Mike Minutes Mastermind 05/23/2022

Hello Augusta Nation. A little bit different. Obviously I'm not in the office of the studio. I'm actually in the middle of at a location doing one of the six week six step defensive strategies and we're actually I'm here in person this week to actually go through it. So one second here connecting to me. So let's go ahead and jump in. There were some questions that came in but. But yeah, I'm going to be here for this week and actually testing everything that we talked about last week. So I apologize for the different angle and I apologize if the quality of the video is not on par as it usually is. But we'll go ahead and go through these questions and share my screen. Boom. No major updates by the way, in terms of for me to give to you up front. So we'll jump into the questions right off the bat. First one's here for the healthcare.gov insurance currently not in enrollment period. Where can we get health insurance for ourselves until Augusta had its own maybe? Yep. So I am still working on this with all state benefits in terms of an option for all of us to enroll and then make it simpler for all of us and get some extra benefits. But until then, honestly sometimes the best way to do this is going to your going to a local health insurance agent. And so most places have an office and they're just nice to walk into because if you go online it just get very confusing very quickly. That being said, QuickBooks and Gusto you can now get.

Benefits directly through them, so you could try that as well. Usually their plans are not as great in terms of cost, but it's an option if you need it right off the bat. I don't know about open enrollment though, how those work with those companies.

Jeff Bromley Mike, I have a hiring question. Currently I have six employees and we were booked out three weeks. I have the opportunity to hire seventh employee. I'm hesitant because financially things are very tight. My team of six is struggling to earn PvP. Last week's average score was a two. Should I keep pushing through or work with my team of six for now? Another thing I need to consider is the mowing list is growing not by leaps and bounds but is eating into project time. I really think at six people if they're if your average is two which is not efficient, I would be locking on your current six guys focusing on them and getting the profitability. Adding a seventh guy is going to make it even more inefficient because they're not going to be trained up and you're only three weeks booked out, right? If you were five or six, that might become something I'd be thinking about. But if Your average on P4P is a 2.0 on mowing routes, they're not making P4P. The company's not making money. You really got to lock in with those current six guys and focusing on honing that means letting go of some of these mowing that is too far away or projects that are inefficient or really focusing on profitability. Because anything under 2.5 is very scary to me on as an average on on P4P. So whether it be a price increase, whether it be inefficient routes, would it be just training the crews up better? We've got to get that above three before I'd be thinking about expansion or getting more employees for sure.

Next question, Evansville gas prices. While I agree with the original statement that we should tighten our routes and take on larger projects and take on some larger projects to help with gas prices, how can we justify not raising or adding a fee now that gas is right on the cusp of $5 per gallon. On 87 low grade gasoline, our trucks went from 80 to $100, almost 150 up to 190 per truck. April is a little slower, and we still spent $2,400 on gasoline between three trucks and an estimated car. Hard assuming this cost when you're in heavy growth. I've already made a plan with Lee on to go on an equipment diet back in February. But with gas being so high, it's like, say it's like the savings from the equipment diet has disappeared. At what point do we reevaluate? Yeah. So I would recommend a couple of things. One is raise your E fee, right? Because again, the E fee and the dump fee go directly to your bottom line. So let's say, for example, you have 15 property cleanups. If you can change your dump fee from say 50 to $80, right. There is what, 15 times 30, like extra 500 bucks, right. In just straight overhead recovery. So I would put this toward dump fees or ifees. I'd raise both those marginally and that should get you an extra $500 or $1,000, depending on the number of estimates, depending on the number of cleanups and debris that you're hauling away should make up for this cost. And so I would focus on that. It's a nice easy thing that you can do. You don't have to change your hourly rate not to raise your pricing to the customers, you're raising your prices but only to those project based jobs for E fees and dump fees. Again I'm assuming that you're booked out a few weeks. If you're still in high growth mode, you probably by doing this are going to have a slight decrease in in close ratio that you're going to raise prices. Slight but somewhat. If you have a close ratio of 50 plus percent and you're two or three, four weeks booked out there, definitely recommend just add it to your E, add it to your dump fee, overhead recovery and get get those cost of gasoline covered.

At what point do we pay off debt for our business? I know in theory the answer is never if it's profitable. We do not have a lot like $40,000 with half of it on 0% financing. But say we hit our million dollar location goal, do we stay in this stage an extra year, reap profits and then open another location? Or it'd be better to open the second location and just pay off.

Its own debt and not have another location opening contingent on another debt. My thought is the cash flow after paying off debt would help build a better, a bigger budget for the next location. As we draw from one to build another. Hopefully this makes sense. This comes massive growth. You want to start a bunch of locations. If you have 0% debt, it's only $40,000. That's not bad, right? Your payment on this, if it's you know, say a few year payments, not, not a lot. So this would definitely be for growth. You just keep going because 0% financing, you know, you don't have any, any interest. You're probably paying you know, like $1,000 a month or something like that. But again, if you were less risk tolerant, that's fine. Just pay this off like you said, wait that extra year on a million dollar company, you'll pay the $40,000 off easily in a year and you'll be able to then go with debt free. Strictly comes down to your risk tolerance and the pace at which you want to grow. This would also be determined by honestly your team. If you have someone that you think you're going to lose because they're so good and they're so awesome and you think you're going to lose them if you don't start a second location and get them as a gm, that's when you might actually prematurely get a second location started. Simply to retain that talent, right? So even this location where I'm at now that we're doing this, this turnaround on, you know, the general Manager probably wouldn't have stuck around very long in this current position out in the field. So that's why I'm pulling that individual into a general manager role, because I can preserve that talent. Right. So that's another reason why you might go that direction outside of just financial or risk tolerance. But typically that is when I would be looking at it. Got a question? How does the P4P point system work? I think you're meaning like yellow slips. Oh, points. Oh, gotcha. You're talking about the 1, 2 and 3. Got it. What? Jeff was talking about that when he said 2.0 for his points. That is a scoreboard that is created for recurring jobs every single day. And that is simply.

A function or an equation of total revenue earned for the day divided by base pay times number of hours clocked, clocked hours. That's how that number is determined. And how I look at it is anything above 3, the company's making money and the employees making performance dollars. That's great. Anything between two and three is like marginally profitable, but not great. But honestly, for me, anything under 2.5, the business starts to get too thin of profit margins and typically you're going to run into cash flow issues. Anything under two, I can guarantee the business is going to lose money.

So that's why that 2.0 is somewhat scary to me. And I lock on efficiencies or raising prices, cutting out, when I say efficiencies, that could be training your crew, that could be cutting out jobs that are further away, et cetera. So I'll have more information about this exact turnaround and what we're doing over the next six weeks. And we're following the exact plan that we set out last week in terms of declaring a state of emergency following the six week plan. And so I actually wanted to jump in and test it myself. And we're going to be able to document that for all of you and it's going to work and I'm looking forward to it. So thank you all. Hope you have a great rest of your week. Happy Monday. We'll talk to you tomorrow.