Mike Minutes Mastermind 09/06/2024

And we're live. Happy Friday, Augusta Nation. Let's get this party started.

Cool. Quick announcement. I made it yesterday on the Facebook group. If you are looking for an estimate template for Christmas lights, there is one created on the Copilot Marketplace. Go ahead and just find that and put in Augusta Capital A123 and you'll be able to download to your account.

Cool. Let's get started.

Boom, boom. Pull this actually up here.

Okay, one second. There you go. Very good, very good.

Alright, let's get started.

Oh, I forgot to post this to the Facebook group. Ah, so sorry. Give me one second guys.

Copy Facebook group. Boom3m094.

Post. Okay.

First question is from Mr. Anonymous. Do you have any plans to work with Jonathan Tonik now that he's making content and working with entrepreneurs again?

I'm sure I will at some point. We communicate.

I'm gonna be going and seeing him next month.

So yeah, hopefully something. We'll do something together for sure. So he's really passionate about young entrepreneurs, like young going, talking to young kids and stuff like that. So.

Yeah, I encourage them to keep making content. Like let's go. So, Mr. Enormous, is there anything good private equity could offer us as franchisees or would it all be bad if we went that route? In the long term there's always, you know, pros and cons. I just think the cons in the long term outweigh the good. And so in the short term it would offer a lot of capital to be accelerate a lot more the technology side of things.

Which would be great.

But I also know they do a bunch of other stuff that we would all hate and really come at the detriment of the community. So.

Yeah. So any other positive things? They usually would usually they have access to really skilled people usually and if they're in a specific niche or industry, they'll usually have some really good talent that they can put into a company.

So yeah, that and capital skill and capital is, is like the, the main positives that they would offer. But yeah, there's 10 other things that they would do that would be kind of detrimental. I feel especially for like the mission of the company.

I'm going to send out as. Matt Slickey, Salem, Oregon I'm going to send out some every door, direct mailers with a coupon code, coupon, a promo code or coupon. Correct me if I'm wrong, but I'm thinking that will, that I will create a tag and copilot with the same name in the mailer. Any new people calling or emailing about this will give the promo code. Is this a good idea? Will CC add the tag to the customer profile if the customer mentioned something about it? Well, you're depending on the customer mentioning it, that's the problem. Also, this is not like a standard operating procedure for command center to like listen to a customer to tell them to add a tag to their profile. Now what you could say is to your customer on there, mention this flyer when you call and we will give you X, Y and Z discount. Because what command center, they'll set up the estimate for you? Whatever. It depends on what service you're doing. Like if you're doing a project based job where you're going to do an estimate, you'll get, you know, estimate notes. And those estimate notes will say this person saw you from the every door, direct mail, flyer, postcard, whatever you want them to say. So that part they can do for you. And then you could tag them however you wanted. But there's no like standard operating procedure for tagging customers.

Based upon that. So I would just take the notes that you get as the estimator. And then if you want to tag people differently based upon certain types of marketing methods, feel free to.

Yeah, just make it really clear to your customer what to say to make sure that that is recorded. And if you tie it to a discount, they will do it. So that's the best way to get someone to mention a promo is make it a discount. They're like, oh by the way, it says I'll get 20% off if I mention the flyer and then command someone put those notes in there for you.

Mr. Anonymous, a while back someone asked about getting loans from friends or family for opening locations to fund operations. In your opinion, is there an interest rate which is too high for or lent money to where it wouldn't make sense to borrow it from friends or family? Let's say you can't get a loan from a bank. However, friends or family would be willing to loan you money for a year at 10, 15 or 20% interest. Just curious if there's an upper threshold as far as an interest expense which no longer makes sense for a business owner to take. In my opinion. If we typically see profits of 20 to 30% of our businesses, it would make sense to theoretically take money at an interest rate lower than that. Right?

No.

Profit percentage is different than return on investment. Okay, let's keep reading. Looking for you to break down how you personally think about tackling this, making sense of this type of loan. Okay, so if you're even considering a loan at 15 to 20%, I would probably just use a credit card. Honestly, it's so easy. You could buy all the tools, equipment, etc, on a credit card and, and then just pay the balance. And what's cool is then you just pay it down as you can because it's revolving line of credit versus, like a fixed loan from a bank or from a friend. If you're considering 15 or 20% interest, I'd probably just do that.

I don't think building a business on 20% interest is a great.

Idea. Mostly because.

Like, that just. Yeah, it's tough. If you take 20 out of your ROI, that's gonna be difficult. Now, I will say this. I'll show you guys. This is coming out in like a few weeks, but I'll share.

Actually, do I have the pictures on my screen? Oh, yeah, yeah, I do, I do. Let me get them out of my trash bin. One second. This will be cool.

Do I have them? I do not. Okay, well, we're gonna go. We're gonna go old school. Is that the last question? It's not. One second. Boom. Okay, so.

This is an example of your return on investment calculator. So if you had a location, you're like, oh, I need $120,000 invested. Great. And over the course of. I think it's three years.

Three years, you make $275,000 in profit.

Give me a second.

Okay.

Oh, I put in the wrong one. Beautiful. Just gotta love it. Okay, anyways. Ah, snap. Now I'm forgetting what the thing was. Give me one second. I'm gonna pull up the scenario. Revenues 200,000, 3115, 145. Okay, folks. Okay, okay, okay, okay. All right, so here's the example. Scenario one, and scenario two, debt. Okay? All right, so cash. Okay, so if you do cash and put $120,000 in, and let's say over the course of three years, you make $275,000 returned back to you. Okay, great. Over the course of three years, here's what your investment gain is. So you gained $155,000. Why? Because you put 120 in and you pulled 275,000 out. Hope you can see what I'm talking about. Cool. Now your return on investment is 129%. Your annualized ROI is 30, 31%. This is the number that you're actually thinking about in terms of roi. That's different than profit percentage. Because in my profit percentage is like 15, 20%. The first year is like 5%. But your annualized ROI is different. Okay, now watch what happens when you add debt to this. Okay, so this is cash. Spend all the money in cash. This one is debt. Now, I only invested $20,000 and I got $100,000 loan. So I still needed the $120,000 to start said location, for example. But now I only put 100. I only put $20,000 down and I got a $100,000 loan. Now the return amount is only $245,000. Why? Because I have a 10% interest loan on $100,000, which means I have $10,000 every year over the course of three years. That's $30,000. So instead of making $275,000 of amount returned, I'm only going to make two hundred and forty five because of interest. However, check this out. Investment gain is $225,000. The annualized return is a thousand percent over a thousand percent, and the ROI is 130%. Okay, so this is what leverage does. Yes, your returns way better. Why? Because you put $20,000 in, you got the same result. You only put $20,000 in. So comparison to just paying with cash, okay, now if you say, well, 20% interest. Okay, well now instead of $275,000, if you pay it with cash, not 245, now you make $215,000 returned because you would have paid $20,000 a year or $60,000 in interest. So having debt is going to allow you to go faster. It's going to have way better returns.

And so yes, in theory, if you know what your terms are going to be, having debt is a huge way to be able to grow your business, get way better returns, you're able to grow faster, et cetera. Just know that that debt has to be paid down eventually. Just know that there's a certain amount of risk that's taken on if leads stop coming in, if you get hurt, if the business is built in a way that can't run without you, there's a lot of risk there.

So keep that in mind. I have a whole video on that breakdown I just showed you there.

Okay, let's go back to our questions.

Corey from Bellingham. Good morning, Mike. I have three questions about robotics and lawn care. Let me see what time this is submitted. Oh, this is morning. You probably saw. You probably got her internal meeting from yesterday.

Do you foresee a future where legal issues come up due to the LiDAR data gathering in clients property? Since it would technically be personal information, it has Value for resale to other landscapers. Would this fall under the same category as issues under shared user data? No, I don't think this will be a problem. It's the same reason why Google can take images of your property from the sky and they do not get in trouble for it. So yeah, I don't think this will be a problem. Especially because they're consenting to you being on their property. If you're doing it against them or will, that's different. But the lidar that I've seen is scanning the property that the customer owns. 2. We have a few customers in the Bellingham shop who already have lawn roombas. They contract us for edging only. Do you foresee a future where The Roomba technology 25 years away is cheap and effective enough to delegitimize the need for commercial automobile companies coming in the next 10 to 15 years? Maybe like 15 or 20 years. The thing is, there's so many things like stuff, stairs, wet grass, slopes, ditches.

Fence lines, etc that are going to require us to be there. In terms of the mowing part, I would love if they got rid of it because I bet you anything those company, those places, we go to an edge for like five minutes, we probably make 70% of the revenue as if we were actually mowing there too. So.

Yeah, like, yeah.

Treatment effect. Okay, 25 years away. Yeah, I would say so. But there's just so many different scenarios where.

You can't use that. Like the Roomba technology just doesn't make sense because even if you have to pay, even if they got the technology down to like a thousand bucks a pop, if you have a backyard underneath, back underneath stair that has stairs down to it, for example, you're gonna need two. Okay, well, now it's $2,000. Okay, great. Now what happens if it breaks? We gotta do blade sharpening. Now all of a sudden it's like, well, the customer doesn't just. It's not just a matter of form, of form of price when it comes to a robot. It's also like they have to sharpen the blade. They have to maintain the piece of equipment. They have to pick the thing up and take it to a dealer or they have to have someone come service their lawnmower. So I would be thrilled if the actual mowing part of our services got robotized so that we could just focus on the more specialized work. We'd make way more money. Our most expensive piece of equipment would be out and we could probably use small little vans instead of trucks.

Job Be a fan. I've stayed out of the loop on Christmas lights, but I did see a discussion once about franchisees renting out Christmas lights to clients and letting them store at their own home. If the Roomba technology does hypothetically compete with commercial providers one day, do you think the lawn care industry will become a Roomba leasing company? I don't think so. The return on the investment is way too high, the amount of debt you would need. So, for example, the Bellingham shop, assuming everyone only needed one Roomba, which most properties don't, they need more. If you have gates, if you have certain types of gravel, if you have stairs, if you have areas that are really, really far apart, let's assume you need 300 of these things. Right now, you're paying at least 1500 dollars a pop. So you're looking at $450,000 to get these all installed.

You would need to. You won't make your money back for two to three years on that piece of equipment. And then two or three years, is it still functioning.

And, like, up to date, or is it just completely obliterated by new technology? So I just don't think right now it makes sense. In terms of Roomba leasing, I think they'll go direct to consumer. The actual providers, like Husqvarna, Honda.

These other companies are making them. They'll just go straight to consumer. That's what they're already doing in Europe. Like, Europe has a ton of these, tons of these. They're very, very, very popular. So do I think they'll come to the U.S. like, the property sizes are just so different. The grass sizes are different. The climates are so different.

And so there's just a lot of. A lot of barriers. Now. I'm. Obviously, you've seen the video I made internally yesterday, Corey. So you, you know, there's. There's companies that are doing this in a very different way that I am a big fan of, and I think they are using lidar correctly. They're using commercial equipment.

And so, yeah, like, I'm very pro this. And what they. The companies I'm looking at are they is like, you have a robot, and you have a human. You take the robot into the backyard, you let it do its thing, while the other person trims the front yard, mows the front yard, and trims the backyard. Like, it's like a sub, like a supplement to the human. Very, very good. I'm seeing this work really, really well. I still think we're a long ways away, but I'm keeping my eye on it. Mr. Anonymous, one of my employees has been with me for 1.5 years. I know his aspirations. Becoming a GM at my location when I add the second in one or two years. He was asking me the other day if he qualified for the 3F program and had 100k in cash, if it would be possible for him to start a location of his own somewhere, spend one or two months launching it and then be remote basically from the beginning. Would this make sense for him and or me? Would this split his focus too much?

I would, I would just say, okay, so he's.

So he would still work for you as a gm, but they hire gm. I don't think that makes a lot of sense. Oh, he wants to like, okay, I'm not sure if he's willing to work with you or not, but if he's willing to work with you and have another location with a gm doesn't make a lot of sense because he should just be the gym of his location. He'll probably get a better return.

There's a significant amount of cash, so he would have plenty of money to burn if you really wanted to do that. But he's like, hey, I'm just gonna go, you know, be on a beach or do something else while my location's up and getting third. I don't think he has the skill required to do that yet. Yet I would probably, if I was him, I'd recommend him be a really solid GM for you. Get skills that will save him tens of thousands of dollars in his first couple years of business. That would be my go to if I was talking to that gm. That's what I'd say. Work two years as a gm, get the skills required to be an exceptional manager, then go start your location, be a great manager for two or three years and then know what good looks like. So you can hire a gm. And yes, that will take five years, but in five years you'll have your own location. You'll be in the architect side of things, either starting a second location or scaling it up and finding a GM to replace you. So if you're willing to hold your breath for five years, that'd be the most sure fire way of getting there. Now more risky would be exactly what you said. And so you know your risk tolerance is up to you. But like I think knowing what good looks like and having the skills required to be a good manager is probably your best bet. Especially if you can learn those skills on someone else's dime, I. E. As a general manager and then go spend your capital. You'll probably be. Not probably. You will be more successful in the long term. In the short term, you will probably get there faster by doing your. The method of just taking the. Taking all your capital and going. Starting it and trying to juggle both. That usually leads to one to two years of pain because you just don't have the skills. And that skill.

The pace at which you will have to gain skills will be very rapid, which is fine. Not against that. Just. It'll be a lot. All right, everyone, have a fantastic weekend. Love you all. We'll see you Monday. Take care.