Mike Minutes Mastermind 12/26/2022

Hey everyone. Hope you're doing super well. Let's go and get kicked off. Just drop this in here. Facebook. I think there's quite a few questions that came in on the form, so I'll get those rolling. All right. Hope everyone had a very merry Christmas.

See here presentation.

As of this morning, I finished all my keynote slides and my talks for for conference. So I feel great. Okay.

Kyle, for all your new locations you set up this winter, have you already started to market for this year or just getting around, getting everything around for March. If you have started marketing this year, what are you pushing right now? Yeah, the only reason you market in the winter is to keep your guys busy or if you really have the money to set up for mark for, for branding, like trying to set up branding.

I'm not spending anything on marketing in my new locations. Probably won't until February, middle of February. We'll be focusing on all the bank stuff and legal stuff and all that stuff as we head into January, getting the new general managers trained. They'll be coming here in February. When they get back, we'll start marketing.

For the vast majority of the leads are going to come from direct marketing, which means a direct call to action. And people don't take action if they don't have pain points. And right now they're just not enough pain because their grass isn't growing because things are not unkept, etc. So right now the best, the best use of your marketing is going to be mostly one estimate emails because you're marketing to a warmer audience that already knows, likes and trust you so that you can upsell them and other things. If P and l shows a $1,000 profit each month, growth mode and this amount gets eaten up with loan payments, which is when is which when is one $0 profit each month, how can we inform employees there is no money for profit sharing if P and l shows about 1,000 each month using 1,000 example. Yeah. So there's a couple of ways you can get around this one. If you want to give profit sharing pre loan payments, you could leave it as is because you right now have these loan payments going on the balance sheet. And so what you're asking is how do I account for these loan payments on the PNL so that it's actually coming out of profit sharing. So I would recommend if that's what you're willing to do is take it out of a truck expense line item on your P and L throughout the whole year and at the end of the year have your account, move it over onto your balance sheet and reconcile at interest expense versus the principal pay down. Because the interest expense is a considered, is considered an expense and a expense on the P L but the actual principal pay down is considered a balance sheet item. Right. So if you, if you have loan payments, that's what I would recommend doing. If you want to make sure that profit sharing is post, excuse me, post payments.

If you're obviously paying cash, you don't have to worry about this. But if you're, if you're doing loan payments, that's what I would personally do. If you wanted your profit sharing to be after loan payments, which makes sense because you're paying that thing down and it's obviously part of the decision because otherwise you could be racking up a whole bunch of debt buying equipment and trucks and it never affect their profit sharing. And that's not really what you want because ultimately then they just. I would keep asking for more and more stuff. So are your personal locations out under your name or do you have some sort of a shell company owning them? With you owning a shell company, would it be a bad day? Have these locations owned by you personally? Honestly, I think 99.9% of people overthink this whole like entity structure game. And.

Until you have a massive company, you will still sign a personal guarantee on all your business loans, all your business checking accounts, all your business credit cards. And so don't overthink this. This is a game that is sold because it is the game of extremely wealthy people that have, the shell companies have trusts and they, they have a hierarchy of different LLCs and, and S corps and C Corps. Like this is why it's so hard right now for Trump, for them to nail down Trump is because literally there's so many different Trump organizations that he's like shell companies of shell companies. So protects you from all sorts of legal stuff. But this is not where our time as small business owners should be spent in terms of figuring out shell companies. Personally, how I'm doing it is I have an S corp with all my LLCs underneath it and each LLC is a different, different location. Right? And then what I'm doing for locations that are all grouped together, like as a executive model is a six. I'm putting under one llc but then all, all different bank accounts. So no co mingling between different.

Locations, but then under one llc. But then ultimately for me personally, I do one S Corp for all my in person business. So wherever there's an actual physical mower being used and actually Doing landscaping. I have one S Corp, Augusta Longer Corporation at the top of all that. But this is not something that should be thought about a lot. If once you get more than three locations, it starts to become something you might want to think about and that is having S Corp at the top and, and then having your LLC underneath. This allows you to move funds between LLC without having a tax event because you have it underneath one escort. Again, you need to talk to a CPA about all this. But if you're filing one tax return under an S Corp, if you put multiple locations underneath that, what that allows you to do is move money from, you know, location A, that's not doing great to location C. That's crushing it or vice or crushing it on versus number A. You need to move some of the funds to number C, that's a non taxable one. Because now we're all inside the same S Corp, the same entity. You have ownership contributions from one and owner's investment to another canceling itself out. So again, that does not matter though in my opinion to three or four locations, even two locations, I'd just do two separate LLCs, keep it really simple. Three even. I might even use three different LLCs. It's. Once you start getting above three, it's like, okay, let's throw one S corp above this just to keep it under one tax return. And then there's some advantages that you can run with taxes. But don't overthink this. Think about production far before conservation when it comes to taxes.

If you work in the field with the crew and doing profit sharing, do you include yourself when splitting profit sharing with the crew?

You could, yeah, that'd be a good idea. I would do this. Make sure that you're giving yourself a salary or P4P or some sort of pay that's coming out as wages if you're out in the field working. But yeah, I would do that. I would include yourself in terms of wages. I would also include yourself in profit sharing as well.

If you have a location where the team members are consistently well over 100% efficiency score in mowing days, sometimes up to 135 efficiency score, do you make any adjustment or let it ride or. Our project based work does not, does not regularly receive these percentage, therefore team members are not really excited to do them. Okay, so it sounds like your recurring work is crushing it. They're crushing P4P on your recurring work and your project based work is not that way.

This is the decision. I don't, I don't know the location name here. But this is what comes down to do you have a hard time keeping team members? If you do, I'd let it ride.

If you have no problem keeping team members attracting new talent, then this is when it's like do you want to give your guys more money or do you. Is the business struggling? Because business is struggling and they're hitting 135% efficiency score, you should be reducing the percentage that you're paying on recurring work, right? So that means maybe you go from 33% down to 28 or 30% as a, as a function of P4P if this is happening. But again, this just comes down to a couple things. Number one.

Is should you, should you lower that, should you lower that percentage of what you're giving to them? Yes, if the business struggling and you are totally fine keeping and finding a new talent. Right? So I don't know who this is because. So if you only had, if you had no employees like your solo operator, I would not do anything. If it sounds you have team members though. So if you have one or two, again there might be like.

Just the fact that they're new, that they are directly being managed by you is extremely efficient, etc. But if you have like five, six team members and this is happening, you need to ask yourself, is the business struggling? Because if it is, you need to reduce that percentage that you're giving to them and then if it's not and, and you have no problem finding employees or retaining them, that that's when it starts to have a conversation, right? So when you're having that consistency being so high, you might want to bring down your recurring. On recurring work they get say 28 or 30% and then on, on projects they get 33% and that can all be done inside of the P4P software or just reduce the dollar amount in general and then you need a raise on projects, right? You need projects and recurring, assuming that you're doing simple services to be somewhat level. So, so there's not like a jostling for who gets projects and who gets recurring. And sometimes that is a game that needs to be played. I don't like moving the percentage of P for P. I'd rather move the dollar amount per hour to the customer. Now in the case though, when they're making they're crushing efficiency score, you're going to have to move that percentage down. It's the only way to, to pull in the reins on P4P. If they're just crushing it like that is if, if that's what your goal is, then the only thing to do is lower the percentage because adjusting the customer's rate, you're not going to bring the customer's rate down. Right. So but what you could do is bring the overall rate down, say to 28% across the board and then raise your prices on project based work to the point where it's on a level playing field. And they're hitting 80, 90%. Right. Because at 100% it means they're usually making like.

26, 27. So if you're at 135%, they're like making so much money, which is great and I would want them to do that if the business is doing okay. But if you're struggling, that's when you got to make a decision for the business. And again, that's going to be balanced out too. And based upon, are you able to find and retain people based upon what you're paying them? Currently.

I need some advice on sending someone to collections that I've never done before and I'm in a sticky situation. We mowed our shop space this year for our landlord for $160 per month. She has regularly paid until the end of the season to where her checks would come later and later. Now she owes us for a month of mo's and isn't making any effort to pay us. I messenger multiple times along with emailing multiple times. However, she doesn't respond to the message or says I'll have accounting look into this. Their invoices from 120 to 160 days ago still owed. I'm ready to send her to collections, but since we have been dealing with her regarding the rent of our shop space and letting us out of our lease, I'm hesitant to poke the bear. My worry is she would simply terminate the lease but force us to vacate and pay the remainder of the four years payments if we were to send her to collections. This is all in a lease, right? So she can't do this. You can't some. You can't retaliate against a tenant because you didn't pay a bill, right? So this is all inside of a lease. It should be at least.

And if it's not, then your lease is probably not bulletproof to the point where you cannot just walk away. So for me I could care less about the money. It's the principle of her trying to screw someone over just because you can that makes it makes her go after no. So she can't do this, right? So these are completely two different Things I would, I would treat her as a regular customer and she doesn't like it. And if she wants to force you out, she can't make you pay the next four years because you sent her to collections over this bill. Can't do that. It's retaliation. I've thought about reducing my rent monthly. My rent payment, $160 per month. But that is just petty. And I don't necessarily want to fight fire with fire as I know she has more leverage plus deeper pockets than me. Should I let it go and not pursue her for the $160 or should I continue send her to collections? What would you do this in situation? I would just tell her, like, I'm sending you collections tomorrow.

And see what happens. Like, it doesn't sound like this is someone that you are working well with. So, you know, get your money and move forward.

If it's a matter of principle, like if it's 160, you just don't want to poke the bear. I'd probably stop mowing. That's probably what I would do, honestly, because it's not worth my time. I just stopped mowing. I'd stop service. And then if she wants to, wants you to start up again, it's like, hey, you got to pay all that. You're back. So. But I wouldn't do the reducing of rent because if you pay less rent now, you're affecting what you said you would do in your lease, right? So you can't do that. That's commingling of contracts. So your estimate and what your services for mowing is totally separate than what your rent payment is. So you got to just abide by your lease. Do that. But then in terms of what they owe you for mowing, I would either just stop mowing service and wait or two, I would send collections. If you really wanted to make a point. I don't know if making the point is worth $160, to be honest with you.

And then her getting mad at you and her having, like she said, like you said, leverage. Just stop mowing. That's what I would do in this case.

So. But yeah, just, just remember, like any sort of stuff with landlords, that's why stuff off the books is tough, like off their lease, because you can't commingle those two things. Otherwise you'll get in trouble for not paying your lease. That will be a problem. But her not paying her bills has nothing to do with the lease and her you sending her to collections, she can't like kick you out because of that. And if she kicked you out without making the pay, what this could do is maybe she makes. She's mad enough to kick you out, but she's not going to get this part.

That's impossible. So. All right, everyone, hope you had a great Christmas. And.

That'S it for today. So we'll see you guys tomorrow. Take care.