Mike Minutes Mastermind 11/23/2022

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

Here.

Okay, I got a few things to go over. A couple or one announcement.

For those of you with growth models. Growth models and you have a territory we're going to be adjusting over next several weeks, a few things. And the reason for that is when you have two circles of territories right up against each other and as soon as you add a third one, there's a spot in between as a dead zone. And it gets confusing as to who that lead goes to. So what we are going to do is we are going to expand out. There's no decrease in anyone's territory by the way, only expanding out to cover in those gaps. And we're going to use main arteries of either zip code name, zip code, city names or like highways. So that way it's very, very easy to distinguish what those lines are in between. And so it's only going to happen where there are territories up against each other and their circles, there's gaps in between those. And so we're going to fill them in equally between the three territories around them. So this is not going to affect 99.9 of you. There's only a few that is actually an effect. But going forward, what we're going to do is we're going to give people 5 mile radiuses or whatever the radius is for their territory. Then we're going to fill it to very demarcated spots of either a zip code line or at least a highway line. So that way then it's very clear in terms of there's no gaps between territories. So that's what we're trying to prevent. Because a perfect circle is going to leave too many weird gaps if you start putting them close to each other. So we'll make sure it's completely up, everything's butted up against each other. It's very clear in terms of zip code, city names or.

At least highways. So if you're having multiple in the city because massive city at least having like a very clear highway, that is the demarcation instead of having a rounded territory. So you don't need to do anything. This is all being changed in the back end and no one's.

Territories is being shrunk at all. It's only being slightly marginally increased. And it's going to be slightly just to make it more where there's not ever a customer that's in between territories because of the circular nature of a radius. So we just found it's, it's, it's not necessarily. We've always been tempted to go the zip code route like so many other franchises do. But the problem with that is you get these weird elongated zip codes and people have to end up buying three, four or five of them just to make a decent territory because you got weird lines or like they do weird shapes, the zip codes. And so it's a way to basically sell more franchises, sell more licenses, is to sell by zip codes. I understand that because it's the most efficient way to get them in, but. But it's also the least intuitive way of how you actually service an area is by zip codes. Some, some states do pretty good job of zip codes. Like they're more square. They're more like the shapes are regular, but a lot of them are weird. And so what ends up happening is you can sell more licenses and sell more zip codes if you do that way. And that's why most franchises do that. But I feel like our model of we want to have as many as efficient as possible inside your service area serves a radius better. And now what we're going to do is the edges that pull it out slightly in order to fit and not make sure there's not gaps between where a customer is calling in. It's like literally right between two territories. And then it just, you know, now it's a flip of a coin if you get that, that, that that customer. Because the service area could be in both. So it's not affecting anyone's service area, just your actual legal territory for the growth models.

Quick thing on benefits.

Let me see here, one second. Make sure I got my audio. Oh, wrong one. There you go.

So in terms of benefits, there's definitely a correlation of when you have benefits of the people that have use the benefits stay longer. These are intangible things that they start to think twice of before they're like, oh, I'll go switch jobs for 50 cents more an hour. When they start having to cut ties with things like health insurance and other types of benefits. That is the reason people use benefits as a way to reduce attrition of their employees and increase retention in the long term, in the long run and retain them, retain the good talent. So the thing is that I found is when you talk about frontline laborers at landscaping, most of our locations, a lot of them have either government provided health care, they're young enough to still be into their, their parents health care. Because like 24 is a lot of times when you can get, you can still stay on in your parents health care.

And, or they're just, they're healthy and they don't, they don't even think about health care. So health insurance doesn't do a whole lot for you or for them. And so we found that the uptake at the local, our local shop, the actual like landscaping locations, there's not a lot of uptake of the percentage of people that actually use the health care benefits. And it's also pretty expensive both for you and for them if they're getting a good plan. And so if they're really young, they don't see the value. If they had to pay $10 for it, they probably wouldn't because they just, they're like, I haven't been the doctor in five years, who cares? Or they already have benefits from the military, their parents, the government, et cetera. So a couple things that I've been rolling around my head I'm going to be trying to work on is you can get really relatively cheap term life insurance and then them not have to go through a health exam. Usually anything under $250,000 in term life insurance, you don't have to have a physical exam. It's literally just like fill out the paperwork, put your beneficiary for your in just an algorithmic ad age, do you smoke, are you active, that sort of thing. So I'm looking to doing that. It's relatively cheap. Like 20 bucks a month, you can literally get 100, $200,000 term life insurance. I think you can get like a million for like $30 for the average. You know, again, we're talking about young males. It's relatively cheap. I mean 20, 30 or 20, 30 year old healthy male that are working outside all the time and are obese. Like it's relatively cheap to get term life insurance. So it's a benefit that is relatively easy. I'm just trying to figure out the best way to do that that is easy to sign them up and take them off without having a whole bunch of paperwork. The last thing you want to do is like, oh, you're laid off or you're fired and, or they leave and like, oh, by the way, I need you to come back because you need to sign off that you're not having this life insurance policy anymore. So I'm trying to figure that out. The other benefit you could do is gym membership reimbursement. So I say, hey guys, up to X amount per month, I'm willing to cover and reimburse for gym membership. Again, young healthy males, this is something that they're probably going to be having, whether it be they're doing a jiu jitsu or kickboxing or they're actually at a weightlifting gym anytime fitness or whatever, it's a benefit that is relatively cheap. Because when you look at healthcare benefits, if like for us, for example, we offer it, we pay up to 250 per month, well, that's a lot for us to pay. And then for them, they're paying between 30 and $150 on top of that to get whatever plan they want. So it's expensive. Whereas if I did a life insurance policy for say 25 bucks a month and then I did 80amonth reimbursement of gym membership, looking around $100 per month and it's something that they actually will use because the last thing, like if they're not using it, it's not super sticky. It's not going to be something that they're like, I. If they're looking at another place to work and like, yeah, it's $0.50 dollars $0.50 per hour more if I work over here or a dollar more per hour if I go across town, then they start having these intangibles that they can't weigh out. Things like, oh man, but they covered my gym membership and I really like my gym membership. Oh, and I got life insurance. Like if something happened to me, my family's taken care of. Like these are intangibles that aren't going to cost you a ton of money, but definitely offers value and better yet, it's a non taxable event for them. So that that benefit that you give them is not taxable. So doing those, for example, like giving $100 per month out of someone extra as a bonus does way less than you doing a benefit like that in terms of just the psychology of when they're trying to, when they're starting to think about leaving. So just keep that in mind. It's something that you might want to play with. There's other benefits, obviously there's a bazillion. You could go down their list from, you know, giving snacks to having Gatorade and water for them every day. Like there's so many different things you can add on, but there, those tangible things are the things that kind of create a little bit more of a barrier to when they start thinking about comparing you against the guy that just offered them $50.50 more per hour when, when they're working that day or whatever it is. So just something to think about.

All right, let's jump back into questions.

Cool. Very good. I don't know who this is. Sorry. I gotta go into Facebook and see who makes these comments. I'm sorry. Streamyard to log in or whatever. Cool. All right.

Thanksgiving. Thank you. If you have multiple locations, can you then offer insurance as a regional type thing or from main. From the main entity. How would something like that work if we have multiple locations in the same state or in multiple states? Yeah. So the challenging part is we have multiple entities. It starts to get a little bit dicey. One entity with multiple states, not a problem. We've done that. It is when you have multiple entities, you're going to have to apply it separately for all of them. So, like, you can always ask. Go through the. On. On the.

Deals page for our preferred vendor for health insurance. You could always ask him directly, Ryan, and see what would be the best for you in your case, what he might do. And this is what we did on mine is I actually have one invoice that I pay for all my entities. And I just. They don't allow me to split up the invoice. I just pay the. Pay the invoice in segments from different bank accounts. So that way I'm able to. Under one policy, I have all my entities, but I have to write four checks, or like four. I do four payments onto one invoice from my different bank accounts. So that way it all evens out. And then in each. Each QuickBooks account, it is correctly allocated the amount of money that's going towards health benefits. So just talk to him. He can figure something out. With you. It's a little bit of a manual process. When I. When you do it like me, you can't put it on autopay because I have to. Every single invoice, I have to allocate the correct amount of money from each entity to pay off the total invoice.

What size of business do you think adding life insurance as a benefit is smart? Life insurance is very, very cheap. So it's something that if I figure this out and I'll let you guys know, it really, I'm really mostly figuring, trying to figure out right now is how to cancel without a signature. That is something that's very difficult to do, but I know it can be done. So I'm talking to a few different insurance providers because again, if someone, like, curses at you and stomps off the job, the last thing you're like, hey, I need you to come back to the office and sign something like, it just. It just. It's just not good. However, you as the, as the payer of that policy should be able to cease payment and therefore go void. So I guess I talk to them, see what's up. And I mean, a few different companies I'm trying to talk with, but in terms of life insurance, I think personally that is a very low hanging fruit that you can offer, that offers a lot of, of value to the employee, doesn't cost them anything in terms of taxes, and you're able to offer something that's very valuable to them if something were to happen to them, to their family, for their family. So like the cost of really giving someone a good funeral and all the rest of it and like people flat to fly in town for all that, like you're looking at tens of thousands of dollars. And so having $100,000 is a good idea, especially if you're a young male, like it's 15, 20 bucks a month max and for a 10 year term. So even, even as you get older, it's not so bad. For $100,000, I recommend everyone get a life insurance policy that's just $100,000 or something just to cover if you were to pass away, that your family doesn't have to go into debt. And it takes a while to get your assets sold off. So if you pass away, even if you have a will, it takes a while for it to all get enacted in courts. And a lot of times what happens is even though your business is willed over to someone, even though your assets are willed over someone, by the time it's transferred, the cost of getting it all done, everything gets, I think the costs are just prohibitive to get it all transferred over and everything. So you want to make sure you have enough money to actually get your will enacted.

So like what I did in my will is I said, okay, like all this stuff has to happen to get things transferred and moved across. How much is that going to cost us in legal fees and all the rest of it? To make sure that my life insurance will cover that. So that way it should go relatively smoothly because there's so many things that happen when it comes to taxation and then the transfer of legal entities and ownership. That, that can be a very slow process and a very expensive process. So if that's not covered by something like life insurance, that should be unlocked very quickly like life insurance. The benefit of life insurance is you get unlocked very quickly. Sometimes insurance policies, in like a week or two, they'll get the money to the family. And so it's very important not only for just the Funeral, family expenses, et cetera. It's also the legal side of getting everything according to your will done. And if you don't have a will, you should get a will. It's not expensive. You can do it online. In a lot of states you can literally just write it up and then go get it notarized and then have it filed. Like, at least do that. In some states you need to actually have an attorney put together. But in some states you literally just need to write out whatever you want done and then go get it notarized and then have it around. But I would recommend take that document and then go give it to an attorney. Like, can you please make this an actual will? Last will and testament. It's important, like, especially more assets if you have family, like the more people that depend on you, you should have a will. It's extremely important.

How many benefits, like life insurance, gym membership should we offer? Is there too much? I think it starts getting confusing for the guys. That's, that's the thing you want to step away from. So we have a whole bunch of like cash rewards and bonuses that they can, they cannot get. But actually like benefits is really just like healthcare benefits. And then I'm thinking about offering these alternatives if they can't take healthcare benefits. So yeah, I think there is definitely a line of too many that gets confusing for them. And when people get confused, they don't do anything. Okay, let me pull these up. Sorry, here, one second.

Okay.

Oh, it's a no name person. These are always fun ones. What do you all supply? What? What all do you supply your GMs with? Laptop, training, et cetera. Oh, okay. Yeah, we typically will give them a Chromebook, like a cheap one, like 200 bucks, just one that they can throw in their car when they're doing estimates that way too. If the cruise contacts them throughout the day while they're out and they're doing estimates, they can quickly route or dispatch.

Respond back to command center if there's a question, something like that. So we do give them usually a Chromebook to use out in the car. In terms of training, usually they come to training. As an owner, this is not something I am necessarily regulating because if you have a gm, as long as the regional manager or owner has been a training, I'm fine with it.

So in terms of training, they're like either either you or regional manager are very much directly linked with them or they should come to training and it just would be sent over like a typical owner would. But we're not Mandating that. I think we have a couple locations starting where like the owners come and the new GM that hasn't isn't coming to training. I'm okay with that as long as there's very much one on one and there's a lot of daily operational training coming from the regional manager or owner. But most GMs do come here for training like any, like any owner would.

When I joined Augusta, Command center fees were advertised as cad. Oh, Canadian fees were raised around spring, but we're still in Canadian dollars. Now you are switching to USD, which I can understand. This amounts to a 25 to 30% price increase for existing Canadian locations. And this doesn't include the former price increase from spring. So the actual increase of the year would be higher. Is there an option to grandfather older location in the CAD rent rate? Currently there are only six Canadian locations and I'm not sure that everyone uses Command center extensively. Raising prices by 25 to 30% had significant impact on my location. I'm not sure it's going to have a drastic impact on the overall P and L of cc. The unilateral decision of. The unilateral nature of decision is somewhat upsetting. Great. So great point. So this is the equivalent of sort of like when you take your customer base and basically say take the ones that you're basically losing money on. Like, hey, like we have to raise prices. We are literally losing money on your job.

And so that's essentially what we've had to do with the Canadians. We, we thought about doing this for years, past year and a half, two years when we first, when I. So I've sold all the Canadian franchises myself personally besides the last two or three, there's another one coming in Delta.

But when I, when I sold them it was very clear it was the initial fee and the monthly fees that will always be Canadian. Because that's the part that I want to say level that you can depend on that you know that that is the amount that you're paying and that's the whole benefit of Augusta. The command center fees are variable based upon how much you use it. And that was the part that I did say could potentially move to USD. And it's actually in, in the agreement too on the fee section. It's the only line item that says USD is the command center part for the Canadian fdd. And I remember that because we put it all in there. It's the only one. Everything else has its assumed Canadian dollars. But then on that command center line item it does say USD and we've not done that for the past while because it has been only six locations. However, when we start taking six, seven locations and we're losing 25, 30%, it's 30% plus because like the other day the exchange was 72 plus. We have to pay 3%, 3 1/2% fees. So it's around 31% loss when you're running commands and at such a thin margin of a couple percent. And we're literally trying to squeeze out every single penny we possibly can. To be losing like loss like every single minute is loss of 30 plus percent isn't really fair to the rest of the franchise where we're trying to, we have to cover the cost of Command Center. So the same way that it would seem like a unilateral decision for your customers, like hey, we have to raise your price, we're losing money. That that's the decision we have to make. And so although it seems unilateral in the fact that yes, I did make that decision and we just moved with it, it's because it can't it talking about it isn't going to change the fact that we lose 30% every single time. And so it's not fair to the rest of the locations when we're trying to keep Command center at a reasonable cost. And furthermore, you'll hear more from Liz at Command center or at conference talking more about even the next few years of what we're trying to do so we don't have to raise prices like we did in spring. It's just a constant matter. We have to be more and more efficient. The only way that we can ever produce.

At Command center and be literally less than half the price of a lot of other call centers like Ruby, Jill's Office, Call Boss, etc. The only way we can do it is if we're extremely efficient. And so and then over time we, as we wrote, we get better and better at virtual where we can lower the cost without as much management on top of it.

So yes, I understand the nature of it. That's what we're giving four, four or five months before it's actually happening. So you can plan for it. I understand that that creates a varying rate for you. I understand that.

And in the perfect world I would say, hey, we're going to go ahead and get a virtual team up in Canada so that we can fix that number for you. All that being said, with real estate and wages, they would the way they are up there compared to where we're even where we're at. It would still have to be higher because the cost of rent, office and labor, as well as taxes up there is 25 to 30% more than here. So if we were to do a virtual office in Canada or get virtual people to work from Canada, it would cost us just as much. And so just the cost of living in somewhere like Vancouver or anywhere else like that is significantly higher. And we just would not be able to get people for 15 an hour on the phone up in Canada. There's just no way. So, yeah, I hope that makes sense. If you have specific questions, Max, I'm happy to answer them. I know that this is. We talked specifically about you. I know you're very well with the numbers and things and you probably have questions, so I'm happy to answer them. But it's one of those things where ultimately we're looking at the entire franchise. We look at command centers. We have to be as efficient as possible. And we are trying to make the entire system pay for their part and their piece of it. And we can't have even 5 or 10% of the locations losing 30% because that means that it takes 20 or 30% of the other locations just to make up for the cost of that. That loss. So if we had a team in Canada we were paying in Canadian dollars, we would be able to then fix command center costs and that potentially might happen. However, currently, as I look at it, if we were to do that, the cost up there of doing having people virtually would be 23% higher anyways and we lose our exchange rate anyways. So I'm happy to explain that more in detail if needs be.

And Liz and Lonnie are going to talk a lot about what's happened at Commencer in the past six months, as well as what our plans are in the next couple years to make it more and more efficient. So I don't want to take their thunder away. When you are hiring someone to help. When we are hiring someone to help us out in a pinch or for a very limited amount of work, and we know they won't be long term, what's the best way to pay them and keep things above board? Oh, this is tough. Okay. For snow work, I'm realizing to scale residential snow removal.

Need to recruit more people to take on properties. School teachers who want to make additional income when school is canceled due to snow. That's a good idea. Should these people be put on payroll or 1099? I think to be 1099, they need to be using their own Equipment and vehicle. The issue is the amount of Augusta trucks you would need to have payroll employees servicing Snow customers. The 1099 seems pretty appealing. Seems appealing for the service. Yeah. So.

Unfortunately.

The IRS did not like if you're. If you're wanting to be above board. Like, let's just assume you want to do everything perfectly. The IRS does not care about how long they work for you. They care about the parameters of what a 1099 is. And so whether they work for you for two days or two years, if they're using your own, your equipment, and you're telling them when to clock in and clock out and they're wearing your uniform and all the above, then.

Are there W2. So the problem is it costs a couple hundred dollars by the time you just like get them set up in payroll and get them onboarded in there and get all their tax stuff set up. Like it. It takes time. So one way around this is using temp agencies. Because temp agencies, what they do is you 1099 the temp agency. Again, every state's different. You have to talk to your local employment temp agency and see what they're doing. But most of them work like this. You pay 1099 to them and they w to the employee. And so you're going to pay a little premium to the temp agency for that service, but it allows you to be able to not have to worry about unemployment and all the other things that go into hiring somebody. So you potentially, potentially might ask that school teacher to say, hey, could you go sign up with that temp agency? And then they'll have you on standby. And then when I need you to come work for me through them again, that's like, if you're going to do above board to the max, most people are just probably going to let them hop in the truck and help them and they're going to get them cash. That's what's going to happen. The problem is, especially with snow, something that's that high risk, there's a large chance of a large damage. And if they're just working with you in the truck, you can. You're going to have some problems. If they run, run the plow into someone's garage or, you know, God forbid, hits somebody with the plow, like you want to make sure they're covered correctly. So this is why we kind of cut tent, cut our snow ultimately is just because the recruitment of needing people for just a couple days. And then when your team is burnt out, then you're asking them to come in that it's low morale, even though there's lots of money in it. That's kind of why we cut it. I'm not saying everyone should cut it, by the way. I'm just saying that's why we did. In our market. Doesn't snow enough to make it worth it.

But yeah, technically, from an auto insurance perspective, you're covered for anyone that drives those trucks. Okay. From a legal liability standpoint, like your, your professional liability, they are not going to cover stuff if something were to happen. So you should talk to an insurance agent, understand your policy. But typically, anything with an auto, if you have a commercial auto, anyone driving that vehicle is covered. When it comes to professional liability or general liability, typically only employees are covered. Like that is just kind of the general standard. So just keep that in mind. If you're just gonna have someone hop in the truck with you, I would recommend them be the person that like shovels the driveway and you plow and you're behind the wheel. That's what I would probably do. In your case, if you're just needing one person, I'd try to be the person doing the driving and then they can like do the load. Lower level tasks like shoveling or putting some salt out, something like that. If you're trying to get around hiring them full time or putting them as a W2 or 1099. So perfect.

All right. That's all I had for the day. Hope you all have a fantastic day and happy Thanksgiving to all the US Side of people. All the Canadians are a month ahead of us. They're on the ball months ahead. In October, they celebrate their Thanksgiving. So my mom's in Australia, so we already celebrated last month for Thanksgiving. But anyways, hope you all have a fantastic day and I will still do a mastermind tomorrow, most likely. So I guess I'll be able to say Happy Thanksgiving then as well. All right, take care.