Mike Minutes Mastermind 12/09/2024

Hello Gusta Nation. Happy Monday. Let's get this party started.

This is just another general reminder. If you have not already, make sure you go to the dashboard and register for conference.

So let me show you how this works just in case you do not know. I know most people have, but quite a few still haven't. So.

From the dashboard just hop on over here, go over here into conference. From here you're going to be able to see the landscape summit which is the Augusta only, and then the blue Collar Summit which is the public event, kind of general information topgolf event the last evening from 6 to 8.

And then we'll need you to sign up here.

So you can put numbers of people. Like, you know, if you bring in three or four people, you can bring them in here. If you're bringing more than two.

You will need to buy an additional ticket from blue collarsummit.com but two are included per location. So.

There you have it. So feel free to put this stuff in here. We do ask that you also put your size in for a shirt. Go a little bit larger if anything, because these can be jerseys that we're making for everyone for augustination. So that will be fun. But we do need to fill out that form, so please get that done. They are ordering food for topgolf as well as the Thursday lunch for Augusta Nation. So we do need to make sure that we are getting that information in to them.

All right, let's see here folks. Got four questions here today. Let's go ahead and get started.

First one's from Thomas in Clinton.

Maryland. How far booked out would you consider being at capacity? How does having a full schedule? I don't know, maybe four to six weeks of projects affect your view of being at capacity with regards to recurring mowing, customer pricing, Assuming the goal is full schedule of mowing. Yeah. So.

At capacity means that I am completing the number of budget hours that I can complete in the week. So it's not, it has no form or function compared to how far you're booked out. Now if you're at capacity and then you start to get more jobs, I.e. demand outstrips supply, outpaces supply, then you're going to have a backlog. Right. So the, the depth of your backlog is going to be the determining factor as to whether or not you A, raise prices and decrease close ratio and you're in profit mode or B, you go hire people and continue in growth mode. So at capacity, awesome. When you start having a backlog, you now more and more of A decision being made in terms of am I going into profit mode and raising prices to decrease my close ratio or am I going to hire more people, expand, grow top line revenue and be in growth mode? So I don't think that a backlog has anything to be whether or not you are at capacity, you are at capacity and then anything in excess of that capacity becomes backlog because just pushing it out in the future and as it gets more and more, your close ratio will go down already because you're simply getting so far booked out. And so you'd rather get ahead of that by raising your prices and extrapolating margin out. So if you're, if you're three months booked out with projects, for example, that's excellent. However, you're going to have 10, 20, 30% of people that will cancel their job or will decline their estimates simply because they're so far, you're so far booked out. And so it becomes a function of, well, why wouldn't I raise my prices, strip those 20 or 30% out anyways and charge significantly higher. So I don't think capacity is necessarily linked to backlog. It's backlog is a determining factor as to whether or not the pressure is on me to raise prices or hire somebody. Because if you're three months booked out, you're either going to like, okay, you've got to raise prices here and extrapolate some more profit margin out of this, or B, you need to hire someone ASAP and pull some of that demand forward. So in terms of assuming the goal is full schedule mowing, keep in mind, if you're 70% of your schedule, 80% of your schedule is mowing, there's only a very small amount that actually needs to be filled with projects. So just a few larger projects can actually book yourself in the future very quickly. So we'll talk about this later. But like when you have excess capacity, this is why it's so unhealthy for the business, is because you can absorb so much projects into excess capacity.

Without like actually building a backlog. So that's why you feel like you're on this treadmill and never actually raise prices. Because every job that comes your way, you can get it done relatively quickly because you have so many extra trucks, so many extra employees, and you're just waiting for work to show up. A backlog gives you way more flexibility. And so that's why I'm a big fan of like constricting capacity by selling some trucks off, letting some of your employees go, making, having less Revenue growth in terms of spending money on ads and marketing. Because as soon as you get that backlog built out, I can increase my prices and, you know, make just as much, if not more money. This is why I consistently see businesses that are doing 607, $800,000 in annual revenue outstripping profit margin or outstripping profit dollars of businesses that are doing a million, five, two million, etc is because of this thing. Because at the $2 million size, you have so much capacity, you have so much trucks, you have so many employees, you can absorb projects very, very quickly. And it takes a lot of projects to fill up the schedule. And so sometimes going backwards a little bit will make it much, much more profitable.

Thomas and Clinton has another question. Rewatching your 30 day challenge along with the behind the scenes for the first time. And I thought a thought popped up. You mentioned getting a ton of leads from outside of your service area that weren't not actioning. When you're a new business with a wide open schedule, when it makes sense to have a wide open service area to at least recoup some marketing costs and collect some revenue and then as the schedule fills, reduce the service area. So this is a very slippery slope. There's something we're going to be putting out at conference to fix this problem. It'll be very, very helpful, specifically when you're starting a new location for what you're just talking about, because I see this all the time. And then when people start new locations, because it is very hard to spend money on marketing and know that 20, 30, 40% of it is just like people that drove through your market. They work in your market and they don't actually. And you don't get those leads and you are kind of wasting that money. It's a slippery slope, is, well, just, I'll just take everyone, I'll just take everyone and then I'll whittle it down later. Well, that could be three years of unprofitability. And so at the beginning it makes sense because you're like, I just need to fill a schedule. Sure, great. And now you build this beast that takes three to four years to pare back down to actually being a profitable business. And so I would rather take a year or a year and a half extra than take three or four years building an unprofitable business and then going through the pain of having to shrink it back down. It's just as painful as having not enough leads. And so we do have a solution we're coming up with because I see this all the time inside of August Nation. And people are apprehensive to simplify services around this too because you have the leads like they're literally sitting inside your hands. And so it's so tempting to keep doing the work.

And so in general though I would say like don't be too close minded. I've seen some people like I'm only taking this one mile radius, it's like okay, great, like why don't you open up to your full territory? You have four mile, you have a five mile territory, open it up and see where it comes from there. And then hyper specialize. But what I'm, I'm good with that. I like that idea. Like where do I specialize my marketing in terms of my territory? And then like the other stuff is gravy. Well, I'm apprehensive is I have seen people are doing 15 mile radiuses of service areas and I just know they will grow. It's the fastest way to grow your top line revenue. But I also see three, five years down the road them having to constrict, cut out services, reduce capacity, so spend more money marketing in their local area to actually get some route density in it. So that's the part I'd be careful of. But if you're trying to get as much revenue as possible. Yes, it's always the fastest to grow top line revenue by adding services and adding service area. It's the fastest way to grow anytime. So will it grow the business? Yes, yes, absolutely will. Kyle Tarvin from Moore, Oklahoma. First question, if we were wanting someone to help us part time to do routing, dispatching, handling the crew and dealing with customer complaints, but they would not be a full time gm, just a current employ employee helping with these tasks, would it be okay to pay to pay them a daily bonus on their check instead of raising their base pay per hour or paying them salary or it would just be better to hire a GM, give them the title and pay them 4k month salary anyway. Okay, so I think this is more of an admin position, not a general manager. I think these are two very different roles that you're, you're talking about. I would say it's definitely not a bad idea. Especially if you're pushing up against 7, 800,000 in annual revenue and you're not in profit mode. Like I've seen a couple of this happen. It feels like you're running a million dollar business because you have 10 trucks and you're doing $700,000 in annual revenue. When four trucks can do that if you're in profit mode. So I have seen this. I would say try to keep it where it's just during the spring rush to where one of your employees kind of help you with admin tasks. Keep in mind too, routing, dispatching, handling the crew can sometimes be a very different skill set than one of your team members on the field. So a good team member in the field, you put them in ab business position, all of a sudden they kind of fall apart and vice versa. So I would not think that, I would not think that your highest performers in your field are necessarily going to love or want to or be good at doing these admin related tasks. But I think definitely as you're pushing up against that 100,000 level, especially during April, May and June, having some part time help doing that would be helpful. And then outside of that window of time, they start to become so inefficient because there's just not enough to do. Like the call volume drops in half, the routing and scheduling, there's half as many estimates. So it just starts to become inefficient. Then you can just hand back to command center. Outside of those, those few months, that would be like my biggest recommendation. You would save a little bit on command Center. You'd probably have a little more streamlined having one of your crew that's been with you doing some handling of the crew to help you with that stuff. I'd be a big fan of that. Just be careful. Like please don't take what I said out of context. If you're doing 150,000 annual revenue, you do not need this. This is someone that is pushing the limits of needing a general manager. And during their busiest season, when their revenues are spiking and tons of leads are pouring in to get a little extra help, maybe part time from one of their crew.

Second question. If you think the above scenario would work, just paying someone a bonus, what do you think would be fair if a GM would make 4k a month? For example, our employees base is at 50, 15 per hour. So first off, if you're doing a salary, you cannot give someone $4,000 a month. Look up the recent law. As of January 1st, it's going to have to be over 58,000. So I would recommend if any of your GMs are on 50,000, you're going to have to move them to 60. It's just a new law that's coming out. So unless it gets overturned, but I don't think it's going to, you're paying your team 15 bucks an hour. And I would probably, especially if this is what you're thinking in terms of a lower wage, I would probably do an hourly thing. If I do a part time, okay, on Monday, Wednesday, Friday, you're doing a half route and then you're coming back to the shop or Tuesday and Thursday you're going to help me do the stuff in the office, do some admin work, clean up the shop, sharpen the blades. Those are little things that you don't have to get done. You can focus on sales during the spring rush and then they can tackle some of those things and then kind of be the point person potentially for you, for your crew during that season because you're literally having to do two to three times as many estimates. And so if you want to focus on that, doing this for those few months is not a bad idea.

But I would say I would try to stick to hourly. If you switch them to salary, they're not coming back. And if you switch them to salary, you're gonna have to move them up to that 60,000 level, basically.

Thomas from Stone Oak been going out and passing door hangers to try and get more clients. Oh, just to add clarification, there is stuff around this, the new salary thing. It's not like you can't do less than that. It's certain types of jobs and general managers are going to fall into that. Basically what they're trying to prevent is people from misusing the hourly system or said the salary system to make people work like 80 hours a week and then they're not making minimum wage even so they're basically bumping that requirement up.

Thomas from Stone Oak been going out and passing door hangers to try and get more clients or winter services. But we've bet, we've bet getting, we've been getting a lot of rain. So my question is, should we continue to pass out door hangers or should we try pushing one time jobs instead? Just started this location in August and I am solo.

It really comes down to whether it's working right? So whether or not it's raining or not doesn't matter. If you're saying that because it's raining or not, you don't seem to be getting a lot of response. I would pivot. But just because raining doesn't necessarily mean that they don't need service. What I'd be looking for is their pain. And so if the rain is causing branches to fall, leaves to fall, gutters to overflow, this could actually be a great Time to do winter services, branches start leaning up against the house.

You know, if there's been wind or whatever and like now the leaves are all over the place, there's branches down like so I would focus more. Is there pain? That's when I would be trying to market winter services. And if there's not pain, one time projects are usually going to be a little easier because you cast a wider net. But I don't think there's a right or wrong. It's just a matter of where is that, where are the leads currently coming from? And what I would probably do to judge that is like what's organically coming in is usually a great measure of demand. So when you don't spend money on marketing, when do mulch installs come in, when you don't spend money on marketing, when do the mowing leads come in? That's your demand curve because you can artificially increase demand if you push yourself into the market and start advertising a specific service. So when do your existing customers organically reach out and ask for stuff is a great way to know when demand is there. And so if people are asking for leaf cleanups, fall cleanups, branches are down, their gutters are overflowing, winter service would be great. But if they're not, you're probably going to be going after those one time projects because only people with severe pain that haven't maintained their property all year long are going to need a. A one time cleanup.

What's your opinion on laying yourself off? Since I am an S corp and taking a W2, I can do so would that hurt me for any future bank loans et.

That could get hairy. Brad would have a better idea of this. Brad, if you listen to this, feel free to chime in on this on the Facebook group. To my knowledge, there's got to be some sort of issue with this because otherwise you could just be claiming w you claiming unemployment.

Yeah, I don't. I. There's got to be a way to block this loophole. I've never done this. I would not recommend doing this.

Man. Seems like you could do that though. I do not know, Braden. I'm sure this is a Google search away and I would imagine there's something on your taxes that could prevent this too. But I do think this would hurt your likelihood of getting a loan because you're going to see they're going to see unemployment on there.

And then that W2 income becomes less stable. And so it's now seasonal position instead of like a salaried position. So yes, I do think it would hurt your future bank loans. I also think there probably is some sort of measure to prevent this from an IRS perspective, but I don't know. I'm sure it's a Google search way though. Actually. Let's just do it, folks. All right, let's see your chat GPT. Let's see here. We're going to go. Can you give yourself unemployment if you are the owner of a S corp? The business is seasonal. Boom. Let's see what we got here.

All right, so if you're paying yourself, you may be eligible to collect. If you only take distributions which are not subject to unemployment, you will typically not qualify for unemployment benefits. Seasonal nature, state laws and business ownership.

Even if you're not actively working, your ownership of the company may disqualify if the state believes you could still generate income for the business. That is the part I'm looking for. So it's going to be around your state laws. But voice, what I'm seeing here, this disqualifies you because if you're making any income in the business, then it kind of negates your ability to be able to get unemployment. So if you search for what I just said, there's a whole bunch of more stuff in here. There's ownership conflict, there's disqualifying income. These, these are things that would prevent you from being able to get this. So that was kind of like an initial notion. But yeah, if it seems too good to be true, it usually is. So feel free to look it up on ChatGPT or Google. But that's what comes up and that's what I kind of figured. Dave from Modesto, what would you say are the main tactics to build leadership capital with the team? Keeping in mind, I have to be in the office a fair deal now also, I dig the vest. Oh, thank you. I appreciate it.

In terms of leadership capital, the challenging part, when you're in the office, you can be viewed as someone who can't roll up their sleeves and get dirty. And so as a mid level manager, you want to prove them wrong. Now if you are an owner, you want to be very careful to think like, oh, I've got to lead by example, I've got to jump in. Be careful with that, in my opinion because like the role of a general is not to be in the front lines. The roles of a team, of, of a coach is not to be on the field. Um, however, there are captains and that I would say that's like a mid level manager and a mid level Manager needs to show that they put in the work. And so I don't think it's an unhealthy thing for a general manager or even an office person if you're with the crew, actually with them all the time to jump out in the field sometimes when things are tough and you show them how to grind. And what's nice, David, is if you do that maybe once a week or even once a month, you should have the energy to crush it for hours, half a day. And so you kind of have this built up reserve of energy because you don't have to be on the field every single day for 8, 10, 12 hours. So reserve that so that you can, you can make the statement that I can do this and that they'll, you'll get respect from them for that. I would also say when they get back from the, to the shop, I'll be trying to like unload their, their clippings, help them clean out equipment, et cetera, if they're done a long day because they'll see you as kind of like the lighthouse. And then the third thing I would do is dress like them. That's a bigger deal than you might think. So when I, whenever I went to the shop, no one ever saw me in nice pants and nice shoes or this vest would never dawn itself. I would never wear a watch to the shop. I was in boots, I was in working clothes just like they were. So I would highly recommend that as much as you're like, I'm an office person, I don't really need to. If you're going to be rubbing shoulders every single day and they're going to be talking to you when they show up and when they leave, I would highly recommend dressing like them.

So up until this year, I would always be at the shop once a week. That was the one time a week you'd see me in boots, you'd see me in Carhartts. Like that was what I would do. I do think that's a bigger deal than some people think, especially for mid level managers. But I would still do it. Even as an owner. When I would show up to the shop.

Everything'S different. As soon as you start doing things like you treat yourself differently, you have different office hours, you have a different things that you do that just kind of give you exclusivity, you start creating walls between them, walls between you and them. And so most workers in the field like to see you rub shoulders with them. They like to see you get your hands dirty, they like to see you lead by example, and that's what a captain can do. An owner or a coach on the sidelines can't do that. And so that's your kind of value to the team, is that you are a player coach. There's some really good articles about player coaches. I'd recommend looking up those.

All right, everyone, I hope you have a fantastic week ahead. Look forward to seeing everyone at conference. Please, if you have not already, make sure you fill out the form on the conference tab of the dashboard. Looking forward to seeing everyone there. We've got a ton of stuff we're releasing. We're running some of it by the Franchise Advisory Council last weekend, getting feedback from them. And so really looking forward to sharing with all of you. All right, love you guys. Take care, and we'll see you tomorrow.