A Mike Andes YouTube mastermind session (12/09/22) where Mike answers audience questions about small-business operations: he recommends using cash accounting for internal profit-sharing (while noting taxes may require accrual), explains bank-user permissions for general managers (mobile deposits/restricted access), and discusses winter staffing and fixed-cost break-even examples (solo operators vs. multi-employee shops). Practical figures are given for break-even revenue and typical GM salary ranges.
Questions this video answers
About $3,000–$4,000 per month.
About $8,000–$10,000 per month.
About $4,000–$5,000 per month.
Chapters
All right, let's rock and roll.
Connect this correctly. Okay. Should be able to hear me. We are in the airport. These characters.
For this character. How'd it go? Okay. All right, we're in Seattle on a layover, headed over to the Ohio for the Spencer Province. Sounds like Chad Williams from Valparaiso, Indiana is coming. Let's go. Make sure you wear your Augusta stuff so we know exactly who you are.
All right, let's go ahead and jump in.
A few questions that came in.
Let's see here. Thomas. When you have payments collected at the end of the month but don't show up in your bank account until the beginning of the following month, you take the additional steps to measure your true P L for that month. Seeing with quarterly example, my November P and L looks amazing on QuickBooks but I know the mowing revenue from October is the reason there's even management of the profit sharing program towards the team. So two things. Number one, I do recommend just using cash accounting. So that way it is what hits the bank account when it comes to profit sharing. Otherwise the guys don't understand accrual accounting. They're like, well, why is it that we didn't make that money like all that sort of thing. Just use cash accounting. What's in the bank is my recommendation.
In terms of.
Should it even matter? It ultimately doesn't matter if you use accrual versus cash. The thing is, explain to your team if it's cash accounting is going to be way easier because they're not going to understand that, oh, like last month we were slow and this month, yes, we're very busy. But because last month was slow, your profit sharing is less. This month they're not. It's not going to make any sense to them. So just use cash accounting and money in, money out. And it looks just use your P L would be my recommendation.
But yeah, in terms of your tax account, they're going to be wanting your accrual because if you it's based upon when you actually earn the money, not necessarily when you collect on it.
I think I've asked this before, but do you get your GMs, the bank logins and access to move money around within the bank system we have in the past. I'm pretty sure we're still doing this. I'm not sure we're starting a new banking system for our new locations and I'll probably move over my other locations once we move everything else over for the new five ones.
But in the past, yes, we have especially you can usually Give restrictions. So if you have mobile banking, typically you can set up a user and then just give them restrictions. So if you like only want the money moving in, you can do that and they can't move money out. Or you can do like mobile deposits only or like they can't see cash balances or whatever restrictions you want to have, you typically can pretty easily.
Do you allow your GM to take the winters off if they want? No, we don't allow GMs to take off. They're on salary and so we would require them to be the last person to cut hours because on salary we require them to be working full time.
So we don't. They don't take their winters off. If they want to take a holiday, obviously they can. But like, it's not like they can't take their winters off because they. You've got to cover your fixed expenses at least just to get above zero. And so if you are.
Yourself a couple trucks, typically your break evens like eight to ten grand a month. If you flex to three or four or five employees, typically the higher your your peak is, the higher your fixed expenses are because you've had to get equipment, your insurance is higher, things like that. So your fixed expenses will typically trickle up. So what I have typically seen is someone who's a solo operator, their fixed expenses, like their break even like 3 or 4,000 if they don't make that, they don't make any money. And then I see usually if someone goes to three or four employees and they go back to like zero, but or even maybe one during the winter, their fixed expenses are 8 to 10,000 per month in terms of revenue. And so typically for us, even if GMs in their first year, where they basically will go back to just being the gm working throughout the winter by themselves, if it hits that level, they're still got to make at least ten grand. Like they've got to be fully busy just to make break even and cover all the fixed expenses and then their salary. So for gm, when they're on salary, like you gotta think about like that would be the equivalent of you doing the work as the owner and being in the daily, doing the jobs. And if that's the case, like they've got to be producing at least 10 grand because if you're giving them, let's just call it four or five grand a month in salary plus taxes and insurance and franchise fees and fuel and all that stuff, you usually have to do like 8 to 10 grand just to keep them at zero. So we don't let them have the winters off. Yeah. All right. I forgot to put the YouTube link in here. I apologize. There it is. Just in case anyone wants it.
Make sure there's no questions that came in on here. Sorry.
Cool. All right. I think that's all I got. All right, guys, Happy Friday. We'll have see you on the weekend. Well, not seeing the week. I'll see you after the weekend. Besides Chad Williams, I'll see you guys at pro event. It should be fun. So hope you all have a great weekend.
