Mike Minutes Mastermind 09/20/2024

Yeah, like on the actual visit itself.

Hello, Augusta Nation. Let's get this started. Just drop this into Facebook real quick.

I had posted earlier that.

We didn't have very many questions. I think we had one. So thank you. Everyone submitted, I think about 8 now. It looks like you just pop this into Facebook.

All right, Happy Friday. Get this party started.

We'll jump right into questions.

Present. Share screen. Boom. First one is from Ken Lynn. It looks.

Like.

I've received emails from site one about holiday lighting. How do they compare in pricing availability compared to the other company that people are going with?

I don't think it's a bad thing to get another price and see what works well for you and balance it out with availability and what they can offer you. I think that most people have found the two vendors on the vendor portal to be cheaper. They're giving us the discounts.

But if you have a local site one and they're willing to train you a lot more or whatever, like there might be value there. So definitely, you know, see what they can do for you. But just realize that they're marking these up tremendously as a retailer, whereas most of these other ones you can get a little bit better because they're more of a distributor. So just keep that in mind. But, you know, just, you know, price compare and see what, what, what they can offer you. I think most people are finding better pricing on either certified lights or the Christmas lights. Contractors 1.

So.

Papa Payne, what would you do in this situation? Close rates for projects are low, on average 20 to 30%. The CFO said we need to be around 50% profit on projects. After direct costs.

We are between 50 to 55 on average since April. Job costing all projects. We are emailing and texting proposals, providing free project folders with measurements and videos, free designs for flower beds, and multiple following up multiple times. We have not run out of work, but we are two to three weeks out instead of two to three months. If we lower the price to increase close rate.

We won't hit our goal of 50%. We are not excessively profitable where that would be an easy level. Close rate P and L and job costing pictures attached. We have aggressively attacked expense line items and have that almost as lean as we can. Efficiency scores for the locations are 80% and on average 90% is regular. Okay, we got a bunch of attachments.

Okay, so this looks like we got close rate for projects, close rate for mowing. Yeah, see, that's interesting because I know you raised a ton of your mowing prices and it Hardly affected your close ratio. That's interesting. Okay, let's keep moving along. Next one here, share this tab. Okay, so each of your locations. So basically we're looking like 27% close ratio and projects like above 40% on mowing. It's the last location. Oh, wow. 17% and 50%. Okay.

I actually have an out of the box idea for this one second. Oh, this is fun. Okay, so this is for the quarter. June, July, August.

For each of the locations.

Okay, so we're operating a negative 5% net.

You do have depreciation in there though. Okay. And amortization.

Interest expense. Where's interest expense?

Where's interest expense?

Sorry, guys, I didn't look at this before, but give me a second. Interest.

Interest paid. Okay. Okay. Okay.

Oof. Okay.

So one thing I'm not. I'm just. I'll say what I'm. As I'm looking at this, what I'm thinking about. Okay, so.

When I look at projects and I have job cost materials and supplies, I always want to mark up this, usually by double, right? So on $50,000 worth of supplies like this, you know, blocks, plants, whatever that I'm selling a customer, I want to be making at least $100,000 in markup. So what I usually do when I look at a P and L, I take my job supplies and materials, multiply that by two, and I take that out of the revenue to come up with actually how much revenue my wages are generating. So that's a quick little thing I sometimes do. So what I see is, and again, I'm gonna make a bunch of statements here. Please don't take us all out of context, folks. When I look at these P and LS, so I see 50,000, I take that out of 204. So I look at $100,000 of labor revenue, and then I would say 40,000 plus 20,000 subcontractors. So you're running around a 60% direct labor on the labor revenue. Assuming you're marking up materials by about double. So that's a little bit high. But I'm guessing that you probably don't mark up all your materials by double. So there's probably a little fudge factor there. But, you know, ideally, if I can get that under 40%, that's most ideal. But again, if your close ratio is low, you're not charging a premium price, etc. So that makes sense. I'm just looking. We got some material. Quite a bit of repairs and maintenance look like.

Okay.

This is quite a bit. What's this. Okay, so quite a bit of overhead. So I'm going to. Yeah, salaries of like all office folks, etc. Okay, so I'm going to assume what you've said is true and that is you squeezed this already. So I'm not going to look at this much in terms of overhead stuff.

About.

18% of your revenue is going to overhead salaries. Again, that's fine. Like I'm going to assume you've squeezed this. All these are just things I would sometimes look at. So. Okay, so if we take out depreciation, amortization, you're running a small, slight cash flow.

Right? Slight positive cash flow. However, you are going to have loan obligations on top of this in terms of debt payments. They're not shown here, just interest is shown here. And I know there's loans, so. Okay, all right, gives me a good idea. All right, I'm just looking through the last one now.

Okay, so this is all your projects and then your percentage here at the bottom. Okay, I'm assuming this is cogs, you have costs. Okay, so just for everyone, cost of goods sold is your direct labor. So your guys out in the field, it is your materials and is your subcontractors kind of make up this.

So okay, so again, as a blended average, if someone told me that, hey, I have really good profit margins on a project, however, I'm not making money in general. I'm looking then for overhead costs and financing costs. So overhead is going to be things like offices, rents, utilities, and then financing is going to be things like loan payments. So if you're paying on a whole bunch of trucks, equipment, machines, etc. Then it would. Again, even though you're having a profitable job, the business won't make money. So. All right, so I could go really deep on some of these little things in this, P and L et cetera. But I actually had an idea as I was reading this originally.

Because if you're, if you're, if you're doing project based jobs and less than about 25% of your jobs are being accepted, you usually won't make money. And it's because the amount of overhead required to get the job sold because you have to do an in person thing, all these things that you're doing for free, like the designs, the follow up from the office, all these extra costs are piling up even though the job itself is profitable. So from a direct cost perspective, it's making sense. And so what your CFO is saying, hey look, we gotta, we got to close like 50%. No, he's saying, oh, he's talking 50% profit. Okay, see, I would, I would say, I would say in addition to what he said, I would say that you need to have at least a 30% close ratio to be profitable on projects. At least. Because otherwise you are doing for every, for every five. For every five project estimates you're sending out, only one's being accepted because of that. It means that if your cost to send an estimate is, let's just call it $200, that means you have to spend $1,000 of overhead to get that project. So even if that project might be profitable, the amount of overhead to get that one project is actually multiplied by five because I've got to go do that five times, go visit the customer, do the measurements, do the design, do the follow up calls. All of that costs money. So there's a couple things you could do. One.

You could go more defensive. Defensive in this case would be I'm going to cut overhead and in order to do that I need to have less admin tasks for them to do. And to do that I'm going to have a estimate fee that I charge up front that then gets applied to future jobs. This is going to probably take your close ratio from 20% to 50% almost overnight because now people have skinned the game, it's going to dramatically decrease, however, the number of estimates that are being sent. And so if the defensive measure, the defensive measure would be charge an estimate fee, drive down the number of leads that you're getting, but close way more of them. And then the only reason this would actually save you money and actually make you more money is then taking the extra time savings of your estimator and putting them in the field. The extra time savings of an admin person and them taking time like not having to work as many hours, that will make those jobs more profitable on the overhead portion because it looks like you're relatively decent on the cogs, like around that 50% mark, that's okay. But the cost of not closing jobs actually does stack up, especially when you have projects because your estimators are there. Like some of these designs take a significant amount of time and then there's follow up and then multiple meetings sometimes, etc. So you want your close ratio higher. To do that we can either a go defensive, which is charge an upfront fee that is reduce the amount of people coming into the filter. Therefore I don't have to do four estimates for every one accepted that don't get accepted. Like four out of five are not Being accepted, we will never make money because we're sending our most profitable person and we have an overhead following up on these estimates that are not going anywhere. The second thing that you might want to do, and this is what I would probably do in your case, Ryan, you have really good estimators that are all experienced. I would consider selling jobs in person on these projects. The time savings of, of right now, the amount of calls and follow up work, et cetera, that's being done at the office could potentially be done in person. Now obviously massive projects where you gotta do a bunch of job costing might not be, you might not be able to do that in person. But even if it's like, hey, give me 20 minutes, I'll come right back to your house and we'll go over the project numbers, knowing your estimators, I think they're all pretty capable of doing that. That would definitely be an option. Like I'm thinking of Joe right now. I think Joe would do a phenomenal job of being a sell in person right after meeting the customer. I think that alone could probably take you from 2025 potentially to like say 35 or 45 and turn those, turn the amount of overhead per estimate much lower. Because now there's not time back to the shop, there's not the office following up multiple times on an estimate that doesn't get accepted and the likelihood of them accepting right after they met with the estimate is just higher. So that's a thought. Either of those measures I think would work defensive basically cutting admin costs, cutting them out of time, the estimators are out in the field doing estimates instead switching their time to productive labor and. Or the offensive measure is go ahead and try to close these jobs 20 to 30 minutes after even if it's they're back in their, their truck figuring all the numbers out and then going right back in. I think that would be the last thing I would add to kind of your current follow up process is just changing the upfront sales process and then that would eliminate all the extra follow up that's required and time spent doing some of these design things that end up becoming a waste. So either one would work.

It just depends if you want to ultimately reduce staff and reduce admin and like that side of things and put your estimators back in the field or continue to take the leads, but just change the upfront sales process slightly. I'd be really interested to see how that works. I think both of them would work. It's just which way you want to Go with it.

All right, Mr. Anonymous. I like the concept of having general managers run locations for me while I do more of what I want with my life or even retire while management runs the business in practice. Managers sometimes leave, sometimes they are incompetent, things fall apart, makes me have to step in and this doesn't feel like an achievable thing. What do you feel is the solution to Augusta franchise owners basically retiring while owning locations? Is this doable? Does it require a bunch of location with a regional manager? Okay, so if you want to basically never be contacted about anything, you will need a regional manager because there needs to be a last line of defense that the buck stops with them and they can make decision on anything, whether that be legal lawsuits, whether that be people threatening to sue, like all this sort of stuff you need, you would need a regional manager. So like my locations, nothing gets to me because I have a regional manager. However, I do believe that if you have a location in profit mode for two years with you as the owner, then when you hand it to a gm, there's enough meat on the bone for you to be able to keep raising prices and create enough of a margin gap. Like I would literally set aside money in the event of a GM collapse if I was the owner and I was like, I have one location, it's profitable, it's doing 6, 700,000 in revenue, I'm going to keep it in profit mode for two years, which means I'm going to raise prices, not get any more trucks, not hire any more people. I'm going to get to 800,000 and now it's producing a lot of profit and I'm going to go hire someone and I'm going to overpay for them to be someone that has been in the industry for 10 years, has done this for a long time and I'm going to pay them really, really well. That would be probably the move I would make if I was trying to retire with one location.

And then I would have that two years where I stack that money aside. So if anything happens that gm, I have this big stack of cash that I can go attack the problem with because the stack of cash will help if there's a problem with a GM going down. Because usually when a GM goes down it has problems with hiring. Like people leave as well as customers. They've damaged a bunch of customers relationships. And so ads will fix, you know, advertising to new customers and getting more leads will help with the customer side to refill that funnel. And then, you know, hiring and like indeed, ads, et cetera, will help with the hiring aspect and then also having enough cash where you could literally have a. A big incentive for a new GM that we would have to refill their shoes with. But if I was only having one location and I was going to retire on it, I would let it be in profit mode for two solid years. The reason I say two soldiers is because I have a location that's been profitable for two solid years and it's just way more consistently profitable. And I know that the, the amount that the GM can make is significantly more because it's been in profit mode for two years, etc. So.

Okay, it looks like you got some project folders. We wanted this, offering a promo pricing, a suggestion from Brian Conner, a coaching call that has closed two pics attached. Okay, give me one second.

Share this instead. Okay, what are we looking at? Oh, click this link to view your project folder. Okay, that's what you're talking about. Cool. So if anyone doesn't know, Ryan, they basically do for these projects, they put like a Google Drive folder and they link it to. To.

They link it to.

A Google Drive folder from the estimate inside Copilot. You can do a clickable link there. So then they just take it there. Has videos and pictures and et cetera. So it's pretty cool. It's a promo. If you accept this proposal in the next few days, we can do work for 22,000, $2,200. Okay, so you've been putting it in the estimate. Okay, got it. Okay. I would be really interested to see. Whoops. I would be really interested to see if you let your estimators actually do this proposal in person.

I would test it out and then if it works well, either equip them with an iPad or even a mobile printer. They actually would print off the estimate and go talk to the customer. And then what I would do is I would say the promo is you get X amount off. If we go ahead and get the job on the schedule before I leave this house.

I think that would work pretty well. Especially like, I just know your GMs, Ryan. I think they would, they would do well in that scenario.

So.

Yeah, promo. Yeah, like the promo. I like it. I think it could be delivered more effectively potentially by the estimator and, or because this is the thing, what you could do is you equip your estimators on big projects. They're already at the property, right? So like we're not saving time by doing like anything remotely. It's like we're already there. Let's spend the time that we would otherwise spend in the office putting the other numbers. Let's just do it right now, 20, 30 minutes, whatever we gotta do. Put the folder together, put the video in there, whatever, and then print this bad boy out.

Walk back in there. And then in their head, they know they can give a certain amount of discount off. So they pitch it. They see where the customer's at. Some people are like, yep, let's do it. Other people are like, oh, let me think about it. And then in their back pocket, they know, hey, I know you wanna think about it. I know you're talking with your spouse. Why don't we give them a call now? Because I can. Actually, I'm authorized to give you up to a $2,000 discount if we get the job accepted while I'm here. As soon as I leave, I can't get that discount anymore. I do think that would be valuable, especially in projects. Like projects is just. It's a bit of a different beast there because the cost of not getting an estimate accepted is so much higher than a mowing estimate. And that's why a lot of times people. It's not the cost of goods sold where they lose their share on products, it's the overhead part. And then the overhead part needs to be accounted for. And the fact that an estimate that is sent but not accepted takes a huge amount of time on big projects, especially if you're doing designs and videos and follow ups and all that, you know, Lawrenceville. A couple questions in this one. Have you ever considered working with New Build New Build construction nationally? To have Augusta language at a preferred vendor for certain builders? This would be something Augusta as a whole would have to save for this certain builder, let's say, Dr. Horton, Augusta locations will give a certain preferred vendor discount for entrance maintenance. This discount would always put an Augusta truck in a new neighborhood and they pop up hundreds of houses over a certain period time period. I would be open to this. Like, it's not like, if they came to me, I wouldn't say no to this. I know that they literally go after the lowest price all the time, especially the home builders, because they're trying to build this house, sell it as quickly as possible. And. And their holding cost is their, like kryptonite. And so they want to like get this mowed up, sell these houses, like create an HOA or whatever and get out of there. Usually that's not the ideal customer for us in terms of premium pricing.

But I'm not opposed to this. I'm not opposed because like especially if we get more and more locations, being able to tell a built home builder like we are in 80% of your, you know, projects radius and we can serve 80% of your projects gives us a lot of leverage.

So not a bad idea. I'd be open to that. And if someone had a contact, that's the big key here. If you can get a contact with someone that actually does the buying for this sort of thing, I would work on setting this up. However, I will say I don't think this would align with our ideal customer.

Kyle Freeze from Blooming to Illinois Within a month I will have an entire team turnover primarily for good reasons. Two have been with me since last fall and one started at the beginning of spring. They are now a killer team averaging between 100, 125 efficiency daily. What would be your focus? Rebuilding the entire team this late in the season. For context, two new guys already hired. One starting Monday and one starting the following Monday. Yeah, I would definitely, I would, I would really focus on the training program. A nail a training program. So I have a two week program to get these new people onboarded. I'd be, I'd be giving a.

Incentive for the trainers to get them trained up. So every single day they have to come in, do the fill out the form. If you don't know what I'm talking about, go to new hire underneath the dashboard there's a document there, two weeks walks through all the tax they need to know has a trainer to be able to sign things off on. I would give a bonus to your trainer if they get to the two weeks and everything is signed and done. I also even if they've left.

When they're leaving. Oh, within a month. Yeah. So within a month means there's probably a pay period. They're still with you after they've done training. I would tie another incentive to if the guy that they trained, the guy or girl that they trained.

Gets above base pay in their first paycheck that when they're solo or not, underneath their them as a trainer trainer, I would give them another bonus. So yes, you'll probably give out, you know, an extra fifteen hundred dollars here in bonuses but it's probably the difference between taking two months and two weeks of ramping up these new crew members. If you really incentivize these trainers to get their brain locked into these new people. So this is, this can be a big problem but it can also be a fifteen hundred dollar problem and that is Incentivize these people. They'll be happy on their way out. They will not decay on their last week or two of work, which can happen even to good performers when they know they're on their way out. That'd be my recommendation. Ricardo Alexandria going through the winter services training, what I got was targeting the pain point of cleanups. Being a higher priced service is the way to sell the lower priced maintenance service. Would it be more beneficial to have winter services as a year long low ticket service for maintenance similar to weeding. That way there is less friction when switching from mowing to winter services. Okay, so the reason I agree with this, I agree with this. The reason this is harder is because the amount of work required during the spring and summer is so much higher. The reason we're able to offer the lower service, like if you actually broke this down, the reason we have three months of the year where we're able to offer the service is because it's the lowest amount of growth that happens. If you wait two weeks on, you know, throughout some spring and summer, you would literally be trimming all the bushes every single time you get there. Like it would be so importantly, it looks so expensive to the customer. The reason we can do this is because not in the growth season. So if you did did the math on this like the cost per service or mo or the cost per visit for like a year round winter services would be literally almost double. If you just do the math on it.

Compared to what we can do in the winter because we know the grass doesn't grow gonna grow. We know the bushes aren't gonna grow a ton. Like we're literally just cleaning up and maintaining.

During the dormant season. Also how could we place this with the year long maintenance service that set in the dry months, dry hot months, instead of skipping or canceling modes, we pivot to it. Hopefully that made sense. Yeah, it makes perfect sense. I would really, I really think that the people that accept winter services are also the people that don't cancel during the the lull in summer. And so there's that that customer that's going to leave during summer, I happen to believe they're also the one that will opt out of Windsor service. They're just the very price conscious customer. For someone to call in over the course to just basically skip one or two mo's during that lull. They are very price sensitive. So I would, instead of focusing on that, how do I kind of get them, I'd go after how do I get more customers that won't call over that and and we'll go with winter services. Their property looking good all the time. Me showing up there consistently is very important to them. That's just a more ideal customer.

Mr. Anonymous, who should I contact to get advice on how a divorce could affect the business and the best way to go about it so it doesn't impact it negatively?

There's been other members inside of Augusta Nation that have gone through this. It usually trickles up to myself. I definitely would got on a call with owner success manager. I've dealt with this quite a bit inside of Augusta Nation just because the volume of owners. But there are many members inside of Augusta that have gone through this. So.

I think I allow anonymous posts in the Facebook group. Maybe not. Let me think. Give me one second.

How would you do this correctly?

How? Message some other owners inside of Augustination and ask who they might know that has gone through this inside of a gust Nation and they can point in the right direction. I am, I have. I, I do step in and help with these sometimes because this can get very, very messy. It's going to come down to valuation, making sure you protect yourself. Obviously, like, okay, I'm concerned about your business. That's the relationship we have here. I'm not going to talk about like family and relationships garbage. Like that's all very important. It's number one. But like from my, from my perspective, when I get involved in these, I am mostly concerned about the business.

And so, you know, I'm not going to try to like give therapy and like to try to fix things. I'm just like the relationship we have is business and I'm going to try to help you on that side. And so I would say you are trying to minimize your valuation and when it goes to an attorney, it depends how messy the sketch too. You're trying to minimize your valuation, so you're trying to mark a lot of your equipment down. You're trying to depreciate a lot of it so it doesn't look like there's a lot of value there.

So yeah, I know like there's just everyone gets like kind of not triggered but like has opinions on that. But I, when I've gotten involved in these, I always take it very strict in my brain of like, I'm not going to talk about this personally. I am, I am here to help you with your business and I would say there are several things you can do to minimize the costs.

But yeah, I definitely recommend talking to other owners most of the time. This does trickle down up to me because as a franchisor, we can help a little bit with giving valuations and like giving, you know, putting up, pointing a court in a certain direction. And so sometimes they do reach out when it comes down to splitting assets, et cetera. So for example, if you've signed exclusively on the franchise agreement, that gives you a little bit of protection because it's harder for them to transfer assets over to them. So sometimes those I could keep the business. There's a lot of other things though, like your house, etc. That becomes a bargaining chip with the business. So there's just so much there. Sorry. Whoever it was, I just. Yeah, it stinks. The worst part about this, Kenlyn, I was going over some of your old content and came across where you said when you're small, you should keep your radius to 2 to 3 mile radius. In my experience, it's difficult to fill the schedule in that small space. I have found the inverse is true. The smaller I am, the further away I have to go.

How do you dress to compensate with this? I am also asking this question. To start more locations, you start a second location. Should it just be one truck in a two mile radius? How does that work? Or smaller locations or multiple locations? Yes. Like I've. I've always done this. When I first started my first location in Blaine, we literally served a mile radius and there was less than 6,000 people inside it, maybe a mile and a half. So we kind of went down to like Point Whitehorn, like a mile and a half, maybe two miles tops. But there's only 6,000 people that live inside that area. The reason I like this is because everyone in Blaine knows who I am. Like me personally, because at the very beginning I literally would share my story. I'm saving up for college and all this garbage.

Then I can hit every single one of them with an every door direct mail. I can target them 100% of time on Facebook for like 10 bucks a day. They. They all see me.

So that's why I did that there. I then when I went to North Carolina, I did the same thing with my location there. I like two to three miles as my focus. Even if I have a five mile race, my focus from a marketing perspective is smaller.

It's so much easier to boil a puddle. And everyone conceptually knows that they need to have 8, 9 touches before a customer goes from a prospect into becoming a lead. However, with our behavior, we pretend as if there's a. We're like gamblers. It's like. Well, as many Shots as I can get, I'll get more options. I'll get a higher likelihood of success. And so we think, okay, I'd rather just go market to 10,000 houses once instead of 2,000 houses five times. We all conceptually know the ladder. The 2,000 homes is gonna get you more money. But we all, like I just see over and over and over again, people really put. Put their money where their mouth is in terms of they just go after 10,000 houses because they want to cast a wider net, then it doesn't work. And then they either say that marketing doesn't work and they stop marketing. If they had a 5 times X budget and they could do it 5 times to the 10,000 houses, they'd probably see really good results. So I've just seen people, they know boil the puddle works, but they still will go abroad. And it is the gambler's mentality that the more chances I get, I'll get a higher likelihood of success. But you got to realize when it comes to marketing is the likelihood of success increases as you bet on the same one, right? So let's just say you have a 0.25%. I'm just making these numbers up 0.25% response rate. The next one might be 0.35%. Next one might be 0.45, like from a betting odds per shot. And so instead of trying to take 10,000 at 0.25, I'd rather go 0.25 at the same 2,000 and then 0.35 in the next one and 0.45 in the next one and then 0.6 in the next one. So it's different. It's not like one marketing piece has the same close conversion as the second one to the same customer. So hope that made sense. All right, everyone, have a fantastic Friday. We got some cool stuff for brewing up over. I'm looking forward to sharing with everyone. I might share it, wait till conference to share some of it with augustination, but it's gonna be really good. So we're working on it. Got to test it a bunch more. But I appreciate you all, appreciate all the surveys that came in a few weeks ago. Taking a bunch of action on those things and kind of changing some of my focus on some stuff based upon those. So thank you very much. Have a fantastic weekend and we will see you soon.