Mike Minutes Mastermind 08/17/2023

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Hoping if not today, tomorrow and if not tomorrow, hopefully Monday. I will have the show you guys a little glimpse of what we're working on with the website design look super cool and more importantly, I'm looking at some of the features and stuff that we're building on the back end that are even cooler.

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Quick reminder actually.

There'S a conference tab on the dashboard. I've had several people in the past 24 hours ask me for equip expo codes for the 50 off as well as where they can book their hotel. There's a conference tab on the dashboard. While you're there, check out July's Max metrics. Lee put those up a couple days ago.

All right, let's rock and roll. Devin Sheridan, Red Deer hey my kinds have a really good right now good good guy right now that I don't want to let go. I want to make him my GM. When he turns 18 he's a beast. Shows up on time, has a truck and skid steer. He's a farm kid. How would the comp work? If I'm the owner of this location but want to go big, I need his help but he wants to leave to farm so I need to get him on salary asap. He's one out of a hundred.

First off.

I'm synthesizing who's writing this to for give me a second.

So I would not rush this. I you should never rush moving into a gm. Every single time I've ever tried doing that, I've gotten hurt including the time I went to south park and I was forced to rush it to try to get it inside the month. It just does not work well. So I would never rush putting someone into the gm. I would potentially in like one on ones tell them hey, like this is what I'm thinking for the future and this is what the opportunities will become and I think you're the perfect person for it. But I am not going to rush that position and definitely not just because I think I'm going to lose them. Because you're going to make decisions and you're going to spend money and you're going to do all you're building your business around this person being here and if they leave now, what so I'd always build your business in the best interest of the company instead of building around one individual person staying with you because life happens, you know, if he, you know, finds a girlfriend and wants to move. If he wants to buy a house and, you know, move to some other state like that stuff happens. So don't build your business around, you know, one person staying because it's unlikely that's going to happen. Honestly, Kevin from Bloomingdale, do you think it's always a mistake to approach a competitor about selling to you? Is there ever a time when you can approach them? The one I'm thinking about has mentioned twice me over the years about getting out of the business soon. I think this winter I might actually be in a position to make an offer. How should I approach it? I would wait for them to bring it up to you again. If you address them first, you're going to be paying a premium. If they say, man, I'm going to get out of this business or I'm thinking about getting out of business or something like that, say, hey, whenever you're feeling, you know, shoot me a number. We'll see what I can do to try to make it easy for you. But ideally they bring it up and then you say something. If you bring it up to them, you are going to get a very, very high price and they have all the leverage because you asked for the deal. So they always really, they can be offended easier, right? If they say, hey, I'm looking to get out of the business, you know, what do you think you can do? Well, now you have a position to like, you know, go much lower on the price. If you go to them and be like, hey man, thinking about, you know, potentially buying your business, what do you think you got for me, like, the price is gonna be way higher. And if they say, if you say a low price now they, they have the right to be offended because you asked for the deal. So.

Kyle Tarvin, can you explain asset and employee capacity again, in regards to how much employee, how much revenue they can produce? I think I've heard you talk about one employee can produce 10 to 15k in remoting revenue. If there are 2, 2 people in a truck, they could produce 20 to 30k per month. Is this correct? Just looking to start planning on what we need to have in regard to capacities, hit our revenue targets. So this is all on the, the scorecard that you do for your monthly coaching call. Right. It's going to walk you through because it's going to show like, what are your hourly rate? How many hours per week do you expect an employee to complete it? Okay, there's your labor revenue per employee. How many trucks do you Have. Okay, multiply that by two. In each truck, there's your labor revenue capacity for employees. So all this is in your coaching card. You should be this, this number. For anyone listening to this, you should know this like the back of your hand. You should know exactly what your revenue capacities are for laborers, how many people you have, how many trucks you have. And then your personal capacity is the thing that you have to determine. And that is 100%, you know, coming down to you realizing that that is in flux at times and that.

That changes in time. And so. But you have to know libra capacity and asset capacity like the back of your hand. And that's why it's on every single coaching card now. So it's, it's just, it's just a math game. It. There's not a matter of like 10 to 15k in revenue per month. It's like literally what do you charge per hour of labor? How many budget hours do you complete every single week per employee? How many employees do you have? How many trucks do you have? Like it. It'll tell you the math and I'll give you the labor revenue. What can be a little bit more variable is your product cost and your cost of goods sold in terms of materials. So if you're doing more project based, your revenue per employee is going to go higher. But I'm not really looking at that because that's going to be completely dependent on my material markup. I am looking at the labor because that's the thing that's actually tied back to how many people are in a truck. It doesn't have to do with how much revenue I'm making. It has to do with how many employees are in the truck and how many hours on the schedule that determines how many employees I need. So just make sure you use that. Kevin from Bloomingdale, can you talk a little bit about the 300-400k wilderness? Is it dangerous? If you're part of gusta having command center, could you give some pros and cons of these two roadmaps? Let me just really quickly say by having commands that you really, really compress this a lot, right? So I would say, like I've always said, 200,000 to 500,000 is kind of the wilderness. You can bring that number down substantially, I'd say to like 350 simply by being having command center. Because typically when you get to 350, 400, you would need an office person and you don't need to with command center. And you can get away with paying 1,000 or $1,500 a month to Command center during the peak season, and then it goes down during the winter. So being part of Augusta and having Command center really brings that number down of finding because I'm seeing a lot of very profitable locations at 350 and 400. And even three years ago, when Command center wasn't able to do full service, that wasn't possible because, like, you started needing payroll and you needed scheduling and you need more stuff done, you couldn't get past 3, 4, 300, 350 without needing that. But now, like, I'm seeing some pretty good locations at 350. Like, my locations are, you know, 350, 400. You know, there's multiple people. I'm just running through my brain, all right, that 350 to 400 level. I'm very happily making lots of profit. And it's mostly because you don't have to have an office person. You can just have Command center do it. All right, so could you give me some pros and cons of these two roadmaps? Okay, 2023, you're going to do 275 in revenue. Look like that's in both scenarios, next year, it's either 350 or you continue to stack cash. Okay, 2025 is either 500k or 500k. Okay, I see you're saying this is a great point. So either he's. What he's doing is he's. They're going to grow by 75k this year and 150k the next year, or he's going to not grow at all and then make a big jump. Here's the thing. This jump, although it seems like a big deal, this is $220,000, $225,000 worth of revenue annually. You divide that out, it's about 22,000amonth that you would need increase. That's about two employees. So really, this is not a matter of can you make this jump or. Sorry, this is not really a matter of which way is better. It's really a matter of how many leads do you have coming in? Because if you're drowning in leads, you can make this jump in literally a matter of two months. Right? So really, the biggest question is, and I'll come back to your question in a second, but the bigger question as to whether which route you go is honestly, do you have leads piling up? If you have leads piling up, you have both. Both of These become options. And these are stacking cash or growing Just aggressively over the next couple years.

But if you don't have enough leads, just keep in mind you might not have the option of growing at this size, right. Because you just simply do not have enough leads coming in. But if you were like, if you were throttling leads, turning off leads during spring rush, you are six, seven weeks booked out and losing work because of you stop taking projects, all of the above, then both of these options become extremely viable and now you have a decision. So I'm going to assume that it's the latter and you are actually making a decision between these two. I already have 3 trucks, so I would be able to do 350k next year.

Asset wise. But just getting another mower and ramp rack by, oh, by just getting a good. Great gotcha. So.

The only other thing I don't know is how much debt you're, you have and what percentage you're paying on that in terms of interest. Right. So this would come down, this decision is really going to come down to your, you know, your personal capacity and stress level in terms of financially and emotionally. Because if having the debt is causing a lot of headache, then I would probably choose the second option is like slow down growth, raise your rates dramatically. And honestly you're probably, even if you raise rates, you're probably going to go to 325 honestly. 320. Even if you try to put the brakes on your growth, just knowing you too, Kevin, like you've grown quickly. You know, if you just, if you just raised rates, didn't get, get any more customers just by raising the rates by you know, 15 to 20%, you're going to get to 3, 23, 10, 320 just in and of itself. So I don't think this needs to be a linear thought process. I think you can have a merging of these two and that is next year raise your prices dramatically.

Just by raising your prices, you're probably gonna get to 320 honestly. And now though, you're gonna have way more profit by adding that extra 40, $50,000 in revenue. That's like straight profit that should be able to help pay off your debt. And then you have a lot of confidence going this, I like this second model. Assuming that this debt is causing quite a bit of stress both financially and emotionally because of the interest rate, because it's just like psychologically hard sometimes I have debt sitting on your, in the back of your head.

So I think that I would go this, the second direction in your, in your planning. But I do Believe you're going to grow more than you think, even if you raise prices. And it's not going to be a matter of like staying here because you do want to get to this 350 level because you already have the assets. But I think without having to get the mower and ramp rack, you just raise prices, keep about the same amount of customers, do 3, 320 in revenue, but be much, much more profitable, pay off the debt, then go into 2025 with a lot of confidence and more than likely a lot of leads that are starting to stack up because you're now in your second, third year and you're, you're really getting that momentum. So I think that's a good move.

Obviously, talk to your coach, though, and make sure that they're in alignment with that.

For those who want to do the jump to double. Double. Let's double. For those who want to. To do the jump to double, you just have to focus on the marketing and you have to have capacity to get the people to get people asap for initial mowings and have a system to get things rolling. Onboarding is so important. One second, let me just make sure who I'm talking to.

Okay. Jump to double. For those who want to jump to do the jump to double, you have to focus. Oh, I mean, double your business. Got it. You have to focus on marketing and you have to have capacity to get people ASAP for initial modes and have a system to get things rolling. Onboarding is important. Great. Also, I know we have, have. I know we talk about being a capacity and three weeks full, that we need to hire someone to continue to raise capacity and grow, but what if we just feel better being booked four to six weeks out? Is that complacency or smart business that is, you know, and what your personal capacity is. Because if one person's optimizing for growth, I would say, hey, three weeks, you, you go higher. If someone is optimizing for peace of mind and not having to worry about, you know, putting more jobs in the schedule and being able to take a couple week vacation and not worrying about getting more jobs, you should probably be four to six weeks booked out, right? So it just completely depends. And it depends if you're in profit mode versus growth mode. If you're in profit mode and you're booked out for six, seven, eight weeks, but you don't want to buy more trucks and equipment and you like the size of business you're at, you just keep raising prices. That's what it should be telling you. And furthermore, for a lot of people, what they should be doing actually is raising prices in the spring and then coming back down like regular during the other seven, eight months of the year. And you can usually do that the easiest. Or e fees, dump fees and material markup for projects.

And I would highly recommend that if you're booking yourself out like eight weeks, seven, eight weeks during the spring, but then it's like you're barely getting any customers during the summer and it's like hard to keep up with getting jobs. Like during that, that rush during the spring, you should be cashing in and you should be raising all your prices because typically it's your least, least efficiency with your crew. You're having to hire more people. So it's inefficient and there's a lot of cost involved there. You make up for that by the fact that if you have that massive spike that you should be raising your prices now. You can't raise it when you're seven, eight weeks booked out. You should be raising it based upon the last two or three years you've been in business. You know what's to come and you know what that demand curve looks like. And so you're raising prices a month before the wave comes, right? That's the problem most people have is like, they start raising like, oh man, I'm going to raise my prices in terms of like, raise all my rates and stuff when I'm six, seven, eight weeks booked out. Well, if you do the business three, four or five years and every single year you're doing the exact same thing. You should be raising the prices prior to when that is being done because otherwise you're going to get six or seven weeks into your booking. And now you're only booked out two or three weeks because you've raised prices. And now the past six weeks of doing work is still at the lower price, you should anticipate the demand curve so that when you actually do all those six weeks, you are at the higher rates because now you know what is to come. And so especially once you've been in business for 2, 3, 4 years and you know what that spring rush looks like, you should be planning for that instead of raising rates when you are seven, eight weeks booked out. If you're trying to optimize for profitability, you should be anticipating that you're going to get that much booked out and raising rates three to four weeks prior to being that booked out. So maybe you hit two weeks booked out and you start raising prices like well, no, it's only two weeks. Well, the bottom line is, by the time you get two weeks, you're now going to be four or five weeks booked out, because you know now what that demand curve looks like. And that's how you optimize for profitability. And that's why typically, it'll take you three years or so to figure out where are those curves where you can optimize for profitability and, um, and even out that demand curve by raising prices before the curve. Right? So too many people wait to, like, the top, the peak of demand and like, oh, I should raise prices when in, like, just a few weeks, the demand's gonna start coming down and they're raising prices, and now all of a sudden, they find themselves two or three months later with no work. And it's because it's like, it's a lagging indicator. So you've got to figure out over the course of your first few years in business, like, when is it that I always get tons of business. I'm putting on the schedule, I'm getting booked way out, and then I'm raising prices. Okay, let's re rewind three to four weeks and start raising prices then. Because now when I do do book out, all that book out is at a higher rate. So.

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