us. It's a reimbursement program at the end of each quarter. So at the end of March, June.

September, they would submit those receipts for those three months and then we refund them if they got fired. In between there it's on them or if they left or whatever. But we don't do it where we pay directly to the gym because like you said there's issues if they get fired or they leave. So it's a reimbursement program on a quarterly basis. It's not.

It is not where we pay for them. From the top. Connor Hutchinson from hundreds of North Carolina, could you briefly explain what it is like to start an executive model as far as credit goes? What should someone currently got to do to prepare for starting executive model? Will lenders be looking for an existing LLC with good business credit, good personal credit or neither and just a good plan with a large amount of investable cash to begin with like the plan requires? What advice do you give to someone who wants to go this route in four to five years? Do you think it's important to start one location first? Will starting one location with the three year program help with the credit line needed? I've playing, I'm playing with the idea of staying at GM for longer to really benefit from profit sharing in those later years then going straight to multiple locations rather than starting all over in two years with one location. I would, I will run the numbers on what compounds faster but what's your opinion? Yeah, so I know I talked about a little bit in person Connor, when you're in training about this, but I think it's a smart move. Like it's tough to go from running being a general manager three or four or five years and then switching to like you being out in the field again pushing a lawnmower. That can be tough. Especially if you've grown it up to 5, 6, 7 employees and you're mostly doing admin estimates, hiring, etc. Not to say you shouldn't do it, I'm just saying it's tough. And so.

I would say in terms of like from a lending perspective.

Having that much industry experience is helpful. The thing that you're going to run into when it comes to lending is the down payment. If you can have the down payment and you SBA loan, you can get just about anything as long as it is a something that you either have experience in or is cash flowing. So when you think about the SBA, you got 504 loans and you have seven loans, right? So 504 loans are typically for asset acquisition, real estate, et cetera. This is the route we were going to go last year for building the headquarters. 7 A loan is going to be for like startup capital, starting the business, et cetera. That's what you're going to be going for is 7A 10% down. If you have good credit and you have experience in the industry or you have.

You're buying a business cash flowing already, you're basically set and good to go. I bought the Anytime fitness gym on A7A 10% down. It was cash flowing, so it gave me the check. And I had worked there for a couple years back in the day as a trainer. So those are two things they look at. So you having the experience as a GM would probably give you a leg up in terms of the.

The financing side of things. What I would be thinking about is do you have enough cash in the bank to really make this work? And I would be going for more than you think you need on a loan, right? So if you think you need, you know, $70,000 per location, I'd go for 90 or 100 because like, once you get that loan, you, you can't run out of the cash. Right. And so a lot of times you can negotiate to your SBA loan how many months of grace period you have once the loan closes. So, for example, you could say, okay, I'm going to close this deal, I want $500,000 and I'm going to start six locations. And what you can negotiate is, okay, the first six months, I don't want any payments. And then your goal would be to take the cash that you get and immediately be able to get within six months them all up to profitability. Whether they're at 30, 40, 25,000amonth around, it doesn't matter. It's like we're going profit mode at six months. And, you know, some locations, you know, we shoot for after the third month, they're in profit mode. But let's just say six, right? That, that gives you a lot of cushion before you're now going to be on the hook for a probably 7, $8,000 a month payment. I was really lucky. And like with interest rates being lower than they were that lower a couple years ago compared to now, you're able to get $500,000 in the SBA for less than $5,000 a month, which is unheard of. So, but now it's probably 7,8000amonth. But again, if you can get all your six locations and be cash flowing 1500 bucks a month by six months in, you could be paying that off in order to be cash flow positive. So the SBA program is an underrated, massive tool that you can use. I would say you need to have either the experience or the capital and the working capital to make sure you're safe. That's still debt nonetheless. But that program is massively underutilized in the entrepreneurship community. And the reason most SBA loans don't get handled that is because a people have harebrained ideas that they're just trying to make something up and they don't have experience in the industry. Or two, they're really struggling to come up with the 10% down. The SBA is looking for the fact that you can give the 10% down and still be okay financially. So, you know, on 500, $200,000, you're going to need to put down 50k and then probably have another 50k that you're still like, hey, I'm still going to be fine. I can still live just fine without taking any money from this business for next six to 12 months. That's probably going to put you in the best position. But the experience of running a bigger location and running that to six, seven employees like you're basically almost doing Connor, is going to be a huge win for you if you're trying to go for an SBA loan. But the SBA loan program is massively underutilized and they love franchises simply due to the fact that they know you have back end systems and it's, it's underutilized. I was going to use a 7A loan for the North Carolina locations until I got my ERC money. Then I was like, okay, well I'm gonna go start the location with that. But I was going to do 7A. And they had approved me very quickly because I just gave them the franchise. They gave them the franchise disclosure document, gave them the operations manual. And like, I got fast tracked pretty fast. So that is a hidden benefit of being a part of any franchise, is the SBA loves you. Like, and I found it with Anytime Fitness too, is like immediately checked on that. They didn't have to go to like I have to do business plans or anything like that. They just checked me through that. I don't think Gus is at the point where they're not going to ask for a business plan. FYI and they've tightened their regulations now, but they're going to give you a lot of passes on the business model and the business idea. If you say, hey, look, there's 130 locations already doing this, here's an FTD that's 100 pages, here's an operations manual, here's all the training they have to go through. They give you a lot of points for that and it is based upon like your banker by the way. They are a big deal. Oh yeah. Connor warned me, said that he wanna he wrote a book. Okay, so here we go. Connor from Evansville. This is something I just went over with Lee, my coaching call after last week. Someone asked if they should lower their minimum. You challenge them with double checking that the that in between 40, $60 is to see if they were saying no to a price category or two our entry price. Okay. So I figured I would bring this to the mastermind in case anyone else is struggling and need help. So I did. Just after my coaching call with Lee, I had an abysmal 43 close ratio in April when I went nothing short of 50% this year. Just for everyone listening, that might be new. 43% close ratio is not abysmal if you're in profit mode. But he's trying to grow. So this is make sure we're all on the same page. There's no such thing as an abysmal close ratio unless you're comparing it to what your expectations are.

Because personally if I was at 43 on some other I'd probably raise prices. Right. So it just depends where you're at. Just adding context on. I do require weekly the through June and bi weekly after we do right at 50k. We will do right at 50k in April which is still double the growth from last year. And the number of estimates increased by 56% year over year. That likely explains why we're still able to grow. Very good.

Me and Lee are balancing around the idea of not requiring weekly lowering to 1.3 for biweekly and then drop EVs and dump fees until we hit capacity. This is the key part I think. Let's keep running. We are running around 140 to 150 budget hours a week right now. I want to hit 200 budget dollars this year to max out capacity. I really want to fill fill by July 1st to do a price increase of $5 across the board. But I need the the max capacity budget hours to give me options first and then I can decide that what switch to flip mowing estimates in April was 106. We have a $40 minimum down from 45 last year. 91 of my 106 estimates were in the 40 to 60 category. 86%. So of the ones that are in the 40 to 60, you won 40%.

A bunch of people. 21% didn't respond back and 34% no. These are great numbers by the way. Great job. 60 plus you have about the same. More people didn't respond back. A similar amount of people saying no. Okay, if anyone's just listening to this, this is only a good few minutes. So actually watch. These are great numbers break down.

1850S, no.

1850S, what does that mean? What does that mean? I think you meant 38, 38, 50 no's sent are at $40. Oh, 18 out of 50 nose or scent are at my 40 minimum. However, 50 or 50 out of the 91 are in my no and scent category. I do estimate follow up calls. What would you do with this data? Would you recommend going down to 35 and then adjusting pricing down by $2 in the 40 to $60 range? My pricing is currently the same as Chuck's. I believe.

I would probably have to see a couple things. One I would have to see is are you hitting budget hours and you're gonna now this is gonna fall on your teams P4PMore like if you guys are making a bunch of P4P, I'd probably give you, you know, yeses on this. If they're not hitting P4P, you have different things. The data you're gonna have to bring into play here and keeping in mind too that by adding more density, basically growing by a third from 150 budget hours to 200, you are going to have better density. That's, that is going to improve their pay for performance. However, you got to make sure that on these $40 modes that you are not going to lose your shirt when it comes to P4P. If they're already beating budget hours and P4P is not going to be an issue, I would say that's okay. I would also say like at your current rate of growth in May and June, you're probably going to get to 180 to 190 bud hours without changing anything. Because if you're growing at 56% year over year in terms of estimates and you're probably, you've probably grown about 25, 30, 30% or so year over year in terms of revenue.

You probably will honestly hit 170 at least to 180 by the end of June. So the question is like what's the rush, right? Other than hitting budgeted hours and be able to raise prices. So I'm not against this. I think based on these numbers, I would give you the path to go ahead and lower the prices, filter capacity and then raise the prices. But I think that even if you increase these numbers marginally, that would probably happen from lowering the prices. It's not going to dramatically impact the fact that you're probably going to get to 170 to 180 without changing the prices. So it is whether or not.

Your confidence level when you raise prices, how much you keep people. If you think you can keep 90% of people when you raise prices in July, go for this. Do it because you'll increase your concentration, which in the short term potentially put some pressure on your guys, P4P, which you could solve that and say, hey, instead of 33% or 35%, we're going to give you more for these couple months because this is what we're doing. We're going to be more in P4P so we can fill the capacity. And then when we fill the capacity, we're going to raise prices and you guys are now going to have more jobs on your route and more dense route. And so therefore you will be able to get even more on paper performance. So that's probably what I would be using.

As kind of a matrix. So I'd be really looking at P4P, what those numbers are. And I'd also be looking at your cash balance and making sure you have enough in your bank to potentially have a lower profit. May and June, knowing that if you can pull this off, dip to capacity, increase your increase the budget hours to 200 without buying any more trucks, equipment, or potentially employees, you're going to be way more efficient in terms of P4P. You can then raise your prices, your guys will make way more money on P4P and you'll be way more profitable. So I'm a fan of this because anytime you start talking about getting the capacity, I get very excited.

So I think that would be fine. Assuming that you can do something with your P4P, make sure the guys are above base pay and secondarily that you have enough cash balance to get through a May and June, a spring rush, essentially, that is a little bit skinnier in terms of profit, knowing that if you can pull this off, get the capacity and raise your price in July, you'll probably double your profits. So, Eric from Largo from Florida, I'm doing a lot of door hangers this week and plan to do door knocking on Saturday when more people are likely home. Sorry, one thing, guys. I got this notification going up in my ear is driving nuts. Give me a.

All right, Eric from Largo, Florida. I'm doing a lot of door hangers this week. Saturday, when more people are likely home, currently have instant quotes and the mowing design that lists other services offered. Do you think one design is better than the other for specifically door knocking, will you use multiple door hangers for your new location in June based on on scenario or keep it simple with just instant quotes? Personally I'm going to use the new one of the newer door hangers that has where you can put in price for mowing, price for cleanup and price for the mulch install. I forget that way I can just decide as I'm going up to the property if I want to add property cleanup or.

Mulch. But I'm going to have all the mowing prices already set. So if there's really nothing that I see needs done, I'd probably just write a quick mulch estimate on each of them.

Otherwise I'd just be doing the mowing ones right? But I think I have two different ones.

Oh the other, the other door here I ordered was the upsell one. So I ordered quite a few stuff so that way it's there in South North Carolina when I get there to at my UPS store. So I think I got a couple door hangers. The one was the all three. The other one was the upselling customers like the property because every single customer I get I need to upsell them if I'm going to hit my goal like I have to get all my mowing customers upsold into something. So that was the other door hanger I got. Nick from Nepean.

Is our first week of nice weather where the grass is really growing and dandelion is starting to come out. I want to pick as many mowing and treatments clients as possible but also need to book out landscape projects, mulch, etc. I'm trying to figure out the best way to split my marketing without diluting it over too many services. Which service should I send as a one click estimate email this week is ideal for one click. I would recommend on the pain point that is current and realizing that you can sell projects all the way to the snow starts to fall. You cannot do that. For mowing I would focus on mowing and treatments now and then. Maybe in three to four weeks I'd be sending out another one click estimate email for your projects. If that's something concerning you or you think you'll need to make sure you you fill up your scheduler. Um but I would be focusing with right now like stuff is taking off when it comes along sell that. I'd make sure that your budget hours are limited in terms of project over the next few weeks as you are catching up on one time mows or sorry initial Mows and overgrown and the mowing takes longer. Then I would focus on projects when there's still in demand, still in need, but you can book them way out into the future. I would only change that strategy if you're struggling to get hours on the schedule right now and you literally need time like hours on the schedule to fill the crew in May. If that's going to be a struggle, then I'd potentially think about doing a project one or potentially what I would recommend doing. Actually this is what I would do. I would filter out all your customers that you have mowing for right now, mowing and treatments and pitch them the projects because they're going to have the best close ratio for project anyways because you've already done work for them. And then I would send another email to all people that have never accepted anything from you and I would send them a mowing one if you wanted to divert. In that case, you'd probably. About 80% of your database would probably be getting a mowing 1 and 20% like your current existing customers with recurring work would be getting a project one customer. If you wanted to shift that more towards projects, I would probably further filter out the customers that have.

I would probably filter out the customers that have ever asked for mowing.

I would probably basically, basically I would use filters on whether or not they use project if they've done a project on an estimate or mowing on an estimate and send them that. Right? So instead of saying okay, 80% of people are going to get the mowing one. Well, if they only ever asked for a project in the past, I might potentially send them more of a project based email if, if you're trying to get more projects, right? So in the perfect scenario, you take your, your current database of mowing customers that's existing in and recurring. I would send them project upsells. The other 80, let's call it 80 of database. I'd be sending the one email for mowing or treatments because that's that. That's just what is the pain point now for the vast majority of people, that's what they should do. If you want to get more granular, you could potentially break down that 80% of people that currently do not have recurring services and go after what estimates they've ever been sent and send them a project or mowing based upon that. But that's about. Whoa, that's about as granular as I think I would get on that.

Why is that cool? What else we got here? We don't typically have an issue hitting PPP. Once trained, our average cut price around $44 around. It is far better already. I sent the picture on WhatsApp. That's what was blowing up my phone. Connor. Okay, I see pretty good route density already. But you remember when it comes to P4P, it's not about how dense your route is, it's what the percentage difference you're going to improve your route density is by adding more services, right? So even if you like, oh, I have a really dense route. If you double the amount of customers in any route density, however good it is, you will immediately have the drive time between jobs. So it can always be improved. Like that's immediately a 50 improvement of drive time as soon as you double your.

The number of customers you have, whether it's going from 10 to 20 or from 100 to 200.

Our guys average around 21 to 22 per hour with a 16 base and already handle 6 to 8 budget hours today. So surprisingly I have a wonderful team this far in the spring.

Knock on wood, bro. Just joking. Also, when doing follow up calls, just use our normal phone number or do we use Google Voice? I think Google Voice comes through as spam often and may be a waste. Yeah, there's a couple things. Some people have gotten like a separate phone, some people have gotten like Grasshopper so they can get a local number and not be spam, etc. Both those options I would flip a coin on. I like having one phone, I don't like having two phones. So I would probably just use like a Grasshopper or some other app that gives me a phone number to text and call from for follow up calls.

But based upon this information, I think you could definitely lower the price, fill the capacity and then raise prices. You raise, you might be able to get away with it, honestly, without having to even address P4P with your team because it sounds like they're making so much on P4P, they're going to be just fine. And the increase in route density will, will wipe out the couple dollars that is coming off the top, off the top line revenue, which to them is only going to be like 70, 80 cents, right? So it sounds like they can, they can handle that in the short term. And then you know that in July when you raise prices, they're now getting like a two dollar increase, right? A third of whatever you're increasing it by.

All right guys, great mastermind. I love it. Let's go. All right guys, we'll see you. Take care of.