Mike Minutes Mastermind 09/23/2024

Hello ladies and gentlemen, August Nation. Hope you had a fantastic weekend. I am on the road but wanted to get the Mastermind in. We got a bunch of questions, eight questions today.

So we'll jump right into those.

Several things. Working on the next few weeks.

We are looking into an alternative for the pro shop because they've become exceedingly slow at making updates for us. So we'll see. There's just a lot of other companies that don't have the technical aspect that they do in terms of some of the customizations they've allowed us to do. We are looking, Lee and Zach and the team are looking at a couple different options with dope, marketing, etc. See if we can get some better pricing too, especially on things like yard signs. So we're working on that. That's going to be the next few weeks project. I'm also making video and text or video and image ads for selling winter services. Over the next couple weeks will be happening as well.

I think that is all I had.

Cool.

Later this week we will also have a automation sequence for follow up for Christmas lights in terms of templates inside of Copilot since you'll want the follow up sequence for estimates that are sent out for Christmas lights to have the logo be different, the verbiage is different, etc. So we will have a process you can just download from the marketplace inside of Copilot and I have all those templates done correctly, have the tagging done correctly so that your Christmas lights estimates are handled differently than mowing and landscaping. So. All right, so those things are coming up. Let's go ahead and present.

Boom.

All right, number one, Danny Diaz from Oswego, Illinois. Is there a way to get tutorial for holiday light estimating.

Utilizing Jolly lights with Copilot from start to finish?

If someone makes one of these, I know there's people have used it a lot more than me. If someone makes one of these on loom, for example, be super beneficial. Feel free to send it to franchisegustalawcareservices.com and CC the media team. So just mediagustalongerservices.com and if it's. It's. If it's. Assuming you record it decently enough, we can go ahead and put that on the academy for everyone else to be super beneficial.

Papa Pain Follow up question to 9 2024. Oh right, that was the one where you submit all the questions. Oh, this is probably the comment that you had on the YouTube. I saw this. Okay, got it. Thanks for reminding me of this all right, Follow up to 92024 questions we mark most of our tools 50% or less. We cannot mark them anymore or we'll we will not close projects. Irrigation, PVC, materials we can mark up 100% but labor, electronics, control panels, lighting, wire, etc customers will not pay 100% markup. Simulated idea. Your home builder isn't marking up lumber 100% because it's already so expensive. We are already premium priced with our material markup because our labor is significantly higher than our competition. $80 for projects, $100 for mowing. Our total payroll field and overhead runs around 30 to 38% of total revenue including my pay. We have $80 E on every line of our overhead. Payroll is the 2 gm the two office steps I take the calls for our three locations plus myself we tried $100 estimate fee up front that would be applied as a credit if approved. We did this for a full month of June. We went from 75 product estimates sent in May to under 20 in June. Out of those 20 we had three agreements to pay. We got flexible on it on the end of the month and if they pushed back just because we needed to work out of the three that paid, one approved. We turned off all project ads on May 1st because the close rate was so low. Then with charging up front for estimates we ended up almost running out of work. With the project work running out, Joe could no longer get billable hours every week helping with projects because then he would run out of work for the fuel guys and our mowing is very is staffed very well. We can finish in three days.

Finish in three days. This leads to the GMs having less work for GM model and less sales at Go do because people would wouldn't agree to pay for an estimate. I even gave the office a script of all the things that would include for the EP designs, pictures, measurements, videos and we allow them to schedule a specific time and day to meet. Instead of a four hour block we are going to take the LTE iPad pro I have with keyboard and try having Joe do some in person that he types up in the truck then shows the customer on the iPad pulling up the PDF for them. We cannot save designs in person that quick but we can have a price for most things, even full tear out grading, sod and irrigation. We will see how this works and report back. I like you had the first thought of let's turn off ads to save money and charge for estimates. So get rid of the tire kickers and the GMs will have less estimates to go do, but they will be for more serious customers. But that didn't work as well. But that, but it didn't work as well as I hoped. In 2020, we charged $120 for estimates and had 10 to 15 a week. It was a different time. Yep, good point. Didn't realize how good we had it back then until the projects dried up. Yeah. So this is, this is the, you know, the seesaw of emotion that I always have with projects. It's like when the going is good, man, you can just crush it. And you know, in hindsight, I think a lot of us would have raised prices, charged fees to get two estimates for projects, et cetera, and just gone, you know, heavier on projects back then. And then, then there's like the see sawing of like, well, now we're charging literally 25% more per hour on mowing, and we're closing 40 to 50% of those jobs. And for $80 for projects, which includes more project management, more.

Equipment, like so much more involved, and we're making less per hour. Right. So it's just, it's difficult, that seesawing. And that's why I do believe, like, having both is important. You're able to really cash in when times are good on the projects and really make a killing. And I don't know, like, you guys have probably more than doubled. I almost called you Papa Paint. I know you guys have basically doubled since that time. And a lot of it's on the back of those projects. So it's not bad to have projects. It's just a matter of like now it's like, okay, having the recurring is super beneficial. So I think in hindsight, when we look back at these next year or two, it might be like, hey, this is the time to go in on recurring. Right. And so it's a matter of like, do we keep pumping money into marketing or do we focus on the projects more or do we, like, let's just build out the recurring. We know customers need it. This is the time we can actually still sell at our higher price and be profitable. Like, mowing is the focus. And I know you've been doing this, Ryan, and that's like moving one of your project trucks over to mowing. It's like, hey, this is where the demand is. Let's follow the demand. And then in probably three or four years, potentially there's another boom. And what do we do? We go into projects, there's a building boom. Like if there are regulations that are removed or funding Moves in or interest rates come down and all of a sudden people are building a bunch of houses and getting cash out refinances in their house, like, let's go in on projects. So I really like this idea of being flexible with this. And as long as you're not tied in, like this is how the business model must be, you can ebb and flow a little bit. And so I know Ryan's already doing this. He's moved one of his project trucks over to the recurring side, put a ramp back on, et cetera, like, follow where the money's at and realize that probably over the course of three to four years, it's going to kind of ebb and flow with the economy between projects and recurring. Because, you know, when they, you know, Ryan raised prices at all three locations, like $20 per cut, I think they lost less than 5 or 10% of their customers. Like, like that, that is the, that is the customer saying, this is my demand. And then when I raise prices to projects, like, I can't close anything. That's demand. And again, not to say that mowing is better, recurring is better. Everyone always thinks I say that. It's not. Not true. It is following the ebb and flow because the projects, your close ratio is probably 50, 60, 70% three years ago and you're booked out six months and you could charge whatever you wanted for you just to show up and do an estimate. Right? So the ebb and flow there is valuable. The flow, the fact that you're trying the. Doing the iPad Pro, I think with Joe, I'd love to hear how that works out. Even if you can take your closures from 20 to 25%, say 40 to 45%, that'd be a huge win. And I think it would reduce the amount of ebb and flow you have to do between projects and recurring. Because right now I am. I have talked to several companies that are doing 10 million plus that are literally shifting everything, their maintenance because they can't sell the jobs. And like we either lay off and sell trucks or we have to move over to recurring. And they're basically, they're selling some of their assets on equipment and putting that towards marketing recurring services. Because I think all their demand is currently out there. So like, having that balance is really healthy. And I really encourage them. Don't go abandon projects. Like in a few years, you'll kick yourself in the teeth or kick yourself in the.

What's the word? You kick yourself. You kick yourself because you're like, man, now projects are really, really good and we don't have the equipment. So like, just don't be too reactionary. I think for all of us it's just like there's going to be an ebb and flow between projects and recurring. Knowing which one is the current hot hand is important. And I think right now we're seeing like people are, they need maintenance. We can still, we're still raising prices and people are okay with it and projects, we're just seeing more price sensitivity and a lot of times it's because it's a bigger ticket. People are going to think about it more, they're going to shop around it more and it's just the economy. But again, if interest rates come down significantly the next couple years, we could be in a very different spot in three years. So don't, you know, for all of us, don't like, oh, I'm abandoning project mowing only. I think, I think you'll miss out on the good times. You know, it's like time in the market is better than timing the market. As Warren Buffett always says, it's like just stay in the game.

Ricardo from Alexandria. Hey, Mike. So I'm bringing most likely two full time employees on board starting next spring to plan for growth. One of them is joining in the hopes of learning the systems and eventually becoming estimator and GM in the future, opening up his own location. And while I want what's best for him, I also, I'm also a bit selfish in the way I don't that I want to keep that talent as long as possible because I know he's going to be great. So what would you recommend? You to retain that talent as long as possible and possibly pass that on to other crew members in the form of training others. Great. This is what I would first say. I'm glad you're talking about thinking about now and not in two years when they're thinking about leaving you. You would not be able to retain this person without the hope or expectation they have of becoming a general manager or owning their own location or becoming an estimator and so realize that you keeping them for two years would be impossible if you didn't lose them in a few years. Now if you make it so good for them that in two years they're like, hey, you know what? I'm gonna have a solid paycheck. This is really good. I'm enjoying my role. They might not leave, but you can make it where they build the position for you. This is the biggest value add that they do leave you in two or three years, they use a 3F program or whatever, or even they just move to a different company. The value to you is that they build the position. So what you're going to ask them to do is like, hey, I want you to systematize this role, the estimated role. I want you to have a checklist like, where do they. Where. What do you do on all these steps? When you come into the office, what's your day look like? How do you save time? What parts of town do we have? Better close ratio, avoid this intersection because it could kill you by 30 minutes. Little stuff like that. You want them to.

Operationalize the role and systematize it so it can be handed off to someone else. And a great person can do that in two years, 100%. And how you present that to me is like, hey, in order for you to move up in the company, I need you to operationalize this role. So that way when opportunities come, like a GM position, I can actually move you into it and the company here will be fine. And so in each of my companies, when I promote someone, the first thing is like, hey, just so you know how things roll here, in one or two years, I'm probably gonna need you to move on to something else. I'm sorry.

Hope that's a little bit better. That's not my AirPods. I'll need you to move on to something else, likely. And then being honest with people that you know they aren't going to move up because like, there's a big constraint to the business. So I don't think they'll mind someone like Liz. I have to move up almost every year or two. Someone like Lee will probably be in his current role for another year or two before there's another big jump. And just being like really honest with him, like, here's what I need. In order for you to be ready to be able to take that jump down the road, I'll need your current role systematized and operationalized. And so it's not a bad thing to say, hey, it's going to be a couple years. So. So in your case, Ricardo's like, hey, I'm going to need a gm, I'm going to need an escort. It's going to be a couple years from now. In the meantime, here's what I need done and here's how I can pay you and here's how you can make more money. But I need the system this operationalized so that you are actually eligible and able to move on to the next role if and when it comes available.

Ricardo Alexander Are groceries considered a write off? Since when I'm eating, I'm working. When that fall under work meal. Um, if you want to make this really clear, like obviously Brad's the best person to answer these questions. As an accountant I talked to your accountant about this stuff. I would sometimes buy the crew a whole bunch of food and then as a W2 employee of the of the company I would eat that food. So we have like snacks, fridge stuff at the office. If you have like freezers, like buy all those things. Then if you take from that you're an employee and it's part of your benefits of the company and working there, that's like the way to kind of operate like make it the simplest. I keep bring my lunches to the office and keep them in the fridge and so I'll order it from the company card. And like part of my perks as being the CEO is that I eat this food from this fridge. So again just keep track of it. That's the main thing. I don't eat those meals at home.

And if I'm just going to buy like some random food like to enjoyment, I would put that on my personal side. So I've showed you guys before like all my cards I have Sharpie like the different businesses like and if you just do like checking account, there's your debit card, you know, business business credit card, a personal, like I just do it all in Sharpie and then when I'm ever I'm just making a bias and I'm like okay immediately which one does this fit under? If none, this is going on personal and then I'm just trying to do my best to make sure that all the circumstances lead to being able to fit that into one of the businesses.

Coach Connor. Morning thoughts.

Like many, we have transitioned heavier into recurring services. However, I quite like projects to break up the mix and so does my team. With some projects such as plantings or installs walls. We have not offered warranties before but it's a gripe from some of these other customers, some of these customers that we don't offer a warranty or a stalemate in a sales process.

In the sales process, my rough thought is that if we are going to offer that we have to maintain the landscape for X amount of time or we only warranty it if we are the ones that take care of it completely like in perpetuity. I feel like to help boil the pond if you want to stay in larger projects, we are Going to continue offering some of those services. We have to make the customer experience even better for long term customer value. Just like Kathy says, we don't need to talk about getting better, bigger. We need to talk about getting better. Because if we get better, they'll demand we get bigger. Yes. So this is actually one of the things I've talked with yesterday about with one of these companies that doing massive, massive projects. They probably do almost $20 million in just projects. And man, it's really tough for them. They, it's tough. They leverage themselves a lot. They grew huge during 2021, but now it's tough. So what I really encourage them is like, don't try to pivot so hard. It's gonna be very jolting. It's gonna be very expensive to move. Your whole business model is like, take all your projects and sell warranties. And the warranties are not, hey, you're gonna pay $300 a year for us to warranty your wall. It's going to be, we're gonna show up every single month, it's gonna cost you 150 bucks. And we're gonna do all these services on your property, break out the beds, we're going to check the wall, we're gonna, we're going to do an inspection, we're going to pull the weeds, trim the bushes, whatever maintenance related things. And then you say, as long as you have us on service for that, we will warranty the wall in perpetuity. Right. Knowing that most customers leave and sell their property within five to 10 years. And so like the likelihood of their paver patio falling apart inside of 10 years is very low unless you actually do a bad job. So if you do a good job, you do drainage correctly on your projects, you install the plants correctly, you require irrigation installed. Like I would say, hey, look, here's our price for the landscape installation. Here's our price. If you would like us to maintain your property on a recurring basis, we will warranty all the work of the landscape install as long as two things are true. One, you install drip irrigation and we do it. And two, you have the maintenance package going forward, as long as you're on the maintenance program, we will warranty the work that we do. And let's go ahead and protect your $20,000 investment or $15,000 investment with a package that's not only going to warranty the wall, but it's going to keep everything looking good all the time. So I would build this into the sales process. I would do it in one of two Ways I would either a do it if you feel like people are you're losing people cause you're in the sales process. Cause of no warranty. I would sell it then and secondly I would sell it of the project. So every project manager would basically have to then during the walkthrough when the customer's peak satisfaction everything looks great. This is amazing. You're selling them into the recurring package which is really just a maintenance warranty on the work that's being done.

Brian Connor from Augusta, Georgia.

We are planning to open another location Aiken, South Carolina starting this January. We choose to use leverage and get financing for this opening. One of our Augusta, Georgia team members, Chris will be the gm. He actually lives in the territory. I don't know if I've ever met him.

Maybe I have.

Okay, I'll have to look at your team meeting. We plan on copying your 2 truck model and race to 40k as quickly as possible. Even 30k Brian, you'll get above a break. Even 30k is like where if they can get there in 3 months I would really reward that because it means you're you start actually making profit. The bank wanted some projections itemized allocations of funds for startup marketing breakdown and three years of month by month profit and loss projections. I know there is a lot to look at. Would you be briefly go through the projection, give me some feedback. Any serious red flags or mistakes. It's just a quick thing on the Excel doc that we have for at the initial training where we go over like each month that's actually on the SBA and really is helpful for like showing your month monthly projections. The main concerns I have are the first five months are in the red and it and it has our working capital dwindling down to about $2500 before we hit our first profit month. We plan on having 30k in working capital when we start. I know we can work to add BHS and get the red to a minimum but I want to project what I thought was reasonable as a startup. Also I did notice that beginning allocation for day one doing Christmas lights has some serious profit benefits. Yes, there's. There's quite a few people doing this. I would recommend this. I just talked to one of our first 10 franchisees that's starting another location and they're going to be probably doing this. They're starting a second location with Christmas lights so they can do all the cash up front and then basically have their websites running on the Augusta side and then it will get like SEO traction over the winter. So definitely a good idea. Okay.

Loan origination. We got payment amounts. Okay, this is your debt schedule. Interest is 12 and a half percent, original balance. Okay. What are these numbers?

Oh, what? Oh, I see. These are all the different debt. Okay. Debt schedule. All right, give me a second. Let me figure this out.

Why is this 20? This is in the past.

Okay. I mean, let me skip forward. This might be different. Okay, here we go. Aiken expansion cost. So $150,000 total. You got two trucks. You got your franchise fee. You got a dump trailer, mowers, ramp rack, paint and lettering. Good, good, good. Okay. Yeah. A lot of marketing. $20,000. Let's go.

Okay, it's good. So really, really, you're putting 100 grand in and you have marketing of 20 grand, and you have working capital of 30. Okay, great. Here's your marketing plan.

So you're going hard in March and April. Very good. Going hard on door hangers. Okay, good. Well, three solid months. Okay.

I do think this is going to be able to get you to your. Like, there's a substantial amount on marketing. I think you'd be able to get to your. It really comes down to your close ratio and your ability to sell for your gm. So now we got team members. Okay. Gm, gm, March, one team member, team energy. I would be surprised if it takes all the way to May to get to this point because you're spending a lot on marketing.

175 at.

40% P for P.

50 clients. 100 clients. 150 clients. Projected budget, hours, income. Yeah. So the one thing I think, Brian, that you might be missing in terms of your projections is projects. Projects are going to come in and they're going to.

Increase this number because the amount of marketing that you're doing, you're just gonna get a lot of leads for projects organically. So I do believe you'll be able to get more like the team members. The two will probably come sooner. When you're spending that much money on marketing and your income will be higher simply because of the project revenue. Like, you're. You're counting on this. This is linear. 50 clients, 75 budget hours. A hundred clients, 150 budget hours. That's linear. What's not going to be linear is the fact that you're going to get projects and you're getting a $2,000 job. $1,000 job. And I think this. That will the pushes this number to above the 30,000 level is your projects. Unless you're doing absolutely no projects whatsoever, which I would Be just know that if you, if you allow some projects like cleanups, mulch installs, etc. You could, I think in April you'd get the two team members. I think you'd push this forward basically one month and then hit this goal faster.

Okay, here's your expenses.

$1,500 a month for insurance. This seems a little high. You got two trucks, so let's just call it 300 bucks. This seems a little high for insurance. Great. The business loan is three grand a month. Okay. So I'm guessing this is like a three year term. Three year term. Well, maybe a five year term. Okay. Because you're 12% interest. Okay. Command center. Okay, good. That scales correctly. Phone and Internet. Okay. Software maintenance for equipment, truck maintenance, fuel. Good. That scales job materials. Cool. So what I would probably look at, Brian, is I think your job materials might scale up, assuming with projects, if you're allowing some projects. So if you're going to bake in some more project revenue, you'll get to profitability faster. I think you'll get it in April, no problem. But your job materials will increase as well. If you allow like mulch, gravel, soil plants to be purchased, etc. That would be my $0.02 on that. So that's pretty good. This is 2026, the year after.

Okay. Yep. That's very conservative. I like, I like very conservative numbers here.

GMPEG scales. Okay. Command center fuel scaling K. And you have 2027. Okay. So the goal is basically get it to four team members. I'm guessing you're gonna switch into profit mode. Yeah, Right in here. Okay.

Yep. At 90. Okay. To $90 per hour is that year. I'm assuming this is 80? Yeah. Okay, good. Yeah, I like it. This looks very solid to me. I think you can do it faster assuming you have a really good closer in terms of someone can sell in terms of the first few months because you're spending a lot of money, you're dumped with leads. If you're doing $4,000 a month on door hangers, like that's essentially someone full time doing door hangers. You should be getting like a customer or two a day at least on recurring, but you're also going get some projects filtering in there. So I think from a revenue perspective you'll probably hit it sooner. Just make sure you bake in the fact that there's going to be job material and cost there. But I think you can increase the number, your crew size faster if you're allowing some of those smaller projects in there as well. That's the only thing I really see in there, Brian. And why it took so long to get above profitability is because you're leaning a lot on those recurring customers. I think especially the beginning. Usually 50 to 70% of revenue is going to come from projects because all that marketing is going to generate these little projects, cleanups, upsells that you can do. And I would be having. If you're doing door hangers, I would be like hey, giving them a property cleanup price with the mowing one. So I can at least get them on a one time job and then try to get them into recurring and vice versa. I get them into recurring, I sell them a one time job. So just know that whoever the GM is, he's got to be really good at closing if you're going to spend that much money in marketing. Because there's going to be a lot of leads coming in which I'm not questioning his abilities, I'm just saying that would be that that entire plan hinges on that.

Our solo model is no longer being sold at a combo with a prospective franchisee and Basin info. I told him to look in that route and he didn't know anything about it. Yeah, it's off the website now. This is something that the Franchise Advisory Council pushed for a couple years ago. We've allowed the past couple years for people to join with the expectation that they'll have to within the two year time frame switch over to growth. And as we move forward it's the wishes of the Franchise Advisory Council. People have more skin in the game and so I'm honoring that. We're making sure that's happening and we've been trying to slowly move it that direction so it's not jarring for anyone. But yeah, right now it's not being offered and not being sold. I think there was one or two that had purchased like six months ago that came last training and maybe one more, it's coming in October but then, then it'll be done. So there'll still be some solo operators that have joined and we will serve them as we have stated until they switch over growth. That'll be just fine. But I think it's the wishes of the Financial Advisory Council and I think it is long term better for everyone especially as we start getting locations close to each other. We want to make it very clear the value of having a territory it only increases when there is actually governed territories. So. Ken Lynn, I had a question about selling winter services. I'm getting a lot of customers drop off right now due to lack of growth and the leaves starting to fall, transitioning all my customers in the fall cleanup and it's working out pretty well. My question is, how do you then sell, sell a service to an entire culture of people that only want to pay for what they need? I get only. I get about 10 to 25% of my customers wanting to skip during droughts and want to stop service before the end of October because they just don't think it's necessary. So if I'm going to try to sell them a flat rate for winter services, do I sell them on the beginning of the winter season? Most customers in the past haven't wanted to sign up for snow plowing until the very first storm here. Snow season December through March. So basically they want to start late and end early. Okay, so you got to get ahead of it. You got to get ahead of the customers canceling. And so if right now you move from mowing into fall cleanup season, before fall cleanup season ends, which sounds like it's end of October for you, you've got to sell them on winter services. Now, we've always thought that our most price sensitive customers will not take winter services because we think, oh, they're paying us more money. If you pitch it as you will save more money, you might be surprised. The price sensitive customers wake up to the fact that, oh, this will actually be cheaper for me. So keep that in mind. Let's just not have a limiting belief. I'm not saying it'll work in every market. I'm just saying let's not have a limiting belief before we tried this. And that is to sell it as a actual price enhancer, a value enhancer for the customer. It's cheaper for them. Like a value sensitive customer will take winter services if yet that's your mindset instead of I've got to sell them this new thing. It can be very beneficial. So I would just get ahead of like do not wait if you end mowing and like people will drop off end of October. You got to get ahead of it. Like I'd be doing it starting and doing it now. Like, let's sell them now. Like at the very, very worst, they will cancel a little bit early. That's like the worst case scenario. I think you'll double your, your.

Pickup rate of winter services if you do it three or four weeks before. Now if you're doing the fourth track.

Of a winter services where you just send an email out and do a click out, usually you're wanting to do a week or two before end of mowing and that's it. Because you don't want people to end off early. But if you're going to actually sell and go aggressive and use track one, two or three, I'd recommend doing it significantly before, like, I'm talking four to six weeks before mowing season ends.

Good. Mastermind. Let's go. Love it. Okay, we got a question. Looks like in the comments. Also curious about customer retention in general, knowing that we have more work to do in the spring cutting grass and less in the summer. How do you sell them the idea to not skip or quit early? I think this is more a matter of just focusing on more leads and then weeding out people that do this consistently. And what I would probably do if this is a big concern is take all the customers that cancel for like one month or like pause services. And I would basically, when you need, when you hit capacity next and you want to raise prices, you can either raise prices or you can take just that customer segment and raise prices substantially or tell them they're not allowed to do it either. Basically like, hey, going forward, we're going to be prioritizing customers that keep us throughout the year. This allows us to be able to keep our team on full time and make sure that we don't have to lay people off for a month or two. Take that position. Don't be like, because we want to make more money, like, it's not going to work. Like, we want to have sustainable work for our crew. In order to do that, we're going to prioritize the customers that keep us on throughout the summer months. And so going forward, we would require that if you want to cancel, that is totally fine and we can offer you other service, other providers in our local area that might facilitate that. However, we are going to try to maintain this consistency for our team. I'd be saying that again, I would do it when you're at capacity and you're considering raising prices. And again, instead of doing that email and explaining all that, you might just want to raise prices on them substantially more, which would make up for the fact that during the summer they cancel. So, like, yeah, cool. Very good, mastermind. Appreciate you all and we will see you tomorrow. Take care.