Mike Minutes Mastermind 11/30/22

Super. Well, let's go ahead and get started.

Comments YouTube.

Now they make it where I can't put these comments in until after I have started. So I have to do it every time. I apologize. All right. Boom, boom, boom. Okay, I think there's a couple questions that came in on the form. Let me go to that right away.

Present Share screen.

Okay, what do we got here?

Chad? I'm sorry to. I'm talking to a company seek capital while getting a revolving line of credit improved for up to 80k which I definitely don't need. They charge 9.9% of total credit limit. They get you. So if I got 50k, if I got 50k, I'd owe them 5k and they take that from the 50k. So I'd start with owing 5k and additional 700 for underwriting. It's 0% interest for 12 to 18 months and monthly payment of 2%.

Hope I explained that clearly. This is a legit offer. It's not a scam. It's extremely high. So typically your initiations fee for a local credit union or something going to be 1%. I've had some banks not have to charge me any initiation fees, but that's rare. Typically you're going to be at 1% for a good bank. And so what they're basically doing is they're charging the five grand. So basically turning a 10% initiation fee by charging the five grand plus the $700 for underwriting when typically like the $700, that's what the actual fee is. This is like straight profit for them.

The 0% is fine and dandy. And what they'll do is they'll try to sell you on this 5k being the interest, like 10% interest for the first year, year and a half. Oh like 7, 8% interest if you just take the full line of credit and then don't pay any interest on it. However, a monthly payment of 2%, if you extrapolate that over the course of a year, it's like 30 something percent. It's worse than a credit card. So I would not recommend doing that at all if that's what you're asking. But yeah, it's how a credit line works in terms of revolving, but it's not it. When they start throwing all these numbers at you, they're selling you something. So they're usually expect a 1 to maybe 2% initiation fee. 2%. If you have like bad, worse, you know, lower credit, but typically 1% local credit union, they're going to change. So if you have a $50,000 line, they're going to charge you 500 bucks every year. That is reasonable.

Better than that. Typically, if you have a better credit score, if you've been with the bank for a long time, they'll just charge you one time, like the initial to set up the line of credit. They won't charge you annually.

And then in terms of percentage interest, you're not looking at 2% a month. That's crazy.

Anytime someone breaks it down to monthly, it's almost always a bad deal. Typically for a line of credit for your business, you can, you can get even right now.

7 to 12%, which even a year ago sounds nuts because you could be getting half that. But that's what it is. So just depending on your credit, right, it could be 15 or 18% maybe if you have really, really bad credit. But like again, 18%, 20%, you're talking about like the likes of a credit card. So you might as well get a credit card. In this case, credit card's gonna cost you less because they don't have all this initiation fees. So if you needed something, I would use a credit card. Sounds like you're using this. You'd be thinking about using this to expand and grow. I would not use that much leverage.

Personally.

Yeah. Do you recommend sending one click estimates throughout the entire year or is it better to not send them in January and February when business is really slow? So I do recommend sending them out year round because it keeps the client warm, keeps you in front of them. And if it's once a month, it's not so annoying that they just unsubscribe for you, especially if you're making it relevant to the timing of the year and what services could be offered.

And again, in the perfect world, we'd send them once a month. The problem is most of us don't send it. And I include myself because we didn't do. We haven't done this the past few years. We haven't sent these during any April, May and June. When your customer acquisitions are the lowest, your demand for your customers is the highest.

You usually don't send out one click estimate emails. Like last year, more than half of Augusta Nation turned off their estimates during the spring rush. And it's no fault of our own, like no fault of anyone. It's just a matter of we get overwhelmed. And so what's going to end up happening is you use your one click estimate emails as a way to fill in your slower periods of time. Just going to have a lower Conversion on them. Right? So in the perfect world, yes, you would send your estimates emails every single month, including spring rush. But for most of us, a lot of us did not because we were so overwhelmed with work, couldn't get employees, et cetera. It is during now the January, February of the world, especially in your, your market max, because I know it.

Using the one estimate is great because it keeps your guys busy and it keeps work coming in. At least it keeps you above fixed expenses so you can break above even. So you know, bush trimming, gutter inspections, especially the bush trimmings and the property cleanups, those are the ones that like we really go after during the winter in terms of one click estimate emails. Because obviously if they're on winter services, don't send them that email.

You could, I guess, but sometimes they get confused. They're like, I thought, oh, you're already doing this. And typically by the time you hit January, February, you've already cleaned their property up to the point where they don't need a property cleanup or bush trimming on winter services. So we would usually filter those people out and then send it to everyone else. And yes, your conversion on those emails is probably like less than a third of what it is compared to the spring rush. But again, the value of that work is higher to you during those times because you don't have very much of it. Right. So during the spring rush you're just like, ah, who cares? I'm going to work. I don't get any estimate email estimate email clicks. I have a gazillion people knocking down my door for work to do to get work done.

Well, okay, here we go. Good morning. As I'm sure you know, my plan for next year is to have Brandon Lake. Oh, to have Brandon take over Columbus as a working GM and I will go to Fremont and open a new location as a GM operator. To start with. One of my employees, Isaiah, was planning to move to Fremont and he would, he would be my first employee and grow that location with me. Yesterday Isaiah put in his two weeks and has decided to pursue something else. Okay, what you spoke about during yesterday's mastermind about an entrepreneur starting and a manager maintaining and how to grow locations really connected with me. So there isn't a doubt in my mind I need to continue pursuing Brandon taking over daily operations in Columbus. The difference is now that I would be going into Fremont completely by myself. I haven't signed the FTD yet. So what? So before I started talking about this, because your plan should never be dependent upon people around you ever. So whether or not employees stay, come, go, you should not allow your goals, dreams, and what you know is right for the business to be dictated by people leaving or coming. Let me just state that very clearly, because if you do that, you're, you're, you're, you're, you're stepping on the emotional roller coaster of people coming and going, and that, that is a train you do not want to be on. So when you know something's right for the business, you know something is right financially for you and for your goals and getting to where you want people come and go. And when, when you say this, people think that you, like, try to use people and like, oh, like when they're with me, great. And then they go, who cares about them sort of thing. That's not what I'm saying. What I'm saying is you need to have a goal, vision, and a dream, know what's right for the business and stick to it, regardless of whatever person is going to make you help you get along that journey. Right. And hopefully on that train ride, they get ahead in their career and maybe they step off down the road, but I'm not going to be emotionally tied to them being on the train.

I haven't signed the FTD yet. So do you think it's worth looking at a different town or should I stick with the plan I've made, which is moved to Fremont grow as fast as possible? Okay, got it. So you made the decision on Fremont based upon having this other person. Okay, so then it makes sense. Like maybe you need to look at a different market. But again, I tie this back like so, first of all, yes, I think you should probably look at different markets and consider, because if you made a decision based upon, say, someone being in your team, this is a short type of thinking that is going to hurt you. Now you take that off the table and say, okay, what is the best market for me to move into? I should show you. Lee, you're probably listening to this. Could you send me the picture you sent me the other day of what we're doing in North Carolina? For my locations, we're doing three and a half mile radiuses and we're actually overlapping some of them. We are going after very, very small areas and doing growth models for each of them for my, my locations. So I'm a big fan of putting them right up against each other. I can show you guys exactly what I'm doing. North Carolina. My biggest worry now is I'm going to be needed in Columbus if There is a fire to be put out or we're not as ready as I thought and Fremont is going to suffer with me being the only person there starting out. I know I have more freedom when hiring, with hiring someone new that I can train. But I also know I cannot let Columbus suffer while trying to pursue a second location. What are your thoughts about what I should be doing moving forward? Okay, so I'm going to assume that you've already calculated the cost and financially, you know, you can take on a second location. I'm going to assume that. And then I'm also going to say that you have. Now, the first part of this, this question and second part are in opposition of each other. Because the first part you say you know what you need to do. The second part is you're basically just questioning your decision. Right. And so I am going to assume right now again that you have the money to start a second location. If that is in question, you might need to rethink things. But if that's not true, what's happened is you've tied your business decisions along the lines of an employee and now the employee's left you and now you're just, you're, you're questioning decision altogether. You need to make decisions. And I say we, you, you, I mean like all of us, all of us need to make decisions. Regardless of who is on your team, regardless of the employees are with you or have left you or whatever, you've got to determine what is right for the business. And if you determine that it is better for you to step out of the operations, let the business stop growing, increase prices so the profit margins increase, if that's what's right for the business and you have a good gm, because this is the thing, the alternative. Here's another case that you might think about. You stay on and then that gm, now you're stepping on his toes all the time because he doesn't have the autonomy that you promised him just a while back. And guess what happens? You lose him. So I'm not saying that you should start a second location. That's not what I'm saying. What I'm saying is figure out what you want and your goals and stick to it. Regardless of whether or not your GM leaves tomorrow, four of your employees leave tomorrow, you have to stick to the plan.

And people come and people go. That's just going to be how it is. And you can call it unemotional all you want, but that is just the name of the game. And economies come and go. Stuff Happens, family, health, whatever. But you've got to determine what you're actually going to do and then just stick to it. And what's right for the business, you got to determine that. And so if, if that means moving to a different market, because now you don't have this other employee, you can't make that decision if that means moving it closer or different side of your territory, whatever it is. I like them being very close to each other. I can talk more about that maybe tomorrow when I show you what we're doing with all my locations in North Carolina.

But this is the thing.

What you're assuming right now is that the fact that your second location is hinging upon having a good first work person out in the field. And the success of a location does not depend on that. You can get good workers as long as you're doing simple services relatively quickly in terms of if they're good, they ramp up quickly. Okay? So you just gotta find the good people. You got a month or two or three months to find that person and you literally could find someone better than the person you're about to just make a business decision based upon. You should never make that size of a business decision based upon an employee, especially a frontline staff member staying with you ever. So just for everyone out there, I'm not saying, I'm not pointing you out, Logan, by the way, I've done the same thing. So this is a matter of. As much as I try to take the strengths of a team member and then build around them, I do not build, make a business decision based upon. I hope this person stays. That does not happen. The business needs to make what's right for the business. And then if other people come along for the ride and it helps them in their career and they make more money, fantastic. That's great. If it's close to their. Where they work, whatever, great, awesome. But I'm not going to determine.

Those are business decisions based upon people staying. So what I would say is realize that this part, the Columbus suffering, this is confidence again in your gm. I don't know that you need to have more confidence in your gym if you're going to let them run the whole operation. Because what you don't want to do is this part here, there will be fires to put out, right? So this whole part here is going to happen. So your biggest worry is that you're going to be needing Columbus. You will be needed in Columbus. All right. If you start a second location, you. You will feel the urge to run back to Home base. Okay, There will be fires to be put out and Fremont will in your mind suffer because you're the only person there starting it out. Okay, so how I would think about this is, number one, I'm going to raise my prices by 15 to 20% at Columbus in order to double my profits. Therefore, being able to afford the GM and the fact that they're not going to be as good as me, because they're not, they're not going to be as good at you at Columbus, your GMs are not going to be as good as you. Come to peace with that. Raise your prices to accommodate the fact that they're not going to have the extra margin. But I can guarantee you that location will almost double in profit based upon just raising the prices and letting an operator take over instead of you trying to figure things out and you're moving team members around and all the rest of it. And based on as I'm thinking about Logan, like even in the past for you, you've had business partners and things like that and people are very, very close to the decision making process. As you've grown up as an entrepreneur, you've got to become more decisive with the vision. Like the overall vision doesn't change people that come, you have, you know, internal things that happen, fires, whatever, but the overall where you're going has to not change. So get really clear on that. And for now it's like, hey, I'm just going to state this location, make it more solid, et cetera. Great. Just keep in mind, if you have a solid gm, they probably will make it more profitable. If you just walk away, increase the prices and let them maintain it and then you take that profit and you go put into a second location where you're able to like fix things and build them up and do marketing campaigns and you're buying trucks and equipment because you're doing the first few crews like that might be better for you. But if you are so concerned about this part here, you will worry yourself to death having a second location.

Because you've got to come to peace with the fact that any GM is not going to do as good as you in your mind, they will likely make it more profitable. And if that's really from objective standpoint what you want, you got to step back and let that happen. So if it's running on the systems and you know that command center can back them up and if that GM walks out, you'd still be okay, then you should just keep, you know, that's the copy and Paste model.

Did all the questions. Hopefully I answered that well. I'm not trying to beat up on you, Logan. I hope you took that right. But I think all of us can learn. We should. Should never make a business decision based upon.

The. The team members, because the team members, like, like, it'd be like. Like when a football team builds their entire team around, like the quarterback and the quarterback gets hurt. Not good news. That could literally hurt them for four or five years because if they've tied up in a massive contract and now the quarterbacks, you know, hurt. It's like, well, now our whole team, the market cap's locked up in this gm. In this. I almost said gm, this quarterback. So that's why it's much better to have a really good scouting, this really good farm system to bring up new talent, I. E. Systematize things, simplify things, be really good at hiring and training. That's a better model to get all stars for a much lower price, as well as maintain the team without putting them at massive risk by putting all your eggs in the basket of one player. So. Oh, I think another question just came in. Let's go, Logan. Oh, yeah, here we go. What you've spoke about with this last question, the same things I've been thinking as well. A better question for what I need is how to do. How do you determine what market is better go into? Fremont is similar to Columbus in size, but is. But so is Norfolk and Grand island nearby. I am opening this location regardless. Okay. It's more of a sign. Where should you get next? Okay, great. All right, perfect. Still a good conversation that we had, but I think this is the right question and that is, which one are you trying to go to now in terms of deciding. Let's just pull it up. Columbus.

You've talked with Lee and everything, but let me just pull it up.

Okay, let's see here.

Nebraska is huge. All right. It's a rule. Okay, so here we go.

Trying to find these markets that you're talking about. Okay, here we go.

Columbus, Norfolk and Grand Island. Nor folk.

Zoom out. I'll show you guys the map in just a second. Give me a second here. Man, these are just so spread out.

Trying to just find the original location. Oh, it's way down there.

Wow, that's far away. Okay, so. Oh, no, it's not too bad. Columbus is right there. Okay. It's like 20 miles away. Not so bad. You're. You're in a rural area. Right. So it's a little bit different.

You can't do anything like Madison Humphrey, that's not really going to work. So Fremont's over there. I like that one. That one's on that main drag. So because like as Omaha grows it'll hit Fremont, Columbus, that kind of along the 30 Highway 30 there. I like that artery better honestly, compared to something like Norfolk. So really it just comes down to I, I'm looking for closest, I'm looking for closest. And what's a good market in terms of size. So I like 50, 60,000 people. I like that I can dominate that. No one's moving in. That's big. I can hit everyone relatively cheaply on marketing for my grand opening. But in terms of those specific ones, honestly it's like whichever one's closest and you think checks the boxes of a good market. Is there a good market for good neighborhoods? It's not super rural. There's actually like neighborhoods and blocks of people. But in terms of like population, as long as like 50, 60,000 people, that's more than enough to do a location. In my mind that's what we're doing. We're taking like what would typically be like probably like one big market and we're splitting it up and it'd be really, really tight. All of my locations in North Carolina.

But yeah, in terms of where you should go next, make the decision. And if you like, it's very similar in terms of size, population growth. So what you might want to look at is those cities population growth over the past 10 years and seeing which if there's higher, if it's all the same, if everything is the same, literally flip a coin, it just doesn't matter. Now if you've already made steps towards the other location.

And you think it's equivalent to these other locations price, keep moving that direction if you've already made steps towards it. But I really, especially when you start Talking about like 5, 10 miles, I really don't think it's going to completely change the outcome of a location. It hinges on the gm. It just hinges on the GM on and if you are the person getting it started, it hinges on your ability to be able to get it going and market correctly. Just finding the niche in every market. So.

All right everyone. Oh, here we go. How many trucks do you plan on using your location to hit 500k a year? 3, 4? Yeah, you would need at least 3. We'd probably do 3. And then estimator truck or estimator car. That's what we've done in Mooresville.

In terms of getting started though, we're gonna do two. We're gonna get two trucks. We're gonna start them in a.

Storage facility until they get to their third truck. And then looking for that third as soon as we hit that third truck, kind of looking for space contractors, contractor yards, behind buildings, things like that. And then after they get established over the course couple years, I'll buy land like I did for Mount Vernon. I'll buy land and actually put our roots down on specific spots. We talked about double up trucks with employees in order to hit capacity, asset capacity, and you can make double the revenue. But at the same time, you've also said before that two crew members cannot necessarily handle double the bh. So does that your example, take a. Considering diminishing marginal return or this side or at this side? Is that really negligent? Yeah, so it's definitely diminishing. You're right. Like, it's just doing the math on that. It would be weird because it'd be steps up. So it'd be like 11,000 for your first employee and then 9,000 for your second. Point. 11,000 for your. So it'd be weird for math. So for the sake of math, yes, I do a linear. But you can adjust your budget hours completed per week to account for that. So if you're like, okay, instead of doing 32 budget hours, I'm gonna do 30, because I have doubled up all my trucks, for example. Right. So you can run the math correctly. And what was I gonna say in this, too? Oh, you could also just assume that they complete the same amount of budget hours. They just have to work a little bit longer. Right. So instead of them working seven hours, they have to work eight hours because they are slightly less efficient with two guys in the. In the truck. So they're going to work eight hours. So I would actually focus on that. Like, the numbers stay the same. They have to work a little bit longer because they're a little bit less efficient with two people in the truck. Right. So it affect their P4P, obviously, and all the rest of. But the actual numbers of capacity would stay the same.

Cool. All right, everyone, hope you have a fantastic Wednesday, and we'll see you tomorrow.