Office Hours 07/13/2024

Hello, copilot members. Hope you're doing fantastic. Happy Saturday or Sunday whenever you're watching this. This is another edition of the Office Hours where I answer questions about business software. Whatever I can possibly do to help you grow your business. So we'll jump right in. Before we do though, a couple quick things. This week we did make another change to the dispatch board. I will show you actually inside my account. Boom. So if you're in here, you're going to be able to see on the dispatch board as soon as you switch to where you select multiple days like a date range, like this for example, which we don't use this for launch. Stop. So there's probably not a bunch of visits in here. But what you're now able to do is very easily and quickly change the colors for every single day. And it'll automatically switch to this coloring mechanism based upon whatever colors you have for the week. So again, you can go up to a month or more of the dispatch board and what it shows as you scroll down, but you can actually select the colors you want and edit those, modify them, customize them however you would like. And this automatically happens as soon as you switch to a multi day view. So that way especially helpful when you're trying to look at your recurring routes for the the entire week. To be able to look at your week that's coming ahead, see if there's a random job that needs to be moved, a new job that was added to a route potentially accidentally that should not be on a specific day. That's kind of the advantage of that. All right, let me see here.

I don't know why my camera is giving me a bunch of problems this morning, but. All right, we're back in business. Okay, let's jump right into Facebook questions. Share my screen. Boom.

All right.

Sweet. So we got 11 comments. Looks like we'll jump right into it. Let me do all comments.

All right.

First one's from William Kelly. With our main location being the S Corp and making $8,000 annually, should I leave that as is and pay our office that from that as our command center first main location and just attach all future locations underneath it as LLCs? Or should I make a new S Corp called Military Cuts Command center to separate it and change our first location back to an llc?

Yeah. So will you? You've asked me this a few times. Different, different ways. I honestly would flip a coin. This does not matter. I know you've thought about a lot. I just don't believe it's actually going to matter. To the business, to be perfectly honest. So, you know, yes, you could do it. You could do the S Corp and call it whatever you want and put that where you have like your command center, your office running out of. And then make separate LLCs underneath the S Corp. You can still do this. So you can have a separate ein number for your S Corp and then a whole bunch of LLC that have different ein numbers for each of your locations and throw it all under one tax return with the S Corp. You can do that.

Because the only really real reason you want to separate this out is really for the sake of a liability, which is, I don't think you're a big problem. It's more just separating out financials and me to delineate costs between different locations. So I would just do an S Corp at the top with an EIN number. That would be your commands enter. And then I would have different LLCs for each of my locations underneath. So I could have different ein numbers, different profit and loss statements, different distributions, different bank accounts, et cetera, for each of my locations so that my general managers feel like they have full control of that. But like literally on this wheel, I would flip a coin. You've been thinking about this a lot and I. Cause I love you and I just want what's best for you. Just flip a coin and make a decision. Because this is not the type of thing that actually moves the needle for the business. These are the. These are the dotting I's and crossing T's that everyone gets wrapped up into. It does not matter. Like, you can make a partnership for all I care with you and your wife. Like, it doesn't matter. Entity structure is just something that people spend way too much time on strategy and like, actual execution is like so much more important. Joe, I love you. And I'm just saying that because I know you enough. Do I have to create separate company handbooks and onboarding documents with each LLC name on it for each location? Or I can just have one generic company handbook with the INC name on it for all locations. I have completely separate cookbooks and bank accounts right now to keep things separate. Yeah. So if you have the. The S Corp at the top, you know, you. You make it. You know, for example, if you want to make your S Corp Military kit military lawn cuts Inc. That'd be your escort, for example. And then you'd throw all your command center office related things into there. And then you could make one generic handbook from that account. And then DBAs for. You could do DBAs or you could do LLC. It's really up to you. It sounds like you're doing that separate LLC model. And so if you're going to do that, you could still, because your LLC can fall underneath an escort. So, like, for example, all my locations that actually cut grass, like, actually do physical work are all rolled up under one LLC called Augusta Longer Corporation. And so.

I can still run one handbook for all of my locations using that one S Corp. So, yeah, you know, usually, like, from a liability perspective, you might want to put the LLC's name on there as well, depending on your state. I know some states I've looked at before. Um, my attorney said you'd probably want to actually use the LLC's name. So to like, really kind of dot your I's, cross your T's. What I would do, will, is I would do your S Corp, and then I would list off all your LLCs and then just add to your handbook as you add LLCs. So that way you can just always have one document, like in DocuSign or whatever, to be able to get Those signed.

The 25%. Oh, this is Mike Owens. Sorry, Mike Owens. The 25% rule for pay. How does that tie in with growth and profit mode? We are hovering around 30 or around 50% acceptance rate, so close ratio, but would like to push heavy growth for next season. So I was considering dropping our hourly rate to fill the schedule, but that would drop the percentage to about 33% on new customers. Got it. Yeah. Like, again, if you want to be in growth mode and you're going to push past the 25% rule, that's fine. I just don't see a lot of businesses that are super profitable when they start getting far above the 25% rule. So you, as long as you're, you know, you're going into this, you're not going to make a lot of profit pushing, you know, 33%, et cetera. So for those that don't know, the 25% rule is whatever your hourly rate is to the customer, what you pay your employees as a function, hourly rate is no more than 25% of the what you're charging the customer. So if you're charging the customer $100 an hour, your base pay is going to be 25% on.

To the. To your employees as a base pay. Now, keep in mind also, Mike, that if you're going to be giving, you know, dropping your hourly rate.

And you're going to be not passing the 25% rule, P4P now will not work Unless you move your P for P percentage up to say 40% to your employees or 45%. So just keep that in mind as well. Again, totally fine. Just know what you're doing, you're going into growth mode and you're likely not going to make any profit. Jack BB as I want to get more commercial clients, I think it would be good to get them on an email list and send them personal emails to keep us on their mind. Is, is doing this once a month too much or is there a way to format such emails? And in that case, how do you do such a campaign for commercial customers or property managers? Yeah, commercial property managers. Commercial customers is actually a little different than property managers. Property managers typically don't want to be bothered very much. Most of them do very little work for their commercial clients. They it's like it's all an acquisition game for them like getting big contracts and then they do as little as work as possible depending on what size of cut property, depending on the type of property management. But.

There'S a lot of really bad property managers out there when it comes to commercial. So what I would say is if you can do their work there, do their job for them. That's ideal. Which means.

To residential customers, one click estimate emails work really good. You can make similar ones for commercial customers, but you would want to tailor it to like the needs of a commercial customer. So they don't really care about some things. For example, they're not going to like click on a one click estimate email for pulling weeds from the flower beds like that's in their contract or for a mowing thing like they already have that in the contract but they might do like little upgrades and add ons. So for example checking the downspouts between before winter installing bark mulch every couple years. Like these are the type of things that if you can keep eyes on the property and give them upsells, those are helpful and then also just like giving them reminders or anything about the property that makes their job easier because like what most property managers don't do very well is like monitoring the property. They don't go check it like they should every couple weeks or even a month or two. They just don't. And so if you can do their job for them and like check up on things, it's that's, that's really the value add for them.

Side question, what's the best process to get in touch with the right person regarding commercial sites and strata? As in the person who actually assigns the maintenance as it's generally not the receptionist. Yeah. The easiest way to do this sometimes if you just want. If you're just trying to get past the receptionist, the. What you want to do is call whoever is on the. Whoever is a leasing agent. They're usually not as blocking as the.

As the. What you called the maintenance person. But what you can do is you can call and be like, hey, I'm interested in this property and I'd love to get some information. Okay, great. Then the leasing manager is going to give you a call or you can get in touch. Usually if you're driving by commercial facilities, it'll have the leasing broker's name and then the number so you can call them directly. And when you call them, you could say, hey, I'm interested in this specific property. Or. Because that's how you can get your foot in the door one way. Or you can just go directly for the kill and be like, hey, I was going by your property, saw that you have some available units. I also noticed that xyz the trees were touching the property, touching the roof. The gutters were full, the lawn was overgrown. Whatever you do for services, that's one way to do it.

And get past the receptionist. Because the reception. If you just call the property management company. Yeah. Typically you're just going to be hitting the receptionist and they just block for him. Mike William Kelly said that if him and I get the Mike Andy's logo tattooed on us, that you would take us out to dinner after the conference is here. Is this confirmed? No, I would not recommend doing that. As much as I appreciate the thought, I would not recommend doing that. What are your thoughts on our 2025 outlook? Re entering growth mode next year to accomplish this goal. As you're aware, we have two owners and we are both going to handle the tasks alone with some AI assistance and potentially levering overseas VAs to assist as needed. Okay, so you want me to look at this? Okay, so you basically have three locations.

Looks like total revenues be at 1.9.

I don't know where you're getting 1.9 from because 8000-005000-00200,000 is 1.5 thousand. 1.5.

So this would be 1.5 million.

Okay, so it looks like you have to buy two new trucks, you have to hire several more employees. It is all in one year.

Oh, oh, I see. So this is the new location. Okay, I got it. Got it. So this is your current secondary location. You're adding a third location, it looks like.

Okay. And then you're gonna Be doing admin. He's going to be doing ops and sales because you're doing general regional. Okay, I see. So your general manager can do your sales. Looks like you're going to do admin and then Dylan's going to do like ops. Okay. And then you got a weed control. Acting independently.

One division. Okay. So, okay, first off.

I'm a little concerned by the fact that right now we have five trucks and next year you're shooting for four more. That's doubling growth. I'm fine with that. Just know growth sucks cash. And so that's going to be steep. And you're more than doubling your team, which again, totally fine. Just it's going to be a lot of growth and there's not going to be a lot of profit when you're doing it this much, which is again, totally fine. I'm just, just setting expectations. Unless I'm missing something. Oh, I see. The reason this is 1.9 is because you have the 400,000 over here. Got it. All right. This line just blocked it. That's why. Okay, cool. So 400,000. 1.93. Got it. Okay, cool. And I'm guessing right now you're more along the lines of 1.2. So yeah, this is definitely doable. You're going to be growing by 700,000. It's going to take a lot of, of.

A lot of money to buy trucks, hire these. This amount of people. You're starting an entirely new weed control division. You're in seven rounds, half a budget hour per visit.

Budget hours to complete two employees.

Yeah, you're raking in a lot of waste here, which is smart for your first year because you only have 2300 budget hours to complete with two full time employees.

Doable. Yeah. I don't think there's anything wrong with the plan. What was your question specifically? Yeah, those are my thoughts. Is. Is like you're just as long as you are all on board with the fact that you're not gonna see a lot of profits. And I would be cautious about adding that many general managers given the fact that you're trying to change your whole admin model. Like just one line in there. What you just added in here will take you a year to really figure it out. Like more than that. Overseas VAs will take an entire, like, it'll take all of your time. So keep that in mind. Like it's gonna be. You're gonna switch from like an operationally driven CEO to basically an admin role of just training and re. And recruiting Et cetera. So just keep that in mind. That'd be my caveat to this. That's a lot of changes to the business. If you're switching AI phone systems, you're switching overseas, and you're adding multiple locations and you're adding a regional manager and you're adding a weed control department, just know that's a lot of stuff you're adding. I'm not saying you can't be done. I'm not trying to discourage you from that. Just know you are asking for multiple things in the business, massive things to be changed, and it's gonna be difficult to identify what's succeeding because you're changing so many variables. One thing I've learned mostly over the past few years is like, change one variable at a time, so that way you actually know whether or not it's successful or not. Cause if you do all of these things and let's say you're successful, great, I'm happy. But was it the weed control? Was it the fact that you have great general managers? Was the fact that you switched your admin staff? Was. Because now AI is able to answer the phone more often. These are the type of things that are difficult to then pinpoint and, and track and measure if you do all at the same time. And it just creates a lot more.

Changes for the organization as a whole when you make that many changes. And it can be off putting for general managers. FYI, here's our P&L for May 2024. May hasn't. June hasn't been finished yet by our CPA. Can you point out anything that may seem alarming that we may need to change? Keep an eye out for or change FY about $2,500 a month in total debt payments between 5 finance truck and 3 most finance at 0% for 60 months.

Okay, 94, 23. Yeah. So it's pretty, pretty normal. Around 30% profits during the go season, since usually it's lower that during the off season. All right, so if I'm breaking out a piano like this live. Here we go.

So decent profit margins, which is good because we're in the middle of the go season. Your payroll is extremely low.

So I would want some clarity on that.

You're paying less than you're paying like 30% of gross revenue. And you don't have a lot of materials.

See your job supplies. Yeah, not much there. So your payroll is really low. So I don't know if you're doing something else like some subcontracting or paying some people outside of this P L, you're probably not taking wages either, I would assume out of this because just in mowing, that's just a very low payroll number which, hey, if you accomplish that, great. If you guys are able to make P4P and you're only paying them like 25%. Sweet. Let's go.

Good marketing. About 5%.

Okay.

Payroll. Payroll taxes. Okay, so you have payroll taxes down here. Got it. Okay. And then your shareholder wages are down here. Got it, got it. And then your pair. Okay, so you've. Okay, you stuck other payroll tax stuff here. Got it, got it, got it, got it. Okay. Why is. Okay, payroll expense, shareholder wages. Okay, got it. Okay, so you are paying yourself. Okay, got it. And that's between the two owners. Makes sense. Got here. I keep forgetting you guys have two owners. Okay, got it. So the shareholder wages the 14,000 inside of the other 30,000. Okay, now we're talking more like 40%. Got it. Okay, we're on the same page. Okay, what's this $4,000 office expense. Okay, so you probably have office spends 4,000 merchant fees, 2,900k sales tax. Okay, your sales tax looks a little low, but I just don't know your state and what that is. But it's also just like how that lines up with each month can be sometimes different. Yeah, looks good, looks solid. Nothing crazy out of. Out of whack for me. The main thing I'm always looking at is like, what percentage of revenue is going to wages. Your admin doesn't look out of control.

Obviously you guys are a big chunk of that. So you're probably around that 10 to 12% of revenue going to admin, about 30% or so of your wages or your revenue going to wages. But you guys probably contribute a little bit to that as the owners still because there's. I think you have five employees if I remember correctly. So yeah, good job. For the vast majority of green industry, months like May, June are really solid. And so we can be around that 30% profit margin because.

During the off season we're lower. And then yeah, I. This is the part that's not on the P and L and that is your.

Cost of debt. So you have $2,500 a month in total that paying between five finance trucks, three mowers finance at 0%. So those are obviously going to be on your balance sheet, not your piano. Ezra Heinrich, what is your personal why? I have pretty fancy why.

And then recently I had. I just like, look, my personal why is like, okay, this is not like me making my personal why or anything like crazy. I actually have a statement that I have, but I don't really share that. The one that I think is really useful though. I heard Alex Hormozi talking in a short and he wasn't actually making a statement, he was just talking with someone. But I kind of pieced together this idea and that was like, the mission is to meet the, the man I will become when I'm doing a billion dollars in sales. Like, the mission is simply meeting that person that I must become in order to be able to do that. Because if I'm gonna do a billion dollars in sales is what his words were. The type of person I will have to become is like significantly better in so many areas than I currently am. And the pursuit of that is a journey worth taking. And so that was super.

Really struck a chord for me. And so like my goal is like make as many of these small business owners rich. Like that is the bottom line. Like it's the core of all of the businesses now. And we're kind of like bringing a lot of them together, pay for performance, copilot, etc. Augusta, the media team, et cetera. We're kind of bringing a lot of it together to make better synergies. And it's like the main core, like the actual principle of all the businesses is to make home service business owners rich. The reason for that is if, that if I accomplish that why everyone else's, whatever their why is will be served. If I'm like, oh, like, like I have other, other things that I'm passionate about. I'm, I, I'm a Christian. And so elements of that, I, I like to see people reach their full potential. I like to help people like from my medical background and give and things like that. So those are all in there. However, if you just make people more money, their why will be served. Like it's somewhat selfish to be like, I want to see other people change based upon my prism of how the world is viewed versus just being like, hey, I'm not gonna imprint any of that on anyone. I'm just gonna get them more money so that they have more fuel to go towards whatever they want in life. And I don't really care what that is. And so if you want more time off, great. If you want a nicer truck, great. If you want a bigger house, great. If you wanna pay for your kids education, like whatever it is, I just want you to accomplish those things. But like a big piece for me is like, I hate when People don't have unrealized potential. And so that'd be like that, I guess. All right, Chris. Ooh, I'm not gonna try. Chris says I'm new to doing budgeted hours, so just wondering how best to schedule it. Sometimes we work as a two man team or solo. Do I set the budget hours for recurring work based off the two man team or the solo guy? I, I have done it based off of solo, but our labor efficiency is at 234%. Also. How many budget hours per day would you aim for? A two man crew. Okay, so it is based upon solo. If your labor efficiency is 234%, you're doing something wrong. So hop on a call with air traffic control, they can walk you through this. But your budget hours is always based upon how many hours it will take on the job for one person to get the job done. If you have two people on the job, it's going to cut. You know, you should double, effectively double the amount of budget hours being done. There's going to be more waste when you have a second person on the crew. So they're not going to hit 100% like a doubling of their budget hours. But that is the target. The goal is to double the budget hours on that crew. So when you're, you're looking at your labor efficiency of 234%, that would mean that, that they are literally getting done like a crew member is getting done 20 budget hours of work in like an eight hour day. Yeah. So I don't believe that's happening regularly. I think that would happen occasionally if that's happening too consistently. Your. But your estimating is way off because you're just inaccurate on budget hours. You want your budget hours to be accurate. So you have to have like a benchmark of, of estimate accuracy in order for budget hours and labor efficiency to actually make sense. Because like you can massively inflate labor efficiency just by doing one thing like giving people way too many budget hours. Right. And so everything's check and balance. That's why pay for performance is so good. Because on pay for performance, you can have a 234% labor efficiency and still not hit base pay. Why? Because your hourly rate is too low.

Right. So all I really care about is so this is why labor efficiency is cool. Also you want to look at your effective hourly rate, which is simply how much labor revenue divided by clocked hours. That's like next question I'd be asking you here. And then I do believe that the 234 is probably an anomaly. I don't think that's probably like over the course of Several months they're 234% labor efficiency. If they are, we're inaccurately budgeting for the amount of hours the job will take. And I would really recommend trying to narrow that in so that that number isn'. Arbitrary. The guys actually look at it and like that's pretty accurate. That's how we like you when it comes to price increases. When it comes to all of that, like you're looking at labor efficiency and you need that number to be accurate. There's always going to be fudge factor. There's always going to be the fact that there's humans involved with estimating and so there's going to be some margin of error. But you want that number to be accurate as much as possible. It makes so many more elements of gaining the numbers in the business actually making them useful. If that budget hour number is accurate on the jobs and at 234%, if that's an accurate representation of over the course of like several weeks or months, I would really look at your budgeted hours and take a closer look at your estimating. Cool. All right everyone, I hope you have a fantastic rest of your weekend and we will see you all next weekend. Take care.