Mike Minutes Mastermind 08/03/2022

All right, we are live. Hope you're all doing super well. Let's go ahead and jump in. Sorry for some technical difficulties if I'm a little blurry. Let's go ahead and get started. One second here.

No, see, AirPods, you gotta love them until you hate them and they just decide not to connect to anything. Let me see if this will work. That should be fine. Okay.

Okay, let's roll. Several questions that came in in terms of announcements today. This afternoon, 2:00pm Pacific Standard Time, 5:00pm Eastern Standard Time, there'll be a webinar live for super users. You will have that invitation from Lonnie in your inbox. I'd highly recommend you be on there. So if you have questions as she goes through the workflows that you can ask those live. That recording will be available using the same link that is in your invitation. So just click on that link afterwards and the recording will be you. It'll be in the same format as these, you'll be able to ask questions live, etc. Quick note about pricing. Just because you are more money, cost more money than another provider does not mean your pricing is wrong. It's actually probably indicative of the fact that if you're running a 15, 20% margin business and someone else is half as much as you probably get indication, they are losing money. Okay? The reason most people will start to doubt their pricing is because of they see the pricing of other competitors and what they fail to realize that the average lawn care business goes out of business within two to three years. All right? So if you're going to be struggling towards the mean and be the average lawn care, you will probably go out of business. So if you are, you know, especially pricing out on project based work, commercial work, snow plowing things that you're new to or you've never done or you don't do very often or services that are out of your kind of scope of competence, you should expect to be way more than everyone else. And if you accept on that, great. If they don't, that does not mean your pricing is wrong or that you are somehow doing things incorrectly. It's either A they built their business in a completely different fashion for those different types of services or that certain type of model, or B they are literally losing money. And that is very, very common. Don't price compare yourself against people who are literally shooting themselves in the foot because they underbid a project, underbid a a contract for commercial, happens all the time and they are likely losing money. So keep that in mind. Can we Sit and watch video later on Zooper to get a feel for it. Promise not to talk. I don't know who this is, but yeah, I'll probably. We'll put the link up later. There'll be more super related stuff for everyone probably next couple months. Today's gonna be very basic in terms of thing that she sees people doing incorrectly. But that will be available probably later. There's a whole bunch of questions. I have not gone through them yet, so let's go ahead and just pull those up. Let me jump down to here.

Questions, Settings.

Share window. All right, here we go. I have not gone through these, so let's take them live.

First of all, let's see here. If I close out my storage. If I close up my storage and use my garage for storage, is that house hacking? Technically my business is paying the rent and not me. Yeah, it's definitely an option. If you're growing and scaling past the 200000 in annual revenue marker, you start needing some space and you kind of want to get out of your storage space. Like it's okay like have one employee showing up your house. If you're running out of your garage, when you start getting like two, three, four employees, you don't want them showing up to your house. And so now if your house has some shop space or a detached garage, let's go. Or some storage area or land is kind of away from the house. I like that. If your garage is literally 20ft from your front door and you literally come out from drinking your coffee for morning breakfast and step out into the garage. I'm not a huge fan of that closeness between the business and your personal life. But it's okay when you're solo. It's just when you start getting multiple employees, you're going to need storage space eventually. But in the short term to save on money, it's not a bad idea. It's a good idea.

Is there any reason why you could not or should not do P4P from the beginning? Or when you are still relatively new and trying to grow? Another way of posing the question would Here one second. I'm getting blinded by the sunlight here and I can hardly read my screen. Much better. Okay. The reason I ask is that on the Christmas Lights video Ryan Payne mentioned some about getting a good price on a certain product and he add that it was good for him because he was wasn't doing P4P at the time. This makes me think that P4P could inhibit your ability to grow because of pay pf the 30%. So, yeah. So Ryan talked about at Memphis how, how you couldn't do PVP in terms of giving budget hours based on linear feed, et cetera. So I would, if I was doing lights, I'd probably do that. That being said, if you're brand new to lights and you don't really have a system and you don't not don't have, your crew is not very skilled at the service and they're going up on ladders and being up to roof, you might not want to be P4P because just from a safety perspective, okay, so if I was doing lights, which I'm not, but if I was doing lights, I would probably the first year not do P4P and I'd give some sort of bonus per house that they do as like an incentive. But I wouldn't do P4P because I don't want going fast on a service. They are inexperienced and there's high level of risk in terms of falling off ladders, et cetera. But the first part of this question is more important and that is if you're just getting started or beginning, I don't Recommend you do P2P right off the bat. Let me say this. You don't need to do P4P until you have multiple employees. Because if you have just one employee and they're with you all day long, there's no unmanaged labor. The P4P exists in order to manage unmanaged labor, I.e. people that go out and work without your constant supervision. If you have one employee with you working in the truck all day long, you're able to manage them. You are the system that keeps them honest and keeps them accountable to their work. Whereas the system of P4P does that when you can't be around them all day long. So if you're just getting started, I don't think you need P4P. I think you should be having budgeted hours. You'd have everything in the system to be able to run P4P and I'd be putting my numbers in each day. But it's not, not super necessary until you do have unmanaged labor and employees that are working without your constant supervision.

All right, next question.

Why 33% for PPP? How did you come up with this number and it. And is it the right percentage for all of Augusta, no matter the stage growth? Is there something wrong with 25 or 30%? Nope. So there's nothing wrong with these numbers. Obviously less is going to be a higher, allow you to have A higher profit.

There's two things that come into play. First and foremost is.

If you take what you are paying per hour on base and then you divide that by what you're paying the customer. Remember, we want that 25% or less ratio, right? So what I mean by that is if I'm charging $80 per hour to the customer, I want to make sure that I am getting, you know, my base pay is $20 per hour or less. All right? So that 25% needs to work out. Now if you're doing that and you're only giving 25% of, of labor revenue to the employees, it means that if they hit budgeted hours, they will make base pay. That in my mind is super demotivating. And furthermore, that would assume that they've, if they clocked eight hours and did eight budgeted hours, they would still hit base pay. That almost never happens because you got 20, 30% amount of waste, just drive time, load time, etc. So typically the reason I say 25% or lower for your base pay versus what you get you're charging the customer is because if I'm charging 33%, there's a good enough of a delta and difference there between what if they hit base, if they hit budgeted hours, they're still going to be making above base pay. Okay? So that, that's the key there. Now if you're going to be stay doing 25 this, that means that you're probably going to be more in the realm of 15 to 20% with that ratio of base pay to what you're charging the customer. That means that if I'm charging my base pay is $20, I need to have at least a hundred dollars per hour for it to make it reasonable for someone to get above base pay at least. Like at least you really probably want 110 or 120 because that ratio, the, the bigger difference between what you're giving on P4P like 33% and then what your percentage of your base pay to what you're charging the customer per hour is that the bigger that difference, the more of their paycheck is going to be on performance and the less on base pay. So you want that to be as big as possible. So when I move it down to 25%, which you totally can, it just means that if I'm giving 25% of labor revenue to the employee, probably means my ratio needs to be like 15 to 20% of what I'm charging the customer, which means you got to be charging 110, $120 per hour. And so I think that we need to get there over the next several years. But you've got to keep your wages competitive, right, because everyone can make this happen by simply, oh, I'll just. My base Pay will be $10 per hour. Okay, well, you're not going to find anybody. And so. But there's nothing wrong with 25 or 30%. I know some people actually owe like 35% too. It really comes down to can you find employees for your base pay and still get jobs for that, The. The rate that you're charging up on the top end. And so there's nothing wrong with 25 or 30%. It's way better. Keeping it at those round numbers is important in my mind, so the employees can make sense of it. With 33%, they divided whatever they made for the day by three, and they know that's what they're making. 25%, 30% are also round numbers and would also work. So, you know, even at the local shop, if we ever raise prices enough, I might lower it to 30% in order to help with margins. So it's always possible. It's got. You need to raise your prices enough to where that percentage is going to give them above base pay. So nothing wrong with 25 or 30%. I'd be all over it. It's obviously more profitable.

Let's see here. Add to stream. I was speaking to another. Another owner who has an endorsement to work in their city. I guess they have to pay taxes for that as well. I don't have an endorsement, and I have. Have not had any issues. What am I asking? What I am asking is, should I have one? Does Bellingham also. I am 1.5 years in, and I do not have a contractor's license. Should I get one of those as well? Yeah. So if you get your contractor's license, Nick, that's usually when the endorsements will come into play. It'll ask you what cities you're going to be working in. So a contractor's license is mostly going to be used. Like if you needed a reseller's permit, some states will require you to get a contractor's license. In Washington state, we have two different types of contractor's license. A general contractor's license and a specialty contractor's license. And as a landscaper, a specialty contractor's license is sufficient. And you're literally looking at like a few hundred bucks a month or, sorry, a few hundred dollars a year to get that contractor's license. And then by getting that you are bonded with the state. I don't see this as a huge requirement. I don't think it's super necessary. Especially if you're not doing contractor type. Like if you're doing big projects and you're getting lots of materials and you're subcontracting, probably a good idea to have contractor's license. It comes into play a lot of times when it comes to even like sometimes rental companies for equipment will require it. But definitely lots of product, things like that. Probably you don't want a contractor's license. Some states for example, like Oregon, if you do anything above $500, I think, I think, I think it's in Oregon. $500. Anything about $500 for project based work, you have to have a contractor's license. So every single state is very different in terms of Washington state and yours. Nick. I personally, because we're so focused on simple services, I'm not getting contractors licenses for my new locations, which is another thing to do. It's just another, you know, few hundred dollars and we don't get a ton of material to where I need a special discount or anything like that. If I was, I would get it.