Mike Minutes Mastermind 07/20/2024

Hello, Gus Nation. Hope you're doing well. Let's get this thing kicked off. Sorry for the Saturday Mastermind yesterday. I did not get a chance to record, so we're in it on a Saturday.

Cool. All right, couple quick announcements. First and foremost, check your email. Also, the Facebook group, the Franchise Advisory Council, voting is live and active. So it's been active since Wednesday. And So there were 16 members that put their name forward. Just go ahead and go on there. You submit seven up to seven. You don't have to do full seven if you don't know people. For example, go ahead and submit that by the end of today. Tomorrow the new group will be chosen based upon the polls. So thank you to everyone that submitted their name and more. So even thank you to all the members have served the past year and I know some of them have already served two years and some of them still have their name on the ballot. So I really appreciate it. It's definitely nothing they get a whole lot of personal things out of. So I really appreciate them serving, giving their time just to ensure that the owner's voices are heard. And so I think it's really important for those of you who never heard the background of fac, it was really came from after Covid with Anytime Fitness. I felt like the reason they actually held things together was because of the fac Francis Advisory Council.

Because so many of their of their locations closed down and. Well, every single location at some point was closed down because of COVID Some froze up to 12 months in cities like Seattle, San Francisco, LA, NY area, etc.

But in terms of actually people shutting down and going out of business was huge. Like it was a huge kind of wipeout. And so their FAC really stepped up for them in that moment, made sure that the brands, the owner's voices were heard mostly because they're owned by private equity. So, like we needed some representation. And so I feel it's. We don't need a crisis to build an fac and we don't necessarily need to do it. Wait until we have hundreds and hundreds and hundred locations. So we started a couple years ago when we had less than 100, and I think it's. It'll serve us well. And more and more emphasis and weight of the FAC will be felt as we continue to grow and the decisions become more important. So a lot of times I'm just running things by them to get their perspective. Sometimes we vote on things that are going to affect owners and so that's really why we have it. So thank you to everyone who served. I really do appreciate it. Tomorrow, once I announce the new FAC members, I will shout out everyone that's been on the FAC this past year and their contribution to Augusta Nation. It's really invaluable. So thank you. All right, I know Nick posted about it, but he did reorganize the Google Drive on the dashboard so it is much more search friendly. So if you're looking for specific template or download, etc. It should be much easier to find. So shout out to Nick. That takes hours and hours of mind numbing work on hundreds and hundreds of templates and reorganizing all that. So shout out to Nick. Thank you for doing that.

That was good. All right, let's jump right into the questions.

Let's see here, we got three, it looks like. All right, make sure I can actually share this. Very good.

Shorten this up. Boom, boom. All right, we're in business. No, I don't want to do that. There you go. Okay, number one is from. Other than Kyle Harvin, over the years I've been pretty bad at saving money for retirement. I've been listening to a few books regarding saving, investing money in the market for retirement, and need help putting together a strategy moving forward. Or even if you can help clarify a few things for me, that would be awesome too. My main goals, Number one, I want to be able to invest money in the market regularly but not be locked into an investment for the next 30 to 40 years. Meaning I can't take my money out without penalty. Okay. All right, I see you have your plan strategy. Okay. Number two, I know I'd like to continue investing in my businesses and continue to grow more over the years. I don't think I'll ever not own a business, nor would I ever go back to working a W2 job. Even when I'm older, I do feel as though I can continue to develop, continue to depend on my business's cash flow as I get older. Three, eventually I want to get to the point where I'm financially free and no longer am tied to earning a paycheck or showing up to the businesses. Cool. So I'll get plan strategy in a second. The last one that you mentioned there, this is just simply patience. Like this is why when someone says this, I immediately think like you, you just have to hold on for 10 years and obviously like you have to take, take the right actions. But like I get, I got nowhere close to this after 10 years. Like it took me forever to get to Theirs. So I just want to make it clear because less than 1% of businesses will get above a million dollars in revenue and a small fraction of those business owners will actually be able to run their businesses where they don't have to show up at it like a small, small fraction. And so realizing the audacity to say that, which I'm not against, I believe in that 100%. Just realize the, the odds are so stacked against you and like the amount of work and effort required to be able to achieve that is significant. So all that say my plan, strategy moving forward, I invest a small amount of money, currently 2 to $300 into a Roth IRA, which currently each month to create a fallback plan in case something happens with the businesses or I fall on hard times in the future. This would allow me to be able to sustain my lifestyle in the future if something did end up happening to the businesses. I guess I'm just going back and forth on our Roth as I know I'll be locked in for the next 30 to 40 years. Good point. And wouldn't want to remove that money until I'm of age.

Other than investing in my Roth, the majority of my excess saved capital would be kept in cash or liquid investments to continue building the businesses, keeping powder dry to be able to jump on an investment opportunity.

Okay, I guess I'm thinking about all this as I don't, I just don't want to put all my eggs in one basket. My businesses and something happened down the road when I'm not left with any safety net. I'm just thinking that I can protect some of my downside risk by investing a little bit into the market while I'm young. Thoughts, Poke holes as you seem fit or other options based on my goals. Okay, I'd recommend a book. Scott Galloway or actually, you know what, here's a better option for you. If you want to interview, listen to Doc. So Diary of a CEO recently with Scott Galloway. That's a good book or a good, good podcast. Listen, it's like an hour and a half long. Scott is very good, I feel, at making financial stuff simple and.

Kind of dispelling some of the myths around entrepreneurship and investing. So it's not like anything new or exciting, but it'll be good for what you're thinking about right now. Kyle so my thesis on this is like follow the seven stages of wealth. The reason I say that is when you, when Scott talks, for example, it's like it really comes down to what are your goals? If your goals are some of the things that you just mentioned, like you want the business to be able to run without you, well, you're going to have to build it up size, it's going to require figuring out general managers, it's going to require figuring out regional managers, and it's going to take a long period of time. I think you're willing to do that. The question becomes, can you do that in 10 years going all in, or will it take you 20? By having this fallback period, like having this fallback plan. Because having a plan B is usually a surefire way to ensure that plan A never succeeds. And so especially when I'm all for diversification and Scott talks a lot about this is why I talked, I mentioned the book or even that podcast.

But.

Like Warren Buffett always talks about, diversification is basically it comes down to like, you're not confident. And so I'm not opposed to diversification. I think that it is at a different stage of wealth that diversification is necessary and useful. Until that point, going all in on something that you have confidence in. And so what I believe in is like the first three to five years of business is simply getting the reps required to have this, to have the skills required to in order to be able to be confident in your ability to be able vest back into the business. It takes three to five years to figure out like, what marketing is going to work, my hiring strategy, the supply demand curve over the course of time and seasonality of the business. Once you figure that out, that is in is perhaps the highest ROI you can have in terms of risk reward. And the reason you want to use that sort of leverage when you're younger in your, in your entrepreneurial journey and building wealth is because you only have a small amount of money. So let's say you had $5 million. Yeah, diversification S&P 500 multiple indexes, ETFs is probably the route you should go if your goal is conservation.

And I would say if someone has less than a million dollars and they want to build phenomenal wealth, you're going to have to put it at risk because the odds of being able to grow massive amounts of wealth and create passive income in terms of a business that prints money without you being there, is.

Is so low, the likelihood of that is so low, you're going to have to risk it with those type of odds in order to achieve these outsized returns. So like, if you want to turn, you know, $50,000 into 10 million, don't expect to be investing in S&P 500. And everyone's like, oh, if you put $50,000 into the S&P 500 like a hundred years ago, it'd make worth millions. Yeah, $50,000 years ago doesn't count for inflation. Like, if you take inflation. So if everyone's like, oh, if you just invest like $200 per month into an A Roth IRA, you'll be rich by the time you have $2 million by the time you're 60. Yeah, $2 million in 40 years won't buy you an apartment. So, like, because of the devaluation of money and inflation, like, that number today seems large. It will not seem large in 30 to 40 years. And so the power of having a business is that you can raise prices to beat inflation. And so, you know, we raised prices this year at Bellingham Shop, for example, by 12 to $18. Let's just call it $15 average. Let's say that's probably like a 20 to 25% price increase.

And we raised them, I think, in 2021. So in three years, inflation's probably been like a combined 12%, maybe 13%, and we raised it by 25%. So we beat inflation.

And so if you have a strong brand and you have pricing power and you have a sticky service, you can beat inflation versus investing into an IRA or Roth or whatever you're going to use. Not against it. I'm not against it at all. Just don't expect to take 10, 20, 30, 40, 50 grand and turn it into millions of dollars when you retire. And if you do, woohoo. In 30 or 40 years, those millions of dollars will not be worth what they are today. Like I can, I'm going to go on a limb and guess that like the, the, the Federal Reserve will come out within the next 12 months and say that their target inflation is no longer 2%. I think it's going to 3%. They'll have to, because the only way to outgrow our debt is to be able to run a very hot economy. So anyways, there's your little rant on that today. All right, question number two. Cassandra Turner, Henderson, Kentucky. Hey, Mike, these questions pertain to overdue payments. Do you recommend charging a percentage or dollar amount for an overdue fee? We currently charge 5%, and we're running into the issue that it only comes out to a few dollars charged. It doesn't really give the client incentive to get their bill paid on time. With our franchise, we bill our clients once the invoice gets sent out to them right after we service them. Okay, would you keep the overdue setting for 30 days, or would you change that with how we bill our clients? If you change your overdue fee amount, how do you go about notifying your clients of the fee change? Great. So this is what I would do. I would change the verbiage on your invoice right away. Then when they actually go to being overdue, you charge it based upon whatever is said on the invoice. So whatever's in the notes at the bottom of the invoice is what you're going to use. So right now you have the 5% verbiage. Change it now to the 30 day verbiage, and in 30 days, when invoices start to become overdue, you're going to use the new terms. Now, what you can do, Cassandra, if you want to maximize revenue, this is the question is, do you want to maximize revenue? Make this simple. If you want to maximize revenue, I'd recommend doing something like, we will charge 5% or $20, whichever is higher, Right? So you could. You could do the. And. Or there. If you want to maximize revenue. If you want to keep it simple, you either stick to one or the other, and you can look at, like, your average invoice on the lower ticket one. The $20 is going to be a big deal. However, if you have a $3,000 job that goes overdue, 20 bucks is nothing. And so 5% on a $5,000 invoice is like $250. Right. So I would. I would say if you're trying to maximize revenue on. On overdue and late fees, I would be doing and. Or whichever is higher. Again, no one's gonna look at that until they're overdue. So I don't think it'll scare people away, to be perfectly honest with you. Oh, and I just. I apologize. I said invoice. I meant estimate. When I said your terms and conditions on your invoice, I meant estimate.

Audie from Plano, Texas. First off, I just want to give a quick shout to Audie in Plano, Texas, because I saw his numbers last month, and him and Karen are crushing it. And I say that because the first few years, it took them a while to really get their feet underneath them. And I was really concerned about Adi, and I care a lot about his family, and it took a couple years to really establish himself, learn not just the industry, but I'm proud of him and Karen and so just want to give a quick shout out to them.

All right, we have ourselves a long question here. We go.

Education. Through my experience, through my reading of the Bible, what I believe to be the best and most reliable source and also best historical account of humanity, I've learned the narratives that we bet we humans best learn by experience. In particular, this comes up because I'm attending Augusta only Certified Lights training and just reflecting on my. Okay, let me pause here real quick. I'll go back to the question. Certified Lights is making the training for all of us free. Very cool. I think Nick will probably email everyone about this. There's several people out this weekend they're going and then they're going to do another one for us in September completely free. So very cool. I know that in Kentucky we're doing an internal training. Jason Murphy's putting it on. Thank you very much.

Which will be great. So if you want to go to both of them, cool. But just so you know, they waived. I think it was like they're going to charge everyone a few hundred bucks. It's free now. So check out the main, the main site on that and I appreciate them doing that for us. I think there was four or five owners this past week that went out, flew out to Dallas I think and we're getting doing that this week. So good for them. All right. Okay. In particular, this comes up because I'm attending Augusta only certified Lights training and just reflecting on my ability to learn and grow. Side note, without a doubt, I'm now sure Augusta will have a base of operations from the corporate level in the Dallas Fort Worth area in the future, which I had previous thought would be through the guise of an acquisition of CityTurf. But apparently it's going to be a quite a different direction. That is Augusta Lights. Back to experience based learning. My 17 plus years in diesel, industrial and automotive technology, I have over 36,000 hours experience based learning. Some 65 to 75% of that is maintenance repairs. The 15 to 20% is major repairs and the other 5 to 10% is electrical drivability repairs. Okay. Now when I graduated from high school I graduated a special education diploma GED at this time the fifth grade leaving at this time the fifth grade reading level and barely sixth to seventh grade math. Maybe seventh, eighth grade comprehension. I'm considering putting my two children or have already enrolled them in public school. I'm a big believer experience based learning, hence my history. I simply mentioned my experience and my whole high school diploma because I still feel behind in my ability to learn is a lot slower than most and I'm fine with that. Audie. Shout out bro. Man, the level of self awareness here. Okay, since you have excelled ability to learn quickly, have talked about and have recently mentioned discretionary efforts, where do you lean as far as your understanding of formal public education versus experience based age? Wow. Adi, very impressive. I'm always wondering if Karen wrote this or not because this is very well written. Okay.

So these are really several different questions. One you're asking about public education versus private. The second thing you're asking is experience based learning versus public education. So let me ask the first one. So I'm not a huge fan of the public education system, especially for younger kids. I think once you get into university there are certain technical things you need to know for certain vocations. But like also there's a lot of junk that doesn't need to be known and learned in my opinion.

So I'm not a huge fan of the public education system. I think it's failed most kids, especially in the past four years. I think it's only going to get more and more.

Oh man, politicized. And like even what they're doing in California is an absolute joke. The fact that someone can have a kid, send them to school and the kid can have a different gender at school and it not be disclosed to the parents is bonkers. And so you're seeing Elon moving out literally over this law. He's moving SpaceX and Neuralink, I think out of California. That was kind of like the straw that broke the panels back. But.

Like that sort of thing's not going to end, unfortunately. And so personally, if I had kids, like, I'm not gonna hand the reins of my child over to someone I think is absolutely an absolute lunatic and is being ran by the government. So it really has no say in what they even teach, honestly. So that's my pov. I think if you have more money and autonomy, having children is really nice because then you have the ability to be able to have the experience based learning. It is not cheap nor is it easy to actually create that for a child in my opinion. If you're actually going to fly them around, take them places, have them experience the world, I think that is so enriching for a child. And I still remember when I was in grade like 2 or 3 and my mom and dad wanted to take us to Australia to meet my family over there for like an entire, I think it was like six weeks. And so it was in the middle of school season, a school year. And my teacher said basically like, your child will learn more in those six weeks about culture. And real life application by being in a different environment than doing any sort of schooling or education. So we did no school for like six weeks. And it probably was only possible because we went to our very small church school that was private.

I think it cost like three or four grand a year. It was relatively cheap and we always got sponsored because we just didn't. My family didn't have the money.

But I would 100% agree with that. The amount of like cultural education I got during that trip was far greater than I would have gotten another six weeks of school. And so I, I do believe that there's a, there's a place for it. I think that most people don't. Most people lack the resources financially to actually make that education meaningful for the child if they're going experience based learning. So I don't know. Obviously I don't have a kid, so I'm speaking off the top of my head here. But like, personally it'd be a matter of like whatever the kid is interested in. I hope that I have enough resources to let them go all in on it. So if they're crazy about music, great. I want you like go wherever you want, learn whatever you want. Be around the best of the best in that field and just crush it.

Now would I be thrilled if they love business? Absolutely. Let's go. But I'm not going to push that. And like, I just want them to. I just want. I would be much more lenient on the experience side. I just think that it's so much more valuable than going and sitting in front. Like when in. Think about this.

Name one time the rest of your life where you'll have to memorize information like cramming. And the next day sit down in a desk in front of a, in front of a whiteboard and regurgitate what you learned last night. There has like, there's like no practical application the rest of your life for that. What you will have to do is learn how to interview, learn how to speak in front of people, learn how to read a budget read, learn how to fire or hire people, be able to read body language. Like these are the type of things that like in my very ignorant pov should be taught in schools. And it's coming from someone who like really excelled in the education system like as it's currently set up. Just crushed it. I think there were so many lacks that I could have, I could have been way further ahead in life even if I would just not have to been regurgitating information from 14, like 13 to 18 when I was in university, like my whole life was just books and reading and regurgitating stuff on tests. And I crushed it. And it has zero implication of what I do now. Zero. None. Nada. Calculus, nothing. Organic chemistry, nothing. And so personally this is. You asked my personal opinion, Adi. So here it is. Experiential based learning is so much more valuable if you take Richter out with you on a route and do estimates like you did the other day when you sent me a video that will do far more for him than learning the difference between tangent and cosine. It just is. And so that's just like angles. There you go. Triangles. Let's go. And then you have the hypotenuse. Like, you know, go kick hypotenuse in the face and learn how to sell a job and that kid will be set forever. And so I think like basic sales taught in high school would. Would like fix so many problems. Like if you can sell something, you have a job for life. And so if we could just fix that one thing, like if there was one class, teach them how to sell. Do reps, do scripts, do phone calls. Do. Do cold calling. Do basic, like, objection. Overcoming. They will never, ever lack for food. And yet we try to teach them all this absolute random, unnecessary garbage. Cool. That was. That was your soapbox for the day I asked you by Audi in Plano, Texas. Cool. All right, I love you all. Hope you have a fantastic weekend. I'll see you guys Monday. Don't forget to vote on the fac. It's in your email and it's also on the Facebook group. I'm going to go ahead and pin it right now just so you can find it easily. All right, we'll see you Monday.