Mike Minutes Mastermind 08/03/2023

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Let's jump right into questions.

All right, first one. Joe Dilmore, Cherry Hill, New Jersey. You're having a major problem with keeping long clients. Oh wait one second. I need to go over a couple things.

Increase. Yeah, here. So.

In 2024. So January, just so everyone knows until you hear hear it here first. The initial franchise fee will be going up by at least $2,000. Won't affect anyone here. If you do keep it on your balance sheet, you can move it up in the value of it by two grand. We're going to keep moving up over the course of time. It's just FYI, January 2024 it's going up 10%. So from 20,000 to 22,000 obviously if you're active duty or if you in the military did a five thousand dollar discount on that. But just heads up to everybody that is the case. So you will hear. Well I will probably talk about publicly but if you hear it, that is true. In January it's going to go up. All right. Joe Dilmore, Cherry Hill, New Jersey.

We are having a major problem with keeping law on clients. We have a great market but unfortunately have literally tons of crews using under the table people around here. We just finished a property thing up yesterday and the guy asked me for a mowing quote and it was 45.65 and he told me that he's playing 35 BI weekly. Also no one else around here uses different weekly or bi weekly rates. I've stuck to my guns and user systems but I've had lots of clients tell me straight to my face. I am far and by far the most expensive in my area and many have canceled straight telling me straight up they are booking cheaper options. And of course it happened after we switched to bi weekly rates. We are nearly through our second season and I can't push past 50 rolling clients now that is now that we are in the summer months. Slow summer, slowdown work is drying up. Fortunately, mowing keeps us both two weeks of the month. But work is drying up and getting worried. What should I do to fill up the moan schedule? Was thinking about temporarily doing away with the different bi weekly weekly rates and doing average. But that would be a big problem in the future when I get booked up and want to change. Should we greatly lower our bi weekly rates knowing we can increase them in the future? Note our closed ratio is consistently about 70% so most project work is getting approved. So rates are good. There's okay, so what I'm. This is the number one thing. This is the determining factor of what your pricing is. It has nothing to do with what customers are saying. Okay, so what I'd be looking at is what percentage? Because you're saying 70% ish on project work that tells me you are not too high priced. I don't care what customers say. But if on your mowing quotes it's 20% then we have something to talk about. But if you're at 70% blended and like in like 70% of your mowing customers are accepting, I don't care what people say, you are not too high of price. What you might need to do is adjust your bi weekly side. So instead of going 40, 60, maybe you 4050 and you do more like a 25% increase from weekly to biweekly. I would not change people if you've already done the price increase. But in the future you could potentially do that. You just need a contact command center, have your price matrix changed and you could do that. If that's of a concern to you, I can see that. Just be very careful when you have 50, 60, 102,000 customers, they don't take anecdotal 1, 2, 3 customers happening in one week. Like everyone's doing it right. So when I see your hear everyone and everything and all I get like, I start to be like no 70% of 70% of your jobs are being accepted. I don't care what people are saying. I don't care what it feels like from 1, 2, 3 customers that happen on the same 2, 3 days that cancel because of something. But potentially what you could do is change your weekly and bi weekly to be less than 50% increase in between those two. I wouldn't be opposed to that, but I would look at the numbers far more than that because your close ratio is just fine. What might be happening though? You're losing people because that bi weekly. So fix that. Don't just adjust your rate down in terms of in the. In the meantime, when things slow down, use your one click estimate emails to sell projects and do door hangers to upsell your existing customers as well as their neighbors during this period of time. Another quick note to add to my last point is I think a big part of our prices being so high is the fact that we are using 30 inch push mowers making the budget high on these lots. So I would just be careful. You look at your close ratio as the determining part of whether or not you think prices are too high, right? So I can agree with you based on what you said so far that you could potentially lower your bi weekly, but I'm not convinced based upon your close ratio that your prices in aggregate are too high. One customer telling you that they got cheaper somewhere else could care less. What's causing that change potentially is because you switch everyone to buy weekly and that is a big jump for them. So softening that blow potentially, I would potentially agree with that. But even that I would want data. Did you, did you lose five people? Well that's 10 of your customers. Or do we, did we lose two or three when we moved everyone to bi weekly? That's a different conversation, right? So just be very careful. When you're in operations, it's very easy to get wrapped up in the emotion of two or three customers emailing you one day and then you think you need to make a big change when it's not based upon the numbers and the math of it. Same thing happens when people raise prices and you know they have 300 customers. Like my goodness, I got bombarded with emails and people canceling. It's horrible. And you look at the mad. It's like it's 25 people, right? It's 10 of your customer base that just got canceled because of the price increase. You literally live in an area. I have a few customers a month cancel us when we show up with non commercial mowers. I've really explained that they are two blade commercial mowers and people tell me you still aren't what we expected and specifically mentioned the mowers we use. So next year between the lawns just taking too much too long and this mindset in our area we are going to have to get at least a medium sized mower so that should help with the rate. It's just too late in the season for me to invest in such an expensive mower at this stage. Yeah, like I would just, just book a coaching call. This is not the mindset you want to be using again. This is probably a few customers and so you just want to be careful making broad assumptions. I'm not saying that you should not get a larger model. If you get like a 30 or 32 or 36, it's definitely gonna make you more efficient. You're definitely more money. So I would not change your pricing though. Really? If you're closing 70%, it just doesn't like.

It'S not pricing. Pricing is not the issue at that point. So potentially though, people want to see you with bigger mowers, great, go ahead and make that change. It'll make you more efficient. You will make more profit.

Kevin from Bloomington Any online SBA lens, not any that I like, can stand behind or like that I've used to be perfectly honest. Nick Napin for the client testimony videos, is there any way we can access them and export the videos? I'm running a giveaway for snow removal clients where clients can can win free snow removal if they send a video and would like to use this video for ads, etc. There is a way I would want you I just ask that you don't ask me every day for them. But if you send email to franchises, guest laundry service.com like once a month at the end of the period I can send them all to you, drop them to Google Drive, download them, put in the file for you, etc. But please just don't do it too consistently else or I will lock that option. So yes, I can give you your customers. I would need to know their names and I would need to know you know what time frame they made the video and I can I can find them for you.

How do you feel your comments that this year and next year will be higher years in business? I don't have enough years in business to have useful data on how this year compares to prior years for lead flow, close rate, attrition rate, et cetera. This past spring was probably the.

Pretty damp compared to like a dampened spring rush. I would say whether or not that is because of weather, whether that is because of the economy or whatever, it doesn't really matter. I saw more of that though in 2022, honestly because the war in Ukraine started and gas prices spiked. So.

It is. Every market is so different. Every single location like you talk to someone looking they doubled or tripled in the past year. Like it's not been an issue. Other locations that are more established, especially that haven't marketed, we have seen a decline in.

In new estimates. Right. But they're not marketing right. So they're not trying to expand and grow anyways. So I haven't seen like anything like 50% reduction but definitely like at locations like Bellingham and OK that are in profit mode, we have seen a reduction in net.

Year over year. If they weren't marketing last year and they weren't marketing this year, we, we have seen a bit of a decline. But again there's just so many things that go into like if you have a really, really dry spring or summer like that could change the math there too. So at the end of the day the grass keeps growing. We still got to keep doing work. So like there's it's never going to drop by like 80 all of a sudden. Even if you had an economic crisis like completely, it just wouldn't like that's why during COVID even during like the pinnacle of March 2020, we still were getting lots of leads like the grass grows, people need a cut.

They might cancel projects, they might, you know, put some things off. But like for the vast majority part, the number of leads doesn't dramatically decrease or increase when you're going after a higher demographic target customer that has more expendable revenue or money. Great excites Ozark Mike When I started using Google services I linked my customer satisfaction email to the local services reviews instead of the main Google Business page. My question is does this matter where the reviews go? As far as how my website ranks, if I move back to the main Google Business page or keep it tied to local services, I would recommend tying it to main Google Business page because this is based on ranking Local services is based upon you paying for the ad that there's going to be more SEO.

Long tail benefits of driving people to this page versus your local services page which as soon as you stop paying them it will no longer show up in the top page. Now getting the review is the most important part. So personally I would just send them to this. It's the easiest one in terms of a link. It's a very small link that they make it very simple for. Although this one they allow you to customize your URL so. But I would just get in the habit of driving your Google Business page. The way that they're changing local services and have over the past few years. I just don't know. I would just have more confidence that your review is going to stick longer on your Google Business listing. Connor from Evansville I have notes to talk to my coach about this. However, I'm thinking of raising our base pay. I hear of other lawn care companies paying 16 to $20, but no P4P. Our average has been around $25 this year. But having a hard time getting some candidates. So I'm thinking about raising from 16 to 18 an hour with an 80 as our hourly. Does raising that base solve any issues like that or is there any issues that I'm not foreseeing is a rough idea of just of thoughts. Just wanted some coach. Yeah. So I would give you the green light on this. The question is, is it 25% blended average? Right. During the spring rush, you're probably gonna have a hard time when now your guys are only making 19 or 20, and the difference between 18 and 19 is not enough for them to work very hard. They're only making 50 to $100 on P4P in the spring rush. They're probably going to slack off, right? So raising base, the delta between these two gets. Gets smaller, right? The delta between the business, the base pay and what they're actually making. And the more of their paycheck that's coming from P4P the better because they're more incentivized by it. So what I would recommend is go ahead and do the 18, 16, 18, but maybe before next spring rush, raise your rates just marginally across the board and then that way you going into next spring and they'd be able to make the same amount in big difference. It basically gives them all a raise on their P for P side of things, Right. So I'd go ahead and do that now so you can get a better applicant pool, knowing that it's really easy for them to make an extra even $7 an hour going from 18 to 25.

And then just try your best to raise your rates across the board. You need to do like a $5 per cup increase. This would probably raise like, let's call it 85 or 90. Now all of a sudden you're able to accommodate that, and there's still enough meat on the bone for P incentive.

Caleb Storts Knoxville, Tennessee. Hey, Mike, I have two employees, best friends hired and work together that has been with us for a year now. They are very capable of high quality work, but over the year they have been several. There have been several irresponsible actions taken that brought them to the brink of unemployment. Jason and I have thrown around the idea of opening a STAT location in East Knoxville to cut down on drive time, which leaves me in the dilemma of who to hand that responsibility to. I have very few complaints overall about either employee, and I want to see them do great Sometimes I feel if they are at an extra responsibility throwing them, they would step up their game and succeed in the long term. As a side note, I'm aware that this adjustment would come with much coaching and assistance in the beginning, regardless of the employees picked. Just wanted to get your $0.02 on giving slightly subpart employees greater responsibility in an effort to boost their drive at Augusta. Hope this makes sense and is easy to follow. If more information would make this question easier to navigate, please let me know. So using a very broad brush and not knowing these people and having no context as to their character or their work ethic, so big, big asterisks next to all of this, I would say that giving someone giving, as you call it, subpar employees greater responsibility in the short term will boost their drive. In the long term they are subpar employees and they will probably do a subpar job. If they do a subpar job at what they're currently doing. Giving them more responsibility will not make them better. It'll only magnify the consequences of their subpar behavior. So. So instead of them messing up the mowing route, they will mess up your entire business if you make them gm. So.

What I'm looking for in someone that is like what you're doing is giving them more responsibility, trying to challenge them. I'm looking for someone that takes what they're currently doing absolutely dominating it. They're working outside of hours, they're working on weekends to improve themselves. They're listening to books, they're doing everything in their power to become best, but when they come to work, they're still, they're still dominating their current position because if they do that, then when I give them another position, they'll dominate that and they'll do whatever it takes to be really good at it. So giving someone who's currently slightly subpar as what you said in your question, more responsibility is a recipe for disaster. And in the short term it will give them more effort and drive, but in the long term, you're dealing with someone who's going to have subpar results.

Jason from Knoxville we are really wanting and needing a shop. We currently running two storage units and three parking spaces for a little over a thousand a month. Do you know if we could buy a residential piece of land not in a subdivision and build a bar, no medium that would have a nice pizza shop, garage, office and a living quarters without it being a problem. Just wondering if you have any experience with anyone doing this things you're going to have to really look into your Zoning, Right. So you're going to have to make sure it's light industrial or that it is zoned for what's called cottage businesses where you have the someone living there and a shop space. Typically that's easier to get if you are living on the property. So for example, if Caleb was to live there and then have the shop space, that's going to be a lot easier than you renting that out to somebody and then having the shop space. Likely they will want commercial zoning there. So this is all a zoning thing. It is absolutely possible. It's a great play. But you're going to have to watch your zoning. That'd be the number one thing I'd be doing is going to your city or your county and be like, hey, I want to see the map of your zoning. You just put zoning map and then your city or your zip code and have all the zonings, what they mean, what you can do in each of those plots of land and then look at the MLS based upon that and you can just literally call the city like, hey, this specific type of land, this zoning. Could I do X and tell them what you're thinking? And they'll tell you yes or no, but highly recommend. Before you buy any land, you ask the zoning department.

Max Harwood from Burnby.

Whoa. Question about monthly versus daily billing. I've been thinking about monthly billing lately and wondering why lawn care companies still offer it. Here's a theory I have and I was interested to hear your thoughts. Launder companies originally offered monthly billing because they were predominantly paid by checks. They didn't want technicians to collect payment by waiting to charge monthly. It was more convenient for the customer because the customer only had to write and mail one check per month. It was also because more secure. It was also more secure because the technicians weren't collecting payment after each visit. All transactions were done between the office and the client via check once per month. On top of this, it was more convenient for the long hair company because bookkeeping was a manual process at the time. It was easier to track one larger payment, several smaller payments each month. Do you think that this is accurate at least for larger lawn companies? Since then, technology has advanced quite a lot and I wonder if companies still continue to charge monthly simply due to habit. It's now easy to charge credit cards immediately after service, which increases cash flow. Or you could avoid credit cards and just use ACH in the States or PAD in Canada. Why wait 30 days to collect payment for work completed at the beginning of the month at our location? We all also set up things so clients only receive an invoice if they request it, which prevents them from being bombarded with invoices throughout the month for smaller, smaller charges. Do you think there's still an advantage to charging monthly for service or do you think it's just a habit for some companies with no longer. No, great points.

I just don't want them seeing four charges or five charges a month on their credit card statement.

Honestly, like if I see things more recurring on my payment, I am far more likely to cancel them.

And so even if they don't request their invoices, which is a great. This is a great thought, that is okay. Because the number one reason I don't like to charge daily or weekly is because payment receipts, invoices, etc go into them. That being said, if you're using clear it, for example, make sure you have to check that because it'll automatically send them a receipt. It can do that to make sure that's off. Because I've seen some people doing this and they're sending a receipt and a paid invoice, basically two emails every single week. Someone can get 10 emails from you just basically saying you charge their card. So I'm concerned about that. But if you're able to take off the receipt, make it, you know, weekly where they only are requesting if they request the invoices. That's fine. That's great.

I am personally not in a position where the increase in cash flow is going to materially affect me. I would rather retain more of my customers during our slow season when we make all of our profit on mowing. So all of our profit and mowing is made in July, August and September, October. I want to keep them as long as possible and I am willing to give up a little bit of cash flow in order to be able to keep an extra 10 or 15% of them that would otherwise cancel if they saw charges on their car all the time and they reminded that every single week. Not for everyone. Not saying that's the right way, I'm just not. I'm saying that's what we've done because I'm not as cash strapped back in the day, if I was restarting person zero, would I be doing this? Possibly from a cash flow perspective, it's great. But for us, all of our profit like a lawn right now, if I can cut it, I'm probably making man 50, 60 net profit on it and I'm probably making 5 to 10% max during spring. So everything I can possibly do to get one mowing in the summer versus 10 in the spring. I want to do so. I have to guard attrition like a beast in the summer. That's why we've always stuck to monthly. I do not want people canceling. I've gotta guard my attrition. And me hitting their, their credit card that many times leads to issues. I am willing to take a little bit more risk in terms of having slightly higher collections, like you know, a quarter percent instead of half a percent a year. I am willing to forego better cash flow for that one purpose. Not saying it's right for everyone. In markets where you have much more stability of your seasons, probably a great move. So that's just what we've done. Not saying it's right, not saying this is wrong. That's just what we've done. And I would say that you are right in that a lot of businesses just out of habit from checks did continue over into that. And I do like, I prefer pre billing over weekly billing. And that is you, you pay for the services that are coming the month. The only problem I've seen with that is when there is 5 weekly mowings or 3 bi weekly mowings and you charge them at the beginning of the month and they freak out every time because they don't, it doesn't like make sense. So I've seen really work is pre billing. If you have level billing. So it's like, hey, we're going to average out 30 mo's in the year. We're going to send you level billing every single month. We're going to do it pre. You're gonna be paying for January, January 1st, you'll be paying for February. February 1st. I like that a lot. But again, you're adding layers now of complexity and friction. And now you gotta sell them on the idea of level billing. So you become a bank, right? That's what's happening. You're financing someone's contract.

So you take the risk of them canceling at wrong times. I'll have a signature came when they add more friction. Now I have a contract. Well, now I need more friction. You have to really take someone to, to court over 150, 200, right? So you start adding friction, not saying it's wrong. I think it's a great move from a cash flow perspective. From a profitability standpoint, if you get everyone a level billing 12 months out of the year and they're pre billing excellent, you're just going to have more friction and growth. So I would move that direction. If that's in your head, move that direction when you're trying to optimize your profitability. Right. But just keep in mind that's not necessarily moving your profit loss statement. It's simply helping your cash flow. I don't want to sacrifice personally my profit instead of my cash flow. I'm very confident in like me collecting on the revenue though. Right. So I hope that made sense. I'm not opposed to any of those ideas. I've just seen that growth gets suffocated if you start requiring things like contracts, signatures, level billing.

Pre billing. It's more things you have to explain to the customer. And therefore you can't just be sold and like on the schedule. Most of us understand $40 per cut, we end at the end of the month. It's so easy for them to understand now. I do believe that concept will change. Just like five, 10 years ago, doing estimates over the phone was like a new thing. And now it's like pretty normal. That will change. And I do believe what I would like to see is down the road is like level billing is super normalized. And then you just do it for nine months of the year. Right. Or whatever your period of time is. So like, even in Copilot, we'll have better control of making that simpler process because we have off seasons. So all of that to say it is definitely something I've always thought about. And for now, when you're growing a location, I see that it just adds friction and I'm willing to forego a little bit of my cash flow in order for just faster growth. And that will change as time goes on. You switch from growth into profitability. You could switch or make those adjustments.

All right, everyone, have a fantastic Thursday. We'll see you tomorrow. Take care.