Mike Minutes Mastermind 07/05/2023

Hey, everyone, let's go ahead and get started.

Just drop this link into Facebook real quick.

If you are interested in the Facebook group. I did drop a link this morning.

Kind of showing a recorded call of Max that was live, getting customer information for a quote.

You know, improving a lot over the next couple weeks. Every single call, we are listening to the recording. The dev team is making adjustments, etc. Just remember this is phase one, so it's still not trained on things outside of lead collection. So things like complaints, invoicing, scheduling.

That'S all happening in phase two. So we're still a ways away from that. But if you are interested, feel free to look at that in the Facebook group. That link. Excuse me. Mercy.

Of a recording of the AI doing its. Oh, great, we have hiccups. This is gonna be a long mastermind. Okay, so.

Let'S get started though. Oh, man. Let's just reschedule this.

If not today, tomorrow I will have another form to everyone with the people that are on the ballot for.

The Franchise Advisory Council. And so if you have not put your name in, please do that immediately. It was a form that was sent a week ago on your email as well as on the Facebook group. Put your name in and I will submit the actually put the ballot out, if not today, tomorrow. So please do that if you have not already. Right away. I think that's all I got for now. Let's go ahead and jump into some questions, see if the Annie came in. Everyone had a great fourth. Okay, we got six questions. Let's go ahead and pull those up.

Boom.

Right?

Kyle Tarvin, at what revenue number do you need to start to see your locations become profitable? Do you try to grow up? At what revenue number do you start to see your location become profitable? We see you got to be over 20 just to make money if you're having a general manager running it. So anything under 20 is. We are typically losing money. And that's just because the salary of the gm, overhead of like a shop space, insurance and command center, those things alone, like, you got to be at 20 in revenue just to make money. The only way that changes. And again, like if you're a solo operator, it's different because, like now you are the gm, you're way more efficient. You're going to probably work longer hours and then their salary would go to you. But if you're paying someone a salary as a GM, if they're not making over 20 grand, you're typically not making any money.

And that's why typically, like in what we're going to be working on right now with the new compensation model for them is there's bonuses now I attached to if they get above 20,000 per month. So for the new locations, number two, do you try to grow up to that number as quick as possible and flip on profit mode? Yeah, we try to grow them past that as quick as possible, more to like the 30 to 40,000 per month range. And then it's not really whether I want to flip them to profit mode, it's whether the GM wants to. Like, if they want to keep growing, they can, assuming that they're doing it profitably. And what I mean by profitably, like if they strip out the extra cost of growth or is it profitable.

Then I would let them continue growing. Especially if from a management perspective they're able to manage more employees. But typically when they hit 30 to 40, I'm kind of switching to profit mode and then I'll let it kind of slowly grow up to 50, 60,000 per month in revenue. So, like the one location I have, it's in its third year. I think now.

Like Mooresville is like around that 50, around that 50 or so. Mount Vernon's 55 or so. And those like are really profitable. So I kind of like that range. And then once they hit above 30, they can become profitable. It's whether or not they want to continually growing slowly over the course of the next couple years, or if they want to in the first year go all the way to 50 to 60, it's just going to take a little more revenue. And so when we're going to take more cash. And so what we're trying to do is with the new incentive program that we're putting in place, is someone who is growing really fast, they'd still get bonuses in that first year because there's just not going to be a lot of profit. So we're working on something like that. Chuck and myself, Kyle Tarvin, we are struggling to get profitable at one of our locations. And I know I'm getting in the way that of that somehow I just can't think clearly right now since I'm in the middle of firefighting mode. So I need your help. I've broken my thoughts into bullet points, so if you could stop answer each one, that would be awesome. To give me clarity, number one, if one of your locations was losing money each month, what would you do to turn the location around? This location does roughly 25 to 30k in revenue and loses 1 to $3,000 a month. Close ratio is steady at 50k or 50. We have one week of work backlog, two trucks, three employees plus myself.

So I would really be questioning the. The efficiency that you're having or your pricing either. A, you have everything very, very low on pricing. I don't think that's the case because your code ratio is only at 50%. So efficiency would be coming into question because if you have three employees and yourself, that's four people doing 25 to 30K.

One of my locations, it is more established in its third year. Two employees and general manager just did 50 over 50,000. Like $54,000 in revenue. Again, that's in their third year. But.

I would really like with three employees place yourself. You're not going to make any profit at that. I can guarantee you it. So I'd be really looking hard at efficiency, route density.

Why are you guys not able to do 6, 7, 8 budget hours a day like the location I'm specifically talking about? They don't have any, they don't spend any money on marketing, but they're completing 10, 11 budget hours per day per employee. Good route density. They cut up last year, cut a whole bunch of the like almost half the amount of area they wanted to service, gave away customers, etc. So please give exact step by step possible. So if possible, what I would be doing, I'd be looking at why are you guys not hitting above? Do they need more training? Do you need to get in with each of them and train them better? Because 25 to 30k should be max. You and two employees max.

Max. So I think you could cut one employee out just to make this more efficient. And whether that be your route routing, whether that be your training them correctly and trust me, this happens all the. Like the Bellingham shop, for example, right now, isn't this, this thing right now where they're retraining everybody because they're just not efficient enough. And so you will have to do this occasionally. And that is like everyone needs to be retrained and it has nothing to do with the pricing, has nothing to do with anything else but training them all that's better. So I would number one be looking at training. Number two, I'd be looking at your routes. Like how far are you driving out? I'd make sure that you were not. You don't need to be spending money on marketing. You can make this profitable at 25 to 30k.

You potentially like, I wouldn't say you really want to raise prices because you're only one week book work backlog but what you might want to do is cut one employee, raise prices. You're still going to end up doing 35k in monthly revenue, but now you have one less employee and you're doing higher margin work. So that might be something you want to do just to cut. If you need to cut yourself and very quickly into profitability. We recently raised prices two months ago to current MO customers after the four after the back and forth attrition. Over the last few months we have additional 20 customers that are new that we have not received a price increase. I think we should raise them their price dramatically by five to ten dollars per cut. I feel really slimy raising price after mowing some of these people only for a few weeks. Not a lot of new work is coming in now. So I have been bidding a little lower just to get the work as we have a monthly net we have to cover. And my thought process is that if we get the work, it will keep the crew busy plus get us closer to that monthly revenue number. We need to break even. Do we just need to be bidding work high to increase our profits? I'm really struggling with this location and can't see the solution. I'm sure it's something simple, but my brain just isn't working right now. Ultimately you need to get to where it's just you and two employees. You can easily do 30k a month in revenue with you and two employees, 25, very doable. So if you need to raise prices, you're going to become more profitable in the revenue that you do have and you're going to potentially lose a few customers, which is fine because you're going to need a cut in employee and that's going to help you massively. Like three to $4,000 a month just gets unlocked in payroll. That's probably seven to $8,000 worth of revenue. And so if you can cut one person out and even if you go to 23, 24,000amonth in revenue because of the increase of some, you lose some customers. I would raise prices again at this point. Again, you're not like trying to grow really fast, right? You need the profitability. So you're going to raise prices, you're going to cut one employee and you're going to make the current two employees.

More efficient by training them, getting more attention on them and likely not even miss. I, I think you wouldn't even have a dip in revenue because these, when you have three employees, two trucks plus yourself, that means every truck is full of two people. I can guarantee if you lose one person, raise prices, you won't even miss the other person, the third person. You'll just keep operating like 24, 20,000, 25,000amonth in revenue, and you'll be, you'll basically lose one person's salary, like pay.

Kyle Tarvin what I'd probably do in this case too is I'd have one like your strongest employee being solo, and then the, the weaker of the two being with you. There's your two trucks. That guy that's being solo will probably do 70% of the work that he would have if he was with someone else. Assuming you have a good employee. Kyle Tarvin Mor how do you go about calculating your mind, the ROI of putting money into a location? Say you were buying another truck. How do you compare that ROI versus putting that money in the stock market or real estate, for example? Please give example specifics of how you calculate the roi. Like in terms of how you calculate, you're simply going to take that amount that you're spending on that location and ask yourself, like, what's the delta? So if you're going to.

If you're going to take.

Say you're like, okay, should I spend $20,000 on a truck? Okay, $20,000 on a truck. Boom.

Okay, so we got $20,000 on a truck that you potentially would be buying. Let's just for the sake of easy math, say you got 10% return in the stock market. So 10% return.

In stocks. So that would mean that you would assume $2,000 per year as a return if you put that same money in the stock market. So then it's a matter of, okay, like, what's the lifetime?

How long does that truck last? Right? So let's just say the truck lasts 10 years.

So 10 years, and then at the end of that, it's worth zero, it's scrap. So essentially then it's the cost of that truck is going to be 2k per year.

In terms of the actual cost by buying it for 20k. Okay, great. So then what you're going to do is say, okay, that truck is going to produce X amount of revenue. Let's just say you get one more employee, you're going to produce an extra $120,000 in a year, in a year of revenue.

And then let's just say you are, let's be conservative and call it 10% after your salary is paid, profits. So that means you're going to get $12,000 per year.

In profits from having the truck. So technically, if you take 12,000 divided by 20,000, that would be your ROI. That'd be 60% return, like your cash on cash returns in terms of buying the new truck. Now, the problem is you only have five years, right? So then you'd have to technically take this cost out of this. So technically, that $20,000 truck is now going to make you $10,000 per year.

And so you'd be getting a 50% ROI compared to 10% in the stock market.

So again, that is assuming the $20,000 truck gonna last you 10 years until it's worthless. Breaking out the cost, taking that out of what the profit is per year of that truck being added to the fleet. The other thing that you're not accounting for is the fact that this.

You know, extra revenue is probably gonna cost you other things. For example, you might need a trailer, you might need some other equipment, you might need to upgrade your shop space, storage, insurance, etc. So you'd want to take this down significantly, a little bit lower, saying, okay, let's say it's an extra thousand dollars per year or $2,000 per year of other added expenses because of more overhead caused by having more revenue. So again, that should all be kind of accounted for in this 10% number. Right. So that's kind of why I went low there. 10% profit is because I'm assuming that there's other costs involved of having that revenue.

All right.

Is there one more? Oh, no, there's a few more.

All right.

Next one. Kevin from South Haven, Mississippi. When's the next quarterly zoom call? Next quarterly zoom call will probably be in two weeks, right after training. I'll be sending out an invite for that here pretty shortly. I also want to have the new Francis Advisory Council to be able to announce that at that call. So, yeah, stay tuned for another invite for that coming up here in the next week or two.

Kyle Tarbin Moore, Oklahoma. How do you go about compartmentalizing and prioritizing things that are. You are working on problems you are trying to fix in the business? I typically just work on the fires that are burning me the most. But I know there's probably a better way.

In the short term, you kind of just have to. You have to firefight because you're the last line of defense. And typically in a smaller business, you don't have anything to delegate. As the company grows, that's when it becomes a little more challenging, because what the. What needs to be handled should mostly not be handled by you. So if there's a problem, it's more about delegating who works on which fires and so, and then stepping back a little bit more. But when you're a small business, it's okay to firefight. It really is. Everyone's like, oh, you gotta like planning sessions and like times, like, look, if you have one, two employees, three employees, your whole day is basically firefighting. You know, at any point in time someone could call you and be like, yeah, this customer's not happy, or I crashed this car or whatever it is. So you're, it's gonna be a lot of firefighting. I would say in those times, I would look to like your weekends and then things like conference, et cetera, as times to kind of like disconnect and have a little more strategy session and time to think about the business. But ultimately, when you're 1, 2, 3, 4 employees, the majority of your time should be making revenue and just doing the work. And yes, that means then you're going to be firefighting and being a little more reactive. That being said, that's why you have conference and the Memphis meetup and all the other things, even the masterminds. Each day is a way to like, disconnect from your reality of the firefighting and like, get other ideas and thoughts in your brain. Super helpful. And I think as your company grows to the point where you have department heads or other managers, etc, then it's a matter of not being reactive. Because if you do that, you usually trip other people up. And so it's more about like delegate to people. And then when a fire comes up, it's like, hey, do you got this? Do you need anything? No? Okay, great. Handle it. Right. And so it just changes. And the one size doesn't fit all. And a lot of people that talk about it on social media, they already have big businesses and they're already thinking in that regard, but they forget that at a small business size like you, you are, you should be generating revenue. You should not be thinking about the clouds and all the things that you're going to do in the strategy and all, like plug into the systems and rock and roll. And that's why like, even like last week when I was in South Park, I was like, hey, guys, like, I'm not going to do this. The. The mastermind for a few days. And like all meetings got canceled. Like, I'm just in the. I'm just going to go out and work like 14 hours a day and I'm going to come back, I'm going to do estimates and we're going to make sure everything's working well and you know, just grind it out. So that's mostly what you'll be doing when you have 1, 2, 3, 4 employees. As you start getting beyond that, especially when you start getting stuck in locations, general managers, etc, that's when you need to start be more okay, there's a fire. Great. Whose role is responsible to take care of this and that's a different conversation.

Chelsea from Arnold hey Mike, when it comes to the instant quote door hangers, it seems based on your 30 day challenge it is assumed that the code is just for the front yard. But when we have reached out to command center last week asking of their protocol to understand the full process better, we're told that the door hanger would spec what doesn't specify the areas CC will assume it is for both front and backyard. We order the same door hangers and you used but don't see front only on on each one. Is this something command should be trained on that the pricing is just for the front yard or true we need to write on the instant quote door hanger. We just want to make sure command center isn't telling the client the wrong info. Yeah so we are creating a second version of the door hanger that says front yard only specifically but otherwise we are assuming it is the whole property. And so when I went out and did it I kind of saw this happen. Like 1 in 5 customers think that's for the whole property. So it's like look, I'm willing to assume now it is for the whole property and we're going to put a price that would include the entire front and backyard. But.

Otherwise you should be putting front on there because otherwise Command center will have no idea what you're if it's not on the on the door hanger there's no way for us to train them around that because some people will want to include the entire property because they can see everything from the front, especially in areas where there's not a lot of fences and gates. So we are creating another version of the door hangers that says front yard only for the mulch and for the property cleanup. But then for things like mowing it's a little bit easier because you do it by satellite square footage. You kind of generally generally know what it the front yard is going to look similar to the backyard in terms of length.

And then we're also working on an instant quote door hanger for like top dressing, overseeding, aeration etc for fall. So we're working on that one. But yeah we are working on Making this safe front yard only. And otherwise a command center just would be guessing. And so it does need to say on the door hanger. And I would say, when I was doing it originally, when I was in South Park, I would say five out of six customers totally understand that front. Like, when you. They accept the quote and then you show up and do the work. That's the front yard. Like, that's all we can see. But it needs to be stated. It needs to be on the door hanger. So we are. We have made edits, and we've submitted those at a vistaprint. Hopefully in the next couple days, those will be up and ready and completed.

Because really, you can only give it on the front yard if they have a backyard fence and a gate. Or it's like a tighter neighborhood where you can't see the backyard. But otherwise, it's kind of assuming the whole thing is included.

Boom. I don't want to print them all. No.

But I would say, like, when. Even on mine, when I was using those, literally, we only had problems with two customers the entire month that wanted the entire property done. But those two are definitely painful enough for us to make changes. But usually people are like, it makes total sense to them. It's like, okay, you can only see what's in the front yard for the property cleanup of the mulch and the mowings for the entire thing. So we'll have an update, though, here in the next couple days in terms of what's on vistaprint and on the pro shop for you to be able to order. And we are changing it to where the mulch and the property say front yard only, so. Cool. All right, guys, have a great day. We'll see you tomorrow.