Mike Minutes Mastermind 05/22/2024

All right, we're going live. So I just stuffed this whole thing in my mouth. This, by the way, is my favorite one.

The mighty Moxie. Very good.

The reason I stuffed in my mouth is, my goodness. We got like 12, see, 12 questions that came in an hour ago. There's zero, which is fantastic. So let's jump right in.

All right. Film, present.

Questions. Boom. All right.

And we're live. First one is from the bearded one. Oh, mercy. Here we go. The nicknames continuous. That includes like 80% of our destination. All right, so the bearded one has a question. You see all the videos on the best way to set up your businesses and assets to protect them. Set up a trust and move your S Corp into the trust, transfer assets from your name to the trust, etc. In your opinion was the best way to set it all up? Mercy? Goodness. This is similar to, like.

The whole thing around.

How rich people, like, pay for their living by, like, taking margin against their stocks. Totally valid. 99% of entrepreneurs shouldn't be thinking about this.

I just set up all of my estate stuff. This massive document now that has like, way too many pages. All what I want to happen with the businesses if I die, what happens in terms of if I go brain dead. All that good jazz. How the businesses need to be split up in terms of equity, where the cash should be going, where stocks and everything else should be going.

Still, it is not super beneficial to me to even do a trust.

There's always ways to do it, and someone's going to say that you should. I would say for 99.9% of business owners, they should focus on creating LLCs for protection, liability, and then making sure they have a really, really solid living will and make sure they have a really, really solid power of attorney, et cetera. So I just went through this whole process. Took me a few months. I have videos that get opened up when I die for certain people. I have instructions for each of the businesses I have, who the equity goes to. All that good jazz. If you're trying to think about when you're dying, a will is gonna be the best. If you're thinking about protection, like liability, have really solid LLCs and S Corps that don't commingle funds and you don't pierce the corporate veil if you do that, that, like, most of your problems will be solved.

Remember that trusts etc cannot complicate your taxes. So.

There are certain advantages of this, especially when you have dependents.

I've dug very deep on this.

Focus on having separate LLCs for different business ventures. So don't like have commingle personal funds with business funds. Don't have, you know, your real estate, being involved with your business, if you own land, rent it to your business, things like that.

I would recommend all those things before I would think about doing things like trust, etc.

There are advantages when you have dependents, you can give them certain amount of equity and pay them and not pay taxes and all the rest of it. The vast majority of people that start thinking that direction, they spend more time and money on that instead of just deploying that same energy towards growing their business and making more money. Oh my goodness. We got another question, Mr. Wonderful. I have no idea who that is.

Okay, well, Mr. Wonderful is bald. Hey. Well, we're gonna keep going. Is there anything in the works to live capture lead information such as name, address, email before instant quotes are displayed on the website? It can be as simple as put contact information and then click next to trigger an email with the entered information and then have anything else populate like it currently does. We get a lot of traffic to our website with very few forms submitted. Yeah, the thing is you have to it is not compliant to capture information without them clicking a button. So the likelihood that they click submit on just their contact information, like you can't just say next and then capture their information. It's against compliance. You could actually get blocked by Google for doing this. They have to know that they're submitting their information. It's also then our way of making sure that if we ever get checked by Twilio or Sendgrid or Mail Mailgun that we can say hey, they actually know they're submitting information to us. And we are able to prove that to prevent us going to spam. And so it's very important. Like even with Twilio right now we are working on several things to actually where we have to capture the proof that we are they are clicking submit instead of just capturing data without them knowing they are giving it to us. So I know this would be ideal, but customers are not going to give their information willingly unless they know there's value. And so that's why having the price as the bait like to get the submission is most valuable. But no one's going to submit their information usually if they're not interacting with the quote and the price. So I know it stinks, but I've seen several people do this in the past six months on long hair web design and they've tried it and they either get chat like really banned Like I wouldn't say banned. They get their ranking on Google drops or they've gotten reported by a customer and their mail or Twilio account have been shut down so highly. Don't recommend that but I understand it's like look, can I just get their contact information capture it when they're going to next. There's a lot of regulation around that and they're cracking down it more and more. Oh my goodness. We are three for three in terms of nicknames, your name or location name is the only thing we have to fear is fear itself.

Oh man.

Is there any plans on incorporating option require new customers to put a card on file if they accept an instant quote? Yes, we do have this in the works. We have two different ways we're working on right now. We have had people in the past acceptance and quote on the website and then ghost us when we try to get a card on file to charge same day as service. If there's a concern with slowing down the site. No, it's not that. Or people abandon the site once they get to that point. Could we somehow change up the web to create a lead in Copilot and have an automation trigger an email text be sent request a card to be on file instantly while it's refreshing the customer's mind when they accept the price? Yes. So we are doing two different strategies on this. One is a stripe integration, the other is a Copilot integration. Both of which my goal is to have these done by the spring rush so that car information can be collected as soon as the estimate is accepted from the website. There is like a lot of PCI compliance around this because we are opening up card information to our main website which completely changes how our website is classified in terms of security. So it's actually a little more complicated. It sounds like just like throw their form on there and it's also going to talk to Copilot because you don't want to just collect it in stripe. And then you'd have two different client customers inside of stripe because you'd have it from the form and then they'd go in and create a Copilot account and you send them an invoice and then create another one. So then they have two duplicate. So we are working on this. We have a way to do it actually right now, but it is far too expensive in terms of just doing it the current way. And so we are probably going to wait until we can integrate with Copilot directly, which would be great because then we could automatically have it create an estimate. We could automatically mark as accepted. We could automatically have their payment information on file, thereby meaning that command center wouldn't have to touch it at all.

That's. That's like more what I'm shooting for. Number four, Chad from Valparais, Indiana. We got a normal name. Let's go. Yesterday you spoke about how some Coopers have massive growth in the first few years. Can you touch on what led to their success? Are these younger guys with no financial burden who can sacrifice comfort like you and Nick have done?

Okay, let me just think of those few on the line. Okay. The first one has a couple kids, young family, though the other one has a wife that is working, but a family also no kids. So I wouldn't say it's necessarily like young guys like that. I actually feel a lot of times when they're. When an owner is really young. This is a broad.

Assumption here. A lot of times they grow really quickly. They hit up against leadership like the 4L framework, the leadership part really quickly. And it's very. That's our hardest bottleneck because we just haven't seen enough hirings and firings and leaving meetings and dealing with sticky situations that they grow really fast. Like 100 plus thousand monthly revenue. That's usually the part that actually becomes their, their, their bottleneck.

I'm feeling liquidity is my largest concern. Money comes in and right. Goes right back out. I was also, I was always willing to live like no one else. So later on I can live like no one else. I took into account the lifestyle my family was living and I find it hard to put a burden on them when this was my ultimate decision.

I blow this thing up fast and reap the rewards. I'm looking into a HELOC for liquidity and would like some direction on where to direct those funds if I get it.

If you're going to get a heloc, you would have a very, very clear plan as to how that money is being spent and how it will. It will directly correlate to the business growth. I would recommend only using HELOC to do two things. Well, really one thing, increase capacity, right? Like I would only use a HELOC or any sort of debt to increase capacity, I. E. Buy trucks, buy equipment and get more customers.

I would not go into a HELOC for a nice shop space. I would not go into HELOC because you're losing money in the middle of the year. Like you're unprofitable. Because if you're having unprofitable Business, you go get debt, you're going to buy yourself a ramp of 12 to 24 months by getting the debt. And in 12 or 24 months, you'll be in a worse situation because now you have all the principal to pay off and we have burnt through all of the cash. So being profitable, gross profit, not net profit, because if you're growing fast, you're not going to have net profit, but you need to be gross profitable, which means if you didn't spend money on equipment, assets, etcetera, you'd be profitable. And your guys are efficient, you're making profit assuming that you aren't growing. But if you're growing really fast, that's when a HELOC makes sense. Because if I get $50,000 out of a HELOC, double the capacity for the business and in 12 months go from 25,000amonth to 60 or 70,000amonth in revenue. Now all of a sudden, paying off that $50,000 is not too difficult and you are able to double or triple the business. So you go. In my opinion, I would recommend, if you're going to get debt of any sort, especially heloc, where you're putting your financial, the financial dependability, your family on the line, there to some degree have a very clear path of how that HELOC is going to increase capacity and allow the business to grow. So if you're in growth mode and you're consistently growing and you hit up against capacity and you want to keep growing, that's when debt is, in my opinion, a great option. Because typically you can beat the cost of that capital in terms of the. If you're in growth mode.

Oh my goodness. No. £ doing big things. Number doing things. Number doing big things. I don't know what that means. I don't know if you mean pound hashtag or number doing. Number doing big things. Okay. After seeing the interest price, interesting pricing for Christmas lights. How long until you add warehouse space to the new corporate location? Bring that side of the business in house. You could justify making the uniforms in house as well. That way the guy that made a good case, the guy made a good case during the Christmas light webinar. Why run around ordering from multiple vendors when we could just order everything from you? This is a great point. I'm not banning this from like down the road being an option because I do think we could get economies of scale once you have hundreds of locations by taking these things in house. I will say right now, I think that this would be a distraction for me and even If I made a little bit of money on it or even if we saved a little bit of money, like as a gustination, my time is better spent on the things that are going to affect all of us more. So right now, if we ever could get like 25 or 30% off more compared to what we're already getting by taking in house, I would do it. I don't see that being the case right now. I have talked to a bunch of vendors and I know what they're getting these prices for. I talked to a couple manufacturers over in China. I know what those, those prices would cost us. I do think that down the road we could save a destination some money by taking house. But again, now it's a whole other logistical thing I have to manage or at least have to get my fingers involved with. And I think my time spent on other things is going to lead to a better outcome than just saving us a couple more pennies per light, for example. Um, I do think that down the road this becomes something and when we're like 500 plus locations where if we can have a warehouse and get that might be something I have, I really don't care. Like I don't believe it's going to make you successful. Saving an extra 10% or 15% compared to what they're currently giving us, which is very discounted by getting like the buying power of all the destination. And they've done it for years. Like why try to reinvent the wheel? Let's focus on going, making 30% margin on these lights instead of saving extra 2 or 3%. Um, by us taking all in house versus us spending that time on things that like for example, getting the credit card information from instant quote form is better use of our time. I'm not ruling this out but like I personally don't want to make money. And secondly, if I do this, owners think I have a shoe in the game. And I would because then I'd be like, hey, order from us, order from us. Like, I just want you guys to win. And this is what allowed me to negotiate so hard with these, these, these distributors is like I, I can just tell them like, hey, I'm not making a cut here. I'm not making any extra money on want to get the lowest price for the owners. And I can negotiate way harder if, if I say that versus.

One second.

Okay, it is live. Okay, good.

If I'm able to say that when I don't have a shoe in the game, I have just so much more leverage when I'm when negotiating these things versus if I say like hey, get into Christmas lights and then I have the Christmas lights for you all to get people are going to doubt that. They're going to think that I am trying to do it like promoting so you make more revenue from the Christmas lights and because I make money from that. So my, my. My goal is like not to get involved with those things as much as possible until it would become overwhelmingly positive for a guest nation because otherwise people will doubt the things I'm saying because they think I have a in the game. So like when I say like get into Christmas lights I don't get a piece of royalty. I don't get your Christmas lights piece of that. Nothing like that. But like I generally believe it's the right thing for your business and I think it should be followed.

Mr. Anonymous do you plan to keep Augusta Corporate in Washington forever? There are a lot of places in the country with a lot less red tape and honestly a lot cheaper than what you have invested already. So I've looked into this a bunch. Honestly when you start looking at the cost of.

Labor for skilled labor across the country even in places like Alabama, Ohio, etc, you might get a decent so let's just call an office person frontline team member for 20 bucks an hour versus 25 an hour where we're from. 26, 27, whatever.

There's just. It's also a matter of like if you go really rural so it's really cheaper. It's harder to find 100 people that you can actually draw from. It's harder to staff them because they're just less of a labor market. This is why big companies with large amounts of labor needs typically go closer to big urban areas. It's simply because they need more people. And so if you're trying to hire a few hundred people like down the road command center will consist of hundreds of team members. And so I got to keep that in mind. I can't be out next to a place that has 2000 people. 000 people or 5000 people. Yes I will be able to get people for you know 20, 30% less wages and the rent will be cheaper and the taxes will be cheaper but I won't be able to find team members and I won't have a talent pool that I can actually calm down to the top 10%.

So I have looked at this quite extensively and this is why even when where we're at we stay on the edges of the city because we can get the rent is about a third the cost and then laborers that are usually willing to drive 20 to 30 minutes without it getting too crazy. But this is like something I've been looking at a lot also.

You know, that's where my family's at. That's where I want to be at. I think it's the best place in the world. And so if I'm not going to save tons of money, like, I mean like a massive amount, I don't want to really want to move.

So there are, there are cheaper places in the country. They're also much more expensive places. Even if you go two hours south of us, like Seattle, it would be five times the rent and it would be an extra 20% in wages. So we're kind of in Washington, but we are kind of in a rural area of Washington compared to what everyone thinks of like Seattle. So it's not as big a difference. When I have, I've ran these numbers, I've looked at other call centers in the in like the the south, etc. And I've looked at their labor markets and I've looked at the resumes on indeed, I've like drilled in this pretty hardcore.

So do I plan to keep forever? I'm not guaranteeing that, but it's definitely not like on my radar in the next 12 to 24 months to move.

Derek Duran from Allen Park, Michigan non business related all right. How do you balance to make plans and better your situation with what the Bible says here? James 4:13 Come now, ye you who say tomorrow, today or tomorrow we will go to such a city and spend a year there and engage in business and make profit. Yet you do not know what your life will like will be like tomorrow. You are just like a vapor that appears for a little while and then vanishes away. Instead you have to say, if the Lord wills, we will live and also do this or that. But as it is, you boast in your ignorance, all such boasting is evil. James isn't condemning making money or planning. He seems to be condemning condemning their ignorance and thinking they know what is going to happen and that they are in control. They forget that they could be dead tomorrow. How does this play into your plans or predictions for business? And Augusta, oh mercy. Let's go. Okay, so.

Two things. One.

I don't believe it's arrogant to plan. And I do believe that based upon what is in the Bible, that being a good steward of what you have been given is extremely important. And so that responsibility of being a good steward, whether it be in your family or in your business means planning for the day that you are not there. And so this is something, something over the past like year I've been more thinking about like if my life is a vapor and can vanish and it can, I need to plan for the people that if I was to quote unquote, vanish or my life would be taken away, that they would not be negatively impacted. And so that's why we were talking earlier about like the living will and having your, your estate all in your affairs in order so that people are not negatively impacted is why it's important to have a life insurance. It's like, well, who cares? I'll be dead. Well, what about your kids? Like, what about your spouse that might not be able to have the earning same earning potential as you? What about your house that is only in your name? And now it's going to be caught in an, in a six month legal battle. What happens to your business and your employees and like their livelihood if you didn't plan for tomorrow? And so I think there are a lot of cases.

This is a great point and I think it's the arrogance to your point, it's not a matter of the planning that's bad. It's a matter of like just assuming that you will be there tomorrow in order to actually carry out the plans you have. And so I try to act as if there will be no tomorrow. And so whatever I do today I will A be proud of and two, it'll be beneficial to the people that I love. But I also know that in doing that it is my responsibility to plan for tomorrow. And there are other scriptures that talk a lot about this. Whether it be planting your potatoes, whether it be putting out your seed in order to be able to, you know, casting your loaves upon the water and it returning back to you. There's a lot of situations where planning is good. I think the arrogance, to your point, it's not about the planning, it's about the arrogance that you're going to be around tomorrow. Tomorrow is important and it's a matter of like, how do I plan for that and how I think about it. Like, okay.

For my plans and predictions for business in Augusta, it's like these things will happen and if I'm not here to do it, I need to ensure that I have planned appropriately to ensure that these things happen for the people that I love regardless of whether or not I am here. And so whether that be systems and procedures, whether that be team members around me, whether it be plans in place that if I was to, to die, that things would still go on and I'd still be able to deliver on my promises. Regardless if I was here or not is important to me.

All right, this is Mr. Anonymous. The stock market lately is what has hitting all time highs, yet we still have high interest rates and most Americans feel the economy is not strong. Why is the stock market doing so well?

Yeah, so.

A lot of the last eight months or so of the stock market or really year and a half, the, the past year and a half interest rates or stock market has done great.

I don't know if I ever said this but like January 4, 2023, I had the keynote at conference where I was, I was kind of showing where the stock market and the real estate market are at. And like I said, like I think that the stock market's basically bottomed out. If you would have bought that day, that was the bottom of the market that exact day, January 4th.

And so the past year, like 16 months, there's been a tear in the stock market.

Mostly because of the expectation that interest rates have been cut, will be cut. And now we know that interest rates are probably going to stay around for longer, higher interest rates. And so, well, right now we're still spending money like it's no tomorrow. We spent $100 billion on war and that simulates the economy. And so, you know, really, even in 2021 we had a, you know, the build back better thing was like a trillion dollars being injected into the economy. Right now you still have student loans. People have to pay their student loans. The vast majority of them, I don't have to be paying student loans. So as all this stuff unwinds, you're going to start seeing it hit Main Street a lot more. And there's, there's definitely clouds on the horizon and companies that are warning of this in terms of why the stock market is so high is a lot of it is, I would say, hype around AI and these new technologies. And if you take the top seven companies in the S&P 500, they have really made most of the growth of the stock market. So like Nvidia, Tesla, Apple, Facebook, Google, like the big boys, they have made up most of the gains. And so.

Where do we go from here? Well, if interest rates drop, there'll be a lot more room to run.

If interest rates stay where they are, we're going to have a rude awakening with debt. The, the. Because like if interest rates are as high as they are, all of our debt is maturing as a country. Our two Year and ten year bonds at a high, high interest rate. So every single day we're paying more and more money to interest as a country. Same thing with mortgages, credit cards, et cetera. All of it's getting more and more expensive. So, you know, people buying houses are paying gobs more money now than even at the peak of the market. Like now real estate's like an all time high in terms of cost to buy a house, while at the same time where interest rates are extremely high. So, you know, unfortunately a lot of it's political. Like for example, the student loan thing has been kicked off till October of this year. It's like after, right around after the elections is when people have to start paying their student loans again, which will lead to massive defaults because no one's been paying on them for years, essentially.

And then we're seeing like climbing defaults in car loans. We're not seeing it in mortgages and houses because the value of them is so high. And the reason they're so high and their value is because there's very little supply. There's not a lot in the market. So why do I think that the Wall street is so high right now versus I think a lot of it is the top seven companies. I would say there's a massive expectation of interest rates coming down. There's nowhere better to put your money right now outside of bonds. And with interest rates as high as they are, you know, say interest or with inflation as high as it is, you got to beat inflation if you're an investor. So you kind of got to put it in a company that's going to make more than 6 or 7% return. You're putting bonds, yeah, you get like 5, 5 and a half percent maybe. But if inflation is at 4%, you're not making enough money to like give distributions to your firm. And so that's why a lot of the money pours into more risky assets, even though they're inflated in terms of valuation. When people look up PE ratios, this is one thing that keep in mind why I am such a big advocate of putting money in your business, is if you look at say Amazon, where the price to earnings ratio is 60, what that means is, is that in order to buy that company, they would have to be profitable at the same rate for 60 years in order to buy the business. That's insane. That's insane. And so when you look at companies that are 100, 150 PE ratios, that means that they are like, you would literally have to freeze their current business in time take their profits and for the next 50, 60 whatever that earnings ratio is, that would be what you're paying on the business. That would be the equivalent. Let's just take a 60 PE ratio for something like Amazon. The valuation that you're paying on that is the equivalent of if you make $100,000 in profit in your business. And again PE ratio like the actual earnings are EBITDA like they adjust these massively. So a lot of times it's not an actual distributions. These are like all sorts of calculations to come up with a better earnings number with amortization and stock options and all the rest of it. But let's just say $100,000 in profit. Would you turn. That would mean you could sell your business for $6 million.

That's insane. So a lot of these valuations are out of whack and and they are priced for perfection, absolute perfection. And I'm not nagging on saying that they're bad companies, they're fantastic companies. But realistically I just believe I can beat that valuation if I'm buying the stock of my business. It's a better, it's usually a better option. Like if I look at Nvidia for example right now stock price is 957 they're earning, their price to earnings ratio is 80. Right. So they have 2.4 trillion dollar market cap 80 price to earnings ratio which means for the next 80 years they have to be as profitable as they are this year in order to be able to make up for the valuation. That's insane. So I personally over the past three months have mostly, I wouldn't say mostly. I have halfed more than half my A third. I have two sold two thirds of my stocks.

I have the cash ready to go for the headquarters.

But I am not buying stocks personally right now. But that's not me. But that just, that's just my opinion. I would not follow. That's not investing advice. It's just a matter of like I believe that there are better valuations in my own business. Like I would rather like I have recently took a lot of that money and I put it in towards copilot because like I need to fix the problems. I give I like we're gonna hi you hire someone for hundreds of thousands of dollars to be director of engineering. Because I believe those hundreds of thousand dollars I get a better return than investing In Amazon has a 60 PE ratio or Nvidia is 80 PE ratio. All right, follow up from yesterday. What changes do you Anticipate making to requirements to join Augusta. You said yesterday that there's a correlation of people leaving that have other jobs. Will that not be allowed in the future? Also, do you see the requirement for solo model to move up for the growth within two years changing as well? Okay, these are lots of questions. Okay, so first off, do I see the requirement for solar move up to growth models in two years change as well? No, I don't see that changing.

If we ever did away with the solo model, we'd give tons of heads up, etc. In terms of changing requirements, we are not allowing people that have under $20,000 even if they have 19. Like we're just not going to. You can actually put see in the form but people sign up for Lee's calls. It literally says if you have under $20,000 like you're not going to be able to get in. So that's kind of like our main thing I think. I feel like if someone has 40,000, they're going to have to scratch and claw and like work their butt off. But they'll be, they'll make, they'll be able to make it happen within two years.

Okay. Most businesses fail in the first three to four years. Is the two year requirement in a way setting someone up to fail in the system? I know we can always do more, but there's some tough markets out there.

No, we can't hold, we can't hold the territory available because now with the two year requirement, we are making sure that that solo model, they have the ability to actually grow their business. And there is like in the past, prior to the FAC wanting to have the two year.

Timeline, someone could buy a solo model out from underneath someone and we just anticipate that would create huge amounts of friction between owners and we didn't want that. So now with the two year gap, we do protect that territory for those two years. I'm not going to hold it though for four or five years if there's a growth model that's next to them. It's been like I want to keep growing but there's a solo model next to me. I don't want to do it. So like.

In terms of them feelings in the first three or four years that's 100% correct. And having under $100,000 when you're starting out, you're at way more risk. Like we're starting today. I'm doing a turnaround for a franchise. They do, they have two locations, they're doing $338,000 in annual revenue between the two, they pay.

$58,000 in royalties, about 15%.

And they require about $150,000 to start. One hundred and thirty to $150,000 to start.

And yeah, like any business that has under $100,000 for the owner, like you're going to be, have a huge amount of ground to make up simply because you're under capitalized. And so at the end of the day, every business fails because of under capitalization, because you run out of money. But in terms of starting capital, it is a huge reason. And so like if you wanted to say, hey, we don't want anyone to close, I would just say, okay, great. Our, our initial financial requirements are $100,000. You have to show us that you can, you have a hundred thousand dollars in the bank. And that would still be on the low end of franchises. And I know why they do this. I like, I just know why. It's because they want, they want to paddle their numbers for PE private equity. I know that. And so because I'm not trying to do for PE, I am willing to have a higher, like the people who have less money, they will, they will have a harder time growing their business. They will have a harder time. The chance of success is lower. But I want to give the chance to someone that can in two years scale up to 3, 400,000 and that is possible. There are people who have done it, but we can't hold it. We can't hold the territory for someone for three or four years, especially the locations coming up around them. It creates too much friction. So if we're going to hold it like we have been, it needs to be within the two years. What is your advice for owners who are burned out, which what is your advice for owners who are burnt. Burned out, which leads to dropping the ball, following up with estimates, getting back to clients, etc. My location isn't profitable enough to hire a manager. So it feels like a first, like a frustration position.

Okay, yeah, so this is, I have no context, so I'm gonna go off what's given to me. If you have leads coming in.

And you cannot get to following up with estimates or getting back to clients, you turn off the leads. Because if you look at the like the continuum of hot customers to cold customers, you are, you are, you are literally making people wait. They're burning the hand. Like they're really ready to accept minus one question or you've done all the work and they just need a follow up call. You're leaving that for someone who's cold, like they saw your truck, great. I know that's like a new shiny customer. But the person who literally you talked to yesterday about their estimate and we're at their property is like so much closer to the sale. So I would rather you throttle your leads and focus on following up with estimates and getting back to clients over new leads. So in this case, I would probably throttle the leads because you're at that, I'm going to guess you're between 200,000 and 500,000 in annual revenue. You don't have the money for a manager. Smart. Focus on the customers that are already in your hand. The ones that are literally, if you turn off your marketing first I turn off your marketing. I won't be spending any money on ads. If you can't do follow up calls, you should not be spending money on advertising. I'm very confident in saying that. Because if you can't, you don't have the time to spend on a warm lead. Why in the world are we going after cold leads? It makes no sense. So I would a turn off your marketing. All ads, no spend. That would reduce the number of cold leads coming in. Secondly, I would throttle your leads if you still don't have the time to be able to follow up with your estimates and get back to clients because those are people are already close to the finish line and you probably have an 80 to 90% chance of closing them versus 40 or 50% chance of closing the cold lead. And you've already invested time and energy into the person you've given the estimate to. So I would focus on getting them across the finish line versus trying to get a whole bunch of people to start the race. Do you think thumbtack is a. Is worth signing up for? Okay.

Thumbtack is horrible. Okay, I'm just going to say it. They're horrible. Are you going to get the occasional great customer? Potentially, yes. Yesterday I was at a service and he is spending. He spent $40,000 on marketing, on thumbtack and made $177,000 in annual revenue. They take a huge cut. And if they, if you want like preferential treatment, they take. I think it's like 40 or 60% of revenue. It gets insane. Insane. And they give your lead out to multiple contractors. It is an absolute race to the bottom. Like you're. I would highly recommend not taking thumbtack. Highly. You're attracting people that literally are just wanting you to compete with a whole bunch of people and get the, the rock bottom price. So that's just my two cents.

Like if you just want to get job on schedule, sure. And just get your name out there. Okay. But I would much rather do done for you ads or hold a sign next to the road compared to thumbtack. From what I have seen and I have not personally spent my own money, but I've seen multiple owners use this. It is, it is a losing proposition. The type of customer going on there, the speed at which you have to get to the client and the price you have to give in order to win the bid. And it's all based upon numbers and they're selling that lead to five different contractors most of the time. And if you don't get exclusivity, you're paying a gobs percentage of your revenue. So. So I don't recommend it.

Investing roi I like the concept of dumping extra cash into more Augusta locations instead of putting it into the stock market or real estate. But this business is so hard and stressful it doesn't feel worth getting a ton of locations and ramping things up for even more sleepless nights. What input do you have for other owners feeling the same way? Great question. So all business is hard and stressful. The reason that you feel is hard and stressful for lawn care and landscaping is because you're in it. Every other industry I talk to feels the same way. Today I'm going to be talking to this company that is franchise that does tutoring and they think it's really, really hard. Why? Because it's hard to find tutors, which makes a lot of sense. It's hard to find people that can like deal with kids all day long and it's impossible, quote unquote in their mind. And it's hard to find a lease that will make you know, they got to find a lease in urban market that isn't above $10,000 a month. Like it's hard in different ways. And so.

The thing is that I have seen consistently in every industry is reps. And after 10 years of solid reps, that's when usually the business owner can step back and be like, okay, the business is still difficult, the industry is still difficult. But now because I have the capital behind me and I'm not stressed and worrying about bills, I can now actually deploy and actually run on a lower margin by having a general manager, having people in place before problems get to me the reason most of the time a business is stressful is because problems get to you quickly and easily. And as you grow the business and as it becomes more Profitable, you're able to put layers of protection between problems and you. And for some people, they think that that is you're being removed from the business. That is a way for you to be able to create sanity for yourself, to be able to think on the bigger problems that the business is facing and think strategically. But it only comes with time and generates the profits required to be able to actually have layers of protection between you and the problems. And so you can't hire general manager, you can't hire regional manager. You can't have layers of protection between you and the front, the customer, and then down the road between you and frontline team members that also create more problems. And you can't afford that with just a few years. And so, you know, the lady today, she's probably going to sell it at a loss trying to sell the business. She's going to sell it at a loss likely.

But again, she was running a good business and four years ago decided to move away. So moving away required her. Now all of her eggs were in the basket of a gm. Couldn't find a good GM to range locations. The locations now cost more to stay open than they do to just close down and sell it. So she's going to sell it and probably lose money after 10 years of running the business. Not because she's a bad operator, not because she's bad at business, not because the industry's bad. She neglected the business. And so you can see in the financials, like what happened four years ago when she moved from Washington D.C. to Texas and tried to just relegate the business to a GM with no oversight. And so.

Yeah, like every, like I was talking to someone the other day, they're in junk removal. And it's also like, same thought process. It's like, it's such a hard industry. It's like business is hard. And because we live in a, in a free market, the price will be always compressed because if, if money is easy to have, more competition enters, and if more competition enters, the price will come down. If the price comes down, it's harder to make a margin. If it's hard to make a margin, you're going to be more stressed. And so, you know, people look like the gym and they're like, oh, that's so there are people that freak out in the gym world about how hard it is because there's so much competition that people can just go down the street and go to another gym. Which is also true.

And that's like, oh, this person's comparing my $40 a month to the person down the street for $35 a month. And they have a pool and they have a sauna. And I've got to do all these things and I've got to have more employees. Like, like every industry is hard. Getting reps, gaining more profit margin, and then having protection between you and the problems is what allows you to focus more strategy. And so the vast majority, when it comes to scaling multiple locations, it will come down to two things. One, capital, and two, the access to great general managers to manage the locations. They are your buffer between the problems, I.e. customers and employees. The more customers employees you have, the more problems you will have. Because every customer's problem becomes your problem. Every employee's problem becomes your problem. Unless you have management in place to be able to protect you from that. You cannot afford a manager if you're doing under 400,000 annual revenue. That's what whoever was yesterday, like in the Mike Miz Mastermind, you know, doing 150, $170,000 in annual revenue with having a general manager will not work. It just will not work. That's why, like the solo operating model is a solo operator model, which means a solo operator must operate the business, be in the business, because there is no way a general manager can work. And so for someone that's jumping to that so soon is usually because they don't like the pressure and the pain that comes associated with having the problems of the customer and employees being directly yours. And the only way to be able to get out of that is to be able to have management in place. And the only way to have management in place and have enough profits, the only way to have enough profits, grow the business of size enough to be able to afford that management. And that comes with time. So it took. It took me six years before I had a general manager. 1, 2, 3, 4, 5, 6, 5. I was still kind of doing estimates at 5. So it was really six years time under the bar and doing reps and simplifying the business in years five and six a lot before I could step away. And where, like people calling out doesn't affect me because I don't even know about it. People going through personal problems don't affect me because I don't know about it. And it's like, oh, it must be so much nicer. Well, you go, if you're trying to grow, if you're trying to grow, if you're doing multiple, like a whole, if you want to do a whole chain, you're gonna have More problems, right? All of a sudden, a certain state will change their tax structure. All of a sudden your real estate like the Bellingham shop used to be pay $1,000 for rent a month. It's now $4,000 a month. It's insane.

And so those sort of things now just become your problems at a larger level. Now your general manager will quit. Now your regional manager you have to fire. Like, these are bigger problems. And so it's not even to say that it's going to become easier or it's going to become better, or it's somehow going to like, this is the land, like the promised land that you want to get to. And that is not how this is painted. This is painted as you are simply upgrading your problems. And if you're trying to get better any skill and you're trying to grow muscle, you will constantly improve and update and increase the amount of weight that you're bearing. And so if right now you're, you're, you're struggling, and if you are currently frustrated by employees calling out customers that complain about the edging not being good and this constant treadmill of that, you will also feel the same way when you have much bigger problems that you're facing that actually have much larger consequences. However, you will probably be removed from the smaller minutiae of stuff. And so it's just a trade off. It's like, which one do you want? Do you want to have high rep, low volume? Like, so when you're looking at the gym, do you want to do 40 reps of 10 pounds or do you want to do 4 reps of 50 pounds? Which one's going to gain you more muscle? Is the latter. And so if you want to build a bigger business the same way you want to build a bigger muscle, you're going to put higher weight and less reps, which means less minutiae, higher strategic thinking, higher.

Higher risk. Like, there's higher risk that if you drop that 50 pound dumbbell, you will hurt your foot versus the 10 pounds. However, the 10 pounds will get very monotonous. You're doing the same thing all of the time, but that is required in order to gain the muscle that will then be able to upgrade, quote, unquote, to the 50 pound over course of time.

All right, folks, have a fantastic rest of your Wednesday. A 45 minute 3M in the book. We'll see you guys tomorrow. Take care.