Mike Minutes Mastermind 10/12/2022

Good morning ladies and gentlemen. Let's get started. I have my phone here sitting because at some point through this meeting I will probably get a text message that I have to respond to. We always underestimate just how hard Apple makes it to launch a new version of the app for P2P and the amount of codes and verification processes that we have to go through is obscene. So anyways, I. I need to get that one. So that's gonna sit there. Let's go ahead and jump in. I did not have a whole lot of announcements. I'm trying to save most of those for tomorrow evening which again is the round table. It's gonna be 5:00pm Pacific Standard Time. That's 8:00pm Eastern Standard Time. I saw there's a couple people joined last night on Tuesday in the Zoom Room. It was not last night. It is tomorrow night Thursday. That will be out. Send a reminder out tomorrow as well just so everyone is on the same page.

And there'll be a lot more announcements during that meeting. All right, let's jump into questions.

Here. There you go. Share.

Kyle we have an older truck that needs some repairs and what your thoughts as far as my best what my best option is. It's a 1999 Ford F257.3 liter turbo diesel. Our loan will be paid off this year. We bought it five years ago. Over the past few years we have have had it spent quite a bit on repairs. 7.6k for an injector and turbo work three years ago. $1800 on brake and caliper blowouts. The brakes literally came off the truck. Oh wow. Regular maintenance. Otherwise I've been told it needs the front suspension redone and it will most likely need a transmission to other drivetrain work done in the near future. The quote shop quoted. The shop quoted me 2 to 3k to pull the transmission and replace it. It'll be another two grand to get the suspension parts replaced. I told the shop I just wanted to get it back on the road and limp it along. My thought is that if we can get another year or two of life out of it, we can save up and get a different truck and use this one as backup. After next year when the Norman location is fully operational, we should be able to take the more location profits and invest in another truck. What are your thoughts on what we should do in this situation? 1999 is getting kind of old to be honest. That's 23 years old. And what I have found when you're trying to limp along trucks or go cheap is I'd rather get a newer truck, even if it has more miles, because all the random stuff like electrical suspension, all sorts of, like 25 years is a long time for a truck.

So you're going to constantly have, you know, things blowing up on it. Sounds like my. My question is, can you sell it right now for five grand and instead of spending, you know, four grand on limping it along, can you take your budget from five grand to now nine grand and maybe flex at the 12 grand and go buy a better truck? Right. So I'd be inclined to see if you can sell it when it's worth something and then put that towards a new truck. That'd just be my. My idea. Here's. Here's something for you guys. There's this really good. This guy I think I've talked about before. His name's Lucky Lopez.

On YouTube. Oh, you guys can see this. One second. If you guys want to know about trucks.

And. And all sorts of things about car. The car market, this is the guy to listen to. He knows his stuff.

And it'd be really interesting. The reason I'm saying that is because the. One second, guys. Okay, that's good, right?

The.

Car market is going through a bit of a weird time right now because it's typically the car market and debt on cars is the first thing in a recession to really be affected because it's shorter term and you don't have equity. Like, everyone needs a house. People can get by with a cheaper car. So when people try to downsize, they'll go to cars first. And when you have a massive bubble like we've seen the past two years with used cars, what that means is people will go underwater on their cars very quickly. Their mortgages are now, the loan is way worth way more than what they had on it. What it's worth, I should say. And that's when people start walking away from their vehicles.

So really, really interesting. And that, that compounds when you get unemployment spike up, right? So people start losing their job at the same time that their vehicles are worth less than what they're. With their mortgage, they're loaning on it. That's when people just walk away from vehicles. They're less likely to walk away from a house because that whole process can take like six months to a year. The whole foreclosure process, if not more in some states. And people need a house, you know, a roof over their head, so they're less likely to just like walk away from a house, especially if they have equity in it. Even if they're missing payments, the bank will work with them a lot more. So anyways, really, really interesting. I've been listening to him for the past few months. He has some really good stuff. He's out in Las Vegas and he is a dealer, so he gets all the back end as well as a financier. So he gets to see where all the finances are at. And now with these vehicles being so elevated in price and now the interest rate's going from like 2 and 3% on a car to 8, 9%. Like it just changed the whole game.

I bought four ramp racks this year. Do you typically. 179. Section 179. Expense those or amortize them. They seem a weird asset to amorize. This would be something you want to go with the cpa. It really honestly, I think you could probably argue both directions because you could argue it is like a piece of. Not a piece of equipment, but like it is a tool that you're buying. But you could also probably argue it the other way. So you do want to talk to your CPA personally. Again, this is not tax advice. I would be looking at my personal situation for that year and asking what's best for me and then arguing that direction for something like a ramp rack. But you probably should amortize it. That's. Oh, wait, guys, one second. Guys, give me a second here.

I gotta send this screenshot with this Apple verification code to the developers. Boom.

0109 08.

Okay, hopefully that's good enough. Okay, cool. All right. But yeah, this is something you want to go over with your cpa, which there'll be more coming on that tomorrow night. So Roundtable have some info about that. All right. I have a question about P. Ls. When looking at our profit and loss, the gross wages are showing up as wages paid to employees. That is before any taxes are paid.

We also have a gross tax category with computed basis based on employee and employer taxes paid every 2 weeks. I think this is causing inaccurate P&LS. My salary of $450 per week would look like this $900 in wages category with everyone else. Then it would show up as $300 in taxes paid. $150. 150 employer. The $150 on the employee side would be showing up in the wages column because it wasn't subtracted out in the taxes column because it was the total taxes paid. I always thought we needed to see net taxes and net wages to have an accurate penal. Let me Know if I'm wrong or if this is an issue needing fix. Thanks. After looking at this image I sent you, it would make sense if only the employer taxes are showing up in the taxes column and the employee. Okay, this is a lot. I mean, look at this. Can you see this, what I'm looking at? No, you can't. Give me a second. Just open up an attachment present.

Oh, I love looking at P. Ls. Wait, no, wrong one. Share present. There's too many buttons.

There it is. Transaction report.

Okay, let's see here.

Wait, who's texting me?

Okay.

Okay.

Payroll, taxes, wages. Quick question for you, Logan. Do you guys run this through QuickBooks or Gusto or some other platform? That'd be my first question.

Employer, taxes. This all looks fine to me. The P and L is what I'd want to see because that sounds like. Okay, that one worked. Okay.

I need to see the P and L because that sounds like that's what's off. This doesn't look wrong. This does not look wrong.

But what I need to see is the P. L. Because that's what you're saying is looks wrong. Feel free to submit another one of those, but my first inclination is the number one thing is making sure that you actually have.

Sorry, I got another code, guys. Give me a second. I'd be making sure that you have. You're using QuickBooks because QuickBooks should automatically do a lot of what you're talking about for you. And in terms of expense expensing to the correct column of like, taxes, net, net wages, etc.

It should all be done as part of the payroll process. So I don't know if command center runs payroll for you or not. So if you could let me know if the command center runs payroll for you if you have QuickBooks, and if you want to show your P and L share, your P and L, I could probably have a better look at it.

But if we needed to, we could take a look at it. Even if we don't do commands, that doesn't do your payroll. Take a look at it and just see, like, why it's not connected to the back end correctly. Is it being categorized incorrectly? Because that's usually a pretty easy fix. It all should be.

Automated. If you're running payroll through QuickBooks, like, it should be really, really clean on your P and L.

Hey, Mike, if you woke up. Okay, this is funny. If you woke up and decided you wanted to pull out as much money as possible out of all your business, 20, 24, how much do you think that would be? Whoa, that's an impossible question. 2024, okay, so 2023 would be. This is fine. This is what we call mental gymnastics. Okay. So that would mean that in 2023, I'd get a idea to be saving up. How much? Oh, you want to know the dollar amount? Oh, mercy. If I woke up and decided I want to pull as much money as possible.

Good question.

I don't know. Like, partly the reason I don't know is that I've never even thought about it. Everything is like, how do we just take every dollar we're making and put it back in? So I would say if I had to, though, if I stopped developing P4P, if I stopped improving the real estate, if I stopped investing infrastructure, if we assume that we didn't have to owe anything on the franchise, man, that's tough, dude. 2024, that's a long ways away. It's like a year and a half away. I don't know, I. I don't know. It'd be a few million dollars probably, but like, you know, if I can put that money back into the businesses, if I did that for one year, I'd probably lose half my team because they, they're all, they're all on board for the fact that we're growing and we're expanding, we're doing new stuff. And so if I was like, oh yeah, like, you know, we're not going to invest in P4P and we're not going to try to grow and we're not going to make the software better and we're not going to try to improve here. But it all takes money. Like.

Super. It takes money. Like we have full time team members just working on the kinks and getting feedback to their developers and like, that takes money. So, yeah, if you stopped all of that, maybe lots of money, but I'm going to be starting three or four new locations next spring. It's going to take, that's going to take some money. All right. Good morning, Mike. I wanted to see if you plan on recording the breakout session. That's for managers and spouses asking because I'm not certain my wife will be able to come as right now, but she'd really love to. I'm not 100 sure on this. This is really tough because if we do, we have to split the media team and we already are hiring other people to help us on the media side this year. But even that, like the main stage kind of needs to be our focus. So I'm, I Don't know about this. I definitely think we could audio record it for augustination, but I don't know if we're gonna be able to video it. So I'm sure we do an audio recording at the very worst. But I don't know if we're gonna have like AV where someone's people are mic'd up and we have everything being done beautifully. Cause that's what we're gonna do for the main stage. We're actually hiring people to come in and actually take some of that off the media team's plate and actually have a really good recording of the event. But to do that now, two different rooms and they're on different floors, et cetera, it just makes it tough. So. So at least in audio recording I can guarantee that.

But we'll try, we'll try to do something with video. I want to start more locations in my area, but it seems like there are others who are also wanting to start locations here. My business is still young and I'm worried that if I don't move quickly, I don't. I won't have the opportunity to have multiple locations in the same area. Can you speak to this concern? This is a bigger concern.

Than.

You'Re making, a bigger concern than it really is. That's, that's my, my POV on this. Especially in your area. Max, there's. The population is massive. I would not be concerned about this at all.

Most franchises lean into this as a way to try to sell multiple locations. You notice I don't talk about this a lot because it's. It is a sales tactic of franchisors to say, oh, you buy up as many territories as possible. And then people buy up all these zip codes and all this stuff. They're only like operating a small location. That's a sales tactic from a franchisor's perspective. And they use fear as a way like, oh, you don't want people around you. That is, it's. It just. It's a scarcity mindset and I'm not going to tap into that because I don't want anyone here to have that. Like, you do not need to worry about this. Okay. So if you have a location and I know there's other locations around you that are like, hey, they're also wanting to purchase. Just keep in mind the amount of location that you could fit inside of your area is a lot, a lot more than you think. And we're actually trying to optimize this to be able to, in our mapping system to A new location start. We have the most optimized in terms of where territories are starting. Everyone that's watching this, you guys already have your territories. But for people going forward, we actually are making sure it is as optimal as possible. And it's not like there's gaps in between, like, of territories, the growth model, because that just makes it where we can't ever put someone else in there. So, like, in your territories, if you have millions of people living around you like you do maps, you should not be worried about this. This is, this is a, this is a, this is a. It's not, it's not of any of your concern. I, I promise you that.

And even if you have a couple other owners around you that are also trying to think about, like, hey, starting second, third, fourth, don't buy into the notion that you need to buy them up right away because other people are going to buy them. We will let you know if someone's buying right next to you and give you the opportunity prior to buy that location out potentially a year before you might otherwise, just so that you can lock it down. But.

I think that this is, this is a misnomer of franchisors that they use as a scarcity mindset to say, oh, you got to protect your territory. But you talk to a lot of franchises. I could name specific ones that I've talked to. And the franchisees own massive zip codes or multiple like areas, and they operate at a small, little, tiny area and they spent hundreds of thousand dollars on locking up these zip codes because in five or 10 years they're planning to expand it. I would not do that. Spend your money efficiently in your one location. Make it really profitable. And yeah, maybe you have to start five miles away or 10 miles away. It's not a big deal. Especially in your market map with that many people, it's never going to be an issue.

Like, literally more than half of our franchise turned off their leads or restricted leads during the spring rush. So the fact of the matter is, when that happens, we're going to unlock and allow leads to go to other franchisees around. If someone, if someone calls and someone is not taking any customers, we want to serve the customer and it's the best for the customer. We give them a solution because they call the Gusta Lawn care. And the advantage of having a franchise is that we can say, okay, great, this person's not taking any leads. Okay, let me give me a second here. And we just switch over to another account and give it to someone else who's willing to serve that area. That's a software that we don't have currently, but we are working with the maps at least right now to have and that is okay. If this person is not taking leads, we're going to give the lead away because it's better for the customer experience that we solve their problem. And on their end, they don't really care if it's, you know, Bob's Augusta Long Care or Jill's Augusta Long Care. I just need a gust along to come fix my problem. And we can do that. And so just keep in mind, literally more than half of our franchise turned off leads during the. During the spring rush and or restricted massively. And so when that happens in a confined area, when, if there's a lot of territories, whoever is the one that's willing to grow and has the ability to grow the most will get a lot of leads, like a ton.

Our Profit margin for Q3 was 37%. 32 profit on 86 revenue. Good for you. And it's cool is because we raised our price at the Bellingham shop. I think we had our most profitable quarter ever. It was like a hundred and just under 140,000 in profit for Q3. Now, Q2 was one of our worst Q2s in the past few years because we didn't raise prices. But when we raised prices in June, July, this, you know, quarter three was great. So is this typical for my size business or is it worth paying attention TO? Currently have 3 employees, 4 trucks, and anticipated gross revenue of 300k for the year. Good for you, Max. Great work. Yeah, that's good margin. That means you're gonna have about a hundred thousand dollars in profit. I don't know if that's pre or post your salary, but that's still pretty good. That is going to be a business that from 300,000 like this year to next year. If you go to 500,000, you're probably still only going to profit around 100, 120,000. Your profit won't go much up next year if you go from 300,000 to 500,000 because that wilderness.

Oh, sorry. Sick. We can't see the questions, Michael. So amateur. All right, one second. Thank you. Liz. Liz dropped me a note. Says we can't see the questions. Actually, that's not Liz's writing. It's Lonnie's writing. Sorry about that.

Such an amateur move.

There it is. Okay.

Okay. Thank you to whoever dropped this note off on my desk. Okay. Yeah, Max, this is good. I would say for Your size. This is a business that you could theoretically optimize because you're. You're kind of at if. Oh, no, you have four trucks. Your four truck situation will get you to 500,000, no problem. You'll just need to hire a couple more employees. But yeah, in terms of 37 profit margin on that size of business, you're running it very well, especially your first year. Like, good for you, man. The fact that in the third quarter of operating, you're running at 37 profit, that's great. The question is, I'm assuming Q1, Q2 is like investing to get it to that size. Right? So now you're at the point where you could optimize this. And what I would recommend is if you want to grow and expand, I would be looking at, okay, we have the trucks, we have infrastructure. Let's really throttle growth to 600,000 next year. I truly believe you can do that in one string rush. Okay. Again, if you just. If you're able to take your leads during the spring rush because you have the trucks or the trucks, if you can get the employees dialed in in February for the March, April, May, and June spring rush, you'll go to 500, 600 grand. Like that. And. And that's the optimal way to do it because you'll get through the wilderness of profitability. Right. So good for you. Great job, Max. Oh, I think this is submitted twice. Nope. There you go. Here's our P and L for September and the year. Jaden is looking at the sinking issue of the taxes duplicating.

Okay, this is the whole year. This is the month.

See here?

Where is it? Oh, there we go. I gotta share this with everyone. Everyone loves seeing P Ls. It's just like everyone's juices just get flowing.

All right, here we go. No, Michael.

Seriously. One day I'll learn how to use this. Share screen window, chrome tab, Profit and loss. Here we go. This is for the month of September. September. Okay.

Wages, payroll, expenses. Yeah, that's a little messy.

Okay, If Jaden's looking at it, you'll be fine. Yeah, it should all be syncing up correctly because it looks like you're running it through QuickBooks.

But it's just a matter of probably in the back end. The automated way that it categorizes things, it needs to probably be corrected.

But yeah, if Jaden's looking into it, you are good hands.

All right.

On top of what I asked about, our balance sheet needs work. Our P L is showing only 800 in profit but we have 35000 in the bank. We sold assets in the spring and purchased assets as well as put money into the business to start the new llc. Can CC help me fix the balance sheet or do I need to talk to a CPA to get everything accurate?

Logan, I will have someone reach out to you.

Yep, this is something at this time of year command center is able to spend time on fix for you and I don't think it'll take as long as you think it will. Lisa can jump in on this and she's really good cookbooks. So this is not. Not something you want your CPA to be working on by the way because they're going to charge you two to $300 an hour to fix this sort of stuff. And usually they're actually worse at QuickBooks than a bookkeeper because they don't spend any time doing QuickBooks. They spend time on taxes and forms and expensive things like that. So yeah, you want. You know, if you. I would recommend. I would recommend I have this for all my locations. The command center does your QuickBooks and mostly do the fact that if they do then on a quarterly basis they can produce a balance sheet and profit and loss statement for you that is. Is reconciled with your bank statements. And if after the first or second one everything gets really smooth, the first one they're going to have to do some work for you like really ironing things out. But I'm actually switching personally to where they do it for me monthly. Um, which I would not recommend for everyone. I'm only doing it because I want. Perfect. I'm at the point once you get audited a couple times, you just do never want anything wrong. And, but, but even quarterly is totally fine. After the first or second quarter, the workload on their part goes way down because they'll. They'll iron out all the kinks. They'll iron out things that are like being incorrectly moved around. They'll get your balance sheet corrected in terms like loans and like you paying off debt, assets, things like that need to be moved around and then after that it's pretty smooth. So it really is way cheaper than your CPA doing it. So.

Awesome. Awesome. We got comments. Oh fun. See here we have CC do our payroll and categorization. Okay. He uses qd. We can't see the questions. We are still looking. Payroll. Sorry, you're talking about the taxes taken out of the employee checks. I don't think you categorize that under taxes, rather under the whole gross amount as payroll. Yes. You're correct. It should, it should collapse kind of like though you have like taxes paid out and then the wages and then it should still be all in your P&L as wage, like cost of wages. Because. All right, off as I still have Facebook ads going and CC is all set up with full permissions.

Oh, Zach's not in today. Logan Albert, cc and then I gotta do Andy Burleson.

Andy, if you could do me a favor and just send a quick email to media@augustalongerservices.com and you say Medford is still not getting anything. We are waiting for this whole week to go by and then we're going to check again because we have to reset every like the whole account.

So just let them know and they'll just manually check your account and see what's up. Sometimes it might mean we need you to delete the account. Like delete Command center and then put us back in. But they're kind of having. It's really weird, like one by one, basically.

I.

I sent the email to the mainstream for you, Lonnie. Thank you, Lonnie. Appreciate it.

Off my list.

Cool.

Let me just make sure who this was because I can't see Facebook use.

Pocket Tax. Nope. Give me a second. Sorry. I just want to make sure I answered this one correctly.

Got it? Yeah. So, Logan, in terms of if they're doing your payroll, they just a matter of making sure on the back end everything is set up to automatically categorize correctly. So I'll drop them a note, they'll take a look at it. And if they're doing categorization for you, it's a matter of making sure that they have access to your bank statements because the reconciling to the balance sheet. So I'll touch base with them, but usually they're harassing you if they are not able to get bank statements and they're not able to reconcile your balance sheet. So I'll make sure that I talk to them, see what's up and then see why. I don't know if you've done it, had any quarterly reconciling because like they will not send you quarterly if they're not reconciled. So let me touch base with them and see what's up there. All right, guys, have a fantastic Wednesday. Look forward to seeing you all tomorrow. We'll do a quick roundtable in the morning and then. Or sorry, a quick mastermind in the morning and then. And then the evening, 5pm Pacific Time, 8pM Eastern Standard Time. We will have the roundtable. Thanks, everyone. Take care.