Mike Minutes Mastermind 06/01/2022

Let's go. Good morning, Augusta Nation. Hope you're all doing super well. Happy Wednesday. A couple updates I already put on the Facebook group. Number one, today or tomorrow, when you get your invoice from Command center, that will no longer be charged that day. It'll be two business days afterwards that it'll be charged. So thanks again to Chuck for giving that suggestion. Should help with cash flow. Make sure you're not surprised by a bill and make sure that you're able to process your end of month billing and and then it's in your account before that is withdrawn so you don't have to pay for anything. You'll get the invoice and then just leave it and a couple of days later it'll get charged. So just a heads up there, second thing, on this month's invoice you will see a breakdown of all your minutes at Command center into several different categories. Five or six.

We weren't going to roll this out until and until this month, but we ended up rolling out like the 3rd or 4th of May to where it was actually completely functional. And so what that means is you're going to see this month alone you're going to see a category that's uncategorized minutes. And that is because for the first three to four days of the month, we didn't have the software in place to track.

What category the minutes were being spent on. So I know it's going to seem a little bit funky and I'm sure people email Command center and have questions about it if they didn't hear this. So just remember, you're going to see uncategorized. If you're wondering what that is, that is 100% those first several days of the month as we have to roll a software across all the computers at Command center and virtual and everything. So that's what that is. You won't see that in the future.

So if you have any questions about that, feel free to contact Lonnie help gustalonkerservices.com but it is going to be much better. So you can see, oh, like they're spending a lot of time on web chat or they're spending a lot of time on doing X, Y or Z. And then if you're like, man, I need to save a lot of money. You can determine how to best take certain services back. Or if you're like, man, there's like, you know, I'm not really not spending much on phone calls. Like, let's make sure they keep taking all the phone calls. Let's focus on driving my ads towards the phone calls because they're cheaper for me. Like, whatever you want. I want just to see full transparency so you can make the right decisions for you and your business and whether or not your spouse is helping you a little bit in the office, things like that. I just want you to know all the information that's there. So that's the updates for today. There was like five questions that came on the Mastermind. I have not gone through them yet. So let me just go ahead and share that screen. Screen.

Boom. Okay, let me zoom in a little bit so you all can see Bo bo, boom, boom. Oh, there you go. Okay, first question from Plantation. When cutting yards. Okay. Can you guys see that? Okay. Yeah, here we go. When cutting yards, that's next to each other, Should I do one at a time or both together? Normally I would do both together, but wouldn't that mess up P for P? I did that today and got about 50 minutes for both homes. I would just split the time up, but I'm not sure because they are priced two different, one bigger, one smaller. So from a P4P perspective, does not change anything. Doesn't matter how fast someone does a job in. It's simply they're getting a percentage of the revenue. So whether they clock in and out of a job actually doesn't change their P for P. The reason you would want them to accurately clock in and out of the two jobs is to be able to track the time accurately of how long each job takes. If that's not a big deal to you and you just want to do them together, it does not affect P4P, because again, you just took out how many completed jobs for the day. There's your labor revenue. Divide that out by 3. 33%. Boom. That's what the employee is getting. So whether or not they clock in out to both jobs and do them together doesn't really matter.

Next question.

When do we start making payments to Command center and for the franchise fee that Plantation contact Command center directly. Everyone has their schedule and you know which month and everything like that. So yours will probably be this week, I'd imagine. You were in the last group this spring. Bryce Clothing. Okay, here we go. Two of the three largest companies in my area are willing to sell their business. Interesting. They believe the labor market is here to stay and they want out. This is what we've been saying, like, this is going to be a great opportunity for people to stay in the game here. Assuming I can purchase their contracts and client list for 1/5 of their revenue and pay them over a 3 year deal that this would 3 to 4x my business. I've been listening a lot to have successful people say there will be great opportunity vehicles in this recession. Is this one of those opportunity vehicles or is this just going to over leverage my business where I won't be profitable? Is this too much growth? I have 25k cash sitting right now. Assuming these deals would happen at the end of the year, would I, I would be able to stack up more cash, but I'm assuming I need loans for equipment since it's such huge growth. I pay myself $25,000 a year and plan on doing so for the next three years. One of the company's owners would be willing to become my GM at a 50k salary with a 25% profit sharing. I would not recommend doing that. He would also get the money from the sale of this. I would not recommend doing that. I have yet to see that work well. Even with really good GMs that I love and that trust. I have not seen that work out well. Where they get a salary, they get also the money and they get profit sharing because there's too many perverse incentives for them. So first and foremost, if you're able to buy someone for 1/5 of last year's revenue, that's usually a good deal. Assuming, oh wait, you're not getting the equipment.

Over a three year deal. Three year deals, tough. Your payments are going to be pretty high on a three year deal, right? So let's say you bought someone for 200 grand. A three year deal is going to cost you.

Seven, seven, eight grand a month. By the time you include tax interest. That's a lot of cash flow. So I would rather, I would rather you try to get an SBA loan on this for a 10 year term at like 5,6% interest. An SBA loan or a home equity line of credit is what I'd recommend. Right. So the location that we just bought out this past week, I use a home equity line of credit to be able to fund the deal because I know I can pay 4 or 5% interest on it and the payment will be. Oh man, I'm going to guess here, sorry. Probably 8, $900 a month. So that's because it's, it's a longer term. Right? A three year term is just, it's gonna be very difficult for you to come in buy the business, have to, you always have to inject more capital. I usually say like 25 to 30% of your, your purchase price. You're gonna have to inject into the business in order to get the equipment back up to spec, hire people, get things back in order because it's, you never buy a business, especially when an owner that is selling knows there's a date. You never buy the business and everything's running well. Never, never, never, never. So you're always doing damage repair. Like we're, we're doing a lawn this week, the sod install because the previous owner here.

The thought the crew took out the wrong lawn. Like sod use a sod cutter, took out the lawn and then realized their mistake and put the sod back on the, on the ground. And so now it's all bumpy and lumpy and dying obviously. So you know that's gonna be a five, six, seven thousand dollar mistake that we are going to cover as the new owners. So you have to plan for that. And so I don't want you to go to debt on such a high amount of payments.

Because very hard to cash flow after those payments, especially when you're having no more cash with needs. When you buy the business, you got to buy more equipment, you got to change things up, you got to make changes to the shop, whatever it might be. So I don't like the structure of the debt. I would rather your debt be longer term. And so the thing is that you have to end the year. I'd be trying to do an SBA loan. And also in doing that process, they're going to require a whole bunch more financial statements and you'll get really good due diligence on the business because you're going through the SBA process and they'll require like bank statements and everything from that business. So that's what I would recommend. The longer term the debt, the better.

And that's why like I love real estate debt is because it's 27 and a half, 30 year debt that I can get. And so that's what allows you to have such low payments. Right? So when it comes to business, the sba, you basically can't beat them. You have six, seven months here to go figure this out. So I would recommend that. And then I would definitely be looking at their numbers and making sure, okay, what's my payment going to be every month? Making sure that from day one I'm going to cash flow above that. And here's the trick. Raise your prices. Because if you raise your prices and you lose 20 or 30% of their customer base, you'll still be Dealt twice as much, twice as profitable. And so if you can do that and immediately be cash positive after your monthly payments on the acquisition, that's a, that's a slam dunk. Now it comes down to do you have the experience to actually make the turnaround? Turnarounds are the hardest things in the world from a cultural standpoint. You have fire people, you're hiring a bunch of newbies, you're not really confident in the area, their customer base. You're dealing with old issues. Like you've got to really be solid from a leadership standpoint. And I would not recommend hiring the old GM that used to be as a GM for the old owner. Wouldn't recommend that. It always sounds so good and it usually works out really well for a little bit and it goes downhill. I would recommend a complete buyout. They're not associated with the business anymore. Prior to the buyout, like two weeks prior, you could have like an orientation where they teach you things, how they've been doing things in their system, whatever it might be, and then pull the plug on them, get them out of there, lock them out, they get, lose the keys, they lose the bank account, they lose everything. Get them out of there. It always goes south if you have a long merging period between, between acquisitions. I just highly recommend that. But it was really going to come down to Bryce. In my opinion on this deal is going to be your ability to be able to hire enough people and to be able to pay off that payment, to pay the payments after the cash flow from the business, but also be able to afford the capital expenditures required. Once you acquire a company, it's going to require capital infusion. So I'd go for an SBA loan and let's just say you're buying this for 200,000. I. I'd try to get 250 and then show that $50,000 extra as what you're going to need to buy and you're in your working capital. But again, all of those numbers still need to pencil out. And that's something you want to go over with Lee in a coaching call. Make sure those numbers actually pencil out in terms of the customer acquisition cost versus what you're paying on that acquisition, etc. Should I be making yellow slopes for every customer complaint? For example, a client emailed saying we missed trimming the grass along her front wall, but said we could fix it next service and make sure it's done every week. Should I write a yellow slip and send the employee right back away for little things like that I've had a couple of clients email things like that. So I feel like the employees weed whacking quality. I just don't want to discourage him by loading him with yellow slips. But I also think it's the best way for him to see the areas he needs to improve your thoughts. This is a fine line because you don't want to overload with yellow slips and they start thinking you're unreasonable. But then you also need to hold them accountable and stick to the system of yellow slips. So I would say if it's, it's becoming a pattern, then you need to, you need to draw them up short and even if you don't make a yellow slip, but you just say hey, look, I haven't been making yellow slips in the past for this because customers are saying this. But that means our quality is going down. If customers are, if one customer's complaining, it means five other people have the same problem and they're not saying anything. And so from now on, if this happens, I'm going to start making yellow slips. So please just be aware of, of your quality of trimming. So it'd be kind of a more of a warning and just saying, hey, these are theoretical yellow slips and callbacks. So instead of let's, instead of trying to get as low a quality of standard of work to make the customer not give us a callback, let's just go all in on being higher quality. Spend the extra minute edging this property and we won't have to deal with this in terms of yellow slips. So the yellow slip though will have to come into play if it keeps happening and so you can actually start making draws on their performance dollars. Can we have CC call customers, inform them about the new payment system? I sent out the brand transition letter, but most of my customers haven't replied. Some I already had the car and file. Or do you think I should call them myself and let them know I have a new payment method? I wouldn't even worry about this. Most people check their email and then they just don't reply back. When you're doing a brand transition in terms of payment stuff, I would just let the system take care of itself. They'll get an invoice. It'll have a way for them to put a card on file. You can send them the email that has a link to put their card on file and in. Cause you're in zooper. It's literally they click a button, it opens up a form, they fill out the information and it's saved it's really, really fast. It's not like they have to create an account and username and security questions and everything like they do for service autopilot. So I'd recommend just stick with the system, keep rolling. And it's a lot easier in stripe to just add your card on file. Cool. That's all the stuff I got for today, I think some good information on the acquisition side of things. Again, I can't stress this enough. The calls with Lee are not about fires. They should be about health. All right. It's like I look at a coach as someone. They're like the general physician. You go there and you get checkups. Now, if the. If you have a big problem at the doctor, they're going to prescribe you medication or they are going to refer you to a specialist or someone that really needs to deal with your big problem. But most of the time, you just get a checkup. They check you out, take a couple scans, make sure you're on track. And usually they're not rushing into the ER after a visit with the. With the doctor. But you need that connection so that when you have a calamity, you know who to go to. You have that connection with the doctor. You have a medical history. That's why you do checkups. And that's how those. Those coaching calls, that's what it is for Lee. Right.

Consistently, what I'm seeing is when someone calls with a massive calamity, employees leaving. I don't have enough work on the schedule. I don't have any money. I'm booked out six weeks and three people just walked off the job. Consistently, I go back and I see when they've been on the last coaching call, that's five, six, seven months ago, and it's like, look, this could have been avoided if you would have been. If someone like a coach, a Lee, a natural, a medical doctor, a family doctor, we're just taking a look at your records. Oh, like your closing ratio is like 70, 80%. You're going to book out really, really fast. You either need to hire or raise these prices. That could have been solved two, three months ago instead of being six weeks booked out and no workers. So these are things that I understand that especially once you've done doing this for a few years, like, why would I have a call if the call is short, if the meeting with a doctor is short and just go in, check in, and you're checking out, that's great. That means that's like you're on the right track. It's a matter of time you're on the right path but it's a matter of making that connection. So I just, I'm only saying that because I consistently see the people have not made calls for five, six, seven months are the ones we're consistently seeing issues with. They're the ones with these massive fires and so just book a call. It doesn't cost you anything. It's just a matter of checking in with the doctor and it's a whole lot more less painful than having to go to the ER and get amputation and you're on life support and you're getting X rays like just stay with the doctor, hop on the scale, see how much you're weighing. You may take your blood pressure, see how you're doing. That's all it is. But that will keep someone healthy physically and that's what keeps a business healthy. Awesome. Have a great day everyone. We'll stay in touch and we'll see you tomorrow.