Mike Minutes Mastermind 10/25/2023

Ladies and gentlemen, boys and girls, destination. Welcome. Let's go and get started. I had a few announcements.

And then we'll jump into questions. Announcements. I made a post on the Facebook group. Few things. We have improved the dashboard in a few different ways. Let me show you what I'm talking about.

And log in.

Okay, so from here, if you go to augustination files, take you right to the Google Drive templates and downloads. For example, right here, it'll take you right to everything that you need for digital templates and downloads. We are reorganizing and renaming some of this stuff, but now everything is here instead of you having to download things.

And then you can literally just go to a lawn care dashboard and see digital marketing and logos, templates and downloads, digital marketing designs, truck graphics, et cetera. So all of it's in Google Drive now. So no more having to like check out and like go one by one. It's really fast. Same thing with truck graphics. So these are the original truck graphics. These are the ones that we just updated with all the different designs. These are the quick PNGs for you to see. Half wrap, full wrap, cab wrap, and bed wrap. And then if you go in here, you get the actual design files, which is the AI files. So if you give someone Adobe Illustrator files, they should be open these up in EPS, any sort of vector images, etc. We will probably.

This is a file. Never mind.

We will probably open these up with EPS down the road for you. But honestly, your designer is going to want in the AI files, they can move it around, etc. So those are in there. What else we got? Oh, sick. I don't think you saw that last part. Okay, sorry about that. I'm gonna show you this. There you go. You're gonna see this. You can go right in here and see all your main files now at the gusta longer dashboard, here's all different folders. Sorry, I just realized I wasn't sharing this screen. So it's all there. There's the truck graphics, original ones, the new ones, these are pictures. Then the design files are inside that folder. So we saw a little ways of organization, renaming something just to make it simpler. But it is all available from the dashboard. It should make things a lot more simple. Also, if I go in the dashboard.

Underneath the conference tab right here.

This is the conference that we had on Wednesday. So you just click watch the conference. Here are a couple cool pictures. I thought watch the conference and just takes you to a YouTube playlist. And literally from the top to the Bottom is the in order of operation of what we we did. So feel free to look at those especially for.

Jake Hundley for the face, the Google one. Obviously the slides are tough to read because of the blurriness of the screen. So definitely want to look at that. But all the slides are baked into the video. The media team cut it all up for us. So you just have, you don't have to have a separate download. It's all on the same one. So. Super nice. Check that out. All there, good to go. If you. Oh my goodness. Sorry. There's the thing.

If you are not at conference, definitely please check this out. Watch all of these ASAP as soon as possible and that'd be great.

Okay. That's all I had. So yeah, new decals, things on Google Drive and the conference recordings. If you were not there Wednesday at conference, please watch the playlist. It's really important that you get all the updates. I know some people got there a little later too just because the traffic. So please watch that first one as well.

All right, let's jump into questions. Let's see here. Boom. All right, Jason Storts from Knoxville. Mike, I have two questions. One, is there a good percentage to follow when looking at how much to spend on leasing or buying office and store and shop space? I know that when looking at a mortgage, if I can be kept at 25 or less of take home pay, it is much easier to manage and take care of all the other things life throws at us. Just wonder if there's a percentage like that on the business side of things. And what numbers, top line revenue would you use? Okay, that's the first question. Okay, so.

This is, this is a. If you talk to some people, they're like always buy your shop space. Those are typically people have been in business for a long time and they are right for them. And that is if you're going to be in business for a very long time, buying your shop is usually a good idea. However, spending that money in years one through five typically can cash draft the business. And that 25% down to payment, down payment that you put on that property could otherwise have doubled or tripled the business. Keep in mind, when you are buying a shop space, you are buying a different industry and that is real estate. You are an investor now in real estate. You're no longer an investor in your business. It is a different business. The game of real estate, when you buy a shop space, the only advantage like you can go rent shop space. The only difference in you buying it Is you know the tenant, you are the tenant. So you're. Whenever you buy a piece of land, you are investing in the real estate game. And it just so happens that you know the tenant and that's a good thing because you know they're probably going to pay their bills. As long as they're in business, you won't have a lot of problems with your tenant. So it's a good thing, typically in the long term, because if you do close the business, something goes wrong, your tenant leaves and you need to go replace that tenant with someone else that is not your business. And that can be tough.

But more importantly, the cash required to put down on a property, if spent on the business, can usually lead to a doubling or tripling of the business instead of buying land or space, et cetera. So I'm a big fan of renting for quite some time, building the business to where it is a cash cow. And more cash for the business means higher taxes. That's when I'd go start buying real estate personally. And when I buy that real estate, I'd be making sure I do it in a way that if anything was to happen and I got hit by a bus, the business collapsed, whatever, I'd be able to find a tenant to replace me and cover the mortgage. Very important.

So some people would say, like, well, you should just be looking at the rent versus the cost of the mortgage. I don't look at that as much. I look much more at the cost of the down payment. Because if the down payment is going to be 25 down, which is typical for commercial property, you're not going to get 5% down unless you're buying a house that you also use as your shop space. Then you might get an FHA loan. But typically you're going to be paying 20, 25% down. And if you're buying a commercial property that's going to be expensive, typically, I know there's some areas of the country you can get stuff for like 100 grand, 200 grand. But it's rare in most places, like where we live, you're looking at at least a million dollars just to get any land that is commercial. We got lucked out with Bellingham Shop, and everyone's like, why did you get Bellingham shopping in without, like, knowing permits? Because I got it for $500,000, which in our area is an absolute steal of a deal. And it's relatively close to the city. So I think that land is probably worth 50% more now, just me sitting on it, doing absolutely Nothing for the past few years.

Which is good. That's great. Except I need a building and it's worth nothing to me until there's a building on it. So anyways, I would just keep in mind you're entering a different business and the only difference in real estate is now you know the tenant. The tenant is you. I would be careful about cash constraints on the business in exchange for the long term benefit of having that real estate.

Question 2. I've heard you say numerous times that you want three months revenue in the bank to cover for down months or for unforeseen circumstances. So if a company has done 80000 for the last 3 months, you would recommend having 240k in your bank account? Correct me if I'm wrong on that. My question is, would you recommend not taking into distributions until you have 240 and only take whatever that number? Thanks for help. No. So.

In the perfect world, I have three months of revenue in the bank for all my businesses. That never happens because I see cash and I don't want it sitting in the bank account doing nothing. I want to deploy it.

We consider distributable cash the average of the last three months. So if you did 80,000. 80,000. 80,000. The average of that is 80,000. Therefore I only need $80,000 in the bank to be considered anything above that distributable cash. So it's the average of the last three months. And I personally never keep three months of revenue in the bank account for my businesses. Never. That is the most conservative viewpoint. Some people would say six months also. Very cool. Just probably not trying to grow like I am. Right. I'm going to take that capital and I'm going to either invest in the team, invest in equipment, invest in new products and services and expansion and like growing revenue.

But not everyone wants to do that. And in the perfect world, yes, you have three months of revenue sitting in the bank account. You will live longer, you will live happier life without worrying about the money in the bank. But if you're growing, in my opinion, you need at least a month's worth of revenue. And I just average the past three months in order to get what that number is.

Logan Albers Grand Island, Nebraska from what I understand, Clearance locked us into a three year contract when we signed up and they charge a $300 ish fee to cancel before the ends end of the year. Will it be true for all of us switching from SA to copilot? Is there any way to get out around. Out of or around the payment. Despite being caught up on their PCI compliance, I still get charged 8 to $60 per month for the clearing account I had before joining Augusta. What? My three year term ends in six months, so no point in paying the $300 now. But not looking, but just looking forward, looking towards a transition now.

I have a pretty good contact at Clarent, Keith. He's pretty good. I've been able to get out of these things before when we canceled locations, for example, of my own. So I'm hoping they continue to accommodate that. I think I have his contact information on the deals page. I believe I still have it there.

So I would try that first. Secondly, they shouldn't. You shouldn't be getting charged the eight to six dollars from a clear account before Augusta. That's very strange. In general, they add fees that most of us do not know about. If you actually see your statement every month, there's almost always these random little fees they add in there and it just makes me mad. Random stuff. So yeah, with Stripe it's. It is slightly higher a percentage if you are a big business, but at least you don't have all that garbage going on. Secondly, next year we are looking to get involved with a different processor which is a subscription based processor and has extremely low rates, like lower than anything Clear will ever give you. It only makes sense though to do it if you're processing more than about a million a year in revenue. So we will hopefully integrate with them. And in terms of closing out of clearance, I think this issue, like the whole three year contract has been more recent in the last year or two that they started doing this.

In terms of signing the three year thing.

As it comes up, I would email Keith. I will triple check and make sure his conduct is on the deals page. I might have taken it down because they weren't honoring the deal that they told us they would give us.

But anywho.

On that note, servers all pilot blocked me from coming to their conference. They canceled my ticket, said I can't come, which stinks because that's usually where I kind of get where the product's going and that's how I usually communicate with all of you since they usually don't do a super great job of doing that.

So.

I will somewhat be in the dark of where they're going, to be honest. And I do have connections with a lot of their leadership team, the ones that have left and the ones that are still there. So we got some really cool stuff coming. At Copilot, I'm pretty excited about job costing and price matrices are coming out in a couple weeks and then the upsell feature that I mentioned the other day is like going to be absolutely awesome. So really looking forward to that. Chad Valparaiso, Indiana for the Windows Services email is what is the notification type we'll receive if a customer ops out? Do we need to set up the winter the service prior to sending out the email? I sent a test email to myself and opted out but don't see any notification that I did. So is there an index of okay, that's the first question. So first question you'll need to check your automation to ensure that you are getting the notification.

Make sure making sure that set up correctly. That's the first step. And then.

When I say automation I mean your email link. Jenny check your email links to ensure that that's going through correctly.

If there's things like this just, just we're all on the same page because the next couple months are gonna be a little hairy if you guys have questions like this. If you could do me a big favor and just put like I'm using Service Autopilot or I'm using Zooper, I'm using Copilot, it'd be super helpful because I could give much better advice if I knew which CRM this was. So sorry about that. And I also I know a bunch of people are transitioning. I used to know where everyone was at and now a bunch of people are transitioning over. So I'm kind of lost where people are on this sort of thing. But you typically based upon generalized advice, check the email link, ensure it's coming to you and I. We do typically set up their winter services for everybody and then we send out the email and they only then go in and cancel the service if they opt out and we get that notification and that's why the notification back to you says please remove winter services, ensure they're set up for next spring. Is there an index of Augusta emails with what their specialties are so we know who to email from what? Yeah, it's under the directory on the dashboard. Go to the dashboard, there's a directory and shows you the different emails and who to email for what. It's all in there. I think the only one that's not on there is onboarding and that's just because it's only for the submit new hire form and it's on there. Nick Davidson, Hudsonville hey there, ever heard of the Profit First Accounting system from the book by Mike Michalowicz? If you Have. Do you have any. Do you know folks who have nailed the profit first approach? What's your take on the system for Augusta? My nemesis is managing cash flow. Yeah. So, yeah, I've read his book. I like it. I think it's really good for people that see money and need to spend it. But ultimately, putting money in different bank accounts does not make you more money. But if you have the psychological problem of spending money when it hits your bank account, then it might be useful to use a profit version approach. For me personally, I'm not going to have a whole bunch of money sitting, waiting to the end of the year for taxes. That's just not how I roll. I would rather deploy it and make it have a return before the end of the year. And that's kind of how I operate. And my bigger problem with profit first is from a bookkeeping perspective. It is not simple.

And everyone. There are always going to be people that have. Have really nailed it. And there's ways to do it and make it really good and nail it in your accounting side of things. But there is nobody that I know that sees a profit first client. And it's like, oh, let's go. I want to do their bookkeeping. Everyone hates it. It takes significantly longer unless the owner has everything dialed dialed in. And I have yet to see someone really dial it in and not take more time on bookkeeping to the extent that it costs time, energy, and money either doing themselves or hiring it out. And it's like, yeah, so I like it. I do like it. There's a few franchisees at Augusta that do prop first, and I just see a lot of times they're moving money around anyways because, like, oh, I need more money for payroll. I just move it over. If you're gonna do that, why did you split it up and have a bunch of different bank accounts in the first place? So I'm a much bigger believer in, like, getting your reconciled bank statements, like your reconciled financials and be able to make decisions based upon that. Like, oh, gas went up 30% a year, month over month. Like, what are we doing? Should we change this X, Y and Z? Oh, our credit card processing went up higher. Let's change that. Instead of just being like, oh, there's a bucket of money. And that's why I have a problem with budgets. Budgets tell you how much money you can spend instead of saying, why can't we just squeeze less? Like, why can't we just spend less? Because, like, the budgeting is like, oh, okay, we have $10,000 a month set aside for advertising. We spent 8,000. Check. There's no, there's no thought of like, well, was it, was it efficient? Was that a good use of $8,000? It's like, oh, well, we spent $12,000. That's a bad thing. What if that was the best customer equipment cost you've ever got? So that's why I'm not a huge budgeter. Personally. I think people, some people really need budgets. They need the like strict, like I cannot spend money because there's not money in that department or in that category. That's fine. That's awesome. I love you. For me it doesn't work great. I am much more. I like to look at the last month and I say, say where can I cut at every single level. I don't care if it's in the budget or out of the budget. I'm looking at every single line of that, of that P and L, I want to cut every single one. And in fact there's some I want to spend more on like, oh, buy. I want to spend more in advertising during spring rush. So me having a set budget dollar amount for the whole month, for a whole year does not make sense. I want to spend more at command center during these months so I don't have to hire someone year round. So I'm not gonna have a budget on that. Sometimes percentage based budgeting is more helpful. But same thing, I might over index on my percentage during certain months for advertising, for growth, for buying more trucks. So there's so many moving parts for most small businesses. I think that they, most of the time the person going into this profit first system, they, they are the type of person that likes order and systems and procedures. The problem is they're also the type person that starts to look at all the little nitty gritty details and spend so much time doing that and basically bean counting instead of growing the business right. So I'm just starting to look into getting a fractional CFO.

For everything that I'm doing. But the reason that the business has grown is not because I have or have not done good bookkeeping, is because I have focused on sales and I have focused on my team and I focus on my customers. That's it. Focus on the customers, focus on your team. You'll grow a big, big business. And guess what? You grow enough big enough businesses, make enough profits, you'll be able to afford good accounting and good tax people and good CFOs and all other garbage. So the numbers do not make A business, the business makes the numbers that then you can then go manage. So I think personally, my opinion, most people spend too much time on this stuff instead of focusing what actually goes the business. But they are good guardrails for someone who doesn't have financial.

Discipline. Same thing with budgets.

My two cents. And that is how my opinion, I don't think that's the correct answer for everybody. So yes, for my opinion, that is what you got.

Just to clarify, is there any type of percentage we should use when looking at leasing or buying a shop space?

Honestly, I can't give a percentage.

Because more importantly is I'm looking at the rent comparative, right? So I'm looking at how long am I going to be in business? Do I want to be in the real estate game? What's my comparative rent versus what I'm going to be spending?

So if it's going to be 1500amonth for rent and your mortgage is $5,000, we got a problem. All right. Because now you are investing 3, 500amonth in real estate and let alone the down payment. That's usually my bigger concern. But then there's places like down in Texas, Ryan paint his boss place for like, I think like $60,000 for a shop space and land and the whole nine yards. Fantastic. Let's go. You know, just pay cash and don't have to worry about a landlord. It's awesome. You know, the comparative rent on that's probably like $400 a month or the payment is probably $400 a month if you financed it. So you're probably not going to be able to rent, get rent for four or five hundred dollars a month. I think he said you could rent out for 1500, so that makes a lot of sense. But if your rent is this and what you're going to spend on buying is double and triple, like you really gotta think about the fact that you're sucking the business dry of cash to invest in a piece of land and in 10 years it might double in value. But I can promise you your business can double in value next year or two if you just put the money there. So.

But yeah. All right, everyone have a fantastic day. See you guys tomorrow. Take care.