Mike Minutes Mastermind 11/23/2023

Too early. All right, well, all right. Give me a second here. I had not set up this yet.

Okay, we're going live, folks. Happy Thanksgiving to the US folks. To everyone else, hope you have a fantastic Thursday. Just another average Thursday for you. But let's go ahead and get this kicked off. Just give me one second here.

Boom.

Also, my mom's birthday. Let's go.

It was funny is they actually didn't know what day she was born, 22nd or 23rd.

So she basically had to choose which day she went on her birth certificate. It's pretty funny.

Paste that into Facebook.

All right.

All right, let's rock and roll.

Let's do questions and then feel free today. Most people are probably off. Feel free to put questions in the comments and I'll get to those after. But let's go ahead and start with the questions that were prepared.

Boom. All right, it's a big weekend for us at Copilot. We're switching over to aws.

It's just, it's the best cloud software out there. It's a lot more complicated, so a lot of CRMs don't use it. So we're. We're paying quite a bit of money for an outside firm to actually help us with not only the migration, but then the ongoing support for aws. Because it is extensive. You need a whole team basically to do it. They don't do any sort of support at AWS in terms of if something goes wrong, like, it's kind of like, sorry, but it's the best of the best in terms of uptime, etc. So we have a team that's basically on call for us, a whole development team. And I just felt like it was the right thing for us to do for the long term to improve the stability of the product. Super. Like, way better security, speed of load time, like a bunch of stuff that we can do by doing that this weekend. It's also going to allow us to fast track the offline mode of the app, which is big. And so we're really, really pushing hard the next, like five to six weeks on that. So that is what we're doing. But this weekend, Saturday, we're switching over to aws. It's like a four hour transition. So that's kind of like my big thing I'm doing this weekend. Looking forward to tremendously. Let's jump into questions. First one's from Nick from Marysville. Let's make sure I'm showing this correctly. Very good. You are right. I bet lots of people want your honest Critique, including myself. You know, there's stuff I'm working on with myself mentally. But what do you see as an area of, as the area or areas I need to become better at? Be brutally honest, I have a million things I feel like I need to become better at. But I'm really curious what shows to other people that could be massive blind spots for me.

I would say if you know that there's a hundred, you know, a million things that you need to improve on, just focus on those at first. Like, sure, I could give my opinion.

But the ones that you already know, those are usually the ones you got to work on. And so in my opinion.

Work on those things first. And so there's really no need to go get other people's opinion that do not spend 24, 7 with you. When you spend 24, 7 with yourself and already know areas of improvement, you need focus on those things first. Then go ask other people like, hey, what's your opinion on some stuff? So I do this occasionally. I take everything with a grain of salt because the person is, they might spend at best 0.05% of their life with me. I spend 24,7 with me. So I actually focus more of my time on how do I become more self reflective and like assessing myself because I have the best data on myself. Most people unfortunately just aren't self reflective enough to do that and therefore they do need other people to tell them what they're good or bad at. So I would first, as a rule of thumb, try to become more self introspective and self reflective and be able to quote, unquote, self diagnose.

Because you have the most data on yourself. So I would focus on those things first as much as I would, I could pontificate things. You spent the most time with yourself. The next person, probably for you, Nick, is probably your girlfriend who spends probably 30, 40% of her life with you and has a good pulse on things and could probably give some good feedback. That gets a little hairy sometimes asking for feedback, feedback. And some people don't like to do that to significant others because it, it kind of blurs different lines, especially professionally. And I, I get it.

And.

But those people have the most data on you. And so as much as I could give something, I spend 0.001% of my life with you and it would be unfair for me to give you any sort of feedback when you spend 24, 7 with yourself and have quote, unquote, a million things you already know you need to improve on. So just Focus on those things because they're probably the most glaring. Anyways.

Next is from Mr. Blank, Mr. Anonymous is back in the house. What are your thoughts on wholesale real estate selling? I don't know if you mean wholesaling or if you mean selling real estate like wholesale. Okay, I'm gonna guess you're meaning wholesaling. I think that it is a business, it is not an investment. First thing. Secondly is you are, it is extremely, extremely susceptible to economic recessions.

Like probably the most recession dependent part of the real estate market because you have no long term hold and you basically are just waiting. You're just, it's all about timing. Because if you, if you buy a property in a down market or going into a down market, you get caught with your pants down. And those are the people who go bankrupt first. Because you have no investment, you have no long term tenants. You also have usually the worst financing terms and you're depending on quick flips, which works well in a hot market. And then you get caught with your pants down during down market. So typically what I see is, is 90% of wholesalers get put out of business during a down market. The other 10% survive. They turn into long term developers and investors before the next up market and they make a bunch of money and then they get caught selling. Usually they sell courses about wholesaling and they get this next wave of people going into the next up market like oh, this is amazing, you can make all this money and then 90% of them go out of business in the next downturn. So it's just like the next full cycle coming along. I would not recommend wholesaling. It is a timing game and yes, people can make money. Why do you see 90% of them going out of business during down markets? Like.

When Warren, when Warren Buffett says that the rules to making money are number one, don't lose money, number two, don't lose money. And number three, repeat number one and two, it's a really good idea to look at recessions and ask when can, how do you lose money during a recession and avoid those things like the plague. So that's like going into debt on expensive equipment, doing massive project one time work and being leveraged on the equipment required for that work. Going into recession, bad news, unfortunately, we just haven't seen it for so long, no one really remembers what that's like. Same thing with real estate, it's like high leverage, you know, depending on turning churning money over 90 days. So for example, like the place I'm sitting right now, this apartment complex, I got a deal, $200,000 above asking price, but it hinged on them being able to get the VAT. Like, it hinged on 90 days for them to come in, fix the whole place up, raise rents, and refinance it. It depended on that. And if it didn't happen, it could potentially go back to defaulting on their loan. And it was basically kind of like a wholesaler. But they were coming in, they're going to, like, quickly renovate stuff, raise rents, and then try to refinance it. I did not take that deal out because it was all in the power of somebody else, and I couldn't control that. And.

I don't know what the market's going to do, and I just don't want to lose money. Losing money is bad news.

Like, I really always think about that when Warren Buffett says, like, the ways to make. To become rich is like, don't lose money, don't lose money, don't lose money. All right, how do I make sure I don't lose money? Let's look at all the ways that people lose money, typically during a recession, and avoid those things like the plague. And one of those things is, like.

Leveraged debt. Leveraging debt in a way that if everything doesn't work out correctly, you could be caught with your pants down. And so was it. Was it difficult to turn it away? A deal has $200,000 above asking price. And. And I would have walked away in the perfect scenario with probably $600,000 of cash for holding a property for two years and being able to live for rent free for two years. That would have sounded fantastic.

The problem is, I don't know if they're going to be able to raise rents that high. I don't believe they were going to like the valuation that they were trying to get to in 90 days. I'm not sure that they're going to be able to renovate all the properties in 90 days because there's existing tenants inside of the building. I'm not sure if the. If the valuation will be as high as they want, even if they get the rent as high as they want, because the market might change, and it kind of has. It's kind of stalemated on the commercial market in terms of like 10 units like this. This building. So I just don't like to be putting myself in that position. I don't even know where that came from. Oh, wholesaling. Yeah. Gotta love it. Dustin from Bloomington.

Oh, man. That's a long question. End of Year analysis. Okay, this year 4.1% of our total revenue was from aerations and overseed. This will continue to drop as we still producing revenue until the end of the year. But this is where it currently sits at. We own our own our stand on mower outright. I haven't heard back from our dealer as far as what he would give us a trade in but he said it's probably worth 8k. My thinking this difference is extremely profitable and pretty easy. But. But would it be better to drop the service and focus all money and efforts on simple cleanups? Mowing and mulch install for 4%. I'm not sure it's worth our time to have a dedicated machine that sits 48 weeks out of the year. Good point. Part two. We also have a utility tractor we use for projects. We are reducing services more and more that get us away from really needing it. However, it is super nice to have for projects and general cleanups around the shop. We do still owe on the machine and here's the details. Loan $7200 0% financing. We are 34 months in. For what reason would you keep the tractor on? For the convenience of what reasons would you sell it? This is in Bloomington. If it helps at all with recommendations. A lot of the tractor part would come down to what can you sell it for? If you can sell it for like as much as you bought it for, for example, that looks really interesting because 34 months ago you might have got it at like before everything went nut Bar Factor 6 and you might, you might be able to get a big chunk of cash then. Then it becomes a conversation. If it's only worth 15 grand or 10 grand, that's like keep it. Like if it's helping your life and it's not going to really do much in terms of cash flow, I would probably just keep it. So that's really the detail I'm missing here is the value that you could sell this thing for. Second the first part though in terms of the aerator, 4%. So that's probably like 20. You're probably doing like 25, 26. 20. 25 to 30 grand. I'm guessing per year from that. Not bad. The bottom line is you're probably going to spend how much more. How much labor are you saving by having the $8,000 machine compared to a $2,000 machine? That's the first thing I'd be asking like if you spent an extra thousand dollars on labor, would you be able to get away with a two thousand dollar walk behind instead of the stand on, I don't know that I'd also be looking at the fact that maybe you can improve the 4% with things like one click, estimate emails and go from 30,000 to 50,000 and all of a sudden that starts to make a lot of sense. With aeration it is, and most times when you need equipment it is a matter of the equipment's going to sit idle more than you would like for things like snow blowers, snow plows, air aerators, overseeding dethatch. You just don't use it most of the year. The question is, is the juice worth the squeeze and in two weeks can you make 15, 20 grand and is that enough? Like you might with that 25 grand pay for that $8,000 piece of equipment in one year because you like it's a 50, 60, 70% profit margin. So I wouldn't necessarily judge it based on just how long you use it because there's times people will get a piece of equipment they use once a year, but on that one time they use it they make a hundred grand. So I wouldn't necessarily judge it on that matter. I'd judge it more on the case of.

How much profit you make on that service. And if you make 30 grand and 1550 of its profit, well you kind of paid for the piece of equipment already. So I wouldn't necessarily judge it on that. I would try to get more than 4% of your revenue to be coming from it, especially because it's a high margin service. So I'd lean into it. I would do ads against it. I would, you know, if you spent a thousand dollars on ads, door hangers, yard signs, etc, can you go from 30 grand in aerations to 50 grand and make it worth more for the equipment? Maybe. What do you eat for Thanksgiving? Does Jocko Energy have a.

Have a turkey and cranberry flavor? I just had a new flavor actually. It was, it was okay.

Yeah. It's funny, Kyle Turner does level billing work with Fever P Even toying around the idea of 12 month launch plans for our customers in the future. Good or bad idea? I was thinking it would be easier to offer winter service in our area if the price is baked in a 12 month plan. Thoughts? My thoughts? I thought to first of all only have four minutes for my next meeting, which stinks. My second thought is.

I would focus for you Kyle. Specifically I think I would focus on other things in the business first. Everyone thinks that they need to change like 12 month billing. And like it's like why? Like let's sit back and ask for a reason. Like is every customer demanding it? Is everyone think you need this? Like, are you getting 30, 40% of your customers not accepting your quotes because you're not 12 month billing. So I would fix other parts in the business and focus on scaling instead and like hiring instead of 12 month billing. A lot of us like during the winter we just get bored. I was talking about this with Dr. Cash the other day is like, I'm like, how do I keep people from getting bored and doing stupid stuff in their business? Because I see this quite often. And during the winter it's like we twiddle our thumbs because the grass isn't growing. So what do we do? We go do this. Like I'm going to add this, I'm going to add this because I have money, I have cash for the whole year now sitting. I'm going to do this under the guise of taxes and I'm going to get involved in all this other stuff. And I'm not saying that you're going to do this, Kyle. I'm just saying and in general, like getting distracted with things like level billing or like I'm going to like all of a sudden go to weekly billing. Why? Like you have no problem with your cash flow, you have plenty of money in the bank and you don't have any accounts receivable and everyone's card on file. Like why make this massive change in the business just for the sake of creating chaos. And a lot of times when things start working, we actually want to create chaos simply because we as entrepreneurs, like in chaos, like everything's going very well. I should throw a stick of dynamite in this by like changing out something in the business.

I would be very, very cautious of that. P4P integrated copilot. Yes, it is inside the integration tab. Inside P4P. We are making a few refinements to it. What we found is if people have multiple accounts in copilot, it is going back in time and finding other accounts. Like Nick Davidson messed up his account dramatically. The reason is, is because he had an old account called Nick Davidson Lawn and then he had a Gusta account. And so when he created the integration, we go back through all the users and we map them. However, there are multiple users in his old account that started pulling forward. Create an absolute chaotic mess. Sorry, Nick, very sorry. We will fix that. But we got, we were still making a few adjustments. For example, when someone clocks in and out of copilot, right now it's creating two time cards inside of P4P. You don't want that. So to automatically now create a break and put it all in one time card. We're working on that next week. So there's a few refinements. Some of the things we couldn't really figure out until we put it into live production and people like Nick got it and then kind of broke it. We hadn't thought about, like, having two accounts, et cetera. So we are still refining it. Some of my locations are using it. And as in the first week of December, when I move, like, Bellingham and all. All my locations over to Copilot, then we will have all of them integrated with P4P. So, like, rush into it. I wouldn't rush into it. You're saving a couple minutes a day, probably. And then it's really a matter of, like, your guys being able to see their recurring amount of revenue if they're on a route that is super valuable. All right, everyone, I have to run, but we did get through all the questions. Thank you very much. Have a fantastic Thanksgiving. If you live in the US if you live in Canada, have a great Thursday.

And we'll see you guys tomorrow, which is considered Black Friday in the US Again. But it'll be another great Friday and we will have another mastermind. Thanks, guys. Take care. Oh, we got new trucks at Bellingham. Got two of them yesterday. And great deal. Fantastic deal. $25,000, 15,000 miles with taxes and everything. You're looking at 29, 30 grand. All right. Taxes, registration, all the other stuff.

It was a good deal. I'll make a video maybe once I've got. We're gonna get two more probably here soon, and it'll be great. We have 90 level billing due to almost all commercial contracts. Fee for fee is doable, but I think making the contract is built on BVP and pay people budget hours rate consistently. Mike just advised me on this. Yes, yes, you can absolutely do the level billing for P4P, by the way. It's just a matter of making sure the budget hours are correct. All right, I must hop on a development call. We will see you all tomorrow. Love you.