Mike Minutes Mastermind 10/13/2022

Hey everyone. Hope you're doing super well. Let's go and get started. Let me switch my audio over. Give me a second here.

I hijacked Liz desk because there's two meetings going on in the other room and it would be too distracting. So let's go and hop in. All sorts of papers. Looks like our itinerary for Louisville. Zach Lee lives and I'll be there at the booth. So I'd love to have you guys drop by. Let's go ahead and jump in here, open up some questions. Here we go. Quick reminder though. Tonight is the roundtable. So 5pm Pacific Standard Time, 8pm Eastern Standard Time is the meeting for this evening. So we'll be on Zoom. I've sent the link out via email. I will send it out again this afternoon just as a reminder and I'd love for everyone to be there. If you can't be live, it'd be fantastic. And keep your cameras on so you can actually see people again. Part of the benefit of being in a community like ours is the fact that we do get to see each other's face and we feel a little bit more a part of something instead of out on an island by ourselves. So be there if you can put it on your camera. Be great if you can bring your manager any team leads, it's always a nice thing to kind of bring. Include them in that again, like 15, 20 minutes of probably some updates and announcements and things coming up in this quarter. And then also we'll open up for Q and A. So looking forward to that.

First question.

Forest we mow year round, even through the winter. I want to do a price increase but don't know how to how it can be done efficiently. For most other states, you guys stop mowing in November and it's easy to price increase for the next year at the beginning of the season. My question is when? How would we achieve raising prices efficiently with the best time to raise prices and retain most of our customers being spring when they can't find another company? I would say yes to that in terms of the best time in terms of retention. Typically spring rush is a great time to do that. That being said, in Florida, in California markets, in parts of Texas, and even some of the other southern states, you can raise prices during the winter because you do mow year round.

And what I actually have found is that especially in markets where people charge level billing throughout the whole year, it typically is around those markets and it's easier to get people to leave their other level billing because they're paying 250 bucks a month and you're saying, hey, I'm only gonna come twice a month, it's gonna be 50 bucks. So it's actually cheaper for them in those months.

But I would say more importantly, when you look at the business in terms of price increase, I've been looking at are you at capacity? Right. So if you've grown the business to capacity, there's no reason to wait on a price increase. Raise the prices immediately because you actually need to lose some customers in order to be able to continue growing and taking on new customers. So that would be my first thing is like, are you at capacity? If you're not, then I'd be looking at, okay, let's keep growing at this point throughout the winter because you can keep growing in your market. And then next spring, let's raise the prices when we're at capacity. That's what I would probably do. So if you're at capacity, there's never a bad time to raise prices if you are below capacity. It's a matter of do I need these profits in the short term just to keep going or do I am I able to delay profits until a more opportune time that I need to raise the prices during spring or when I hit capacity, which typically also aligns with spring rushes.

Thomas double O1. Let's go. Two topics. I'm very interested in the idea cell phone company tactic you mentioned yesterday. Oh yeah, new client onboarding price that is scheduled for price increase at a later date in order to get them into our system, try us out only to get caught in our stickiness. I assume that client would be aware of the agreement. I would be interested in a breakdown of systems scheduling a verbiage of the model. So it would. The client would not be aware of the agreement. There would be no agreement. It'd be simply a matter of you. You know that you are filling people up. You're trying to get 70, 89% close ratio. And you know when you hit capacity, you're going to raise prices. You know that if you fill up a bunch of people in this spring, that you're probably going to fill up your schedule and be raising prices in July and August, for example. I would. This would not be like an agreement. This would not be like, oh, your first year is $40 a cut and we're going to raise it to 55. Don't do that. You get them in the door because you will not be able to get them in the door and prove your quote unquote stickiness. If you're doing that, hey, we're having a scheduled price increase in a year from now. You would, you would not get people, so get them in the door with the lower price. And the whole advantage is that you don't need the agreement and that you can raise prices when you hit capacity.

So. And I would not call it a tactic either. It's not a tactic. This is a way of growing your business more efficiently and that is close every single job you possibly can and maximize close ratio until you hit capacity limit, which is trucks and employees. And at that moment, you raise prices. And again, if you've done a good job on customer service and you've done a good job for your customers, the stickiness should keep them through that price increase.

And again, when it comes to this, use that document from a few weeks back in terms of modeling out your prices, modeling out your price increase, and seeing exactly the impact it's going to have in your business and see if, okay, if I lost 15% of my customers, what would happen? Okay, how long would it take for me to recoup those customers? All of that's in that document that we shared a couple weeks ago when it comes to price increases and being able to model exactly what that's going to do for your business.

2. Your thoughts on a return bonus program for employees that return the following season, assuming we have to lay them off for the winter. If so, what dollar amount would make most sense? I'm not a huge fan of return bonuses, mostly due to the fact that if someone doesn't want to stay with you the whole season, they'll just come back through one pay period and then they'll boun. And that's actually worse for you because if they do one pay period in the spring rush, you're two weeks into, even deeper into spring rush. I would rather train people up a little bit sooner, get them up and running and know that they're there for the long term. So I'm not a huge fan of return bonuses. It could vest. Like if you really wanted to, you could best. It's like, hey, if you come back next spring, you'll get $100 one month, $100 next month. That potential might work. We've never done that. My goal is that when, if we have to lay someone off, that they want to come back. Because in the alternatives to getting other positions is not as enticing as working at your location. Right. So whether it be P4P or profit sharing or health benefits or whatever, you're offering that should be incentive enough for them to want to come back. And.

If you're losing all of your guys every single winter, it's probably a good sign they're finding better stuff to do and so you might need to increase your compensation plan.

Seen a few of the franchisee Facebook pages without their location the page name maybe it's just a pet peeve of mine, but shouldn't everyone be required to have their location the name like we do with Google my business might prevent some confusion when doing search or whatnot and having wrong locations called look I have tried to tell this at training I have it in the checklist I have it in the training I have on slide now. Yeah 100% recommend this this is why we actually don't allow owners to take control of their Google my business page is for this one. One reason it would it messes up your SEO. You will get random calls from other locations because you're you're you will rank in other random areas is why Google we we literally don't allow anyone to touch it because of this. I recommend the same thing to your Facebook page. I recommend the same thing for every other social media page and that's what we teach at training and and trust me, it's for your benefit because number one better for SEO. Number two, you're not going to get other people out of your state searching. And because you just have Augusta lawn care and they search Augusta lawn care you now pop up, you're getting called, you're getting wasted time on the phone at command center. That's not what you want to be doing. So highly recommend this through and through and through again. So if someone doesn't do it they're just hurting themselves. And so yeah, that's why again Google My business we do not allow anyone to be owners of those accounts for this. This is the main reason we allow everyone to be managers. So you can add pictures and do reviews and all the rest of it but we will never give up the ownership because of this. It needs to state your city name was a waste other people calling your location and it hurts your SEO in terms of your ranking for your account.

Is there a point at which we should be reducing a budget hours just to close the job even though the budget hours set most likely would be unobtainable for the crew. We have already stopped any EVs, dump fees, trip charges. Do I still need to close more work for our location? Yeah. So that's when you start taking a haircut on the budget hours you're correct.

Yes. So like, if it's, you know, eight budget hour job, you might put seven or six just to get the work right. So again, filling the capacity is the number one thing. Once you fill the capacity, that's when you start throwing on e fees. That's when you start raising prices. That's when you start increasing margin. That's why, like, the only thing I care about is getting the capacity. Because once you get the capacity, you get a very interesting business. You can add e fees, you pad pad budgeted hours, you're booked out so far, you don't really want the work, so you just like go really high. That's when the business gets interesting. Like I mentioned the other day, we had the best, to my knowledge, our best quarter ever at the local shop in terms of profitability, just under 140,000 in profit. That is 100% because we hit capacity, we were six to eight weeks booked out and we raised prices multiple times in that. In that quarter. So getting to capacity is like, should be the number one focus of everybody in their business. And then at the capacity market, you determine, do I keep growing, I. E. Buy more trucks and hire more people or do I focus on improving my margins and actually making profit? If you look at anyone that is.

This is the thing I don't really understand is when people are like, I am so busy, I can't find any employees. I've booked out 15 weeks and I'm not making any money. It's like, look, if you're booked out that far, you should be raising prices. You should be making really good margins. Okay? The only time that I think that a service business should be struggling is when they're growing really fast. I completely think that you're going to be run, you're going to be cash strapped because you're trying to invest the money back in the business. Or two is you are not at capacity and you have four trucks, five employees, and you're doing 20, 20,000amonth in revenue. You will lose money every single month, guaranteed hand over fist every single day of the week. All right? So if you're not at capacity or you're growing fast is when you will lose money. And that's where most service people, most service businesses are. That's why I always say, like, the only thing I want you to do is get to capacity because then you have options. You can raise prices and make really good margins, or b, you can continue to grow and then reset your threshold of what capacity looks like for your location.

Is There a day of the week that one click estimates work best. Monday or Friday or does it make a difference? We haven't seen a direct correlation. We've done all over the place, time of day, etc. There's hypothesis and I have my hypothesis, but I can't say that we test anything like that's the day and that's the time. I just can't say that. You know, there's so many hypothesis and some of it depends on the age of your demographic. I know, for example, like myself, if you send me something during the night, there's a good chance it's getting like. Because when I come in the morning and I take 10 minutes and scan everything, there's a good chance I'm missing stuff, right? So if someone wants to reach me, they're probably going to contact me on the afternoon. That being said, there's a lot of older people that like they'll spend their first hour of the day strategically going through all of their email reading everything and that'd be a great time to be in their inbox. But there's just so many different. I've seen it. I've seen ones crush on the weekend and I've seen ones crush it in the evening, I've seen ones crush it in the morning. So I don't see a correlation enough to where I'm like that's the time, that's the day. I've just seen every single day and time work. Well. It most the much larger factor is what does that email say? Is there one call to action? Is it clear in terms of what service is being pitched? Those are much more important based upon what I've seen over time. So cool. I hope that makes sense about the, the growth to capacity. We've always talked about growing the capacity and then what we were talking about the other day is like what, what, what cell phone providers do. And that is like, hey, you, you start off with a lower price, entry level price and they try to hike the price up to year one or year two, like a cable company, etc. You have the advantage in your business to not have to tell them about the price increase because you know you're going to do it when you hit capacity, okay? And until that capacity moment, you're going to probably lose money. If you're, if you have $35,000 a month of capacity and you're doing 15,000amonth in revenue, you will likely lose money because you're inefficient. You have trucks sitting there, your asset utilization is horrible.

That's why close ratio is the only thing you got to focus on. And so to do that, if you cut out E fees, cut out dump fees, compress budget hours, do whatever you do to get capacity because at capacity is where you can turn a lot of levers in the business. Throw on the E fees, increase your rates to existing mowing customers.

And just so many things you can do to become more profitable. So all right, well we will see you guys this evening again, 5pm Pacific Time, 8pM Eastern Standard Time. I will send you the zoom link again in your email. I look forward to seeing you all there. Take care.

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