Mike Minutes Mastermind 12/19/2023

And yet again, here we are. Edition of the Mike Minutes. Mastermind. Let's go ahead and hop right in. I just opened up the question thing, and there was like, 10 questions. So we're gonna rock and roll with a little bit of a marathon Tuesday. It looks like I can find my link. Nope, wrong link.

Sorry. They may keep adding more and more steps between YouTube and Facebook when I gotta set these up.

All right, put this into the correct playlist.

Boom, boom, boom. I've already seen the first question, so I'm about. I'm about to unleash a tirade.

I wouldn't call it tirade instruction. Thoughts, Whatever you want to call it. Okay, that's the wrong one. I want to put this into. There it is.

All right, here we go.

Okay.

First question. It has to do with a belief about money that I had that was incorrect. So that's why I'm. It came to my mind when I saw this. Okay, here we go. This is from Kyle Tarvin Moore, Oklahoma.

Piggybacking off Brian Connor's question about ERC money. Oh, one second. Let me check my audio settings. I always make sure. Good. Check, check, check.

Cool.

Once the money gets sent to us, are we basically able to do whatever we want with it? Like, Brian, I am planning on purchasing at least one truck with equipment and use the rest on marketing for our Norman location. Can I transfer money from the L from one LC that got the ERC money to another that didn't get the ERC money? Okay, so a couple things. Let's go over the blocking and tackling. First of the ERC is for. It is an employee retention credit, which means you get money back if you kept your employees during a season at a time that was tumultuous for the economy. So basically rewarding you for keeping your employees. It is a credit, which means you just get money back. And they are basically crediting back your payroll taxes. So basically a payroll portion based upon how much you're paying out of your payroll taxes come backs to you, comes back to you if you kept people employed during that time. So I kept my employees. We kept everyone on staff even though we were losing money. It basically helps the government from having to do unemployment. So we kept them on staff, and during that time, they basically kind of like underhandedly said, hey, if you keep people on staff, we're going to help you out. So, sure enough, they did, and they gave a bunch of money to owners that kept their employees on staff. So first off, it's a credit. You're Basically getting payroll taxes. In fact, what your, your attorney's attorney, your accountant has to do is actually refile 2020 and 2021's tax returns because you have to redo your payroll taxes. So, you know, Brad can answer more of this question stuff if you're using Brad to do your taxes in terms of ERC specifically. But this is the notion that I'm trying to talk about. Okay? So this is not direct to any person. This is a mentality that I had to learn and it really, really helped me. So here it is. If whatever you were going to buy with the ERC money isn't going to have a better return than if you were to get that money via a loan and have to pay interest on it, you shouldn't be using the money. Like, if you're not confident that you can go take the 300, let's call it $300,000 or $50,000 and go spend it and get more than a 10% return or like 8% return of what you'd pay for a loan right now. You should not be making those purchases. Those are bad purchases. And so this came across, this, this happened early in the year when, or a couple years ago when the Eidl loan came out at 3.75% interest for 30 years fixed. You will never get that kind of debt ever. Now in the moment, 3 to 3, 3, 3.75% interest was kind of high because we were at like zero interest rates. People were getting like 1.8% on their mortgage. So like 3.75 seemed big in the moment. Everything seems like it's going to stay forever. It doesn't. So in that moment when they offered a whole bunch of loans to business owners at 3.75 interest rate, like I took every single dollar I possibly could. You know, I did with the money I put into Treasuries because I knew interest rates were going to go back up. So guess right now I am sitting on five and a half percent of Treasuries. That money is sitting there and it will pay off the rest of the headquarters whenever the building is ready to go. So it is literally paying all my living expenses. It's like, I think like six or seven grand a month in just that money sitting there. It needs to be used and it's going to be used toward the building project, which is eligible for the Eidl loan. And I also paid off what little left I owed on the SBA loan for the gym because I had a 10 year term on that. I was paying 5 0.75% interest on that. So might as well refinance that bad boy because it was 10% or 10, 10 year term, 5.75 interest, make that 30 and get a lower interest rate. Sounds like a great plan to me. So it was all eligible under the eidl, but this is its bottom line. I knew that the very worst, if that money got called on me for whatever reason, I know that the return from making having the building project would be greater than SEC 6, 7, 8% interest. So whenever you're making a purchase, if you can't make like whether you get an employee retention credit, whether you get a loan, whatever it is, if you can't make sense of earning more return than the interest rate, then you shouldn't be spending the money, right? Like if someone today, right now was offered me a billion dollars at 4% interest rate, I would take it because I know that I can take that same money and get more than a 4% return on the money either A right now risk free in bonds, cash, get a 10 year bond or B I could be able to spend that money in my business and make more than 4%. So when you think about any purchase, you have to be comparing it against what is your rate of return on that money and if it's greater than what you're going to get on debt, that's when you should technically always get debt because you can grow faster and still make margin. Now you introduce a level of risk because you're chopping away at your profits when you have an interest expense on your P and L.

So because an interest expense is considered a profit and loss cash flow item is on the P and L, it is not just on the balance sheet. So.

The reason I'm saying this so strongly is any purchase decision has to be going through this matrix. If you can't rely. If I had cash sitting here in my bank account, I should not go buy a truck unless I believe that buying that truck is going to beat an interest rate on what I would otherwise buy for that loan. So if I so for example, if it's $40,000 for a vehicle, $20,000 for a vehicle, should you get debt? Well, If I have $20,000 in cash here, it is the same buying decision as to whether or not I had $20,000 of debt. It is, am I going to get a return on this money? And so if you're like well I'm only going to get like 3 or 4% return on the money, well then you shouldn't be spending the money on the truck. It's a bad purchase because you're not beating the nominal interest rate as if you were going to get debt. So if you spent cash as if you always had debt debt on that cash, you would spend it differently because you'd be making sure you were able to cover the cost of the capital. But this is the thing, everyone thinks the cost of capital for cash is zero when it's not. It's the nominal rate of interest. And so typically I just compare it against the 10 year Treasury. Like if the 10 year treasury is at 5% right now, that means if I can't beat 5%, I shouldn't be spending. Like I should not spend the money.

And that's why like when all that loans have come, I'm like, oh, like this is not no brainer. I know the interest rates are going to go back up and I can take that money literally just pay for all my living expenses. And that money just sits there and it'll be ready for the headquarters building and I'll use the money.

But I think it's more of a notion around like, oh, cash is there, I can spend it. No, treat it as if it's all debt. Treat every dollar as if it's debt because that money is still being taxed. It's called inflation. And so, you know, last year we all lost, we all became 4 or 5% poorer because of inflation. For every dollar of cash any of the bank, it became 4 or 5% less valuable the year before it came like 8 to 9% less valuable. So there's always a tax, whether it be interest or whether it be inflation. So you always have to beat that, that rate of return.

Anyways, that was my tirade for the day. That has served me well if you and I think it will serve you well too when it comes to money. All right, next question number two. Nick from Marysville. So the copilot team let me know when clients seeing who processed the payment on the paid invoice receipt but intentionally but didn't explain why. Okay, this is great. Yeah, that we brought that up. Could you explain why I made this decision? I'm having a hard time seeing the benefit for myself. I have a lot of clients who think I am an employee and it helps with the reviews and keeping questions to a minimum. But if they are meeting with me. Yeah, I get this. Okay. So basically in copilot you can see who processed the payment the same way as if you go to any restaurant, any store, you see the cashier's name. Now I was on your same wavelength, Nick. I was too until this was brought to my attention. Now could I be convinced otherwise? Potentially, because I see your point. But it is extremely way better for tracking because like right now you process payments. As you grow your business, you will not be processing payments. It'll be command center, it'll be an office person or spouse, it'll be somebody else. And so it's really, really good for track record, track record keeping because you can see a payment was processed, but to know who did it, you now know exactly who to talk to. And so for example, it's also a way for um. If you have an office person and they make a mistake or you make go in there like you do, you do prick processing on the weekend and all of a sudden you're blaming them for a mistake and they're like, no, I know I didn't do that. Well now it actually says who made that processing. Now you could say, and this was the point I made, well, why don't we just have that on the internal side and not show the customer that. But again, when you ever. You have every, any receipt, any receipt, it says who, who is your cashier?

So I could be, I could be swayed otherwise in terms of the customer facing part I, I am still in debate in this on my mind, but.

I think it is a level of transparency as well as for track record and especially with command center, like with so many people being able to process payments and the fact that we can see that immediately is important.

But I could be convinced otherwise. I will, I will, I will be keeping an eye on this over the next like six months. But I'm not making a decision like on it right now. This is from Mr. Anonymous. Is there a way in copilot, when you're building a mowing estimate when you enter price, if mo, the BH will automatically populate. Yeah, you just have to in your items and services make that the standard. So you can make different items and services. Or you could just have a standard one and then do under budget hours. It says like budget hours for estimates and it says budget hours for P4P. Just do it under estimates and then it would pre populate.

Mr. Anonymous, again, is there only one estimate template for sending estimates? Is it possible to have different estimate templates, one for maintenance and one for projects? We are working on this. We use the exact same plugin that service Autopilot does, but we have the upgraded version so it'll look a little bit better but we're working on getting this done early in 2024 and has like the ability to have like, where you can customize all sorts of stuff inside the estimate templates. But that is coming after a few more things we can do for treatments. Wow, Mr. Novice is on a tie right here. How do we change the estimate term? That bottom of estimate terms for mowing will be one set of verbiage, but for project it'll be different. Like for now you if you wanted to change it like between estimates, you wanted to change verbiage at the bottom, you would have to copy and paste those between different estimates. But down the road you could have different estimate templates and then just change the name of it. Like projects or mowing, for example. I would highly recommend making those terms and conditions quote unquote as small as possible. And I do.