Mike Minutes Mastermind 09/19/2022

Little August nation. Hope you're all doing super well. We'll go ahead and get started. I won't do the questions yet. Let's go ahead. And a couple things. Happy Monday. Last night I emailed earlier this morning emailed a all of you the three one click estimate emails for Zooper and Service Auto part. So I did leaf and fall cleanups, we did snow services and we did core aeration. All of those having a one click estimate email. And so especially if you're in Zooper, check those out because they're all brand new service autopilot. We updated them slightly. They're all ready for download. Video is in your email showing you how to do that. If you have any questions, feel free to bring up today or on tomorrow's Mastermind. A couple other things. First of all, thank you all for last week. It was my birthday and so many of you gave. I know, I know everyone that did. But thank you all. I looked down yesterday I was at church and everything I was wearing was purchased for my birthday from all of you. So thank you. And this morning I was at the gym and everything I was wearing. So thank you all for taking care of me. I don't know if I should take that as like a slam, the fact that I don't know how to dress myself so everyone just buys me clothes on my birthday. But I appreciate it. Thanks so much.

See here. I think that's all in the way of announcements again next week. Give me one more week. In terms of having the back end dashboard for your website, we're working on that. I'm shooting for next week. So I apologize again for the two week delay. I said it was gonna be last week, but I do we just need a couple more weeks. We're trying to build in the ability to be able to take off the chat and then add it back on within like 24 hours. But you able to do it from the back end dashboard because some people when they're overbooked they don't want the chat feature because typically website chat is a bit more expensive than the phone. Takes long to communicate with the person. A four minute phone call is probably a ten minute chat. So again there's people who would not pick up the phone and they'd rather chat. So we always have it on still. But I know for some people when they're trying to, you know, really trying to watch their budget and they're growing quickly and they're pouring money back into business, they'll reduce that, especially if they're tuning their leads down. So things like that. We're trying to just add more features, but I'm trying to kind of cap features. We got to get this. Push this out next week, and then all of you will be able to see that. All right. I think that's all I had for announcements, I think. So jump into questions. I looked at one or two of these, but not all of them.

Okay. Can you see this? Yes.

All right. I have a guy that is selling 50 accounts for 15k. The price for these seem pretty steep. I was thinking somewhere around 7k would be a decent price. Can you help me break down this deal? Yeah. So assuming that they all stay, you're paying. Let's see here. Let's just make sure I get. I think it's like 300 bucks. 15,000 divided by 50. Yeah. $300. That's what you're paying per account. So, you know, you're probably paying a 3x multiple on what your customer acquisition cost is, which is high. It's going to take you an entire year more than likely to recoup that cost of that customer. And again, we're assuming that 50 stay with you. Let's assume 20% attrition, which is pretty common on acquisitions. Divide that by 40, now you're paying 375. So again, you're going to take probably an entire season to recoup that cost of that customer. Then if 20% of those customers leave just because natural attrition, it's getting expensive. Right. So I'd definitely be much more comfortable with 7k price. Again, I'm assuming that the pricing of these customers are consistent with yours and that they're in a good area that's ideal for you.

How I always approach these deals when it's like, I don't really need it, but it'd be cool to have if there's the right price, is you approach the owner, you tell them, hey, I think you probably get a better offer. You just tell them that so they make them feel good. I think you probably get a better offer if someone is willing to buy out all of these and have your equipment, etc. I'm willing to buy out just the contracts. Here's my price. Don't be offended by it. I hope you get something else. But if you have to bail and you have to leave the business, I'm here for you, and here's my price. So I would probably go this guy and be like, hey, you know, we're not really looking to buy out people, but, you know, if you need to leave, the company can't find anyone else, I'll give you five grand. That's what I would do.

And somehow they never find buyers because at that size of business, you're not selling anything besides the job.

I'm wondering what your thoughts are on service area. I am wondering about the idea of constricting it to a two or three neighborhoods that abut each other. There are about approximately 3,000 homes between them. It would essentially make the service area a 1 mile radius. I got the idea from seeing some other home service businesses that have 90 to 100 customers in the recurring service list and are all in one neighborhood. The idea is that I can commit to hammering them every month with every door direct mail and using Facebook radius over just the neighborhood and add areas of exclusion around focus. Who sees it. Also, I would be, I would be seen very frequently. Sure, I like the idea of covering an entire city, but filling the gaps throughout density is difficult. Yes, this is 100% on brand and what we teach, especially this past, the past six months when we come to training, I actually tell people not to start with their whole city. I tell them to start with one mile radius, choose those 1,000 to 3,000 homes. And yes, 3,000 homes, you can hit every single one within every door, direct mail piece for less than 800, $900, including printing, postage, everything. So I 100% behind this, especially if you're under 100,000 annual revenue or sorry, 100,000 in monthly revenue, anything below that. I really like the strategy. When you get above 100,000 in monthly revenue, you start needing to expand outside of that. And that's when we started hitting capacity in Blaine when there was like, there's like six or seven thousand people that live there. And we probably would have topped out around 1.1, 1.2 million in that size area. So we have to go outside that. But we grew to $1 million before moving out of blame. And so I'm 100% on board with this. This is exactly what everyone should be doing. Because remember, you're doing advertising, you're doing direct response marketing, which is someone sees an ad, you have a call to action, like call us, click here, go to our website, fill out a form, whatever it is, regardless if it's online or offline. And that's direct response marketing. You're looking for a direct response. The way that you achieve lower customer acquisition costs is you have brand awareness to the point where people don't have to see the ad. They just think of lawn care and they bought, they purchase from you and they called you. That is achieved much easier when you zero in all of your marketing efforts on one area because they see you so often compared to you trying to boil the ocean. If you have a hundred thousand people in your territory and you try to market all of them, you, they literally might see you once. Whereas if you take 3,000 homes and you hit them 10 times, that's the equivalent of hitting a third of your city one time. I guarantee you a better results hitting those 3,000 homes 10 times versus 30,000 homes one time. Guarantee it. Because what's going to happen is they're going to see so often and now your ad and your marketing will live beyond just the week that you send the every door direct mail or the time that they click on the Facebook ad. Because now they're seeing your truck in their neighborhood every single day. They start to think that you're bigger than you are. They start to see your trucks all of the time. And because you're marking so targeted to that neighborhood, you're also going to put yard signs, you're going to put door hangers all around those areas and just really, really again reach brand penetration much sooner, sooner in those small markets. So 100% agree with this.

At training. I had asked you about your Choice between commercial 30s and 20 inch residential and you had mentioned you like the residential Hondas better than the commercial 30s due to the weight of the 30s and that they break often. We're experimenting going only solo routes with 30 inch mowers we bought a few years ago and they seem to be working well. I, I just think they need to be replaced often for them to run well. Would you change your mind back to the 30s if they were cheaper, say $1,500 to 2K versus the residential Hondas you can buy for 5 or $600. I think Toro makes a residential 30 mower for 15, 102K. These would be easier placed in a year or two. Yeah, 100%. I like this idea. 30 inches that are residentials. We don't have a dealer that services these in our market that we, that we like. But yeah, there's like the Time Masters that are like 1200 to $1500. The thing is, 1800 or two grand used to be what we would spend for an ex mark 30 commercial. Well now that's like three grand. And they're so heavy and they break a lot. They break just as often as a residential in terms of like little pieces. And so if you need Something to last for five years. Yeah, I want it to be commercial, but if I'm buying these cheap residential ones that are lighter, better for the employees, they enjoy using them better. It's less wear and tear on them and I can just switch them out twice as often because the lower price point I would be game for that. So I like those Toro time Masters. I've heard some really good things about them. We just don't use them in our market simply because we don't have a good Toro dealer that we we've used a lot.

I know you say to grow our business and then copy and paste. I am 100% in online care but wondered what other industries or industries you feel would be potentially be a better business or better margin business. Is there any plans in the future to attempt another franchise or run another division under Augusta for cleaning service, cleaning services or water restoration, etc. Also, do you feel that this could be looked at more as upselling existing customers on different services within the database or. Or getting too broad with services which could hinder growth and get you out of simple services? I would think about running this under two totally separate businesses but sharing the database for free marketing ie one clicks. Everyone consistently thinks that this is the direction I'm going.

And it's not. To be perfectly honest with you.

I think that this was split my attention and it would split owner's attention. This would be the way of scratching everyone's entrepreneurial itch, myself included. Verse and the owners. You know, you do two, three locations, everything's running on GMs like oh let's go figure out a different service. Why, why not just go do 20 locations and now your new new thing to work on is managing managers and having regional managers and figuring out cross state work and doing.

You know, work outside of your state and figure out different laws and regulations and figuring out different ways of employing people, whether the HDB program, etc. Like there's ways to challenge yourself by just growth a whole different business model when you're at one location versus 10. It's a completely different business as a CEO when you have 10 general managers and a regional manager above them. And so that's what I'm trying to create right now over the next couple years.

Because I just don't have any passion about different, different industries and I really think we underestimate this part. You know, you saying there's a better business or better margin. I'm not picking on you, Dustin. I appreciate bringing up the question. The better business, better margin that is a game that everyone plays because there's people in the water restoration and cleaning services. Like cleaning services guarantee. They're complaining about thin margins and the fact that their labor is 60 to 70% of their revenue. Water restoration. How in the world are we going to find people that actually know what they're doing and are qualified and certified to do the services that we need to do for our customers? Yeah, they might have higher prices. I just believe in home services in general. And so the thought process that I'm going to go into different industry would only ever be if we got so many locations of Augusta that someone could not expand using Augusta lawn care.

Where every single territory is bought out. You can't find anyone inside your state that you could buy. That's when I would start considering, okay, let's take all these systems and plug into a different service so our existing owners can diversify. But I just see absolutely no benefit financially to diversifying into different industries. None. I just talked to someone the other day. They said the same thing. They said 15, 20 years ago, their biggest regret financially was was going into a different business. It split their attention. And they said if they would have stayed with the first one, they would have got what they got in 15 years. They would have gotten five or six because they would have had all of their attention on one thing. Right.

And Alex Hormosi said this the other day in one of his videos. He said if he would just stayed with gym launch instead of doing prestige labs and his nutrient supplement thing and all the other stuff that he was doing, he said he would have doubled or tripled the size of gym launch. So I really just believe that this is not an issue for at least 10 years at Augusta. And that is, I would only ever do this in order to be able to allow an owner to, to, to grow and expand without having to go across state lines there for their second, third operation. But the margins go down the training curve. It's horrible. The only way this would ever work is if you. Simple, simple, simple services. There is one service I'm very interested in right now. And when I say interesting, I don't mean like I'm going to do this service. I think it's a good model though, because it's a simple something that's very, very simple. But. And it's easy to train employees, but it's very, very high margin. The thing I don't like about it, it's not recurring. And that's why, again, back to this. Better business, better margin.

You have to Take into account that we have one of the best recurring models in the world. When you have a 4 to 5, your average lifespan of a customer and you have price inelacticity like we've seen this year, where everyone's raising prices and they don't lose customers. I'm sorry, this is a better business than people think. And we can always chase the next shiny thing, but it's just not there. The one service that I, I think I have looked at quite a bit and I think could have potential is like routering, router services, unclogging drains. Literally just unclogging drains. No plumbing, nothing else, just unclogging drains.

And there's plenty of other services out there. But again, it's just a matter of how do you professionalize it, how do you make it more systematized? How do you make it where you have a unique advantage from a brand perspective? But you can. I don't like it because it's not a recurring service. People don't depend on you being there every week to come do their pipes. And there's massive peaks, like weather, massive peak, I don't know, like lawn care. We have this like three to four months, like wave that we usually go through with rushes and seasons. If there's a cold spell, you literally go from 10 calls a day to 200 calls a day for things like clogged drains.

Something happened, the water systems, things like that. So I'm not a huge fan of that. Compared to lawn care, I really don't. I think we just, we're also affiliated and acquainted with this industry that we we just fail to realize how good it is. It's an amazing industry to grow, expand, learn business.

And this is why everyone's like, oh, what are you going to do after lawn care? It's like, no, I think it's an amazing business. There's billions of dollars to be made in this industry. If you can just figure out how to scale and figure out the systems, figure out the software, figure out the robotics in 15 years, like that's going to be needed. So I don't think I need to go anywhere. I think as you scale a business, you're going to have plenty of challenge. And if you're like, man, I'm bored, like, everything's kind of working on systems. I know there's a few owners already in this position, but just scale scaling creates all of the issues that you want as an entrepreneur to stay sharp. And if someone's like, man, just like kind of complacent like the general managers are running things and I don't really need to be there. Great. Go start 10 of them, then see what happens. Then figure out how hard it is to find GMs and then find a regional manager and create compensation plans around them. Have them flying around and stepping in when a general manager doesn't show up, and all of a sudden their employees are. And you have to fly in and save the location. That's a whole different can of worms compared to sharp. Making sure the blades are sharpened every Tuesday. Right. So I really think that scaling and growth is your recipe. If you feel like you need more as an entrepreneur, it's not to go into a different service, but if we ever do something like that, it'd be very, very simple services that you would not need training on how to do the work. It's simply be like, okay, use all the same software. Use command center. Here's a different service. Plug it in. I have no, no passion doing that, though. Unless we have market saturation inside the United States.

That'S all I got. Question here. Thumbs up. Thanks, Dustin. All right, guys, have a great Monday. Have a fantastic week, and we'll stay in touch. We'll see you tomorrow.