Mike Minutes Mastermind 10/24/22

Hey everyone, hope you're doing super well. Let's go and get started. There's a whole bunch of questions that came in and then I want to talk a little bit about working GMs and just go over several things on their pay, their.

Their workers, their employment contract, etc. There's some questions that came into me over the weekend on that, so I want to talk about that as well and go over it. The documents are in the dashboard. They're currently on the dashboard. All right, let's go ahead and answer questions first though.

There's 11 that came in it looks like.

Since you are paying your GM's profit sharing with after tax profits, how are you calculating that? If your P and L says you made 10k in profit, would the GM get a cut of that or would you actually be less? Because taxes aren't shown on the P and L. I do it pre taxes. I do the profit sharing again as an S corp. Any profits in the business after? Because the reason I do that is because their wages that I give to them and their bonus I give them is a deduction. So in the following quarter it's going to come out as an expense. So.

If there's $10,000 in profit and I give them 10%, that means they get $1,000. However, that thousand dollars is coming out as an expense on the next quarter because they're getting paid for the previous quarter. So I just give them a percentage of the profits on the P and L. If you start trying to do post tax, it gets hairy and messy and it's not as straightforward for them.

I created my winter services email to send a custom to clients. We will be coming weekly and mowing as needed, typically bi weekly and performing which services task every other visit in the opt out email link. The link is to the bestlong insurance.com. thank you. See attachment on that page. It states we will mowing your lawn again next spring. Which is incorrect for me because if they opt out then we either stay mowing weekly or bi weekly depending their current frequency. What do you make the ID for the link? Keep link as is impossible. Have clients call seasonal clarification.

I see what you're saying. Let me see this screenshot real quick. Yeah, it says you out there when service got it. Okay, so you're saying that you mow regardless of winter services. So.

Let me think about that one. I don't know that I don't want to change the page because for 99 of people or 90 of people it's going to Be better that it say that still. I'm just trying to think about how the best I do that. Give me one second.

Okay. So I need to think about that one.

Link for opt out.

If mine.

Yeah, I probably wouldn't send them the thank you page that says that. So let me see if I can't make a secondary page like thank you thank you number two or something like that and then just say we'll continue mowing. We will thank you for opting on winter service. We'll continue mowing your property only something like that. But again only a couple of our locations continue to just mow during the winter. So.

Yeah, I'll follow back up on that one. Vlad.

Kyle we are getting ready to start our Christmas light installs for our existing light customers this year. We'll just charge the full balance of the install, removal and storage right up front before we show up. How would we go about notifying everyone that what their price will be? It would kind of be a pain to email everyone individually. Thoughts?

I assume your price would already have been established prior to you doing this.

How would you go about notifying them? I would probably just send them an invoice and then in the body of the email.

Say anything that you need specifically about like being upfront. But I don't think another email is required if they've already accepted client, you know.

Lights. I'd be sending an invoice honestly. Or charging their card.

Yeah, I guess I'm kind of assuming that the price has already been established. So unless you're changing price, I don't think you really need to email them in terms of notifying about their price will be if the price changes. That's when you email them. But if they've accepted service and you've done their service in the past for a certain price, I would they would they assume and I would just assume that the price is the same. Is there a certain mileage you won't go over when looking for new fleet trucks? Most of the trucks around me have 100 to 175000 miles 2005 to 2010 model. I'm wanting to stay around the 5 to 8k price tag. Yeah like I don't like to go over 100 like 60, 170000 miles for sure. Because then at that point the only reason I'd be doing it is, you know, it's only last me a few years and the hope is that in a few years that I'd be able to afford the next truck right so is this tying you over or is a long term truck? If it's a long term truck, I'm shooting one at 120,000 miles max.

Whereas if this is a short term tie me over, I need the next two years just to and I need to increase capacity then looking at something 160, 170,000 miles. That's when I've done that in the past and I've gotten trucks as low as 3,3200 bucks. And we just got rid of one and it lasted me four, five years. But I knew that going in. It's like, like, okay, 3200 bucks. I probably put a couple grand into fixing it. Average out over five years. I ended up paying like 100 bucks a month to keep the truck. Right.

It just depends if you're trying to look more long term. I'd be looking for lower miles if possible. How can we know if any action is being taken with accounts that get sent to collections? I'm finding a, a losing battle to send people to collections because they are not collecting any money for me. And if I circle back to people and keep chasing it down, I then have to pay the collection agency a third of the money when they did nothing. How common is it actually get money from the collection agency after going for it? When we switch to super, I'm going to do weekly billing in car on file. So I don't get accounts accumulating so much overdue. But collecting money has been a major pain point. Yeah. So if you're going to send the invoice to collections, it's kind of your time to like stop pursuing it. Right. So I wouldn't send a collection until like you've shown up to their property, you've called them, you've emailed them, you have called them. Like you've done everything possible to try to get the money from them. And at that point you're kind of just hoping that the collections department can do something for you. And whether the Empire, if you're using somebody else to do that collections part for you, I would then follow up with Empire or whatever your collections agency and try to be kind of like, stay on top of them because they can.

Be more forceful if you're on their case. That's, I would say, like, if I had an invoice where I had tried my best, I had been sent to collections and I didn't hear anything from them, I would be like following up with Empire and be like, hey, just check in. Have you heard anything from this person? Can we be a little more forceful, blah blah. I'd do that after like May a month. But again by the time it gets sent to them I should have tried and exhausted basically everything including going to their house because I don't want to give up a third of our 30% of that invoice Junior weekly meeting with GMs what do you talk about? This is something that we will create more frameworks around inside of the working GM files on the dashboard. I'll go over a couple of them today, end of the questions. But typically it is KPI's is just an overall focus on certain tasks, certain things that the regional manager is seeing as weaknesses or holes really keeping the working GMs accountable to the 30 budget hours per week minus estimates. Those are the type of things that is going to be the main driver of those calls and more global things because they're going to have weekly one on ones as well where the one on ones you dig deeper into their dispatch board, things like that. But any trends is what they're really going to attack. During a weekly GMs kind of conference call which I think.

Chuck has has my GMS on a Tuesdays after the roundtable a lot of people are pausing mowing service because the drought we've been experiencing. One Should I wait till mid November to send the winters Winter Services email? 2 Should I assume people assume the sale of people who have already paused mowing services? Yeah, this is a tough one because typically we don't send the opt out email to people who have already stopped mowing because they get confused. And so you could though you can just expect there to be a few calls about like can you explain this to me? And I didn't really I already stopped mowing and all that sort of thing. But.

I would say I typically say like for example in your market max, we mow to the end of November, you know we've gotten rain the past day or two. You're going to start to get some growth. But yeah, there's people who have already canceled and then what will probably happen, they'll like call you in November for one mo and then you could potentially try to get them on winter services then. So it's either a you send it now and you risk some people quitting. That's the big thing is if you send the email out saying hey winter services they can now click a button and cancel or win their mowing services and they're going to quit one or two mowings prior to when you want them anyway. So you're going to lose either way. Either A, because of the drought, you're either going to lose A, they drop off sooner or B, you send it too soon and then it makes it really easy for them to cancel services for the remainder of the year. So it's kind of a double edged sword, I would say. Typically there's a nice balance in your market first or second week of November to send that out and you're guess you're going to lose some people that are pausing right now. If they're pausing, that's one thing. If they're canceling for the next spring, you know, if a lot of them are honestly maxed, I would probably send the winter services, opt out to everybody and then just know you're going to get several people confused. But it's better because you're going to have a whole bunch of people that you could.

Potentially put back on winter services. It just, we've never done that because I can't assume the sale with people who have already stopped mowing services. And I can't just like start winter services again if they've been not mowing for two, you know, a month and a half. So that's why we've never done it. You can, you just have a lot more questions and a lot more people disputing that first invoice. So we only do it to people who have current are still on mowing service in the first or second week of November. Again, two to three weeks before we're done mowing.

Hey Mike, what are the KPIs that need to be tracked on a daily, weekly and monthly basis? Also, please address. Yeah, working GM compensation contract from last night, if not already done. So yeah, I got your text. So in terms of KPIs, it's max metrics. It is close ratio. It is what percentage of your revenue is going towards late wages? It is.

Budget hours divided by clocked hours. Your efficiency rating. Those are the things I'd be tracking at all the time. So there's a reason why we, we call them max metrics. There's a reason why down the road we want Zooper to have them as a live.

Calculation on the dashboard instead of us manually doing it every single month. These are things that can be done. But yeah, that's what I'd be tracking all the time. If you're using P4P software, it kind of does some of those already for you in terms of the budget hours divided by clock towers. But things like your close ratio, we always are checking those things. And making sure that those are where they need to be at. Because if you do it on a weekly basis and all of a sudden one week go down to 15%, something needs to change. Like so.

Heard you say before, we should stick to a one or two mile radius when we are small solo and only go up to a five mile race when we are in the later stages, I'm finding it harder to do that and easier to go up further 10 to 20 miles. What am I doing wrong or is it my thinking wrong? And how do I get more accounts in a smaller radius? When I say about sticking to an area like that, it's about creating route density, obviously. But more importantly, a more efficient use of your marketing dollars. And if you're spending money on finding customers, I'd only be doing it in a smaller area. Because if I was to have the decision between marketing to 100,000 people one time or to 10,000 people in my most ideal market of my county, 10 times the latter will perform much better. And when I get those jobs, it'll be much more efficient and profitable because the route density is higher. And the reason that it'll perform better is because now people start seeing it multiple times to the point where they actually start to think about you beyond just the one time they see the piece of mail or the ad because they've seen you so many times now, you've actually created a brand new. So again, we focus on direct marketing. But if you do direct marketing enough in one geographical area and then all of your jobs are in that area now they've seen your trucks all the time now you switch from direct marketing into branding much sooner than trying to boil the ocean. So if you're spending money on marketing, that's when I really want you to focus on a specific area. The reason that you're having the what you're having now happen.

What'S happening is you got all these customers like this that need mowing service. Okay. And let's just do an even distribution kind of across your county. One second.

You know all these customers, we're doing an even distribution of just people who need services. Right. And so the question is, would you get more customers if you served a larger market? Yes. My service area was that I would get more customers 100%. The question is, if I just focus on this area, will I get less customers? Absolutely. I only have four customers. The thing is, when I start spending money on marketing, which is the faucet, which is a forced way of creating customers, I want to make sure that they're all in this area. Okay? Because this will become the most efficient and the most profitable. Of course, increasing your service area will get you more customers, but again, the most, the least profitable way to grow your business is by adding services or adding geographical location and space and.

How far you're willing to serve. So that's why it's a super slope into a big business with very low profits.

For those who have locations next to you or on top of you, be sure to share your winter services and most marking tour with the other location. Me and New Bird location are essentially copying and pasting each other's winter services. Since we are in the same market and have the exact same seasonality. This ensures that clients get the same experience and same explanation, no matter who they talk to and also allows for brand penetration. And you can piggyback off of each other's marketing and get a better bang for your buck organically. Great. Very good. Yes. That's why it's just so important to be communicating with your other owners and around you. Again, the fastest growing locations are the ones that are next to two to three locations next to them. The reason for that is brand penetration. And so communicating with those people is extremely important. Getting on the same page, having monthly meetups, having a chat that you say, hey, I'm sending out my one click estimate email today, like things like that. It'd be really, really helpful that we can kind of keep pulse on everything and you know, maybe you all send your one click estimate email at the same time, right? Things like that. Then that way it's like, okay, I got a couple leads that came in over closer to you. We all send them out the same day. Here's a few. I don't want them. And if you get any on your side of things that are in my area, just send them over here. Right? That's the type of communication that's going to lead to better brand penetration. And just honestly like the locations just do better because all marketing dollars are being spent in and around your territory. Therefore brand awareness overall is trends up and people see your trucks more often, etc. Etc. Etc.

I have an employee that I've decided needs to be terminated for performance, culture and other reasons. The issue is this employee is the only one certified to apply chemical treatments and we have our final round scheduled for this week. I can either have him be the final round, then fire him or fire him and I have another or another team member can do the final treatment. What would you do?

It sounds like this has been Death by a thousand cuts. Because you've decided this is not like I need to fire this person.

So in this case, because their hands are so tied and you don't want firing an employee to hurt everyone on the team, I would probably let them stay on for another week just so they can finish the final treatment and then busy yourself trying to get certified yourself.

And the only reason I say is because it says the word decided. He says if you would have said I need to let this person go because of big blow ups that happened last Friday, that's a different conversation. Then it's a matter of weighing out the balance of the business versus what it's going to do to have them still on the team for another week. But again this sounds like these cultural performance all this sort of has been leading up to, it's like it's been a thing like that. So I would probably make sure the business is not put in jeopardy and everyone else's jobs are put in jeopardy by firing him too soon. Although it's the right thing to do, I would just. Yeah.

Yeah, you give him a week. Obviously I'll be seeing if you can try to salvage the relationship or like give him some sort of notice or like tell him that these are the things you need to improve. But I'm assuming all of that's been done, right? In that case then it'd just be a matter of like you don't want the whole team on the business to suffer because of one person. So. Yeah.

All right, let's see here. I got a couple of things I want to share.

Pull this up. So this is the compensation plan for GMs that we're going to use for my locations starting next year.

Why does that keep doing that? Oh.

Let me move over this.

And this will be for our new locations going forward. This is not the current one that we have for our current gms, but this is one of the one we will be using going forward. And these, there'll still be changes to this as well. So let me explain this. So year one there's a base salary and then we're really trying to focus on growth again. We are just trying to get them to grow as quickly as possible. They have a base salary, they get bonuses when they hit these amounts of revenue for the annual year and they get a, if they hit a 50k per month, one month day to over 50,000, they get a 1k bonus. If you they hit 100 customers, they get another $1,000 bonus. If they've hit 500,000, they get an end of year bonus of 500k. So if you add all this up, if someone grew from zero to 600,000 in one year, they would literally get like 75,000 or so. But again, they deserve it because they scaled up so quickly. If they do not hit 500k in the first year, this is what year two looks like. If they do hit 500k in the first year,. This is what the second year looks like. Okay? So you have two options. Year two if they hit 500k and year two if they do not hit 500k. Okay, so this one's pretty straightforward.

And then what it says Here is the GM cannot get the bonus 2 times. For example, a GM does not get a bonus for 200k every year, only newly obtained goals. Right? So if they get $3,000 here for hitting 200 grand, great. If they hit 200 or 300 grand here, they get the 2K. So see how these diminish. So again, we're incentivizing them to grow very fast that first year. And we're not tying any of their money, their compensation, to profit, because I just want them to grow the business. But then notice that the bonuses for hitting these revenue targets diminish as time goes on.

Okay?

So if they do hit, if they do hit 500k, we give them a higher base pay, so a base of 56k as well as a minimum compensation package of 65. And this is when profit sharing really kicks into high gear. And they get 3% of year over year growth. Which means if in year one they did 500,000 and then year two, that it's 700,000. That delta year over year growth of 500,000 to 700,000 is 200,000. That's the year over year growth. They would then get 3% of that. So they were a $6,000 bonus end of year for that. Okay, Again, this is assuming that in year one they hit above 500k. If the GM does not hit 500k in their second year, okay, this is when it starts to become like, if they don't hit 500k in their second year, they potentially might be on the ice, honestly. They're on thin ice, honestly. But if they don't, year three's base salary again, they still get their bonuses at 300, 400k. They're not going to get a bonus at 200k, because if you're hitting 200k in your third year, that's really, really bad.

So all of this is the same. And yeah, year Three and beyond is more or less what we have now, which is the 25%.

Profit share.

I don't know why this is not there.

There you go. And they get 3% of year over year growth. So again, whatever they grow in terms of top line revenue from year to year, they would get a minimum of 3% or they get 3%. And their total compensation package in this case would be 70k at the very least. So what that assumes is 56k is their base pay and that if you do 25 times 14, so 4 by 4, that would assume that you have a minimum of $56,000 in profit for them to hit this. Because they're getting a quarter of that, it would be $14,000. Right. So again, these will be improved, these will be changed, modified over the next three to six months. But this is what we're working with right now. And that leads me into my second one which is, is this. This is again not what I use, but this is a template. Okay? So take what I have in here and then modify it to whatever you have in your compensation agreement. So obviously like this one for example, is going to be different. If you're using what I just showed you, the composition, this would all be different. This would be basically what I just showed you. Change it. All right. I'm not saying this is what you need to use for your first year. This is what we've used in the past. But the problem is there is usually not a lot of profit sharing. If I'm trying to push them to grow very quickly the first year, you can use this model, which is here. If you want to be profitable pretty quickly and then just have a smaller revenue size business. This is what, this incentivizes that.

But this, this sort of thing incentivizes that. But you can change it. You can change. This is just a template. Change it however you want. But.

Going forward, that compensation model is what we're going to be using. And it'll probably modify it slightly, but.

Pretty close to that. So then just take whatever you're going to use and modify and use it in the template so you can use it for the employee contract.

Okay, one second here.

Let's see here. We got questions. Thanks. I'll touch base with Command center and see who we are using for collections. It's Empire. Who are you using for collections? And Jerry's head of the collection department. She's pretty good at getting it. Honestly, before goes to the collection department, I think the clutch agency. I think the one thing that you could do that. We can't is go to their house and again, if it's a sizable enough.

Bill, I would do that with super can make it where they can't even get on, you know, can't even accept the job without the credit card file. But again sometimes people credit cards, they'll max them out and then you're. You try to build them and it's still overdue. Right? There's still going to be overdue invoices with credit cards on file. There just is. If you do it weekly though, you can prevent from going months and months without getting that prior.

They tell you to get off the property. Yeah. Well if they owe you like you have every right to be on the property if they are, if they owe you money. So if they're telling you to get out of there, that's fine. Go put a lien on their property. So.

Would the working GM be responsible for fixing any equipment if needed or maintenance like oil changes and blade sharpening? Yes, but again at that side of business this should not be a full time job. If someone's spending three days a week doing equipment maintenance. I'm sorry you're not being efficient because at working gym model level you have a few trucks, you have a few pieces of equipment. Like it's not a full time job to be doing equipment maintenance. And so. But yes, they would be. If they're not super, you know, mechanically inclined, I wouldn't be. I don't think it's a problem. They just got to be spending the time they would be fixing the mower. They gotta be spending that time out in the field and then obviously be going to the dealer to get stuff fixed.

But yeah, the GM is responsible for fixing everything. Whether it's themselves a crew member or they take it to a dealer. It might be worth it to max it to max to send it to pause people because most customers don't even know it exists. So it might be worth the friction of the first year. We're the only company I know of that does the service. They may not even know they want it because now it's a normal Service. This is 100% true and this is why I could advocate for sending it. I think the challenging part is if they don't click on that button, do you just go ahead and assume they want it and put it on the schedule? That is the question. That's an easy thing to do when they're. They're still mowing and you're just telling them hey, we're switching the type of services. It's a little bit different when they stop service for a month and now you're telling them oh, we're going to come back. That could be a little more difficult. So again though, they can just opt out. So you're just going to have a few more. I would say Instead of like 2%, you're probably have like a 5 to 10% of refunds that you'll have to give out after the first month of winter services. If you send it out and then assume the sale for all, all customers that you've done service for. That would be my only thing. So I'm 100 game for that. I've seen people do it. It's worked. It's just you're going to have a little bit higher more conversations about it and refunds after that first one.

Where do I find the commercial agreement it gets to use for commercial properties. Who is this? One second. Let me see who this is. Give me a second. I refresh this.

Yeah. Because there's.

German.

So inside of Zooper then for you again, there is a template in terms of what we have in the estimate calculate the estimate template that has ours we use. You're going to customize that to whatever you use in terms of your market and then you're going to copy and paste that like a regular estimate and paste. Paste that in there. But in terms of what we use in the template that is there it is on the estimate document. Estimate template document that has estimate notes. So you basically take that. You have, you know, the. The 10 things you typically do in your area, the type of services you'd customize those change your budget hours, et cetera. And usually if you're doing a really big one, I'd recommend doing that with Lee or Chuck on your first coaching call and making sure that's all dialed in correctly. But the actual template, the agreement side of things is just inside of the estimate comments standardized. Those standardized comments template.

What's compensation for Bellingham GMs this coming year? Very similar to what we just talked about. In terms of that it's very much more based upon the 25% profit or the profit sharing side of things. Again, I only 10% because I'm still involved in that location. So it's not 25. 25 would be someone who's completely independent of me. 100. So I still go there once a week and involved to some degree in their decisions. And so therefore it's 10 for them.

Can you explain the minimum being here? Then the base can you explain the minimum being here than the base. If they are not to. If they are not to hit good profitability, very little growth and hit base. Why would we were more up to the minimum? Can you explain the minimum here being here than the base? If they are not to hit good profitability, very little growth and hit me. Oh, I see what you're saying. Yeah, it's a great point. So the reason you do that is for attempt is attracting talent. Someone that is say making 60 grand a year right now because they're, they're running their own business or they have a general manager Someplace else, that first year at 52 is a down year for them. But if you can say, hey look, I can guarantee in year three you're making at least 70k, that looks a little more appealing to them. So you're doing that for an attraction tool for your GMs. The goal obviously is to be way beating that number by year three because of profit sharing. But it gives them the.

Dependability that they are going to have steps up in their pay. And then again if they're hitting that base number because of that minimum threshold that we are raising, then you really got to question whether or not you want them as a gm. And then by year three, if they're hitting that base, then I'm not going to have them around. And so that's a different conversation. Right. But the reason we have that is for attraction of talent and for them to know that it goes up in time. Foreign.

I'm going to take my son out on Halloween and we will trick or treat from everyone that has a huge overdue bill. Then I'll slap them with the invoice. That's great. I love it. Great strategy work is slowing down a lot. Looking at 60 to 70 budget hours per week, currently three employees. Should I lay someone off now to give the remaining employees more hours or wait in case we get lots of work in November? I would lay someone off. And then going forward, I don't know who this is. If it's your first year, you got to have the expectation of your crew that as you head into October, November, their people are going to be laid off and that they will have a guaranteed date that they can come back to work for you. And we've done this for the Valley location and the year that we started doing that and setting the expectation is the year we became way more profitable because we were just digging ourselves into a massive hole in the winter. So if you from the get go and you're hiring people Whether it be in the spring or in the middle of summer, you are telling them, hey, four months out of the year you can work your brains out. Four months. The next four months out of the year you're gonna work 30 to 40 hours a week. And the other four months out of the year, you're probably either gonna get another job or you're gonna be working like 10 or 15 hours a week and set that expectation up and then you'll be fine. So I would definitely lay someone off. You have three employees, there's no reason why you can't do 30, 30 and then you knock out the other 10. Right. So there's no reason to have three employees in my mind, unless they all only wanna work 25 to 30 hours a week, like clocked hours. But usually you're going to lose good people if you're cutting them down to 20, 25 hours a week. So I would cut them. And again, if it's your first year, it's always tough to do that, to set that expectation. But going forward, when you hire people, just from the onset, be like, hey, there's a good chance during the winter our hours go down. If you need full time hours, you're more than welcome to get another job. And then we'll give you a guaranteed position, a start date for the spring. And whenever we lay people off, most of them come back in the spring. Especially if you have a specific start time, say, hey, look, you know, I gotta let you go on November 1st. You can come back March 1st, whatever it is. The dates, you just gotta be really clear with them. And they usually take it a little better. But then going forward, tell them in the interview process so they can expect it. It's not shocking. So when a GM takes an established location and the goal is just to maintain, do we focus more on profit sharing? Yes. You basically skip to year three. Without the incentives or the higher base pay. You'd just be going to like, here's your base pay and 25. Right. If they're, if they are doing everything in the business, remember your 25 is only if they do everything, like everything and you're never involved. That should go down to 20 if you're like on a group chat with them. Right. On a 15 of them, if you ever show up, should go to 10. If you ever make a decision in terms of buying and they run things by you. So really make sure you gauge that in terms of what that profit sharing amount is.

Awesome. You guys have a great day and we'll see.