Mike Minutes Mastermind 12/06/2022

Hello, gustonation. Hope you're all doing super well. All right, quick announcement. Let me just go ahead and paste this link in here, though. One second.

All right, quick announcements so I can go back to here and paste in here. There you go. All the Facebook people. Okay.

I put on Facebook the Facebook group last night. A reminder. If you are looking to stay at the hotel for the conference, please book your rooms asap.

There's more rooms that they booked yesterday and so I think the day they're probably down to about 20. So if you need it, need to get there, just go mikeyani.com summit there's a link there gives you the cheaper option for the discounted room rate. So please do that because as soon as I let the public know, those will probably get bought up. So if you want to be at the conference center, actually at the hotel on site, which you literally can eat there, there's two restaurants and all the rest of it, you can just stay there if you want to get shuttle or take the bus. Either way, if you want to book your tickets, make sure you go to mikegandy.com summit. Click on the little link for a hotel and then book it through there. It's a little bit cheaper there. Through that link. There's one other thing I'm gonna say. I forget what it is. This weekend I am going to Spencer Vaughn pro event or whatever I think it's called. I'm hoping this is my last event that I kind of do where I travel out for another YouTuber influencers event. I think it's my last one. This one. We're going to try to help them quite a bit. Zach is coming with me, Liz is coming with me and Jaden's coming with me. And they're going to help us kind of put the whole event on. So we're going to test several things at their event as a way to kind of prep for landscape summit. But we are kind of doing it to help them. And so yeah, Sean's actually a really cool dude. He's one of the few guys I really, really, really like in terms of personally. So I literally talked to him last night for an hour and a half. It was like 1:30am his time. But good dude, really good guy and want to support them. So trying to help them out and they've been helpful even on our end in terms of referring a lot of people to the different services that we offer. So it's been a good, it's been a relationship, but we haven't, we don't like exchange money between the two. Like they don't sponsor us, I don't sponsor them or anything like that. So it's just been a good relationship. I'm going to go there this weekend and it's likely that next year I will not be doing any more of these. I did the one for Brian's and then Brian's Law means and then this one too. But I doubt I'll do it again next year. If I do, we'll see. It's just too busy of a time of year. So anyways, let's hop into questions, questions, questions, questions. I'm getting very excited about the conference because now I'm actually putting together all my talks and stuff. So I was putting together the Thursdays. The last few days I've been working on Thursdays, keynotes and stuff we're going over. So I'm really looking forward to it.

Marcus. Welcome back, Marcus. Marcus went out of country for a few weeks to get some a break from Augusta Nation before he jumps into his locations. We must be back in the home front in the US Of A. Welcome back, Marcus. I plan on taking owner's salary monthly. Do you know what percentage that is? Tax approximately? Yeah. So just to depend on what income bracket you fall into. Remember, if you're actually taking a salary with a W2, then you know that's one way to do it. Or if you're just taking distributions, realize you're going to be taxed at whatever your tax rate is for the whatever bracket you fall into, whatever the profits of the business are, you're going to be, you're going to be taxed on anyway. So whether you take a distribution or you take profits, it doesn't really matter.

I'm sorry. Whether you take a distribution or you take a salary, doesn't matter. Whatever comes into your bank account, whether it be profit the business or transfers or salary or whatever you want to do, you're going to tax on the same way, whether you're an LLC or an S corporation, it's the past rent T. So in terms of the percentage that you're going to be taxed, approximately, just look at your federal tax rate and it's going to give you different brackets.

And then that's the percentage you're probably going to be getting. Because in Washington state, Marcus, you do not have any state income tax. You don't need to worry about that. All right, I messed that up. Very good. Okay, there we go. Next.

Would we be able to record listen to other franchise coaching calls in order to Gain additional knowledge. Permission asked for each call. Of course.

I'll talk to the coaches about this. We leave it really up to you all if you want to record calls you more than more than welcome to. So if you wanted to Thomas, I would recommend doing is reaching out to other owners and say hey, if you guys, you record your call, I'll record my call and then we'll like swap. That would probably be the best way to do it. And I know there's other groups of owners together in areas that might be something if you really enjoy that format of just one on one to say hey guys, let's all record our phone calls on speakerphone and then we'll submit like a shared Google Drive and so we can all listen to each other. I'm fine with that. But the coaching calls aren't recorded on our end because then we are kind of liable for whatever Is that where that information goes? So if you want to record it up to you, you're good and then share that however you'd like. And if everyone likes that, I don't mind facilitating something for everyone to drop files into. But we aren't going to be the one responsible to distribute files, etc.

Yesterday you mentioned a monthly draw for your locations. Can you explain how you go about that without interrupting or decreasing the profit sharing for the GM and team members from those locations? Yeah, great question. So, so technically when you pay yourself, it's not an expense to the business, it's a owner's distribution is on the balance sheet, is not on the expense sheet. Now if you're trying to pay yourself a wage, that's going to be considered wages and you're going to give yourself a W2 and that's going to be on the expense side of the profit and loss statement. But the, the profit sharing is only based on your P and L. Your profit and loss statement is not based on your balance sheet. So when I move money into my account, when you're looking at QuickBooks and you see you're categorizing and it has like account name and it has like either has income is equity or expenses. There's other things there and there but that's the majority of either expense, equity or income. If it's not income or expense, it does not show up on the P and L. If it's equity based, whether it be trucks, equipment owner distributions, all that, that just shows up in your balance sheet. So that's the importance of making sure that you have whether it be transitioner on a quarterly basis Or a bookkeeper, somebody balancing your books and making sure your balance sheet is updated and making sure it reconciles with your bank statements. This is the biggest thing that people mess up in their small business is that they take distributions like I'm doing and then some of it's in the P and L, maybe it's on the balance sheet, but it's not reconciled correctly. And then at the end of the year their tax accountant says, okay, your bank statement has $40,000 and your P&L says it's $150,000. Why? Because typically someone has taken a whole bunch of distributions out that should be on the balance sheet and they're putting it against the expense of the business and can't do that. So the only way you can run it as an expense is if you're actually running as a W2. You're running as a salary and you're paying taxes on it as an expense. And it goes the same way for profit sharing. Right? So that's the way to do it. Most above board you could theoretically run your distributions through an expense line item. And there's no, you're gonna have to pay taxes down the road. And the only reason you would do that, if you were very actively in the business and you, you're not really and you're trying to pay yourself, quote unquote a salary without paying W2 like paying your taxes and all the rest during the year and you just want to pay at the end of the year, maybe you could do that. But that's the only reason why I would, you know, run my distributions above the bottom line. But typically, typically owner distributions are going to be on the balance sheet, not on the profit and loss statement. Again though, if you are actively in the business, you need to make sure that something in the expenses under wages is accounting for what you're doing every single day. And you're not paying profit sharing on what is basically you just working your brains out. And if you paid yourself a nominal salary, there'd be no profit to share.

Population equals business capacity. Let's say that a population of 50k has a potential capacity being a 1 million dollar business, yet the location you're you're on has a population is 200,000. Very dense market. In this example, your location has a potential capacity of being 4 million. All example numbers of course. Would it then be make sense to divide that location up into four separate smaller locations in order for multiple Orchid GS easy to find to max out the potential of the real estate? It seems as though a lot of money or potential are being left on the table if we open a new location elsewhere without maximizing this. The one in this example. Yeah, this is very, very indicative of why I'm doing what I'm doing in Charlotte, North Carolina. That is we are like cramming these locations in because typically we could put one 5 mile radius territory and cover all three that I'm doing in one spot. But we're going to put three in there. And the reason for is exactly what you said, very dense. There's plenty of if you have 50,000 people you can build, you're never going to hit capacity even at a million in revenue. Like it's just not. So.

This is the reason behind breaking it up like I'm doing because I'm not trying to build a four or five million dollars company. It's just a matter of like 5, 700,000 working. GM is the model and then copying and pasting those and the closer they get that means the the more and more tight and densely packed my marketing is more and more dense and tight my routes are. And so that's really what I'm going after.

And typically you'll get to profitability faster because you're more tight. So you're marketing be more effective because you're going to have a higher concentration of marketing in one area. Secondarily you're going to have that tight route where your guys will get to people P4P faster. And that's why a lot of people the first year can't do P4P is because they're so spread out their guys never hit P4P simply due the fact that their routes aren't tight enough. So.

How to mature 500, 700k model. What do you expect your yearly draw to be? I personally right now I'm just doing where after year one I start taking a thousand dollars a month. After year two, I take $2,000 a month. After year three, I take $3,000 a month. And then at the end of each calendar year I'll just take a draw based upon the working capital that's left in the business. So that's personally what I'm doing because I'm looking at it more like very much like real estate. Like I buy a spot, I invest in it, get up to market rents and then I hope to make a cash flow on it. And so when I'm doing as many locations I'm doing, that's how I'm looking at like I can make $1,000 a month after the first year, 2000. Like, if you want to go more aggressive, you can, but I'm letting the kind of the money stack up in the bank account, and then I'll take a draw at the end of the year based upon, okay, as long as we have, let's just say one and a half months worth of expenses. Everything else I'll take out as a draw.

On 500 to 700,000. Assuming it's like in its third or fourth year and it's not growing anymore, you're ramping up profits. I would. I personally would be doing probably a $3,000 per month draw and then hoping that there is a good. A pretty good chunk of cash at the end of the year, and that should align along with the gm, their goals, and that is making it as profitable as possible. So on 500 to 700,000, you know, there's just no reason why you should be able to do $150,000 in profit. You'll maybe 120 if you're doing a pretty healthy distribution to the team and you're completely removed. So let's just call it 120. You're completely removed from the business. You're going to probably need to keep 20 to 30 of that in the bank if you're growing to any capacity in terms of more working capital for the business. And then the other 70 to 80, you know, that's divvied up over 12 months plus a distribution at the end of the year. So I would, I would be happy with 100,000 on that location. Again, that's a year, three, four. And that's what you're expecting. So I'm going to talk a lot about the seven stages of wealth at conference. The break it down really, really in depth and detail. When some people will be shocked is how long it actually took me to get you to those stages. Because everyone gets in this rushing mindset, like, oh, I see seven steps. I didn't get seven steps within a year or two. One. One or two years? No. Like, I didn't get a regional manager for nine years. So something to think about. All right, guys, we'll talk to you tomorrow. Take care.