Mike Minutes Mastermind 09/01/2023

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All right, we'll jump right into questions.

All right, five the day. First one up is Jake Rexburg.

Submit question. Oh sorry. This question stems from commerce cash flow question in.

Yesterday'S Mastermind and John's comment to Connor on the Mastermind. I'm curious if you've done any studies or comparisons on monthly versus weekly billing. I did a little survey of my family and friends and they all said they'd rather pay small weekly payments rather than one larger payment monthly payment. To me it sounds like smaller payments just seem less significant on a bank statement, whereas a larger payment will stand out more. If I'm wrong, it is so if I'm wrong it is so significant that you should sacrifice consistent cash flow to bill monthly. Yeah, so this is like a very popular question and in my opinion the most popular questions are industry are location specific. So what I mean by that is in places like Florida, parts of Texas, California, parts down South South Carolina for example, where there is more consistency to needing services pretty much year round, you're going to have much more ease. And I would say I would highly recommend doing more frequent billing level billing you even contracts. And the reason for that is because you need services year round and there aren't as much drop offs in the middle of the year. That being said, in a market like Washington, for example, the reason we don't do weekly billing and I think most people should do weekly billing if they are cash crunched or just getting started out. The reason that we didn't do it and we've never switched over is because.

There is.

I don't want to look. We just consistently see the drop off during the time of the year when we make our most money, which is July, August and September when it comes to mowing. Like those three months make up almost all of our profit for mowing because our guys go twice as fast and the lawns are never overgrown. Like we don't have any clippings growing cause we have to bag the clippings, right? So if we don't have to bag clippings, that's when we can make money mowing. If I have people canceled during that time, I am probably wiping out the majority of the profits I make on their property for the entire year. And so what we found is all of our cancellations happen three to five days after we send the invoices. Out. If I send those out 12 times, 13 times within that three month period, there's a really high likelihood someone's going to cancel or pause their service versus if I do it three times. Typically we get through with maybe 20, 25% people pausing service. And so.

Because like the lawns literally don't grow, they need edged and we blow stuff off. But if I can keep them, servicing them through that time, that's where all of our profit is made on mowing. So in other markets though, where that's like warm season grasses, for example, continue to grow through very hot seasons, I think weekly billing is great. Daily billing is great too. It's okay if I do your service today, I just bill you, I'm fine with that. And so this, this question though needs to be narrowed down to area the geography as well as where the business owner is at financially. Right? I don't, I'm not in a cash crunch. I don't need to have my cash today. And I'm willing to forego like half a percent of revenue potentially not being collected because I'm not collecting as quickly. And I do that in exchange for my one click estimate emails being clicked. Because if I have to send out multiple invoices, let's say you don't do that, then you're just worrying more about what I just said. And there's like multiple payments in a month coming off their credit card statement and they get reminded four or five times a month and then they're more reminded to pause service when the grass goes dormant. That's one part. The other part is if you're sending them a receipt or a paid invoice receipt, that adds more, a little more admin time. But more importantly, if you're sending those out, it dilutes the click through rate of your one click estimate email. And if you're at the stage where almost all of your marketing, all of your leads come in from one click estimate emails, you guard them with your life. And so those are the two reasons why we don't do it. And I don't think everyone should only do monthly. If you're in a lot of these markets, billing same day or weekly is the better move from a cash flow perspective. But if your cash flow is like for me cash flow is not a problem as long as I collect on that payment and I do a really good job of that. And especially with me knowing that like in the future I'll be able to require a card on file with copilot, I'm not as Concerned about that. I want them to open up those one click estimate emails because I have 12,000 emails at Bellingham that if I if I can keep those customers warm and I will never have to spend money on marketing. I'll just keep combing through and re engaging with customers in that list and that's where I can make be really profitable. So just different.

Everyone's situation there is different. If I was to restart my business, I would probably do weekly billing and then I would get more focused on filling in that lull that I get we get in our market during those months with projects. That's probably what I would do because cash flow was difficult for me for the first few years. But seeing now cash flow isn't as much of a problem as well as I know that when I go into switching to copilot I can require a card and file and make sure it's off authorized before they even start service. Gives me a little more confidence. And then I just, I all want that one click estimate email. It's like gold. Like once your location gets to the point where you're not. You're in profit mode and you're just trying to.

Live off of one click estimate was like you literally guard them with your life. It is your stream of all your leads. So I don't want receipts, I don't want oh your card is expired. Popping into their inbox and them seeing that for me I just want to see them. I want them to see an invoice, paid invoice at the end of the month and in the middle of the month a one click ask them email. That's all.

So again there's different ways of looking at. Everyone needs to.

Just assess for their own location. Talk. Talk about on a coach on a call with coach Mike from Math is Tennessee. I auto charge my credit my customers cards but I feel like it kind of cheats my team members out of the chance of getting tips added on. Not that zebra tip button even works. My question is, do you think there could be anything put in place to still give the customer a chance to give tips to the team members? For example, when they open their paid invoice there could be a pop up that asks if they want to tip their lawn technician. Yes, this is a great point. This is something we have on the roadmap for copilot and that is not just having it when they get in to add a tip and then pay but on their paid invoices to be able to add a tip. We have this as a As a ticket. The reason most CRMs will not do this is because this will create two processed payments, right? It'll have the invoice and then it'll have their tip because it will not be able to put them together.

And so that's why most time you only get it if you have an existing invoice. They have to pay and then they can tack on more tip to that invoice. But we do have this as a, a feature request that we should have done by next spring in copilot and that is on paid invoices receipts, the ability for, when they click, they open it up to be able to leave a tip for the crew. And there's a tip report inside of copilot that you can see the breakdown of that.

Jeff, Sandwich, Massachusetts, please see attachment. How would you approach this? Several different technicians have mowed this property and it's not a specific incident, but sounds like an overall quality issue. Would you issue a yellow slip? Thank you. Let's check it out.

As a cc call. FYI, complaint on from September. That's today, September 1st. Client called asking about his recent invoice, does not like the quality of service and will begin looking elsewhere for services requested. We do not terminate services until he calls back.

Oh, that's weird. Okay, so basically, if I was you, I would call this customer immediately if you want to keep them, obviously, because it sounds like what they're doing is they're like, hey, I'm not happy with my service. I'm going to go look for someone else. And when I find someone else, I'll give you a call back and cancel my services. So if you want to keep this customer, I would definitely call them right away. I think a good, a well placed phone call and them feeling heard and you telling, hey, I can add notes to your visits, like, what, what is it wrong.

That vague of a complaint? I would not issue a yellow slip. I would call the customer and ask for specifics so that you can address it with your team. And I think if you did that immediately, you'd probably save the customer. Again, we're assuming you want to save the customer. If you're like, okay, this person's a pain in the neck, I'd probably just let it go. I would not issue a yellow slip over such vague things. Unfortunately, if it started to become a theme, then you gotta, like, you gotta, you gotta get specifics with yellow slips. Vague yellow slips don't do anything.

Ken from Fenton, Michigan. Then if you leave a yellow slope too vague, it seems like Punishment instead of like trying to help people improve. Constructive criticism.

This is Ken from Michigan. I have at least four people that want to go to sub it any quick expo, but they all say they don't know yet if they have time, so they don't want to commit yet. They all said they'll let me know the first week of October. What is the deadline cutoff point for them letting me know they can go or not. What do I tell them? We will likely allow Augusta people to be able to come pretty close to the public conference. Like, that's fine, I'll leave it open. But in terms of me knowing if they're going to come to the Tuesday night dinner and the.

The Wednesday event first week of October, squeaking it squeaky. Like very squeaky. But for the public event, we will likely let people go right up into the last moment. They just will not get like custom lanyards and like the customization stuff with their names and stuff like that if they don't sign up earlier. So it looks like we're going to be able to have people be able to basically sign up until the last few days till it gets cut off.

But for the, for the Augusta event, there's the conference tab on the dashboard. Please fill that out if you're planning to come. For any person that is planning to come, whether you spouse, two employees, whatever it is, please fill that out. And if you're doing more than two people coming per location, please buy them a ticket@mikeanny.com summit and then still fill out out that part for Augusta in if you want them to come to the dinner or on Tuesday night and the Wednesday event for Augusta, we just need to have a solid head count on that. Otherwise you will not be eating on Tuesday night and you might not have a chair on Wednesday. All right, next question. Ken from Michigan. I submitted mine earlier and I don't think went through it did go through. Yep, we're good.

All right, next question. Kyle Tarpon from Moore, Oklahoma. How would you handle a key employee asking for equity in ALC or they will leave? I'm not going through this now. Just interested in hearing your thoughts. Oh, like you're not going through this. I was like, I don't think that would happen right now. How would you handle a key employee asking for equity in LLC or they leave? I would probably be able to dissuade them because honestly, it's like, look, you want equity, so if I give you 10% and the next time I need $300,000 to do X, Y and Z, you're pitching in 30K. And if you're not comfortable with that, you probably shouldn't take ownership in this business.

Like even the Bellingham shop. I'm probably gonna spend 2 to $300,000 on revamping all the trucks, all the equipment and everything like that this, this year. Because I haven't done that for like the beginning. So you'll see. I don't know if you saw, like on my Instagram, I put like a little video. I'm selling the very first truck P1.

And that's because that truck is now 10 years old. And we need new stuff at Bellingham shop. And so it's been a cash cow, which is great. But I'm going to spend 2 to $300,000. If someone owned 10% of a business and they own equity, they have to contribute that percentage into the business. And so I'd probably be able to talk anyone that wanted equity out of it by saying that. Secondly, I would say.

You just gotta assess whether or not they're worth it. And most of the time, people are not worth giving equity to.

That's why I'm literally buying back equity from my partner. Like, I want all the equity and then I have full control. And then when it becomes really profitable and it's consistently profitable and I don't have to worry about having to have people give money back to the company, then I might give out equity. More likely, though, you want a liquidation event in order to be able to give equity away. So that's like why I've always said, like, I want to take Augusta public eventually is most of that is that I can give equity away. It's easier to do. So I give common shares. It's. It's priced at what the market rate is, so it's not based on what my valuation is of how much they get. But in terms of like a small business that's doing, you know, a million dollars, something like that, and someone wants a piece of the equity, you need very clear about the fact that there's a need for owners investment. They have to contribute that percentage to the business. And for most people, that will scare them away because that is the reality. And if they don't, it should be a loan against the business until you are paid back. And so I almost gave 10 away of Augusta Lawn Care to my first employee to keep him because he was of this mindset that would have costed me a lot of money, a lot of time and headache. And I would. I don't Know if I would have been able to franchise because having that partner with his mindset, I would have never been able to move like I did. So be very, very careful about giving equity. It makes everything complicated. And even things that start off good because it always sounds good, it gets complicated. So if you're going to do it, make sure everything is ironed out ironclad. In terms of how is owner's equity, how is distributions work? Who determines how much work in capital is in the business? What happens if we get a grant from the government? How does that get split? It should always be split based on equity of the business. If we need more money in the business, how is that being distributed or how is that being invested back into the company? If, if there isn't a requirement for investment and someone pays in because someone else can't, how is that handled? Is that loan for the from the company to that owner going to accrue interest? At what rate? What is that determined by? These things all need to be figured out in an invest in a partnership relationship. So.

Like my, my partnership, the only partnership I have is with Patrick from co pilot and I'm already buying him out. It's less than a year. Not buying him out completely, but I'm buying his equity back because I want more control and I don't like having someone else that I have to ask for money from when they have a piece of the business and the business is losing money and I'm trying to grow and invest and like I'm full growth mode. I don't need someone slowing me down. Like, hey, I can't really afford this investment into the company. So.

You, you, someone is requiring that as an employee I would, I'd probably put them, try to get them more focused on profit sharing and things that are more dependable because profit sharing, guess what? If there's no profit, you don't lose money. As an apart, if you get equity and you're a piece owner, if the company's losing money, you're paying. That's. If you own a piece of business that's losing money, you pay. And so even in the public market, when a, a company's losing money, it's like, oh, like I'm a public, I own a public company, it's losing money, I don't have to pay anything. Oh, you are. Because what's happening is the company is selling shares to fund their losses. And by them selling shares, it puts downward pressure on the value of your stock. And that's why all of these tech companies have lost, you know, mass 80, 90% of their value over the past couple years. Good businesses. The reason is they were losing money. And so as they were losing money and gain growing very quickly to everyone during 2020, 2021 was super happy to give them money. Why? Because the interest rates were so low, interest rates went up and the cost of capital went up. Now people don't want to give them money. So what do you know? They have to do. They have to, they have to sell their shares. And if you sell shares, it's the equivalent of taking that money from all the existing shareholders because the value of all your shares get compressed. And that's what happened and that's why they all collapsed. And so everyone wants to own a piece of the business until it's not, until it's not making money, until there's a big capital investment required. Right. So if I would have given, given away a percentage of just the Bellingham shop, they'd all have to be paying up right now as we head into the winter and I'm going to spend a bunch of money. Most people aren't willing to do that. So I. I'm a big fan of profit sharing. See, there's not as much politics, there's not.

As much painful conversations required and you can focus on growing the business instead of diddle dallying and figuring out compensation plans and how things are going to work. And then down the road, once everything is much more consistent or you do some sort of liquidative event which is selling, going public, etc, then it's just easier and smoother and people are happier. Typically, he says, my. My general thesis.

All right, you had Oliver.

That's it. All right, everyone, have a fantastic day, have a fantastic weekend and we'll see you on Monday.