Mike Minutes Mastermind 06/12/2024

And we're live.

All right.

Let'S get this party started.

Let's jump right into questions.

By the way, I've had a lot of people responding to me of price increases. Very, very good. If you are on the fence, just do it. One thing Nick Reed said the other day to someone else that then they regurgitated. To me it was really good. You can spend the first six months of the year growing and the next six months profiting, raising prices, optimizing for profit. I like that idea.

And.

So at the Bellingham shop, we're actually raising prices across the board. $12 for weekly, $18 for bi weekly services. All customers, including the 15 that have joined in the past week or two.

Time to make some money, baby. I think they have probably about 300 and something recurring mowing customers. So I'll have numbers on that. I'll probably make a video about it in a couple weeks. But let's jump into questions.

First one comes from.

Brenton, Utah. I grew my location in Cedar City, Utah as big as I reasonably could for a city of 35,000 people. Has stayed the same size for about five years now. I'm happy with it being a cash cow and staying about that size. Three years ago I branched into St. George, Utah, 50 miles south with a population of a hundred thousand people, expecting huge growth. I have had, I have had an unlimited budget for those three years, dumping 40k into Google and Facebook last year, door hangers with very little response. Newspapers, just everything I can think of. And last year we only did 200k when we joined Augusta. We made this city a separate Augusta location, figuring with a manager over location would finally grow with the extra attention. We are still doing roughly 22k per month. I was hoping to do 300, 350 to 400,000 this year, but this pace will be more like 230,000 plus Christmas lights, which we have never done. I am not seeing a way to magically rush to 500k in revenue no matter what we do. So the location can do more than break even. I would love the input. A couple of things about this area, very dry and desert, like lots of tiny lawns. Roughly 30% of homes just have desert landscaping with no lawns, lots of old people but tons of HOAs taking care of them. Which bids we never seem to win. We do spray weeds in desert landscape for about 100 people. So perhaps pushing that more than just mowing may be productive. I simply don't know. Thank you. Great question. So this is the challenge when going to a Market where like the actual climate, grass type bushes are very different. This is like why when I went to North Carolina last year, like it took me a couple weeks just to realize like how the grass grows. Like several basics. Obviously grass grows the same way. But like things like this, that the way that people are, the dryness of the weather, the type of landscaping does play a big factor. So thinking that you can just take your same marketing and throw it into a different market doesn't always work. And so being cognizant of the fact that, okay, the vast majority in this market have small lawns and hardly and mostly weeding. So then it'd be a matter of, okay, can I sell instead of focusing on the mowing, can I sell more of the treatment package side of things or the like the spraying, weed control and like overall maintenance. This might be the. An option to be able to include all of the, the spraying and the weeding inside of a mowing visit and having one package price.

Or just making sure that every single bit. Like I want a couple other things on this. If you could, Brent, actually copy this, this question if you have it somewhere or even just like doing it for tomorrow and give me like close ratio. And then if you've recently done the done for you ads and like tracked leads, if I could get the cost per lead, that'd be super helpful. I know last year you spent a ton, but like as of now, like, if you could run an ad for me for say a week and a half to two weeks and give me like on Facebook the cost per lead, run 10 different types of creative to get a cost per lead and that'd be, that'd be super helpful. And then I'd probably say I would do that as one campaign. I'd do another campaign for just the weed side of things. So like property maintenance, you could say, okay, property maintenance packages are going to have a quarterly bush trimming and a weekly visit for weeding. And then here's the price every single week, year round.

And that includes the four bush trimmings or however like you they need. The bushel rings are not four times a year. I don't know, it might be drier, so maybe only two. But you'd want to lean into this. I know down in El Paso, Abraham also had this issue massively. He was one of the first owners inside of Augusta. But like he was the only person that most people don't have a lawn. It's mostly weeds. It's mostly. You pull weeds, you trim bushes and you spray and so you want to change your marketing a little bit around that. And I'd really make your lead pictures. Pictures of your guys spraying, pictures of your guys pulling weeds, pictures of you trimming bushes. And then say something along the lines of don't, don't have a lawn. No worries, we got your whole property maintenance covered. Here's what we do every single visit. And you can roll that almost like winter services for the whole year. Like what everyone calls winter services you'd be doing all year round. Here's what all the things you get mow if needed, if they have grass and then all the other things that they get.

So that would be my recommendation.

For now. I would want to see ideally cost per lead and then what your close ratio has been all this time as well. And that cost per lead being from the recent done for you ads. If you have that, that'd be most ideal. But I'd say as general rule of thumb, you're gonna have to adapt your marketing so there's no reason to have someone mowing grass if the vast majority people don't have a lawn. Like make sure the pictures are your guys pulling weeds or spraying and then make the offer around that.

So.

Nick Davidson from Hudsonville, Michigan, I just watched a video from Alex Hormozi about profit and he suggests that annual billing is better than weekly or monthly billing. He argues that more frequent billing increases customer reflection on costs which can lead to higher churn. What do you think about this for our industry given that we've been advocating for shorter billing cycles to improve cash flow. Yep. So watch the video. Also have specifically talked to Alex about this. So the, the.

Seasonality of what we do changes this slightly because the need for their services varies. What he is mostly talking about when it comes to annual billing for example, is subscription based services where the value that you get is pretty consistent. So for example, this is not going to affect Augusta Nation, but it's going to affect other people that join copilot down the road. You'll see in a couple months, probably later this year. We're not going to necessarily raise prices, we're just going to, we're just going to raise prices if you go to not being annual. So we're not going to make annual contracts. We're just simply going to give like a 30% discount if you are going annual versus the prices that we're going to be doing bi weekly, not monthly, bi weekly. Because just by going from monthly to biweekly, I go from 12 billing cycles a year, not to 24, but at 26. So you get two extra billing cycles in there. It's like having 13 months in the year but you only have 12. So the actual price to the customer won't really change. In fact the dollar amount from a price psychology point will go down. So I'll go through that and I can happy to share about those numbers. It's not gonna affect anyone's side of guest nation right now. Everyone's will be the same but for copilot you'll see what we do there. And that is really the model that he's talking about is like incentivize annual billing for the sake of reducing churn. However, the problem is from a cash flow perspective on that I'm going to collect up front. And so the challenging part with mowing or home service, I've seen the past is the ability to collect up front.

Because customers just. It's just something that. It's just difficult to ask for an entire year's worth of mowing upfront. Is it possible? Absolutely. I've seen some people do it, especially on weed control when you have like say six or eight services and you're looking at like three to five hundred dollars. It's a little more difficult to sell someone on 1500 DOL dollars up front for mowing services for the rest of the year. I have seen that be a big challenge, especially on something that we are trying to get them like immediately to. To buy like instantly. Much more difficult. That being said, could you offer a massive discount to try to incentivize it? Yes, you could. The question is if your service is good enough, you just keep them anyways so the churn wouldn't be a problem. And then the next question is, are they actually going to keep.

Are they going to come back to you after six months when they sell their house, are they going to want the rest of the money for the rest of the year? Now all of a sudden you have a contract, you're going to get signed in a terms of service, etc. So it makes it a little more challenging. I'm not saying it's impossible, but the demand for our services fluctuates so much that the customer doesn't see a consistent like access to your product, use of the product etc. So it's much more of a pay as you go model which you pay the more you use our services versus flat for everybody. And when they, when someone sees prices are flat for everyone, they're more inclined to be willing to pay upfront for everything. Because they know that the prices for everyone is the same. They like, hey, I can hear. I can very quickly judge the two prices. It's like doing contracts for snowplowing. It's like, sometimes you do it more, sometimes you do it less. And so it's just more. It's a little harder. Because the demand for your services and the need for our services does vary a lot. But, yeah, the more often you bill, you're going to increase churn.

That is then just like, right? Against the fact that, like, as you increase your number of times you bill, you're going to improve your cash flow. It's like, which one do you want? Right? So it's like, which one are you trying to optimize for? I would say is most important. And so for a lot of times, when people have go into profit mode, they're okay with less churn. They want more, less churn. And they're okay with not as great cash flow because they have plenty of profit. They usually will go to monthly billing. If someone is like, hey, I am growing very quickly. I need cash, like, cash is very important to me. They'll typically go to, like, weekly billing because they get the cash faster and they need that to sustain the growth. That's a very broad stroke. I'm not saying that's what people should do. I'm saying that's a general observation. I've seen is when you're in growth mode, you need the cash. You prioritize the overturn because you'd rather just get more customers and fill the churn up versus the alternative.

Great question. Constructive criticism. Thank you very much. All right, let's see what you got here. I'm writing to ensure accountability on the teaching side of the seven core values. When I say, I heard you say in the Mastermind yesterday that you just don't know what to say, it brought back some painful memories of when I was in school. Okay. Oh, I guess this is when I was showing frustration around the.

Expected hurdles or something like that. I would often have teachers get frustrated with me and instead of learning how to teach me how to learn, they would just throw up their arms and say, well, I don't know what to say. Okay, that's a fair point. Then when my child was in school, I would hear the reports of my child's learning and would end up saying the same thing. As I've gotten older, I now know that it's not just on the student, but the teacher. So if I coach, if a coach or yourself or Liz just doesn't know it help that person that needs to. It's not just on them to figure it out. If we all truly care about the success of one another, it's on the teachers shoulders to figure out how to teach in different ways, I. E. To learn how the student learns. P.S. i'm not accusing anyone of this. I just, I know I get frustrated too. But please keep this in mind as constructive criticism. Please don't give up on the person that's having a hard time learning what you're trying to teach. Most of us have a strong desire to learn what you're teaching as much as we want us to learn. Thank you. Great constructive criticism received. So this is the. What I would say back to that is yes, I was frustrated yesterday when I was like doing that.

The constant thought processes, how do we solve that problem? So for example, it's not a matter of like, I'm just like frustrated not doing anything about it. For example, a big thing that we saw in the feedback around this topic is when you leave training, you're overwhelmed and you're just like really overwhelmed with things you need to do. So over the course of time it's been, okay, can we give them a checklist on the business, marketing and operational level that they need to do when they go home? Great. Still people overwhelmed. Okay, great. We're now going forward having where Nick is. Nick and Command center are hopping on a zoom call. And for each cohort, we'll get everyone on zoom every single week for six weeks after training. So every single week you're going to be with your team that you were here in training with all the owners and general managers all on a zoom call together, making sure that checklist actually gets done. So and coaching you through those expected hurdles. So that way you're still, you stay in the game. Because what happens is even though they're expected, when you face them, it's your first time. And so the number one thing we can do and it's even happening like today, I know Nick is starting this. We're automating for people that we haven't heard from for a while. Automating to keep them in the game and keep them connected to coaching, connected to the masterminds, connected to the Facebook group, connected to the community. So when people go MIA usually it's about three to six months later, we all of a sudden hear about a massive problem. I don't have enough money, I don't have enough leads. I haven't had any coaching calls, I haven't been on the masterminds haven't reached out to any other owners. That's too late. So one of the things like, so as though yesterday I would say, like, I don't know what to say. What I meant, what I was saying in that is this is a problem and there's constant evolution of how we, how we fix that. And really what it comes down to, to your point, is like making sure that we stay in contact, making sure that we coach people. And that's why we have Nick Reed as like the owner, success manager. That's why they've revamped the coaching program to have actual like introduction, diagnose problem and then action steps and only having one or two things that you walk away with because this is what happens. Otherwise it's like overload. Right. So good constructive criticism. Hopefully that explained it a little bit. Mr. Anonymous. Let's say, for example, okay, this is one of these hypotheticals. Let's say for example, that you had a family member with deep pockets and they wanted to invest $140,000 into something, let's say your business. What would be a fair return back to them over the course of five or ten years? Oh, this is what you call risk adjusted returns 101 boys. See here. So this is how it looks risk free. Adjust risk free returns. Right now around 4 and a half to 5% because they could just go get treasury bonds for the next 10 years. So, you know, t Bill, let's just look it up right now so I can actually show you guys Treasury.

Treasury bills, 10 year yield. All right, Just get it live. Here we go. Let me share this with all of you.

How do I eat that? Why wouldn't this let me share? Oh, I gotta remove this. All right, give me one second, I'm gonna share. So this is the 10 year treasury yield.

So if you put your money like a savings account, the bank's gonna go buy a bunch of these. Usually.

4.26% right now is as high as 5% last year. So this is like the, what's called the risk free yield. If you look back like five years ago, it was way down to like, it's basically almost zero percent after Covid because they cut interest rates so much. But right now it's like four and a half percent. So if there was zero risk inside a investment, you could easily get four and a half percent. Then you have what's called risk adjusted returns, which means as you add risk to the investment, you should be able to get return in excess of risk free. And so in excess of 4.5%. So like you start and then be like, okay, well what's the likelihood that it's going to be successful? That's really the turning factor of what interest rates are. Right? So like I would say if you go to the SBA, they're probably going to charge you 7, 8, 9% interest. Okay, well they're backed by the government, so they're usually pretty optimistic. If you're going to a personal person, you're probably going to pay a premium. On top of that, right now, if your person, if you're whatchamacallit, your friend or family member is being friendly, here's what I would do. 7 a loan interest rate. So I would do this, I'd say, okay, right now.

Terms and conditions. I go to the SBA, I'd say, okay, look, right now if I'm getting a 7A loan amounts gratuity. Here we go. So like, okay, I need $140,000 base rate plus 6%. Okay, well, base rate. Let's see what base rate is.

Base rate, percent.

Bo.

So their base rate right now looks to be 6.5 base rate plus 4%. So you have to ask your SBA to get a very specific. You'd have to get what their base rate is based upon is a bunch of different factors. So usually it's gonna be a few percentage points because that's like how they make their money and make sure they pay for admin. But 6% on top of that is gonna be what you're looking at. Usually 8. Right now it's 8 to 10% kind of depending on your credit. For an SBA, 7A loan, 504 is real estate. 7A is like a business loan type of thing. So you could be like, hey, right now it's going to cost me like 8% for the, for if I go to the SBA, Small Business Administration, I'm happy to give you more or match it. Right? Like 10%. Whatever it is, if they love you, that could be potentially what they do. If they're looking at as an investment, you're going to probably be looking at a higher interest rate. Like you're probably going to look at like 12% plus probably 10 to 12% would be like a good investment on their part. So because then they're doubled the just adjusted rate of return or risk free rate, which is government treasuries.

Cool. All right, that would be my answer to that question. What else we got, Mr. Anonymous? Hey Mike, saw the new video on creating multi locations question was the 300k what owner pockets annually across all the locations. Yep. Did I not make that clear? Yeah, the very end. That's like distributions 300,000 because net profit was 420,000. But then I paid a gen a regional manager. Keep in mind that all those locations should have been optimizing for price more after 10 years. Like the first year location, I still kept at $700,000 and $70,000 in profit. After 10 years you should be raising prices significantly and making more money. But yes, and I was just trying to be as conservative. Is that low? Yeah, that's only about like a 7, 8% distributions. But I think it's realistic if for that those first seven, eight years you're putting the money back in and you're really pro growth and then you do. You know I talk about there. So yeah, that was $300,000 in distributions. Essentially passive because you add the extra layer of management with regional and general managers which is required because if you don't have a regional, you are the person that steps in when something bad happens.

So.

Cool. I think that's it. Let's see if anything else came in. Nope. All right, Augusta Nation. Have a fantastic Wednesday and we'll see you tomorrow. Take care.