Mike Minutes Mastermind 07/17/2024

And we're live. Welcome, Augusta Nation. Mike's minutes Mastermind. Let's jump right in last night, great roundtable. Thank you all for joining. The recording for that will be sent out shortly via email. It'll be on the new dashboard. It'll also be as a Google Drive link. So if you haven't seen the announcement for the new dashboard, it's inside of the round table last night.

You'll give you instructions and all that. But there's also going to be in the email a Google Drive link also, if you want to watch it that way.

Cool. I sent out on the Facebook group and I'll be sending out an email also. In terms of the Francis Advisory Council voting, there were 16 owners and general managers that put their names forward and you can vote accordingly.

So looking forward to that. That'll be all of the rest of this week. So Sunday that'll be turned off in terms of the voting. So I posted on Facebook, you can get an email in a matter of an hour or two. Also for the polling of the Franchise Advisory Council.

Sweet. I think that's all I had in the way of announcements. Obviously there's a lot of announcements that went out last night in terms of the D of the new discount and the deal with Wright mowers and lots of announcements around the new dashboard and things that we're working on at command center, upcoming webinars, etc. So make sure if you did not listen to the roundtable live last night, that when the video comes out in the next couple hours that you are able to view that as soon as possible.

Cool. All right, let's jump in. Oh, I didn't open up the questions. One second.

All right, we got four questions it looks like. Here, make this a little bigger for you. There we go. Present, share. And we are in. Make sure my microphone is working fine.

All right, we're in business.

Responses.

Individual. There we go. All right. Connor Hutchinson.

Acquisition question. Lindsay with fine turf wants to sell me his mowing route. Super Denson only in South Park. They will keep the treatment and enhancement side of things. So we will only do leaves and mowing, no trimming or mulch.

Okay. Clients are on a 12 month agreement, 58,000 monthly. Wow. Well, they're really trying to get out of it. Well, cool. So just for everyone's information, I know Lindsay directly because I was in south park and I actually met with him and said basically a person that they really just want to focus on chemical and applications only, 700k year round because they pay level billing at 12 months. He would sell me two or three trucks and give up a few team members. He would help with the transition. His team runs P4P and says his guys make money at our same hourly rate of $80 per hour, 150 total clients, no additional contact list. He does not need to sell as he will will run 20 to 22% margins this year. He wants to double down the fert side of business and said no point in competing with Augusta for mowing. Since we work so closely together, he's willing to own refine with a decent up front payment. Thoughts? Especially knowing our position.

So first off, the value of this is significantly higher to you than anyone else because you know Lindsay and we have like a really good relationship with him. So it's kind of like when I bought the gym I knew I was paying a pretty good premium, but I fully trusted the owner and had like worked with him, etc. So. So the deal terms don't matter because like I know the deal much better. I have so much more insight to it. I think the same thing is true here. Obviously I've met Lindsey. I've also seen Lindsey at a mastermind conference thing that I went to and he's just a very honest person. So that like is a huge deal. When it comes to deal making and acquisitions. If you're not bringing in massive amounts of cost in terms of attorneys and advisors and consultants is just like trusting the person and then trusting you. So I think that's like the biggest pro of this whole deal. You'd basically be almost 50% increasing your revenue. So that's huge. You would immediately be making that location profitable. So what I would do if I was you, I'd be. How I would look at this one, Connor, is I'd be looking at what are you going to cash flow on the $58,000 per month and then if you can just from day one cash flow on that.

By with paying him also I'd probably try to make this deal happen. This is going to look like extending your current series, your period of pain for another extra year or two, but probably doubling that revenue. What that's going to look like in five years or even three years potentially. Also the south side of North Carolina has always been a tough one for you to crack and this would immediately like anchor you there and then allow you to backfill the other locations that you want to do the 12 around Charlotte. So it would kind of. Basically I'd be looking at this as the money you would burn trying to get to 700,000.

You'Re just accelerating that by two years essentially.

Yeah, that's a tough one. Obviously you haven't come to terms, he's not giving terms, so I can't really comment on that. It really comes down to the terms, like how much does he want up front and then what are the premium terms over the course of time. If you could somehow, if I was you, try to get this to be a three year balloon payment, that would look really good knowing your current financing situation. If you could get this to be a three year balloon, that'd be like massive. So if you could pay him something now as like, hey, I'm gonna make this happens. And then cash flow in it from day one in terms of the profit on the 58,000 and then it's gonna be skinny, like a few years are gonna be skinny. And then by the time you hit the three year marker, you're, you would have cleared out the other, the financing side of things that you need to do. Or potentially when you go get financing, you balloon, you kind of try to wrap all of it together, which would then give you like a 24 month window. So that would be interesting as well. I think you'd probably be able to swing that because in say a year you'd go to finance a bank and you'd be able to look at like, hey, take all my debt and just like consolidate all of it. That looks very interesting. So.

Like at 20% margins on that, for example, you're looking around, let's just call it to be conservative, 10 to 12 grand a month. If you can give him say 7 or 8 grand a month, even 8 or 9 grand a month as the payments, some sort of an initial upfront something and then make a balloon payment in 24 months. And then you know you're going to go get financing for all of the everything. Like you're going to try it for all of it and then include whatever the balloon payment is in that amount. I'd push for that hard. It's just going to be, you're, you're basically pushing another year into this series of pain that you're going to have to go through before that financing closes. And like it's going to be a sprint to make sure the business is of size enough to take on that debt. But you know, I know you, this is why it's context is so important. I know Lindsey, I know you. This is why I would approve of this deal. Because I know you're going to be like, you'll be just fine. You're going to be able to put your head down for the two years required to grow the bins of size enough to get the debt required to make this deal happen. And in that two years you'll probably be doing 3 million plus in revenue. And so that's why I kind of would give my blessing, quote unquote on this. His asking price is 315k, not including equipment. I told him this was too high. Maybe 300 with equipment. Whoops. I just sat down with him. He wanted 25 up front, 25% up front, which is good for three years of payments with interest handoff March 1, 2025. His current margins is 19% but they also have extra expenses we wouldn't have probably get closer to 24%. So 13 to 14k a month profit to us. His asking price is a 315,000. I told him that was too high. Maybe 300,000 with equipment. If you can get 300,000 with equipment, that makes more sense. 315k without equipment, that's steep. That's, that's pretty steep.

But if you can get 300 with equipment that's very solid, like I'd be all over that deal.

Because on, let's just say you have to do, you've had to finance 300,000 and let's just say you're getting something crazy like 9 or 10% interest rate on an SBA loan. I would again try to balloon. I would try to package all of your debt together, Connor, on this deal.

So if you can balloon this, I would be pushing for balloon massively. So for example, instead of trying to do 25% down, I'd be asking for 10% and then asking for more of a balloon. So for example, I'd be willing to give up some of the asking price. I would give up on that. If you let you go get away with less down up front and then balloon it in the three year period because then you know you're going to get a piece of debt in probably a year and a half that will cover everything and then give yourself 12 months after that to actually keep growing the businesses and be in a really good spot by the time the balloon payment is actually due. Could be really solid.

But yeah, on $300,000, 10% interest, you're probably looking at.

Like three or four grand a month. So if you can cash flow it, let's just be conservative. I know you said 13 to 14, let's just say conservatively 10. This makes a lot of sense. Now you Just gotta think about the balloon payment and you gotta think about the 10% down right now that 10% is worth a lot to you. So I would give up much more personally like this is price and terms. Things like I do not care about the price, I care about the terms. Cause you know in 24 months the business will be significantly larger than debt, will be easier to get, you'll be in a better cash position. So I would, I would relinquish some of your pressure on price and put it more towards the terms of moving from 25% trying to get that below 10%. Like 10% would be better because from a cash position right now you don't want to deprive the other locations of the cash they need. So good stuff dude. Best of luck on that.

It's going to push the pain out a little further which I think you are aware of and will be capable of handling.

Why have two YouTube channels? Home Service Millionaire has been posting some high level content that would be sure beneficial benefit the main channel audience. Yeah, great question. So we tested it, we did the more in depth videos on the main channel. They does get a little bit more views, maybe 50% more videos views. The problem is it taps into an audience that has been for now a year used of the more the of the sort of.

A little bit more of the drama and the entertainment side of things. And so what we don't want to do is hurt a good video on the main channel because last you know on Tuesday we post a video, most people aren't interested in it. Totally fine, let's say it only gets 10 or 15,000 views, whatever if I do that. But then on Friday now because of the previous video didn't do well, YouTube doesn't push it out as fast to my audience. Most people like 70% plus don't watch from their subscriptions, they watch just from like their homepage. And recommended. Well YouTube was less likely to recommend my video if the last video had bad click through rate and bad average view duration. And so my, my plan is Home Service Millionaire being the more dense topics that is more like nitty Gritty Mike Andy's being what I'm known for which is like the turnaround stuff and then cross pollinating with like just community posts and social media. So if people are in the nitty gritty they get some more details with the more entertainment style stuff, the turnaround stuff and then the people in the entertainment side that are going to get more views, I'll use a post to get them over to the Home Service Millionaire channel. We also have some ideas down the road to be able to make money in order to use the Home Service Millionaire channel kind of as a challenge situation where they can come in person. Kind of like workshop style stuff down the road that's like a year plus but we need to make more money on that in that division of the company. And so that's kind of like also the long term vision is like you'll be able to market to those people for those higher ticket items down the road versus the main channel being much more of our high like top of the funnel. So people in like the main channel that are more, they're, they're much more entry level, just getting started. They're, they're interested, they like the drama, they like the, the cuts and like that sort of thing. The people in Home Service Millionaire like they're looking at profit loss statements. The average revenue is probably five times higher, I would just guess in terms of the value of that audience on a Home Service Millionaire. So I can kind of diversify that way. That's why.

Fins from Medicine Hat. Hey Mike, I had a coaching call with Jeff Romley and he recommended asking you about how to best do my price increases. We lowered our pricing for new clients this season to grow our mowing list from about around 100 last year and we made it to 160 for us was great, which for us was great. I am thinking of raising the price by $5 per weekly mo for all properties at $49 or less and raising by 10% weekly mo for all properties $50 or more. For context, about 70% of our clients are at the $49 or less mark as most of the clients we service are 3,000 square feet or less. Our team is currently struggling to make PPP and have around 75% efficiency when working solo and 65% when working as a crew of two. Would this price increase strategy be an effective one or do you have any recommendation? Think in advance. So okay, I agree. I always agree with price increases, especially given all the things that you just told me, especially around P4P efficiency, et cetera. I would say this. If you're going to go through the pain of doing a price increase raise by more than five dollars, I would do at least eight bucks. I know most of your loans are less than 3,000, but if a property is A$40, just raise it to 48 like you're going to. You're going to lose so few customers at the 5 and the 10. I would recommend doing 8 and 12. At least. @ least.

I just generally believe if someone's going to leave over over $8, they're also going to leave over 5. So why not just literally add an extra 40, 50% of margin on that price increase by going from 5 to 8? Like that's a 60% increase on the price increase, right?

I would highly recommend 8 and 12 is like the lowest I'd raise because, like, if someone's gonna leave over 8, they're gonna lose leave over 5. If they're gonna leave over 12, they're gonna leave over 10. So that'd be like my minimum. So we did 12 and 18.

We do have smaller lawns as well. The vast majority of our lawns are probably between 2,004, 5,000 square feet as well. And we lost about 8, 10% somewhere in there of our customers. But I just knew that if I would have raised it by like 5 and 10 instead of 12 and 18, I would have lost probably 6 or 7%. So I just recommend if you're going to do the pain of price increase, just make sure it's actually worth the squeeze. If you're only going to draw an extra thousand dollars at the bottom line on a price increase, might not be worth the pain. Just like doing the work, like the extra admin time of like sending out emails and handling more calls like you're. Your admin cost will jump for that month because you got to do all that stuff. And so I just make sure the juice is worth the squeeze. On 150 customers. If you lost 10%, that's 15 customers. You're probably gonna get them all back with. Even though we're in summer, like, you're probably gonna get them back.

And if you raise it by an extra $3. So from 5 to 8 and from 10 to 13, for example, on that, you're gonna be making like 6, 12, 10. You're going to make literally an extra 10,000, like between 12 and 1500 dollars just by going from the 5 to the 8. So there's your 10 customers in revenue. So.

All right, everyone, I hope you have a fantastic day. If you did not get the roundtable, make sure you watch it. It's coming out here in the next little bit. And new dashboard, let's go use the searchy, searchy search bar at the top. There'll be things down the road we want to add to that, but right now it's definitely a step up in terms of searchability, which is great. Shout out to Nick Reed, owner, success manager, that is going through all of the Google Drive and retitling everything, making it much more intuitive and from a search perspective. So that's going to be good as well. I'll let you know when that's finished. Actually, Nick will let everyone know when he's finished that project. Got a lot of other stuff we're working on. Check out the roundtable for what's coming up. All right, guys, love you all. Have a fantastic day. We'll stay in touch.