Mike Minutes Mastermind 05/24/2024

All right, ladies and gentlemen, boys and girls.

Happy Friday. Let's rock and roll. Okay, we have some questions, it looks like. Let's see, how many? Five. But I do have several things I want to go over that are more education. So if you like education, stick around to the end if you don't like education. Let's start off with questions. First, I just need to drop the link in into Facebook.

First off, wanted to also say.

Thoughts and prayers out to the Christian general manager out in Texas. His father passed away last night suddenly.

So thoughts and prayers out to him.

Yeah. Okay, let's go ahead and jump in.

Why is that not working? Okay, good present. Okay, so I do have some stuff at the end if you are watching this later. Feel free to skip towards the end if you like the education side because I'm going to talk about several things that I think will be helpful. All right.

First, so questions. Okay, I want this one up here. Thank you.

Okay.

First one is from Mr. Anonymous. Good morning. I watched your last week or so of home service Millionaire Content. Just wanted to let you know. I don't know if it's the depth perception or whatever in that big orange room, but you are looking jacked lately. Oh, that's hilarious. Oh, that's so funny. Eat meat, lift heavy things, baby, let's go. Okay, thank you. Next one. Mr. Anonymous as well. Would you ever entertain a GM wanting to invest into a location with you that you own or manage? I had this question posed me earlier and was curious your thoughts. I think it may have the money up the waters as far as GM owner roles, but would be beneficial to partner with a superstar GM on one location. As far as an operating partner.

Usually don't recommend this, to be perfectly honest, unless they have been with you from the beginning. And I don't usually like equity splits.

Because eventually the partnership will end. If they're not going to be a true owner in the business and you're going to give them a meaningful stake, like someone will walk away from 10%, no problem. But if you give them 20, 30, 40, 50% now, all of a sudden it means it's meaningful enough to where they actually wake up and care about it. So what you want to be careful of is by muddying up the waters, you give someone 10% thinking like, oh, this is gonna be so beneficial to them, they'll walk away from 10% like the back of their hand, like, doesn't matter. And then you're left with the legal ramifications of undoing that partnership and getting rid of that equity partner.

So I would allow the equity to either vest over time. So, so for example, if you wanted to give someone 20%, like hey, it's going to invest at 5% a year over the course of four years, which means if they leave in six months, you're not dealt with a massive issue. But they can earn that, you know, earn the equity. So I'd let that do. I'd have a vesting period.

I would also realize that profit sharing is usually the best form of giving an equity split because it retains control the one person so you can move more autonomously. You don't have to have meetings over every little thing, especially one location. If it's not doing more than a million dollars, it's just not big enough to actually have two leaders. It needs one dictator at the top telling everything how it's going to be rolling and then just listening for input. Otherwise you're constantly debating things on a small business not useful. So I would prefer just to give someone a higher piece of the profits. And typically someone who's not an entrepreneur didn't start the business. They usually like more compensation and cash than equity because. Because if they were thinking about equity already, they would have started their own business. So I think a lot of times owners think that giving someone equity is like a quick way to make someone else care about the business. And they do it as a form of desperation because they're overworked and they're tired and they think that if I can just give someone else equity, they will care about this business as much as me and they will still work as long as me and they will still do all these things that I do. And then many times they're disappointed when they give minority stake to someone. It actually creates more trouble in the relationship.

Kevin Tan is from Bloomingdale, New Jersey. After a coaching call with Nick I am 100 profit mode. Is there any reason not to to charge credit card processing fees to the client? Adding 3% back to the bottom line would be nice. We're not selling right now so adding friction is to sale is not a problem.

We already raised prices so adding process if being seen easier than raising prices. Again, just looking for your thoughts, pros, cons if you think I should how to go about to do this as smooth as possible.

IMO. In my opinion the 3% isn't what I'd be going after. When I do price increases, I'm trying to go after 10 to 20% price increases. I would rather stomach one of those than trying to nickel and dime people in 3%. So I would let this slide. But in 12 months, you raise prices again by 10 to 20%. A whole lot more than 3%. You're gonna. The amount of questions that come in every single time people get charged. They, they realize after three months that they've been charged processing fees and they call and they're mad. They want a refund. Then command center doesn't know how to react to that because they're freaking out. They're saying they're not, they weren't notified and all this other stuff. So I would personally eat the cost of all processing, grease that as much as possible, and then focus on, continue to raise prices. I would rather you will make far more money if you raise prices by 15% next spring than if you charge 3% processing fees. The amount of people that will complain about both of those things are the same. So the same 10%, 20% of your customers will complain about the price increase are the same 10 or 20% will complain about 3%. So just focus on the larger increase. Right. So I'll take a, I'll take this one out of my book. Right. So there's a good likelihood that in 2025 we are going to raise to new owners the initial or the monthly fee. Because our costs have gone so much up in the past five years, we need a raise to 1500.

I am not going to raise that to anyone inside of Augusta Nation.

And so the thing is, do I want to convince everyone that every single year we need to have an extra 40 or 50 being added the month fee? No. Every single year be painful. No one wants that. So I'm just going to focus on every five years I'm going to raise to new owners the initial fee or the initial fee and the monthly fee as we add more value to them. People who join on later, they'll have to pay more. Then the cost of the, the value of the license will go up as well as, as we have more value, the people that come down the line, they can pick up the tab for inflation. People have joined earlier will keep their, their twelve hundred dollars per month in perpetuity as long as they want to stay with Augusta. And so I would use that same logic with your business. And that is like I'm focusing on like next year we are technically having a 25% price increase for new new owners that come to into August Nation. I'm not going to nickel and dime all of Augusta Nation on 3 or 4 or 5% going from 1200 to 1230 to 1260 to 1290 every several months. Like I'm not going to do that. Don't worry about 3% being charged to customers. Focus on the big price increases that you can, you can do and that'd be my recommendation. Like focus on the larger levers instead of the tiny little things in the business that do add up over time. However, if you just focused on one big lever instead of 20,000 little things in the business that could adjust it, make it a little bit better. Price is such a massive lever. I would pull price far more than processing fees because I would imagine last year your entire processing fees was probably about two and a half percent because some people pay with check or ACH, et cetera. Two and a half percent of your revenue. You could literally 4x the increase in your business by just having a 10% price increase, which is the minimum price increase I would ever Entertain. I like 20% plus. So hope that made sense. Mr. Anonymous. How do you know when it's right to open another location? What does the process look like and what are the parameters for your perspective to allow someone to open a second I. E. Cash, current business skills, etc. Yeah, so there's several times we have been very clear to owners that they should not start a second location. One time that's been overridden and it was as expected.

Actually no, there's a couple times we've, we've given warning. But one time specifically like I was like please don't open second location.

And sometimes people have to learn on their own and that's fine. And so that owner will, has grown and will continue to grow and become fine over time and then they'll pass that information down to the next person that's jumping the gun on a second location. I think two things need to be true to start a second location. One great general manager that is itching to have more on their plate and if you don't give them more, they're gonna leave. That's a huge thing for me. So for example, like Connor Hutchinson, for example, last year started a location, crushed it, got it up to profitability, 30,000 plus a month. Had this, got the second one underneath his belt. He needed more. Like I knew he was going to leave within a year with the 3F program anyways. So that, that is super beneficial to be able to like be able to retain that talent is you make sure that you have more opportunity for them. That'd be the first thing. The second thing is from a cash position, the first location is in profit Mode. If the first location is growing in second cash and you're thinking about starting a second location and you don't have massive amounts of cash reserves, usually if you're in growth mode in one location, your, your money is better spent on that location. You'd only then switch, you'd only be in profit mode in the first one and then go switch, go start a new one in growth mode. In my opinion.

That'S the safer route. Are there people that are considering next year join Augusta with multiple locations from day one? Yes, but they have 2, 3, $400,000 in cash to be able to get started. And they are comparing that opportunity versus starting one location of another franchise that costs $400,000 $300,000 to get started. And so yes, they will start potentially three or four locations at the same time. If you don't have that kind of cash reserves though, I recommend get one location, get it to profit mode with a general manager and then I would focus on a second location and then realize that you're either a going to get a general manager for the second location that is sales oriented, but I'm just gonna use his name for because everyone knows him. Connor Hutchinson, Sales, very sales driven, likes new stuff, or you're gonna find the general manager in your current organization that is going to be a working gm, very solid, loves procedures, loves profit sharing and wants to keep doing the same thing over and over. And there are multiple gyms I've had that is like, hey, I don't want to start new ones. I just want to keep running the same thing, make it better every single day, make great profits, great. And so there's no right or wrong, it's just where do you go as the entrepreneur. You're either going to stay in your current location because you have someone that's a starter and you're going to put them in the new location or you're going to take that person that's a GM that is operationally driven and they're going to stay in the four profit mode business, the existing one, and you're gonna go start the new one.

That'd just be my recommendation. So the two things I'm looking for is one, the skill set of the GM that you potentially would lose otherwise. Secondly, are you in a cash position because your first location is in profit mode and pumping out cash?

Usually it's more of a tax incentive thing as you scale up to like the stage five and six of wealth in Augusta Nation is like from a tax perspective. If you're going to be paying $50,000 a year in taxes. I would rather go spend 80 to 100 grand on starting a new location and not paying any taxes. So.

Number five, Corey at Bellingham. Good morning, Mike. I was curious about how Mike Mintz mastermind fits into your schedule. Knowing you are busy, I'm very curious of how you fit in something that takes anywhere from 15 to 55 minutes of your time per day. Thank you, sir.

Well, there are times that I do have a hard cut off.

I just make sure that I will speed up questions if I have to. But then there's other times I've cut in the middle just to make sure I can answer the questions down the road. What's nice is the questions are rolling. So like if I don't get to the questions, I can always do them tomorrow. So we make it work again. Priorities come prior. I very rarely miss a Mike Mintz mastermind and if I have, I usually make it up for on Saturday, Sunday because it is a priority to me it is something that we can scale, I think will come better with time, with better and better questions. And that leads me into.

Education. All right.

Couple things I wanted to go over.

All right. First one is switching your business to being in an architect instead of the manager. 800 000. I've had several.

Talks with owners over the past week about that. Next thing is the fastest way, fastest lever to fix an inefficient crew and an inefficient business. So let's go through them. The switch to architect.

So as a recap, labor is the focus of from 0 to 2000-002008-00000. Your focus is going to be a manager and then after 800 plus years you focus on being an architect. A lot of people will stall out.

At the 200 to 500,000 level because they're struggling with switching to being a manager. Right. We talk about this all the time. The wilderness. The next challenge though is getting past the 800,000 and getting like getting to that million marker. And a lot of times it's because someone who is a great manager struggles to become the architect in the business. And most of the time it's because they're really, really good manager and they're really, really good laborer and they're really, really good at their job.

And an architect is required that an architect, if you're growing the business that way, like from zero upwards instead of just being hired on at a business that does a million and a half. If you get hiring in A million and a half. You need to be an architect from day one, like improving the business, et cetera, et cetera. Or if you acquired a business, you don't need to go from labor to manager up to architect. But a lot of times people struggle switching from manager architect because they're not okay with someone else doing 80% of their job at their level. So if you, if you can do 100%, they're not okay with someone else doing 80, they need someone else doing 99%. And if it's not that, they can't delegate. And the thing that is a little bit of chicken and egg situation is if you, if you, if you delegate and someone else does the job at 80% of what you currently do, the quality will drop and you will have an unhappy customer. You will be disappointed, et cetera. However, by doing that and having that delegation, you now have the time to actually invest in training them correctly. And you actually have the time to create systems for them to be able to have checklists and for them to be, for you to actually do one on one training, have one on one meetings, talk about their future in their career. So like delegating someone at their 80%, it's chicken, egg, because it'll drop to 80 and then you'll have the time to actually invest in getting up to like 85 or 90 or even 95 if they stay with you long enough.

And that's the role of the architect. And a great manager is someone who's going to, usually if they have Trouble getting past 800,000, it's because they start to micromanage.

And sometimes someone can go fast past 800,000, but they run themselves ragged and they literally go insane because they're still trying to be a manager instead of an architect. And the architect steps back off of the building, looks at plans, drawings, makes adjustments from afar.

And a lot of times perfectionists. Like if you have a perfectionist tendency, it's very difficult to make this transition from manager to architect because one Google review will send you in a tailspin. One unhappy customer, one mistake from your crew will send you in a massive tailspin.

And not acting emotionally to that and cutting someone off if they can just do 80% of what you do, but it frees up 100% of your time from doing that task. It's a huge win. And then by doing that, it now frees you up to scale. And now you might have four or five people being able to do that same task. And then you have time 100% of your time to now coach, create systems and make sure that they can get to 85, 90, 95% over the course of time. So I really see a lot of great operators, great operators be able to get to 7, 800, 900,000. And if they go beyond that, they start to literally lose their marbles and feel like they're going crazy because they're working seven days a week. But if you're hitting 7, 800,000 revenue and there's a bunch of owners right now that are around this level, bunch of people.

The switch to architect is not easy. You will have to be okay with things falling through cracks and not being reactive. When things go bad, expect them to go bad. But then know that you're getting your time back so that you are able to then go create as an architect would the plans, the systems and the processes to make sure that they can improve. All right, that's the first thing. Second thing is the fastest lever to fix an inefficient business. So if you have more than three employees, the fastest way to fix the problem.

Is to raise the percentage on P4P.

It is not necessarily the best fix, but is the fastest fix. This is what we did last year at the Bellingham shop.

And it switched in a month, as Lee showed in the numbers.

Here's why. Because if you're paying them 33% of labor revenue and they're hitting base pay, you're not. You're not paying them 33%. You're already paying them 40 or 45%.

Of labor revenue is going to wages. So increase the number. So increasing that percentage gives them a taste of P4P. It gives them a chance to make performance dollars. And so I talked with the owner last night and they did it this morning. Great job on execution. Let's go. A location that is in profit mode used to have 80 to 100 efficiency. Now being at under under 65%, it's like, what do you do? Like, yes, there's probably ways to have equipment, better trucks, better management, better organization, more accountability, blah, blah, blah. Yes, those are very difficult things to change overnight. But you can in one meeting tell all of your crew, we're raising percentage of of P4P by to 40% or 45%. And immediately they're all right on the line or making a dollar or two extra more per hour on PvP. And now there's incentive. And all of a sudden you can unlock 20 to 30% of discretionary effort from your team and unlock an extra 20 to 30% of revenue. Without hiring any more people. This is the fastest way. If I go into business and they have more than three employees, I am looking at if they're not efficient and they're running paid for performance and no one's hitting base pay because they're at 50, 60% efficiency scores, the number one thing you can do to immediately get buy in and just levered, levered their discretionary effort, which is effort that could be spent but they don't spend because they don't. There's no incentive to.

That's the fastest way to do it. So we will see how this location plays out. I genuinely believe having that conversation with the team is a great way to be able to immediately unlock talent, immediate unlock, massive efficiencies. There are more long term things that need to be discussed in terms of management accountability, organization, et cetera. But that is much harder to change a general manager or a crew around those things versus just being like, instead of, instead of beating you, I'm just going to incentivize you to do it better. I'm going to actually give you a reason to make it better. I'm going to give you a reason to make it more efficient. I'm going to review a reason to think about the trimmer line, the gas being filled up correctly and not waiting around and having yellow slips. Like yellow slips and all that stuff is garbage. No one cares if there's not incentive. Like just follow the incentives in any sort of relationship and you will determine the outcome. And so if you want your crew to be more efficient, incentivize them to do it. If they're not hitting you above base pay, they have no incentive. They literally think you are an absolute joke and they think P4P is an absolute joke. So prove them wrong, give them higher percentage and all of a sudden they actually have the opportunity to make more money. And then you start to highlight every single day the crew member that has the highest P4P and how much bonus they made. You do that for one week and you will turn your organization around. You'll just, you will literally unlock 20 to 30% extra effort and discretionary effort as Dr. Cashy calls it. And that is all 20, 30% revenue in your pocket. How do you do that? You have a meeting and you show how bad things are and how bad the efficiency is and that no one is making P4P and you get mad about it. You do not get mad at them. You do not get mad that you're losing money. You get mad at the fact that they're not making more P4P.

And.

In my opinion, emotion channeled at the right time is super powerful. If you're always an emotional reactive person, you lose credibility very quickly with your team, with anybody. You'll get short term results at the cost of long term relationship building. If you act emotionally and you punish people with your words or your actions. Like if you want a dog to do something, you can beat it into submission and it will do it. It will not do that out of its own accord or its own will. It'll simply do it because you it wants to, it is afraid of punishment. But if you incentivize the dog and you give it a treat, it will take them four or five tries. It will take more time, it will take more effort on the part of the trainer and the owner, quote unquote, to be able to get that behavior. However, once it is learned, it'll be because it was incentivized and because it was.

Of their own accord. That and it will be a more long term. And so I find it interesting when I see an entrepreneur that is reactive and will get mad, they get results and so people will follow after them. They're like, oh dude, I should do it that way. That good results in the short term, that does get results. And that's why many people will go that path. Because they think that by doing that they get results and they do in the short term.

But if you can channel emotion.

In a way.

That gets people excited about them reaching their goals and them making more money and their incentives, you will have much more long term buy in. It'll be harder, it'll take longer, they will make mistakes. But if you can channel your emotion around P4P and that the fact that you want them to make more money, you know very well that then making more money means the business makes more money. And you know, when the business gets more efficient and you having a bunch of profit, you're going to share a piece of it with them. But right now, quote unquote, when the business is not doing well and they're not efficient and they're not making pay for performance, you get freaking mad at them. Mad at that, not at them, at that problem. And so most of the time when I see owners that cannot control their, their emotion, it is because they get at people instead of the problem. If you get mad at the problem and then you incentivize people to fix the problem, then you have an effective way of actually dealing with the issue.

So that is my 2 cents for the day on that.

Like, dude, emotion is super powerful if you can channel it correctly. If you always are pulling out the sword on everybody on every little topic, they will not take you seriously. In the long term, you will get compliance because you pay their paycheck, you control their livelihood. Of course they're going to listen to you. But fear is just a horrible, horrible way for people to have long term success and to be able to act in accordance with your wishes outside of your direct interference and management. So give them an incentive and then reward them when they do it. That's like if you're training a dog, yes, you can beat it. You can get it to sit down by pushing its butt as hard as you can and beating the thing into submission. Or you can give it treats every time it sits down and it will take longer and it'll take more time. But I promise you that dog will love you more. It'll want to sit down and it'll want to comply and out of its own free will because it was, it was incentivized to do so and it was in their best interest.

There's my two cents. And to the few owners that have talked about these two topics in the past few weeks. I would love to hear what happens over the next couple weeks in the business as these changes are made and those things that we talked about right now have been executed. I hope you have a fantastic Friday, an awesome weekend. We'll see you all Monday. Love you all. Take care.