Mike Minutes Mastermind 09/15/2022

Hey everyone. Hope you're doing well. Let's go ahead and get started. Let me switch.

There it is. Cool. Some announcements. Cool. It was kind of cool. Yesterday I talked to Corey Ballard, did an interview with him, but it looks like he is going to be coming to conference as well. So that'll be a lot of fun. Good interview with him. That'll come up like probably in a week and a half or so. If you don't know who he is. He built a like 15, 20 million dollar business, perfect cut out in Iowa. But then it got bought out by a massive, massive company. So he's basically still works on their board. That was a cool and interesting conversation. I did have some announcements. First and foremost, let me go and pull this up. So while I'm talking, you can just see it. GustAlongerService.com.

The background video on everyone's website as of one hour ago has been changed to something that is a little bit more fall cleanup. Like you have to be pretty vanilla with these videos in the background. And we're still highlighting mowing because I know for a lot of you it picks up right now for mowing, but it is highlighting leaf cleanup and that, trimming bushes, things like that. So all of that is on there. It's looking good. While we're watching that or taking a look at that fall cleanup bidding. All right. A lot of you, especially your first year, are wondering how to do fall cleanup bidding when someone's asking for a price. It's very difficult. Okay. Especially your first year, you don't have the experience of looking up in the trees and be like, okay, how long is it going to take during the next three months for me to, you know, do leaf cleanup on a weekly or bi weekly basis? Everyone's very proud of this shot that they did here with Max and it's an air freshener that they throw inside the bush. Anyways.

So in terms of bidding those, obviously the goal is get them on a leaf cleanup, initial one if they have current leaves on the ground and then a recurring weekly or bi weekly service for the next three months for recurring fall cleanups and leaf cleanups. So I'd recommend that. And yes, your first year, you are guessing okay, because you're literally looking up at the trees and thinking about how long they can be in the ground, how many of them are going to be on the ground. And that's so many variables in terms of the weather the day before you show up. If it's dry, it's easy to blow them, whereas if it's wet, you're raking them. So I would really recommend looking at things like fences because if you have a whole bunch of trees with fences around it, you're probably picking up 90% of the leaves in that tree. If it's a bunch of trees and no fences, there's a good chance that 80% of those leaves are getting blown off the property at some point and you're not going to be picking them up. So keep those, some of those variables in mind. You're gonna do three, four. I remember Thomas Salazar's first year out in Colorado was really concerned about this. Get four or five under your belt, you're gonna make mistakes on a couple, but you'll get good at it. This, this fall. If it's your first year, you're probably only gonna have 10, 20 of them anyways. So you'll calibrate very quickly and be able to get better at the estimated budget hours for fall cleanups. Unfortunately though, it is something that's like you gotta do some of them to get some experience. So.

Remember that the initial price per minute per man on your OTP estimates for mowing is only if the lawn is overgrown. If it is a normal cut and say there's 45 minutes budgeted and takes you 35, don't charge $35. Charge what you are charging for the, the 45 minutes, the regular price. The only reason you go in and change the price on an over the phone estimate first initial mo is if you are over the budget hours, buy in my opinion at least 10, 15 minutes. Otherwise I just eat the cost. It's the first visit, I just eat that and keep the same budgeted hours and not charge the different differential. But just, I'm saying this because I'm seeing people, they're, they're, they're doing over the phone estimates. It's, you know, to say it's 40, 60, the first visit takes them 20 minutes and they're charging 25. It's like. No, no, no, no. Like you only charge the permanent rate if it's overgrown. It says that in the estimate. We're very clear about it. Command center don't discount the weekly or bi weekly price because the initial mode takes shorter amount of time than expected. The customers agreed to that price and stick with that. Okay. Another thing is if you are the growth model in the growth model and you've been around for a long time. I don't know if I made this clear enough and that is that now at command center services are a La carte you. Which means you can literally choose one or two things. In the past it was like kind of like, hey, we needed to do. If you want to do full service, it had to be like a variety chunk of different services. You have to have email management and all these other things. As it was kind of like, you know, 0 or 1. Now you can pick and choose. There's a whole list of things that they can do. And if you just want us to do payroll, he just wants to do your P4P. If you just want us to do one thing, we can do that. So if you have questions about that, just reach out on ConnectEAM on your chat and ask Command center for a form that they can fill out of what services you're interested in or want to talk about getting added to your account. Again, those are ala carte. So again, if you just want one thing done, just annoys you as I'll get out for QuickBooks or annoys you as I'll get out for payroll. Whatever it is, they can handle just one of those if you want. You don't have to do all of them. Okay. So feel free to reach out unconnect team chat and they'll get that for you. Last thing is your monthly. The monthly franchise fees, we move from September 1st to the middle of the month, which is September 15th. That's the day. So you'll see the franchise fees come out today for September. So we move them two weeks from two weeks ago till today. Just help with everyone's cash flow over the course of the month. That's all I got in the form of announcements. Let's go ahead and jump into questions.

I think I got a couple that came in I have not had a chance to look over yet.

See here?

Right.

Oh, Dustin, what is the status on headquarters? Oh, yeah. So in terms of the loan and everything. So here's where we're at right now. A building project is three point, just under 3.3 million. The thing is that I so the SBA loan, the reason that we're not going to qualify for that is because they are requiring 80% occupancy by the entity that is.

Signing for the loan. So originally that was 50%. And over the past couple months, as I've been wondering why I keep hitting my head up against the wall with them, if they have changed that to 80%, we don't qualify for that because we have the media group, the franchise and the Augusta Longer Corporation all at the same location. If we tried to do under One, it wouldn't qualify for that size of a loan. So we need all three to be able to qualify for a loan. The problem is now we can't have more, less than 80% occupancy for the one entity that is signing on the loan. So we are in the process of qualifying for a much smaller loan, which is actually going to work out fine. I think in terms of 1.5 million, the SBA loan would have been a $3 million loan. There's a $1.5 million loan. It'll be enough, though, for us to bridge the gap. I'm going to sell probably one, maybe two of my real estate deals just to make sure we have a good cash position. I don't want to run so dry during the winter, which is I'm not thrilled about, because it's not a good time to be selling real estate. But I have a lot of equity in those, and so I can sell those and make things work. So that's kind of the goal. That's the plan right now. The problem is that a regular bank loan that's not SBA is going to usually have a pretty big contingency factor of 10% or more, 10 to 12% on the building project. So on a $3.3 million loan, they literally are building in 3 to $400,000 of contingencies. What that means is they are the last $1.5 million in the project. And this is why I'm having to sell a couple of the real estate deals, is because the 1.5 comes in the very last. So let's say I have 3.3. I've got to come up with 1.8, then they start spending their money. The thing is, they haven't. With the 10 to 12% contingencies, I've now got to spend more like 1 or 2.2. 2.1. 2.2 million before their money kicks in, because their contingencies, they have to leave until the end of the project. So that's why I got to sell a couple of real estate deals. Not fun. There's a bad time to be selling real estate, but I gotta unlock the equity and just make sure that we are in a good cash position. So. And I'm gonna probably sell. If I sell enough of it, I might. I'll probably use some of that to start new locations for Augusta next spring that are my own corporately, hopefully make up the cash flow difference of not having the real estate. So that's kind of the plan.

And, yeah, that's the direction we're moving. I'm not. I have not closed on that loan 100. They want to actually see what the property is being sale and things like that. So, like, literally this evening I got to go back and sit that last part of that real estate exam. Knock on wood. I pass. I don't know why I would pass because I haven't studied at all. I said about 20 minutes yesterday.

So if I pass, it's like, I don't know, fluke. But I passed the main part, the national exam. I just got to pass the 35 question part on the state exam. So let's hope I pass that tonight so I can list those properties, get them sold, and the bank signs on the 1.5. Because I can't afford that whole 1.5. I can definitely sell enough real estate to make up the difference. And then the reason I feel good about that though is the 1.5, the loan on that is from day one way less than what our rent is currently. So, like, from a cash flow perspective, the businesses will all be better after that loan because the mortgage on it is less than what we pay in rent right now. So that'll be good. So that is the current status in terms of the headquarters actually being built. I'm shooting. I'm like knocking away, hoping October we break ground. So I think I'm still kind of shooting for like July, August, next year, move in. So what I'm not looking forward to is renegotiating all our leases. I'm just holding off on it until I have a more solid date of completion for the headquarters so I can renegotiate our leases to actually make sure that, you know, because they're all ending in March of next year. So I got to renegotiate a month to month lease for like six months.

Is there a way that we can get a new estimate calculator for snow? I want to. Who's this? I know it'll be perfect, but it would be similar in success to over the Phone estimates with 80 to 90% being accurate. For example. Okay, yeah, this is all great. Yeah. Okay, I'll read it. For example, we have an estimate calculator section. It says $55 for one car driveway, 75 for a two car driveway, 95 for an E car driveway, includes Cybox, etc. Then if they wanted salt, it'd be a straight line item of this. That way if we want jobs, it could be sold over the phone. Ready to go. Want to know your thoughts on this? Could also give Command center, some minutes on hours for winter as well. Yeah, so we've discussed this a lot. I think Lee caught some of our the call. It might have been on the vlog last week a bit. But the reason that I am saying no to this is because several things. Number one.

It takes us weeks to train people on over the phone estimates for mowing, but 95% of the system uses that. So I feel like it's a good investment for us at Command center and it's fair to everyone if we're doing that amount of training and investment and spending the money that all of you give us to be able to train everyone at Command center for snow plowing. Less than.

15% of the franchise does any snow plowing and it's a very small percentage of most of their revenues. So it's not really fair that we do a massive training overhaul at Command center and that is funded by everyone's fees. If it's going to such a small portion of the franchise system. And that's what leads to us, you know, if there's more cost of Command center, we eventually have to pass that along to everyone. So I have to look at it as like, what is the best use of the time for Command Center? Because we're spending a bunch of money for a couple locations because they're doing different services or out of the systems. That's where we eventually have to draw lines and like, hey, we can't because it's not fair to everyone else that they're being charged and paying for these extra costs. So when it comes to over the phone for mowing, it was a massive underhaul overhaul to like really get that all done with training and all that. We can't do it from first, no applying without the exact same amount of training. And the reason for that is because the variety. We have people that do snow blowing, we have people do salt, we have people who do sand. We have questions now about things like salt on people's aggregate driveway in the sealant. We have some people that push, we have some people that put it to the curb. We have other people have now a whole bunch of questions about the actual technique of plowing because over the phone estimates for mowing works because like the grass gets cut and we edge and we blow. People understand that when there's a whole bunch of questions about, okay, where are you going to pile the snow? What time do you come when a snowfall comes, how long is it guaranteed that you're going to be there? What's this trigger there's so many different variables across different different locations that we would spend so much time training at Command center. And it eventually becomes more costly to all the franchisees. So for you, for example, when I look at this question.

You have all these metrics, like for example, 15, 25, 40, all that's, that's great for one location. But when I'm trying to expect Command center to know that for 100 or even just they have to be trained on it as if it could be a hundred, it becomes so much time to get them trained that the cost is prohibitive to the whole franchise as a whole. And it's not fair that 85% of people who don't even offer snow have to pay that cost. And that's ultimately how I look at Command center is like, we need to be as efficient as possible to keep that cost down. So I don't have to do. I did this past spring and that is raised prices. So right now it's going to be a drive by estimate. And I would recommend if you have these sort of notes for you, it's simple for you. You can answer a quick question or two about how you take care of the snow, your trigger points, how long you're able to, how long it's going to take you. Are you guaranteed to get to their property if you use a snowblower or a plow, if you shovel the driveway or shovel the walkways if you don't, if you do salt, if you do stand, what type of salt you have all of that, you know, and is very easy. I just can't scale that across hundred, let alone a thousand locations. We're going to make so many mistakes.

So I hope that makes sense. And I think it's a niche of enough service to put that back on the franchisees. So I hope that makes sense. I think we make a lot of mistakes by trying to create the system. And then it'd be very expensive to train everyone because everyone at commence center, even though it's 15%, would need to be trained on it to be able to have the coverage do over the phone estimates, be able to answer the calls and the questions and not be like, oh, well, I'm gonna have to have someone else call you back.

I hope that makes sense. We do have a snow division at Command center that is educated really well and have done tons of snow routes. Most experienced team members at Command center are in that group and they're going to be on staff for in route communications. So when you're in the middle of A snow route, you're going to be most likely in touch with that division at command center, the most experienced. They've done tons of routes. They're 10 times better at it than me when it comes to snow routes. Inside of service, Autopilot and Zooper. So that will be available, but we can't guarantee that they're going to answer every single phone call. Therefore we'd have to train everybody at command. So I hope that makes sense. Don't just know that we have thought about this, talked about many meetings about this specifically, and ultimately I made the call on this one because Liz and them had a system and a plan for actually for this to work. But the amount of training and systems that we have to institute and the amount of variety of sealants, types of concrete, driveway versus pathway, steps, trigger, trigger times and trigger depths per push per hour. Like there are so many, so much variety, we couldn't do it. It's not like a cut per square foot like it is for mowing. It is, from a theoretical standpoint, very simple, like one car, two car, etc. Or we could do square footage on maps like we do for mowing. It's all those other details where it's not like we cut your grass and we edge your lawn. It's like types of salt, types of concrete, where you put the snow, how you do the snow triggers, depths, how you charge. We have people charge per hour, people that charge per push. We have people that charge per contract. So it's so, so much variety that we would make more mistakes and in the amount of training to get that level of proficiency would be extremely expensive at command. And I just simply look at it. If it's costing us a lot of command, it's going to eventually cost our franchisees. And I want to keep Command center at these prices for as long as I possibly can because I don't want what happened in spring to happen again. So I hope that makes sense down the road. Once inflation corrects, it's more like 2 or 3%. We'd probably institute something where every year it goes up 2 to 3%, the cost of command. But I don't think I'll need to do that for quite a while because of we raise it sufficiently in spring. So see, that's all the questions I had there. This one popped up in here.

I feel like the economy of how to do snowplow is not much different than using a zero turn for 48 or using push mowers, trailers versus ramp rack, etc. But I don't realize it was so low a percent of revenue. Yeah. In terms of percentage revenue, it's less than 5% across the system and it's less than 15% of franchisees that use it.

Yeah. So like there. I know that in theory, one location. It sounds like very simple, like how you outlined it. Like it's basic. There's just so many variables. And for example, back to this point, most customers don't care about the size of mower, whether we use a ramp rack or a trailer, what type of trimmer, line we use, if we use a stick edger versus a line, edge, line trimmer. They don't ask those questions. People ask questions about where you plow the snow, what your trigger, how, how fast you get to them once the snow comes.

The type of salt you use, and how it's going to affect their concrete. And if you do shoveling on the walkways and the steps, do you do sand? Like, there's so much. So that's why we just made the decision not to. So I hope that's clear. I'm happy to answer any questions about this because we have thought about this a lot. And they actually have a system at command center to make this work. And so what we just settled on as a happy medium is we're going to create a vision where during snow route there's specific people at command center on call ready to go to help and throw people in the dispatch, be able to do the trigger parts on pricing in special service, all by having the. Where you charge by the inch or you charge by the pound. We have. We have the capacity, but we have to make a division because that will take us way less in terms of cost than training 50 people on the intricacies of snow when half of the people we hire have never seen snow and they'd have never done plowing or salting. Most people get mowing. It's easier for us to train. So I hope that makes sense. I'm happy to answer more questions, though. I'm not trying to sweep that under the rug. That's something we have thought a lot about and had extensive conversation about rolling that option out. So I think that's all I got. No more questions in there. Awesome. All right, guys, have a great Thursday. We'll see you tomorrow.