Mike Minutes Mastermind 05/23/2023

Hey, everyone. Hope you're doing well. Let's go ahead and jump right in.

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Looks like I've got a few questions come in, so I'll jump into those first.

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All right, three questions it looks like. Okay. First one is from.

Nobody. Okay. Why are debt payments not on the P L? Should I take my debt into consideration when paying out profit sharing? Okay, let's address this. Two different questions. The second one, though, in terms of whether or not you should account for in profit sharing. Personally, I would only do this if it was for equipment.

But if you want a debt to like start the business, for example, holding that against your crew could potentially take years before you ever actually have a profit sharing quarter if you're actually taking into account all that debt payment. That being said, I would also account for your personal salary in the profit sharing in terms of the cost of wages. So I would personally do that. Especially as your location becomes grow into profit mode. Those first couple years, you're just trying to incentivize the guys and give them something. And if you can for one or two quarters, great. But once you hit like you're 3, 4, 5, 6 and beyond, I think that's where you definitely want to take a salary. And then outside of that, you're. Then the profit sharing is there. And in terms of taking debt, I would probably take into consideration debt for equipment because otherwise you could theoretically then have a scenario where you have a whole bunch of debt. And because you're profitable on paper without the debt, then you're giving away profit sharing when technically you're actually losing money because of debt payments. So that is the case. However, if you're doing a small little payment, I probably wouldn't worry about adding it into, you know, the actual profit sharing, to be honest with you. So that'd just be my recommendation in terms of why debt payments are not on the P L. Let me see here. I mean, I can pull. Let me see here.

Present share screen.

See here. I always had this connected little work. That is the question. Okay, let's see here. So.

It'S like a profit and loss. Oh, look at that little red thing. Now, profit.

And loss is equal to an income statement.

So when you think about a P and L.

Can you see that? Yeah. Cool. A P and L.

Or you think about an income statement, it's the same stuff. So this tracks income. And you could also think of like profit and loss, like expenses and revenues. Right. When you talk about a Balance sheet. A balance sheet is a snapshot in time. And I think about is like it looks at my balances, right? And all you're really looking at is assets equals liabilities.

Plus owner's equity. You see that? Cool. Let's go. So, for example, when you get debt, right, what's really happening is let's just say you have $100,000 of debt. Well, assets have to equal liabilities. Well, if I got $100,000 in debt, it means I also got $100,000 in cash. So assets always must equal liabilities. What that means is if I pay off is you want to pay off my loans. Doesn't really change a whole lot in terms of your balance sheet. Because what's going to happen is let's just say you're going to pay off $50,000 and you're going to take cash, you're going to throw it over here and make 50k reduction over here. So that's why assets always have to equal liabilities. All right? But this has no, no.

Sway or change of the income statement because the income statement just simply looks at income.

And expenses. That's all it looks at. These have no bearing on that. The only expense that you actually see on your P and L is interest expense because interest is in addition to whatever the principal of this debt is that you're paying off. So let's say for example, you paid off 50,000. Well, let's just say now you had $3,000 worth of interest. Well, that's not an asset, it's not a liability, but is on the P and L, it's an expense. So that's why you'll typically see an interest expense line item on like your standard.

P L and QuickBooks. So usually you reconcile at the end of the year and that is like you do all your payments and either quarterly or annually, you'll break apart the loans from principal and interest because the interest part is going to go on the P L whereas the.

The principal pay down is not.

All right, next question. Nick from Marysville, I went through the MBA course, landscape business course and your YouTube channel and I could not find a video breaking down an acceptable price to pay for competitors. Route is. I know the video exists, but could you give me the rundown to. To my understanding there's a bit of subjectivity to pricing a route yet. Let me go ahead and give you the link. I can look it up real quick. Back.

Acquisitions.

Andes.

The video is.

Right here. How much is a landscape business worth? It's like an hour and a half long. I go through all the different value mechanisms. I will put it in the comments.

Boom, boom. And just in case no one can see the link, this is the video on the YouTube right here. Buying lawn care valuations and acquisitions goes through like five different ways of valuing route, a landscaping business, etc.

All right, present. Stop. Screen. Share. Present. Share. Screen Mastermind. Share. All right.

Kyle Tarvin. We are losing crew members for every few weeks. It seems like it never fails that after a rainstorm we lose people because they didn't want to work when they are wet. Last week we had some rain come in here around 10am Everyone was calling, ask if they need to work in work in it. I told them either sit in the truck and wait it out or push through. I put everyone on projects but still got complaints because they were wet. After that we got. We had one guy just not show up to work. I can't run a business where we completely stopped work at 10am Due to some rain. I am out in it too. Yes, it sucks, but no one wants to come in the weekend either. So my hands are tied. A little bit frustrated right now. Do I cave in and just stop all work once it starts raining, or do I push the guys and just be okay with high turnover? This is where someone's leadership abilities is tested. Because ultimately this conversation that you're having with yourself really should be happy with your team. And that is, hey, guys, I can go hire five more people right now and we can get this work done during the spring rush. But if I do that, I'm gonna have to lay off half the crew when we hit July and August and there is no rain and the grass isn't growing as fast and we're not getting leads coming in hand over fist. So either a, we all work extra day, we work 45, 50 hours a week right now, or if we keep working 32, 33 hours a week because everyone's calling out, we're having rain days, no one's showing up, et cetera. You know, yeah, I'm gonna go high. I have to go hire more people, but I'm gonna have to lay off half of us during the summer. Oh, and by the way, during July and August and September, that's when P4P is, you can crush it and I'm gonna have to lay people off. And we're gonna have limited hours when everyone wants to do the work at the highest rate because we failed to hold the team accountable to showing up and getting work done even when it's wet. So that you know the ability for a leader. During this time. I had this conversation like, this morning. So the.

Anyone can lead during November, December, January, February, when all your crew is, like, wanting hours. They're all working 25, 30 hours a week. So they want to work. They want to get more hours. Anyone can lead during that time. The person that is the test of a real leader is when everyone's working 45 hours a week. And you know that you only need about three to four weeks of everyone pushing, but everyone does not want to push. That is the distinguishing factor of a leader. And there's three ways to lead. One is you lead by complete abdication. And that is like, you let the team basically pull you around and do whatever you say. They call out all the time. They don't want to work. They leave their route halfway through the day, or they leave their route with two lawns. At the very end of a long route, they leave those, just come back to the shop. They basically run you. They run the shop, right? They run you how you. How you schedule, how you order, your schedule, your routing. Everything is ordered by the crew, okay? You will never be profitable. You'll never be able to be able to pay very well in P4P because there will always be inefficiencies. There'll always be lots of overtime for your highest performers. They'll get burnt out. If you're trying to. Constantly trying to suffice. The lower performers, right? And you're like, oh, I'm being nice, or they're calling out or they don't want to work in the rain. I'll pull them back. By doing that, you're basically just throwing all of that extra work on your highest performers, and they will quit simply because they're overworked. So what you will have to do is you'll have to hold your. Your lower performers accountable to the standards you create. And that is. Oh, by the way, if you. If you miss today or if we get off today early because of the rain, all of us are working Saturday. That's the expectation. That is the clear expectation. So that way, the lower performers that want to come home, come back and. And, you know, end the day early, great. We'll be expecting to work Saturday. Why? Because if you don't do that, the guy who pushes through and works really hard on that day and works in the rain now, he's going to be the one coming on Saturday, and he's the one that will get burnt out. So it comes down to standards and Expectations. And the first one is they run you. That's the first way of leadership is basically you just listen to everyone. It's simply like there is really no leader. It's a matter of like what the general public wants, right? This is what leads to absolute insanity in most organizations is when it's like, oh, like what everyone wants and we're all going to do whatever we want. Okay. Seconds, second or the worst. So that's over here, right? The other extreme is you have to force people to do something. Basically you threaten them with their job. That is the extreme version of pushing somebody. Okay? That should only ever come up when the, the peril of not pushing someone, pushing a team member through puts the entire team in jeopardy. So this is typically like a Friday. Someone like at the very, the very last route, like hey, I can't do two more MO's that now is requiring you to pull in other team members and jeopardize the entire team morale by you pulling your highest performing team members that work like crazy all week and they have to come and work on Saturday. So you will have to push at that point. Squeeze the last little bit of that person and if they quit, so be it. But you're trying to protect your team. The part in between those two extremes. One is again complete leadership by abdication. Completely let everything just run haphazard. People basically tell you what they're going to do, when they're going to show up to work, etc. The other side extreme is you push people, you threaten them with their job, etc. In between that is where you want to be. The ability for a leader to switch between those three when needed is important. But the vast majority, in my opinion of someone, a leader's time should be spent in the middle and that is inspiring their team.

It typically can be seen by someone who is extremely sensitive as someone who is pushing, but it's not pushing. And that is someone that is inspiring. That is. Hey crew. 20 hours was budget on this project. Joe just absolutely crushed it the day he got done in 10. Kudos to him. That's gonna really help us this weekend. I really appreciate you guys pushing through on these large jobs. That is leading by inspiration, not just even saying like hey guys, really appreciate your hard work. I know it's hard out there and I was working hard. I really appreciate it. That's nice and all, but really leading by inspiring somebody is totally different. Give them the numbers, tell them who's doing really well. Tell them what's going on. Give them all of the data. And hey guys, I need you for the next three. For the vast majority of us, the next three to four weeks are going to still be crazy. And in two months, guarantee you two months, these questions all about burnout, all will be switching to how do I keep hours for my crew, how do I keep jobs on the schedule? I got to make sure I fill up my crew schedule. So you've got to be able to get your team to push through the next few weeks. Because otherwise if you over hire right now, if you start hiring over now, you're gonna be laying people off in six weeks. Cause there's not gonna have enough work. So you've gotta be able to muster enough inspiration ideally. And then if you've gotta push people like on the end of the week and if you missed a day, you are coming in Saturday, guaranteed you are doing that. You must do that because you're protecting your highest performers. And if you constantly are abdicating and constantly relenting to the lowest performers because of the way they feel, that they're sick, they call in, they call out, they don't wanna do the last job or two on their project, they don't wanna do a certain type of job, they don't wanna use a certain type of mower, they don't wan, they don't want to do this customer, all of these. If you start relenting to that, you are not hurting your team, you are hurting your highest performers on the team that will burn out because all of that extra slack gets put on them. And so those in my opinion are the three ways to lead. Probably like way better forms of diagrams about that. But like that's the way I think about it. Either got someone way too far extreme on this side, way too far in the strict stream, and then you got in the middle, you actually need to do all three. But the vast majority of time should be spent inspiring your team. And that might mean that you come in and you work your brains out on a Saturday or you come really early and actually do their job to set them up for success.

But inspiring them is totally different than pushing somebody. But you have to push someone. You have to go extreme, push. If nothing else is working, you will have to get there. And that means that might be firing someone just for the sake of the, of sending the example. So.

All right, that was all those. I'll be out of Town for five days next week. I have one employee who I'm firing June 5th and am currently growing fast. I have two new guys starting June 5th and one new guy starting June 12th. What is your recommendation for how to handle estimates and yellow slips for the week I'm gone? The guy I have now doesn't do great work and gets lots of callbacks which is why he is getting fired. Obviously it's not ideal, but I have to leave for these five days and trying to figure out how to make it's got cut off. Here we go. I'm looking at Facebook now. I have to leave the fight and trying to figure out how to make this work. Thanks. This is going to come down to. So it sounds like you literally don't have any trust in this person and you're trying to have them basically hold on to the business while you're gone for a week.

That's pretty brutal.

You're going to need a massive amount of communication. You're going to need to be have as like hey, I want to we got to do a FaceTime when you show up at the shop, we touch base with me at each day at 1pm when you get back to shop, give me a FaceTime as well. Like that level of communication is the only thing that'll probably make this work because the likelihood without massive amounts of over communication with this employee that you literally have no trust in, that's the only way you're gonna be able to keep them accountable is do the jobs. And if they pull us off, you might want to reconsider firing them. If they're able to work by themselves and actually get the work done.

They can't be that bad. But obviously there's enough water on the bridge for you to know that you do not want them around. But if you're really having to do this, I would say you just got to over communicate and I would ideally have a dinner sit down with them because your whole business is hinging on this person doing well. So you might want to think that one. Take your time on it. So. All right everyone, have a fantastic rest of your day. We'll see you tomorrow. Take care.