Mike Minutes Mastermind 08/08/2023

Super. Well, let's go and get started.

If you didn't get the email just in case. Landscape Business Course and MBA for Entrepreneurs. I did a video last night that might be of interest to you if you kind of like just listening to stuff.

Basically there's an offer on my apartment complex that I kind of broke down the math on it and how it kind of works and then kind of why I'm not going to take it as is. At least I'm still negotiating with them. So feel free to watch that. If you have questions, I'm happy to answer them here on the Mastermind. And as there's updates, I will let you know kind of what happens in terms of the negotiation. All right, let me just drop this into See Facebook.

A quick correction. The other day I made a mistake on something if I can.

Where did. Weird. Let me refresh this. Sorry, just trying to find this on Facebook. There you go. I made a mistake on. I was talking about.

The. There was a question yesterday, I forget from who, sorry. That asked about the solo operator model and it once you pay your invoice for the growth model, do you what's your fee schedule like? And I, I apologize because I was reading it in my brain as they were asking if they get the free period that we give to all growth models when they start. And the answer to that is no. But the monthly fee does go to the 600 for the year like every other growth model. So I misread that and misquote, misaid that. So if you are a solo operator and you switch to growth model and you pay the initial fee that first year after payment is $600 per month, it is not $1,200. So I apologize. I made the mistake there. What I was thinking was the fact that you don't get the free months that a new growth model would get if they joined right from day one. So my bad. I do apologize. But yeah, if you, if you would like to check out the that lecture on MBA for entrepreneurs or landscape business course, I think pretty much everyone has access to the courses. It's all free. You don't have to pay for it. Don't. Please do not pay for it. If your employees want to join, that's totally fine. What I would just request real quick is if you are getting a bunch of your employees at the same time to sign up for one of the courses, I'm fine with it. Just in their like last name. If you can just put like in parentheses like ALS ALC for Augusta Lawn Care. So That I know that you're sharing it with your employees, because we've had a couple times where people will just take the code and then they'll share it with people. And if it gets on, like, a Facebook group, I've had, you know, 20, 30 people join in an hour. So just. I just ask that if you're sharing the Augusta code to get your employees for free, just put it in your parentheses. I typically know if it's, like, a spouse, I can tell it's by, like, last name or if it is, you know, one of your managers. I typically know them by name, so it's not a big deal. But sometimes we just get chunks of them at the same time, and then I kind of know what's going on. So if you could do that, that'd be. I much appreciate it. I just got to kind of make sure whoever's in there is at least vetted. We've had to block some people out of there, so. But, yeah, watch that if you'd like. It's about 37 minutes long. Walking through a very, very complex real estate offer that I ended up turning down, and I'm still in negotiation with. So, again, if you have any questions, let me know, and I can answer those.

All right, let's jump in the questions. Let's see how many we got today day.

We have four share present.

This is from Kevin from Bloomingdale. Yesterday, I asked a question about the growth. Oh, this is exactly what we just talked about. Let's go. Okay.

Okay. So, first off, Kevin, I apologize. I. You were the one who asked the question yesterday. I misquoted you. So you are 100% right. Once you switch from solo to growth, that. That first year is $600. So if you're currently paying 1,200, it would drop down to 600 for that first year. Like any other growth model, you just don't get the free months that we typically give growth model when they're starting up. So, again, I apologize. That was a misquote on my part.

Kyle Tarvin from Moore, Oklahoma. Is there a general rule of thumb on how much your insurance and franchise fee should be? Right now? Our insurance is $1,400 per month, and it's 5% of our income. Our franchise fees are 3,700 per month, and that's 13.5% of our income. Yeah. So I would personally break out your franchise fee from your command center fee, because what you want to do is have your command center fees covered by your E fees. That's the Goal.

Your insurance is pretty high, I don't know, 5%. So 5. That'd be 20. Let me just do the math real quick. 1400 divided by 0.05. So you're doing 28,000amonth, approximately paying $1400 per month in insurance. It's a little bit steep. Let's say you have two. Three. So you have three trucks, max. Let's say two trucks. I don't know how many trucks you have. Sorry. Let's just say two. You're. You're paying quite a bit in insurance. Like, we don't. Every state is so different, so it's hard to, like, give you numbers. But like, the Bellingham shop pays, I think around 2 to 3 grand. And they like 10 something odd trucks or 15 odd trucks or whatever. So I would just take a look at your insurance. I think this could definitely at. At 30 grand a month in revenue, you shouldn't be paying more than 100, $250 in general liability insurance. Unless you're adding, like, tree services.

Snow removal, etc. And then your trucks, if you have two or three trucks, like, let's assume there's a two, three. Let's see. $300 a month. So you could probably shave a little off there. I would shop around a little bit. In terms of this one, you're probably paying $1,200 per month for your franchise fee. So that means you're paying $2,500 for your command center costs. That I would say is basically about 10% of revenue. I would say it's about, on average.

You'Re probably full service. You're probably getting a lot more done for you. And then the second thing I would say is make sure your E fee. So, like, out of that 2500, let's just say you're charging $50 per EFEE. It means you need to sell 50 jobs a month with the EFI attached or 50 line items a month. Right. So, you know, the Bellingham shop, like I said, you know, we usually paying between 5 and $8,000 a month for command center. They're doing more for us. But then some of it, they handle like. But they do all our email payroll, P4P, all the rest of it. So basically full service.

But that took a long time to kind of refine down and like, really make sure, like, we were doing everything inside the systems, because that was a lot more previously. And then it was just a matter of like, okay, like, like, let's shave this down. Let's make sure, like, we get things. Stop doing these certain types of services. Stop doing manual adjustments on P4P this certain way. Like, just really, really simplification of things really, really helps to get that percentage down.

But you know, I would say on average, if you're doing, you know, full service, 8, 10% at Command center isn't bad. You just want to two things always be looking for where you can just refine down and get things down to the system. So, for example, if you're getting 50, 60, 70 emails a day that are spam, like, spend an hour and go through your inbox and unsubscribe yourself from like hundreds of emails. Because Command center is going to like open every single one. Well, that's a few minutes every single day that they have to go through 60 emails and like, you know, archive them all. So things like that, you can definitely refine it down. And then the next thing is you want to look at your Command center cost as how once you. I've refined it as much as possible, and when you look at your bill and say, okay, which of these tasks, if I'm not super busy, can I take off that are like the highest cost to me that I can do, no problem. Like, it doesn't. It's not like P4P where I have to do it every day. It's not like my email I have to stay on top of. Like, what can you take off of them is if you're trying to cut there. And then looking at E fees as a way to cover all of that is simply a math game. So you're like, Well, I had 70 accepted estimates. 40 of them were projects. Okay, let's assume there's just one estimate fee, one line item with an estimate fee on it per. So now it's like, okay, 2500, divide by 40. Well, now your estimate fee needs to be like $62, right, to cover that cost. So I would adjust your essentially to cover the cost of Command center, and I would adjust that E accordingly.

And it will that way too. It'll scale, right? So like during spring rush, we'll have more estimates and more EFI collected, but you'll also have a bigger Command center cost because there's more leads coming in and calls and all the rest of it. Landon Smith Tallahassee, Florida. I wanted to get a landscape truck to grow to 40k per month by October. I put some details below for advice on a loan. Can. Can do 35 to start. Can do 25 to 30K. Three guys in one truck, 22.5 last month with guys out for a week and another out for a few days. Great job man. Good job. Two, I currently have. So you're doing one truck, 25k per month essentially. Currently have 15 grand in the bank. About 10k after payroll this week I have 35 budget hours of mowing, watching.

Watching week. Okay. Four, assuming I can get a truck, open trailer, paint, decals and any extra hand tools for $18,000 combined. Okay. I currently have three guys in one truck, but I'm hiring because two guys are leaving soon. I want to do the training.

I want to do the train. I want to do the training with myself, not taking salary in a separate truck from the already productive guys. If I can do this, I can make up for the non trained employees revenue, thus not taking the financial hit. Question. How much would you recommend getting a loan for versus paying out of pocket without being super financially stressed? Okay, so how much would be safe too? Okay.

I would personally say that if you can grow, if you're confident you can go from 25 to 40 because you have lots of leads. The one thing I did not get here is like how far booked out are you and are leads coming in and are you like stopping leads from coming in because you can't get to the work? If that's the case, I'd be even more inclined to say go for it because I know you'll get from 25 to 40 simply by getting this truck. Also by getting this truck, you're going to unlock a lot of inefficiencies which currently is having three people in one truck, especially when you're doing, you know, 35 hours worth of mowing.

So just getting the second truck, like you said, having two guys in the other truck and then one person with you, for example.

Would likely mean you don't need to hire another person to get the increase in revenue because now you have two trucks, two crews. You just unlock a huge amount of efficiencies by having that instead of having to go out and hire a fourth person. So I do agree with you in terms of this premise and I think it would make up for a loan amount and just, just your efficiencies gained.

Just make sure you include the fact that you're going to have insurance on this truck and it's going to be a higher amount because you have lower deductibles, et cetera, based upon having a loan on it. So keep that in mind in terms of what your fixed costs are going to go up by.

I personally would not be using Any of your cash if possible. Because it is low. That is low. If you're trying to grow from 25 to 40k, that's a kind of low. That however, the next five months for you are going to be where you see all your profits. And if during that time you're confident based upon lead flow backlog and how much work you're turning away or not able to get to right now, that you can go from 25 to 40 is a very good chance that that extra 15,000 revenue that you unlock is 50% profitable. And so you know, if you're 50% profitable on 15K extra revenue, that's 7,5000. Well now you got back out loan, extra cost of that storage of that vehicle, insurance, fuel, et cetera. All of a sudden though, you could be netting on extra four to five grand a month in profit because of you adding the new truck. Again, all of this hinges on what your confidence level of going from 25 to 40k by unlocking the efficiencies gained of having the two trucks. But also keep in mind, you're saving quite a bit of money because you're going to essentially increase your revenue without having to add another person, right? So you could be more than 50% profitable on that revenue because you're going from three guys in a truck to having two and two.

Without having to change your payroll at all. They're going to make more money on P4P and you're gonna probably get an additional 20 to 30% more revenue simply by having the second truck and then you know, split out and go from three guys in a truck to two. Cause that's a pretty big inefficiency that you, you'll find especially with mowing.

So yeah, to answer your question, all that really hinges on how far you are booked out and how your, your lead flow. And so if your lead flow is good, you're booked out, I would say three to four weeks. You lot, lots of leads coming in, you feel like you're overwhelmed cause you can't even get to them. Cause you got, you can't even go do the estimates because guys are all working in three of you in one truck. I would give you the green light only because I would then be confident that you can get it to 40k in monthly revenue at least with the two trucks, three employees. That's very doable, especially if you're out in the field. And I think that'd be very profitable. And so the goal should be that you are able to afford the monthly payment, but Then you're probably gonna have a pretty high interest rate. So I would be stacking money aside, trying to eventually pay that loan off. I wouldn't rush it. Like, it's okay if you pay a thousand or $2,000 in interest over the next year. Don't try to rush it and pay it off in the winter because you got a bunch of cash. Because you're gonna get a bunch of cash over the next five months, you're gonna probably have 40 or 50,000 in your bank account. And then you're like, oh, I should go pay off that, you know, 20 grand that I tool. Be careful because you now will be going in next spring rush with a lot more momentum and a lot higher capacity. And if your cash is back down at 15,000 winter, that puts you in a bad spot. So if you're going to take out debt, don't feel like you've got to rush to, like, just come to grips that you're going to spend an extra $2,000 in interest over the next 12 months and then start paying it down like the principal, potentially next summer. Right. That'd be just my recommendation. Slash, warning. Will there be, oh, this. Ken from Fenton, Michigan. Will there be a booth at Equip Expo this year for Augusta? No, there will not be. After the Wednesday session that we have as franchisees, we're going to take the team that is currently going to be helping at conference. We're going to go to Equip Expo for probably a few hours and then everyone flies out besides Liz, myself and Lee until the next day. So.

But yeah, we'll just be at Quitbox for a few hours just to kind of get everyone just. They can walk around, kind of chill out after a few days of craziness, they can make sure that.

They at least see one time. It's one of those things that's kind of fun to see once.

Carrot from Glendale during interview. Is it a red flag if a candidate talks about having lots of experience and knowing how to do pretty much everything? Interviewed a can today with 10 years experience, he didn't seem arrogant, but Chuck mentioned it can be a red flag. It can be like if they're not arrogant, that's one thing, right? If someone's saying they know everything, you know, but if they have 10 years of experience, like, ask yourself, if you did this for 10 years, would you feel like you're pretty confident to everything? Probably. So it just, you know, it really comes down to number one, can they back up what they said? And then secondly, if they're not arrogant. I'd probably give them a shot. But if someone's arrogantly saying that they know everything, you just know you're gonna have problems. How often it's raised prices within a year or so, I truly believe this is the wrong question. Because raising prices should not be based upon whether or not it's okay for your customers. It should be based upon your capacities. Because if you can't grow anymore based upon capacity of employees and trucks, like asset capacity, and you're hitting that all the time, and you're maxed out and you're working crazy hours, I don't care if you raised prices last week. You need to raise them again. So either A, raise your capacities, or B, you've got to raise your prices. That's the only two options. So it's not a matter of when you raised them last. Because if you raised them two months ago and you still now, you lost a few customers and then got a whole bunch more of it, like, they just keep. The leads just keep pouring in. Like, OTP just keeps pouring in and you're not willing to go buy trucks or hire more people or you can't do either of those two things. You absolutely must raise prices again.

Carrot Smith. A lot of it depends on their attitude. Depends on if they are humble about their skills or if they talk about. Yeah, great.

Cool. All right, guys, have a great Tuesday. We'll see you guys tomorrow. Take care.