Mike Minutes Mastermind 10/26/2022

Hey everyone, hope you're doing super well. Let's go ahead and get started.

There is a new link if you would like to use it. If you mow throughout the winter. This is a new link. Let me show it to you. Give me one second.

That has a different, slightly different.

Verbiage on it for your winter service email. In terms of a link, give me one second.

There it is. Cool. So this is an option for everyone that we currently have. We have opted out win services. You have opt out WIN services. We will start mowing your lawn again next spring. 95% of everyone uses that. If you take away the S on the URL, it changes the verbiage.

And tells them they've opt out winch services and we will continue mowing on the same schedule. This is going to be useful if you are like Vlad that mentioned this the other day in the Mastermind and you continue to mow year round and you don't want to say that you're going to come back in spring. So again, this is probably only talking to a few of you, but this is available. I think I emailed Vlad, I think I emailed you this link directly just in case you are on the Mastermind. But for anyone else that doesn't want to have that verbiage of we will come back in spring.

I did not want to change that because the majority of us, we want them to see the fact that we are confirming we will be coming back in spring. This is kind of your way of already negotiating next spring, not having to tell them next spring that you're coming and starting mowing. So that is available again. Only thing you're doing is taking away the S. Oh, you guys can't see that? Sick. Okay, give me one second. We can fix this. Streamyard is being a blessing. Let me share my whole screen. Share screen.

Let's do this. Okay, so here, this is what I was talking about. This is the one that we currently have. And if you just take away the S in the URL, it has this varied option that is going to assume that we still mow even if they opted out of bunch of services.

So cool. What else we got? Another quick note. Ryan Payne, I was talking to him at Equip Expo. He came over to the our Airbnb. We were talking, he had a thought. That was really good, I thought, especially for those of you who are struggling to get 30 plus Google reviews and that is.

He texts the people after he leaves their house with a very personalized text message asking them to review him with a link to the Google review. And I get all the Google reviews coming to my personal email and I always see them mentioning Ryan, Ryan, Ryan, Ryan. Never his crew, just Ryan. And that's why is because he asked for the review after the estimate, after he meets up with them and he texts him and says like, hey, this is a way to review me and my service. And it's really detailed text. So Ryan, if you hear this, maybe put this on the Facebook group, maybe put it as a part that everyone could copy and paste. If you're struggling to make Google reviews, please use it. You should have 30 plus every day of the week. I think in doing that this year, he's gotten like a hundred plus reviews, at least between Corpus and Rockport. So congrats to Ryan. It's a ballsy move because sometimes people will get that email after they get the estimate and they're going to speed up about pricing. But based on what I've seen from his locations, that happens very rarely. So that'd be my 2 cents if you are struggling with getting Google reviews.

Cool. Let's jump into questions actually here. 1. This is fun. So years ago, when I was thinking about buying Anytime Fitness, I actually told the owner that I was gonna buy it right away. But when I was thinking about it afterwards, this book, I bought this book called Street Smart Franchising, because.

As with anything, when you. When you Google on the Internet, you're going to get contrary opinions. And when I googled franchising and Anytime Fitness and all the rest of it, I just saw all sorts of garbage. I'm like, I'm buying into a scam. Franchising is a scam. I'm making someone else rich. This was a really good book.

And I had it on my shelf for a long time. And I read this way back. This is. This would have been years before starting Augusta and Franchise and Augusta. I had read this and this is what convinced me that, like, I didn't see any reason why I would ever start a gym without being a part of franchise. And why I, after reading the book, was like, I don't know why anyone would want to start any sort of business without if it was already franchise, unless it was like new technology, brand new, something like, why would you not do this? But the reason I like this book, it's because it's very balanced. It wasn't wrote by a franchisor. It's actually wrote by mostly franchisees. And so I read it as preparation to become a franchisee on our trip to Kentucky. I picked it up. I can't say I read it because I can't handle reading 250 pages. Sorry. But I did go to the table of contents and go to a part that I had forgot about because at the time, I was not a franchisor. And it's a really good thing. It's this little chart here. And I think I might have actually taken a picture. Give me a second. I will airdrop it to myself.

And again, sorry for the background noise. I had to drop over here into the main command center because yet again, loud meetings happening. You know, it was today. Brad was on his call with Nick Reed doing tax advice, his tax strategy, which, by the way, if you have not signed up, make sure you click the link. Brad put it on a couple days ago. You gotta sign up because I've got to fill the remaining spots for Brad's time with public people. And we're going to next month, so please do that. We don't make any money at the franchise, so this is not a pitch for me. It's a matter of please use Brad as a resource like I'm hearing what they were talking about the other day or just minutes ago. And he's gonna save a lot of money on taxes because of good advice. So please, please, please take advantage of that. It is not just a tax prep service. You can get that for probably 30% less if you want, like TurboTax or H& R Block. But good tax advice will save you 10 times more than what you pay for it. Anyways, this is the chart that I thought was pretty good. If I can pull this up. One second.

Stop screen. Present share screen window. Here we go. This is a good picture. I thought, I'm gonna start using this at training. This is what I just showed you here. It's just a picture. Now, this is the franchisee satisfaction over the course of time.

And I can attest this to being true at anytime Fitness.

And that is, I would say this chart is probably three to five years over the course of time. But, like, when someone comes to training, they're always glee. Everything's like all sunshine and rainbows. We're gonna take over the world. Then very quickly, like, my goodness, all these fees. I gotta pay a franchisor. What in the world? And they're very dependent on the franchisor at this time. And this is actually the hardest part in my opinion, right here, because they haven't. They're still dependent on the franchisor. However, they're afraid of fees. And they start to think more about me, right? So like this is the me section. You start, think you start becoming more like my territory me. Like it switches this, I'd say this is usually within 6 to 12 months. And then they go to this free stage. And that is they're basically usually trying to iterate on systems and they're trying to change the model and they start to feel like, okay, I don't need the franchisor as much. I understand how things work and I'm going to basically kind of quote unquote, go rogue and figure things out my own. And then what starts to happen is they start to usually this, they hit rock bottom down here. This is usually happens financially or with the employees. And like, oh, like I see now why P4P exists. I see why they say to do certain things on the reviews. I see why I'm supposed to be doing this a certain way. My estimates, etc. The free, the free section is always where people bottom out. They'll hit rock bottom. And this is I, if I had to draw another line, I'd probably do like a line that goes here and that is they quit at this stage. But if they see the value and the interdependence relation between franchisor and franchisee, they start to see that benefit and they say like, oh, like this is why the systems that I taught that were taught to me back here work. Right? And then, then as the time goes on, it becomes a we interdependence and like a mutual relationship of, of trust and knowing that, you know, a franchisor does not exist without franchisees and the franchisees need the franchisor and vice versa. And so it's a we relationship that can be very mutually beneficial. And that's what originally helped me with as a franchisee in this book is realizing the value of getting to this spot. And so I, I saw this, this, this chart. I was like, this is, this is so true. This is like spot on. We see this time and time again. And usually this happens. This, the bottoming out period is, I'd say between 12 and 18 months. We see that and some people will go lower, some people will go, won't go down too deep into this because they will follow the systems from day one.

But it happens even, even for general managers, they're going to go through this, right? They get a job offer like, let's go super excited and like, my goodness, like all these fees in the franchisor, I'm not getting paid enough. Then it starts to become like, how Can I conserve my time as a general manager? I don't want to work as much. Same thing here. Okay? Now I've given this role, I can be very free. I can do what I want. I don't have to work as much as I did in the past. And then they start to realize like, oh, I need help here. I need support, whether it be from my general, from my manager above me, or from the franchisor. And then again a coexisting relationship of we, where together we are better. So this is a great chart. Feel free to screenshot it, whatever you want, but it's fantastic. Feel free to look at this book if you'd like and really understand the nuts and bolts of what a franchise, what the franchise model means. And yeah, I remember this is what convinced me that anytime things was a good move. And again, I just don't see why anyone would start a business model and try to recreate it if it's already been done before.

So anyways, a little bit of sharing. Okay, let's go back to questions.

All right.

QuickBooks and profit and loss statement. I purchased a piece of equipment for about sixteen hundred dollars in October. I know that purchase will go on the balance sheet as an asset. However, should it go on the P and L in the short term when calculating profit share? Curious about the proper protocol for categorizing expenses and staying on top of things. Are equipment purchases active profit check? Okay, great question, great question. So we do profit sharing based on cash, all right? And the reason we do that is because it makes the most sense to the crew. It does not make any sense to accrue if you're like, oh yeah, we are amortizing this truck over the course of five years. Therefore, three years ago, we bought this truck. So it's affecting your profit, your, your profit training this quarter. It does not make sense to them. And you'll. They need to be very straightforward as like cash in, cash out. So we run our P, L base on a cash basis, and at the end of the year, I go back through my equipment and I have my account move things off of the P and L onto the balance sheet and expense them correctly. Right. That's just how I do it. I'm not saying that's the right way to do it. I've just found when I'm doing profit sharing and when I'm doing open book management, it's the thing that makes the most sense to the team. And they see truck expense. We bought a truck. They see, I bought a mower. Mower expense. What they don't see is this, this nebulous $5,000 per month because I'm amortizing trucks from two years ago. Does it make sense to non profit sharing? They start to get disillusioned, they start to think you're manipulating the numbers and you've lost all their trust. So I just do cash basis. I put everything on the expense P, L at the end of the year account is like, okay, what needs to be amateurized? What do you want to take as section 179? And we go through it that way. All right, that's a type of call that you'd have with someone like Brad towards the end of the year. And then you actually move it all over in the second call in January, February, when you're actually running your numbers and creating your tax returns. So that's just my how I do it. I'm not saying it's the right way talk to a cpa, but that's how I've always done it when it came to profit sharing. I started off having one set of books that I would show my team and my accountant. And I got too many people crossed eyes thinking that I was manipulating the numbers when I was doing amortization. So I said, look, we're going to cash. Makes a lot of sense. They see a new piece of equipment, they see it on the P and L. Makes a lot of sense to them. And they don't see things from way back when that I'm amortizing from five years ago. It just doesn't compute. And they start to think you're manipulating the numbers. And once they think you're manipulating the numbers, then there's no point in doing profit sharing. So you just, just show everything.

Forest, what's the best way to find people existing businesses selling their routes, cold call? No, I would not recommend doing that. If you ever reach out in a transaction, any sales transaction, as the buyer, you have come from a position of weakness and they have all the leverage. So for example, if I walk up to a random house and I'm like, hey, I want to buy your house. They have all the leverage. They, because I came and asked for the sale, you want it to be where they put on the market. Because as soon as they do that it's like, oh, they want to sell, they, they're in a weak position of weakness because I as the purchaser initiate the transaction after they have already raised their hand and said I want to sell. So what I would recommend doing is just staying in Touch with all your competition because if you're. If they're comfortable with you, they'll come to you first before they put it on the market. So you obviously, I would keep an eye on Craigslist. It's honestly where the small guys go when they want to sell a client list or they're just going out of business, they'll go to Craig. This. It's easy to list. They don't have to go through brokers. Biz buy sell is always gonna be a premium. Much larger companies, you're gonna be paying a lot of goodwill. You're not gonna be able to buy people's routes. So I'd recommend just don't reach out to people. If you reach out to people, literally, they could be thinking of selling. You call them the next day and say, hey, I want to buy your business. The price that you're going to pay for that probably just doubled or tripled. If they now though, text you and say, hey, I'm thinking about getting out of the business this winter. Are you interested in buying me out? You have a way better leverage position to buy at a lower price. So I would. I personally would never reach out to someone and ask to buy them out. This is why when there's mergers and acquisitions like publicly, they always pay a premium on top of what their market value is, is because they. They are wanting to do a strategic acquisition, right? So if the stock price of, say, Twitter is worth 30 bucks, well, if Elon comes and says, I'm going to buy it for 50, there's basically a $20 premium per share. And the reason for that is because the strategic acquisition, if Twitter was doing so bad, they're like, we need to sell our business. Elon would probably get about 10 to 15 bucks a share, right? So it's just the leverage of the buyer and seller relationship. And you don't want to come across as the one initiating that transaction.

Do you have. If so, would you ask or ask when you call around to see if someone on the side of the road working? I would not. Y. I think I kind of addressed that. So I would wait for them to either list list or to reach out to you Again, the best deals are going to come in the form of them reaching out to you, because this is what the conversation looks like. Hey, Forest, good meeting up with you last week at the coffee shop. I'm really thinking about getting out of business. I'm just wiped out. Is this too much for me? I haven't made any money. I can't get Any guys to work for me. Would you want to buy any of my trucks? Would you want to buy me out? Your text back then looks like this. Hey, Joe, thanks for reaching out. I know it's been a tough year.

I don't think I'm really interested in buying you out, and I want to just keep it as gusta. I'd probably be willing to buy some of your. Your contracts and your customers list, but not your trucks and equipment. What I would recommend is go ahead and list it. Put on Craigslist, try to see if someone else can buy it for everything. But if you can't find a buyer, let me know. If you and I would. I'd be willing to take the clients off of your hands, and then you can sell the trucks and equipment separately for asset price, asset value. On any site, trucks and equipment usually can sell for close to market value. They can do that separately. And again, what you've now set up is, number one, they have to do some work in order to list it. They don't like that. Usually they just want to get out it and wash their hands of it. Secondarily, what you've done is basically said, hey, I don't think your business is worth very much, and I hope because I'm a nice person that you can go get more and someone is willing to buy it and pay for it. But most these businesses that have 50 to 100 customers aren't worth a whole lot more than just asset value of their trucks and equipment. And so they don't. They don't think that, though. They'll be like, if you would text back and like, oh, yeah, like, yes, I'm interested. What's your price? Immediately. Now they have leverage. They're gonna be like 100 grand, right? I wouldn't do that. Right. You could probably get it for five grand or ten grand. If you just buy the client list and let them go sell the trucks and equipment, and they'll make 50 or 60 grand on the total transaction. Right. So I would just really come from the place of, hey, go find someone else to buy it. Because guess what? No one's gonna buy it for 100 grand. Nobody. So what you do is you just simply tell them, hey, go try to find something. That's the optimal thing. If you can't find anyone to buy it, I will be. I will. I'm willing to take the customers off your hands, and I'll pay you something for the client list, but I'm not really interested in the equipment or the name or the brand or anything like that. That's where you'll get the best deal and you'll be amazed. Two weeks later they'll come back to you like what would you give me for the client list? Because they realize that no one wants to buy the whole business. They're going to have to break up the assets from the client list because there's nothing to sell. So that's why it's so important. Like systems are not just a matter of making the business better or making more profits in the short term. It's a matter of when you. When do you want to sell? Not if you will eventually want to sell your business 100%. You eventually want to sell your business or hand it off to your kids.

There's only two ways that the small business goes. You either hand it off to your kids or you sell the business.

If it's successful. And both of those, the valuation of that business is exponentially higher. When you're using systems, it's not just about making more money. Now creating systems actually will typically delay profitability because creating the systems and adhering to them is actually you will usually slow down your sales. Right? So implementing P4P having commands and are taking things for you, you know, working within the systems and doing estimate notes and all the rest takes you more time. You actually sell less, you actually scale up slower. However, the asset value of that business will be precipitously higher compared to a business that is run off the, you know, off of the cuff and you ramp up sales really quickly, have no systems. That business is still worth nothing. So it's not just short term profitability or even less headache that systems are built for. It is for the eventual exit. And all businesses exit all businesses either through passing that business along or you sell a business.

Cool. Let's see here. Okay. Windows site 2 still says we will return next spring. No, take the S off of there. Let's see here.

Yeah, no it doesn't. Here, I'll show you real quick. Vlad. So if you go here, the S is being added to your browser because you've been there before. So it is remembering your site here. One second. Let me stop. Screen. Present. Share the screen. Hop into here.

So this is the one without the S in the URL. So winter service and it's just, that's what it says. So just remember if you've gone to the other site your, your URL is probably remembering it and taking it to Winter Dash Services which says we'll be back next spring.

So how do you let People know we are buying you, don't you? You create connections with the local owners, and when they are embarrassed because they're failing, they'll come to you first because you've made a good relationship with them. The. The largest acquisition that I made was an owner that had been business for 10 years, was very public in the. In the local eye of the cut of all the competitors. Knew him. He was at all the trade shows, did massive projects, did like 1.6 million in revenue. Only 3,300 thousand of recurring. Mostly big projects, big work, grading, excavation, water features, the whole nine classic story.

And he came to me because he knew I wouldn't judge him. And he just like, hey, I don't want everyone to know about this. I was like, okay, great. I'm not gonna tell anyone. Here's what I would do. And I told him the same thing I just told you. And two weeks later, he said, what would you give me for just the client list? So people don't want to be embarrassed if they're going out of business. If they're retiring, they typically have a lofty valuation that I think the business is worth that the hard facts of the market crush once they try to sell their business. So in his regard, he was. It was a failing business. So it was a little bit easier to convince him that it wasn't worth a lot. When people are retiring and they're like, oh, no, it makes 80,000 a year. It's like, yeah, yeah, because you're working 90 hours a week. If you just hired someone, you wouldn't be making any money. The business isn't worth anything. There's no systems, and you have all the pricing in your head.

So in that regard, that's usually when you tell them to go put it on the market and tell them to see if they can sell the whole thing, because they quickly realize that no one wants to buy a job. So, I don't know. I'm sure people are watching what Samantha is doing behind me here. She's crushing it. Connect teams open service. Autopilot's open. I see zebras open. I see emails open. Good stuff. All right, everyone, hope you have a great day, and we'll see you tomorrow. Take care.