Mike Minutes Mastermind 05/30/2024

And we're live. Hello Augusta Nation. Hoping you're having a fantastic Thursday.

Couple quick things. First off I shared this in the Facebook group but I'll share it here.

Graphic here from the we're adding this to training. This is the seven stages of wealth inside of Augusta Nation. So very cool. Now we have a full time designer. There'll be lots of really cool stuff. I have tons of projects lined up for them, little things like this just to make the frameworks a little bit more visual etc and they're going to be helping with a ton of stuff so it's been great. All right. Not to say that the rest of me team can't do design, it's just that having someone full time just dedicated to it is going to be really good for all of us. Other announcement slash.

Whatever is I just want to say thank you to all the friends of the Advisory Council. This past week has been really busy for them and approving and denying certain actions. So really appreciate their time obviously completely volunteer basis and so I appreciate them spending so much time they did. I'll mention one vote that they had and then they're in the middle of one now it's been a couple day process of back and forth and everyone's sharing their opinions. So you know, if you're praying tonight, give a little word of prayer for them because they need some wisdom. It's not easy for me to ask them to make some of these decisions.

In terms of they have to think about what would new owners think about, what would existing owners think about, what would a smaller location feel like, what would a larger location feel like, what would it feel like if I was in an urban area versus a rural area. So it's really, really good. There's lots of dialogue currently about a certain topic that'll affect mostly new owners in terms of changing our franchise agreement on a couple things. And so you know I appreciate them a lot. Obviously they're not getting paid for it's a voted on position and when there's another month that'll go by and then we'll vote on another set of Francis advisory councils. But I just want to say publicly thank you to all of them. There's a lot of dialogue that goes back and forth on some of these and everyone weighing out decisions and debating things. So really do appreciate it and it goes to show the importance when you do vote in July on a franchise advisor council just know like they're more and more meaningful things being handled by them and voted on. So if it's Something that is I think critical to the overall mission of Augusta. I'm going to roll with something. But more and more and more I am leaning on the Franchise Advisor Council for things that need debate because if we all debated, we'd spend years trying to figure out one topic. But if having seven, six or seven other owners inside there that can give me feedback is really, really positive. So one thing they did vote on last week that was actually Unanimous was the around Ring Central. So Ring Central has a feature where we can actually record outbound calls. And Unanimous agreed to not enable that. And here's why. In order for that to be enabled, there has to be a recorded audio saying prior to the customer picking up that it is a recorded line. We tested this and about 75% approximately of calls were hung up on. And so whether the follow up calls, collection calls, etc. You do not want that. And so I still ran it by the advisory council just to make sure that, that everyone's in agreement on that. Because obviously there's benefits of quality assurance, there's benefits of getting someone to say something on a call when we're doing collections that can kind of pin them. But in order for that to happen, we have to notify the customer they're being recorded. Very normal when you're inbound calling to a company for you to hear that and still stay on the line. But one of the Franchise Advisor Council members said what I think everyone was thinking, that is as soon as you hear that the first thing you're doing is hanging up. And so we don't really blame customers for doing that. And we cannot have where 75% of people are hanging up on us at Command center we're doing outbound calls. It just makes it super ineffective. So that stinks. I don't see legislation going any other direction besides more protections around that. So I don't think that's ever going to change. There are certain, certain states where it's not required, but we have to do it across the board for our entity. And, and I don't want to put anyone at risk by us not having that around state lines, things like that. So kind of stinks, but that is what it is. Thank you. The Franchise Advisor Council, that was an easy one. They're currently in the last couple days been weighing something out. So again, keep them in your thoughts and prayers. They're making some really important decisions for future owners. And so it's, there's, it's very gray, lots of things that they deal with. So appreciate them. Tremendously in their time and effort, all of them being so committed to that. Okay, I think that's all I had for announcements. Let me triple check. Give me one second.

Yes. All right, jump into questions.

Boom. See what we got here.

6. Okay. Droll tarot act, Boone's Creek, Tennessee. Hey Mike, when looking at the profits of your business, how much do you figure you'll pay in taxes? 20, 30, 40? Just say you make 100k in profit for a benchmark. Yeah. So here, this is what I would do if I was you. I'll just try to show this.

Okay. So you could do this in the chat GPT also. But let me show you what I would do in this scenario. I'd be like, okay, how much will I pay?

Pay profits in self employed. And then ideally you need to do your state. So I'm going to do Washington.

All right, so then you're okay, self employment tax is 15. Great. That's going to cover your Social Security and Medicare. Great. Then the really the only thing in, in Washington, for example, I don't have any state income tax. Right. So go to my Washington state income tax calculator, say okay, I'm gonna make a hundred thousand dollars. I'm in Bellingham, Washington and I'm single. I don't care when I want to retire. Whoop de doo. Doesn't matter. So again, my state income tax is zero because I have no, there's no income tax in Washington state. But I do know that I will be on the hook for federal taxes. So federal taxes bracket, boom. Okay, so let's go ahead and look at the tax brackets.

I know they just adjusted these a little bit. So you'd be at a hundred thousand dollars, you'd be at your first $11,000 would be taxed at 12%. Then from 11,000 to 47,000, that would be at 22%. And then 100, from 47,000 to 100,000 you'd be at 24%. So as a blended average, you're probably going to be looking around 20% of federal of your money's gonna be federal going to federal taxes. So to answer your question more directly here, let me switch over to.

Here.

To answer your question here, I would probably. Okay, if I'm doing $100,000 in profit, I don't have any state income tax. So I'm gonna be looking at around $20,000 in income tax to the government plus 15% self employment tax. If you're an LLC, this is why you switch to an S corp. Because in this Case you would say $15,000 simply by being an S corp, you're going to pay an extra $2,000 in legal and accounting fees, but you'll save 15,000 in taxes. So 30 to 40% would only be if you are in a higher tax bracket or if you're in a state where there's high state income tax. So if you're in New York, if you're in California, they can have income tax statewide from 7, 10%. So then you have to tack that on. So I think conservatively I would probably tell someone to put aside 30% of their profit. I would also say that if you're in those higher brackets, it starts becoming more and more worth it to spend that money and invest it instead of spending 30% plus of it on taxes. Again, remember the first 12,000 you get deduction, then above that you pay like 12%, then you pay like 20% like so don't think, oh, I went right above the bracket, I'm paying that percentage on all of my income. That's not how it works.

All right. Nick from Marysville, I heard you mentioned High Yield Savings Account. Then I heard Graham Stephan mention them as well.

Confirmation bias. Any obvious cons of doing those? Haven't done this, done the research. Just want to hear your thoughts on how these compare to other investments. Yeah, so how savings accounts work in terms of the bank is they take money from you, they give you a percentage of interest and then they take that money and you should just go buy bonds with it. So if they can make 5% on a 10 year treasury bond from the government and then give you 2 and a half or 3% in a high interest, high interest saving account, they get the spread. So that's how a bank would typically work. If you know, if they're doing higher, more leverage. If they're doing higher risk type of lending, they would take your money in your savings account. Instead of buying a bond, they would go put it on a loan. So they would go buy a house with it and then lend money out to somebody, another member of the bank and get 8% interest from them on their loan on their mortgage. So that's kind of how a bank works. In terms of your question. Any obvious cons? No real obvious cons. The nice thing is that they're liquid, which means you can usually take the money in and out. If you a CD or certificate of deposit, then you're typically locking the money in for a certain period of time and then collecting the interest, which typically is going to give you A higher interest rate because it's less volatile for the bank's sake. So they're willing to give you an extra 1% usually or so on a CD versus a high interest yield savings account which you can move money in and out of. So nothing wrong with high interest yield saving count. How I like to think about is that usually you can cut your cost of inflation in half. So if inflation is 3% or 4%, if you get a high interest yield savings account, you might be able to save, you know, an extra 2% coming to you in terms of savings. So usually it costs the cost of capital, like just money sitting there doing nothing by about half, which is better than nothing. It's better than putting a checking account where you're getting like 0.015%.

So, Mr. Anonymous, if I were to turn part of my territory in a second location, how would that look? Do you still have to pay a new franchise fee? You do have to do a new franchise fee if you're going to start a new territory. If you're taking, hey, some of it, I'm going to overlap. This is what I would do if I was you. I've said this before and that is I would. If you're like gung ho, I'm do the second location. Great. If it's literally right, like part of your current location and extending out, I would just service the area for one year or even one season and get a bunch of customers in there and then buy the territory. The reason you could do that is because you know that you'll get a call from Lee if someone's going to buy it anyways before they do. And so you could always jump on it, you know, in six months or down the road. The main reason to do this would be because of traffic. A lot of times I've seen certain territories. It's like I can get to everywhere within 15 minutes. But if I go to this side of my territory, it can literally take me 45 minutes. That's when it makes sense to have a different territory that might overlap a little bit. But I would, if I was doing multiple locations, I would grow into an area. And then when it's like, man, it's a long drive, I'm driving 30 plus minutes just to get over there. Build a one route to where like you get 30, 40 budget hours of mowing. Then I'd start a second location so I can get a working GM in there right away and they're making money right away. That's the most ideal. But yeah, It'd be totally separate because then what you want is you want like a separate website, separate phone number. Everything is separated as soon as you have multiple territories. And the main reason you'd be doing that is if you want to like promote a general manager. If you have someone that like, without you doing this, they're going to leave. But if you can kind of build them up, you can kind of like, you can buy yourself some time if this is a problem for you. And that is, hey, tell you tell them the really great All Star employee, hey, next year I want to start this other location. We're going to start growing in that area, have your service area moved, et cetera, get a bunch of customers. And then when you start the location, they're already making 10, 15,000amonth in revenue. That's like ideal case scenario. And it's also help you retain that employee while you're kind of saving up money for the second location. Mr. Anonymous, if you start a second location after the franchise fee increases to 1500, will your new location have to pay that rate or are all your locations locked in at 1500? It's based on whenever you sign up. So for anyone that signs before the price increase, they're good to go. But if you sign after like a new territory, it will be at the 1500, that's 100% correct. So if you have signed even a year ago and you're a solo operator and you're upgrading to the growth model, you'll still be at 1200 next year because you sign that in the FTD, the FDD will change once we increase the prices. And then anyone that signs after that, the price would go up. So great question. It's just across the board.

Again, that's like in what, seven months? Dustin and Kyle. Dustin and Kyle. Bloomington, Illinois. Okay, wow. We got a joint. We got a joint question.

All right. While it's early in the morning. Oh, is it you guys three hours ahead? Nevermind. I think that these questions probably every three months. I think you get these questions every three months. But we are looking for some podcasts or book recommendations. Okay. We're looking for an organization and planning book or author we can look into. Organization and planning. Okay, let me give you a few. We have a really good speaker coming to conference actually called Blanking on his name, but he wrote a book called simple numbers 2.0. Really good. It's very much in the weeds, so this might not be the question you're looking for, but organization and planning. Let me see here. Some of the ones recently. Derek Duran recommended. This one book I'm just about to start. I gotta finish this other one first.

Okay, let's see here.

I'm just trying to see if there's anything that blows me away. There's someone here that Liz has bought that's probably more on your alley, but I don't listen to some of them.

Organization and planning. I do think that Dan Martell's book Buy Back youk Time would probably be a good starter on this.

I'm just scanning here. Give me one second here. Something will pop out.

That one's okay. I wouldn't recommend that.

Okay, I'm gonna go with Dan Martell. Buy back your time for now.

A really good. So it's Craig Crabtree. That's the person that's coming. Simple numbers 2.0. That's the name of the book. That's a really good book, by the way. Very Much in the Weeds. I also would really recommend Verne Harnish Scaling Up. I have listened to that book at least 10 times. Again, very Much in the Weeds. It's not an easy read, but is. It's solid. I'm looking for something along the lines of communication, but I can't put my finger in the name of genre. I'm looking for something like the tone of voice, volume of voice, nonverbal. Okay. All right, we got another good book for you. It's coming. Because this one is in my. I just listened to this like three times. It's a small book. It's like 45 minutes. It is called I Put this on the Facebook Group. Exactly what to say by Phil Jones. It's literally like a 45 minute read. Although I maybe it might be two hours. I listen at 2.2. So it might be like a two hour read or listen exactly what to say. Phil Jones, highly, highly recommend that book for everybody. Anything to do with sales or communication, regardless of topic. I almost always have a stance and will often let emotion run with that stance rather than have control over how and what I say. Yeah, highly recommend that book which whoever's asking that question. Exactly what to say by Phil Jones. Short read, killer. Like very easy to read too. I highly recommend you answered your question, I think last week in regards to the market. The top five being most of the gains in the last year. So I'm guessing you're talking about s and P500 stocks. How are you finding that? And so on top of it, are you just tracking stuff, looking at trends, have someone looking for it? You? I'm not sure how to to how a question out of nowhere about the market can get such an in depth answer with examples with how much other stuff you have going on. I if I need to only be sleeping two hours a night like last week to be on top of that stuff, I'll do it. But to be honest it's kind of frustrating to ask question and you just know the stuff. Please teach me your ways. Would love a podcast or a book for this info as well. But if you teach me your secret, I may not need one. Oh man. Okay, so the honest answer to this is the fact that like the same that you probably make time on the weekend for like spending time with family or fishing or hunting or looking at like a a magazine about whatever. I just listen to economists and I enjoy that and usually pretty dry stuff. But like the only real news I could I consume is related around the economy. So I do think it serves me well on the edges like the fringes in terms of knowing where the market is kind of going and really helps me with trends. So like being confident in what we're doing and being able to see like benchmarking Augusta versus the market, our returns on capital. If you spend $80,000 on a location getting started, what's that otherwise going to be in the market? Whether it be like there's other investment vehicles like bonds, real estate, stocks, you know, you can do ETFs, etc. And then the bigger reason why and while I've done several things when it comes to this is like back to the stages of wealth stage seven. I need to know these things if I'm going to actually help owners inside of Augusta Nation. So a big reason I did the real estate was this because I know it'll be helpful for a lot of people. So you know me having 23 units will be helpful to owners especially in 2, 3, 4 years when people that currently are just getting their second location, they're kind of getting that rolling. They're in stages four, five, six of wealth building. When you hit seven, you're going to need help. And I would prefer that we keep the community still together and that we all grow together. And so the only way for me to be able to lead is to be on the edge of that. So I, I do but I do enjoy all things to do with economy and how the economy works and you know, pieces and parts of it came from my mba just like interest in that topic but is literally my the thing I do to like unwind is read economists, analysts and stuff like that. Like quarterly reports from different companies and things like that. What does the process look like? Someone has been part of Augusta, for one. Or you should close their location. A handful of clients and no assets worth selling.

What does it look like? Talk to? I would definitely set up a call with, you know, owner, success manager. I'm assuming it's less than a year.

Less than a year to close their location. A handful of clients and no assets worth selling. So you haven't really got started. I'm assuming. So definitely set up a call with Nick. I don't know if this is hypothetical or if this is someone. Actually, please set up a call with Nick, whoever this is.

But it sounds like you never got started.

So talk to. Talk to Nick, see what's up. See if those clients could be handed off to someone else. See if you just need to have a pause. We've allowed someone to do this in the past that didn't get started, and that is they went through some personal stuff. We said, hey, we're going to pause. And then they came back and they've been good. So, like, this is again, please communicate. So important. We will work with owners if they're struggling to do something personally, especially when you haven't started. Like, this is something that we can really help with. So whether it be, hey, let's do this again next spring, and let's just stop fees, we will do that. We want to work with you. We don't want a personal issue to cause you to go in a bad spot. So please just reach out. That would be my main thing. So whoever that is, or if it's hypothetical, that's what I would still say.

All right. That is all I have for today.

If you want another book that is also very in depth, it is a weird name, weird cover, but a good book nonetheless. It's how to Get Rich by Felix Dennis.

This is definitely, if you research Felix a little bit, some of the stuff he says is very, like, it's black and white when most of the time life is a bit gray. So be careful with some of the things he says about, like, everyone should be an entrepreneur, basically like that. I think some of it's kind of dangerous, especially to say that and knowing that 90% of people won't make it and they will actually ruin their financial livelihood for their families, I think, I personally think is dangerous to put out publicly. It's different if you were in a room full of people that all were very wealthy to say, everyone should be entrepreneurs and own businesses.

90% of people will not make it. And most people should not start their own business. But that book is in the weeds. A little bit different, but. But good. I like it. So, anyways, while we're on the topic of books. There we go. I hope you all have a fantastic Thursday. I'll see you all tomorrow. Love you all. Take care.