Preparing for the Spring Rush! [Home Service Millionaire Q&A]

Ladies and gentlemen, boys and girls, welcome to another call in show here.

My Candy show.

I apologize for being a little bit late today.

A couple hours almost actually. But I promised myself when I first got into content that I would do two things. Number one, I would create content that I loved so I could do it forever. And secondly, I would not be a misplace my priorities in life. And so today there are other things that had to take place and I put this on the back burner. So I apologize for that. But I'm here and I'm willing to take questions. Today I want to take it a really focus on the spring rush for the vast majority of home service industries. Regardless if you're in lawn care, landscaping, cleaning, pressure washing, window cleaning, fences, decks, whatever you are doing in the home services. Almost everyone here is about four to eight weeks away from being in the middle of spring rush when leads are pouring in and we have tons of jobs and work to do. And so if you have a question, I'd love to answer it. 361733-3333 is the call in and I will answer your question here live. We are live. So if you're wondering, is this recorded? This is not recorded. This is live. And so I'm looking forward to it. I will also answer questions in the chat. However, I will be giving priority to those that are in the call in queue. All right, so what do we focus on in terms of Spring Rush? So first and foremost, knowing that you only have several weeks, the things that you've been putting off need to get done. The same way that I talk about earlier in the year, early at the end of last fall, I said, hey, look, you gotta have a plan for winter. It's the time when your revenues typically go down. There's typically less work and less leads coming in. You've got to have a plan in place to create systems so that when spring rush comes, you can capitalize on it. So whether it be creating new systems or in how you do your sales, how you set up your website, it is honestly too late to be doing things that are going to take you two or three months to figure out. Right now, trying to institute pay for performance, if you haven't already done so, is probably not a great idea right now, is you need to be figuring out how to hire and getting ready to train and ultimately getting your team ready for spring rush both in the office, the admin side, the operation side out in the field. And then from the sales perspective, how are you going to handle the Influx of leads how you capitalize on the spring rush will determine for the vast majority of home service businesses how well they do in that year. And so if you can capitalize on getting more of the leads that are coming pouring in and actually able to lock them in into recurring service, you'll likely be able to do a much better job the rest of the year. And the people that are able to capitalize on the spring rush have figured out several things. Number one, operationally, how do I have a team that's ready to work and actually able to be efficient during the spring rush? For example, my general manager, one of them I was talking to the other day, he has tiers of team members starting, I think it's four or five team members starting new every week for the next five to six weeks. However, he didn't just they're not just gonna be showing up for their first day. They've already come, they've done their orientation, they've got their uniform, they, some of them have been to training already and so they're coming in warmish and then they're going to make sure that over the course of two weeks they are trained up. So what is your training process for your new team members? How are you going to handle when all of a sudden you have 10 estimates in a day versus what it's been in the past few months, which is 10, 10 estimates a month? Is it going to be you out in the field doing work from 8am till 12 and then from 12 to 5 u estimates? These are the type of things to nail down now instead of waiting for the spring rush and then having to be reactive when everything comes pouring in and that's what will happen. Will the spring rush be a little bit less busy than usual because of all the interest rates and the economy? Potentially. But I guarantee you there will be millions of jobs to be had this year and they will go to the people that are most prepared for the spring rush, both on a sales operations and admin. Look at all three of those areas and am I preparing operationally? My team trained up making sure I have system in place to get them efficient within a couple weeks, ideally. Secondly, from the admin side inside the office, do I have systems in place that are going to make sure that I can take incoming estimates, take incoming emails and voicemails? How are those things being handled? Do I have a way to track and measure exactly how effective I am at answering calls and how quickly I get back to people? Third, that's your sales aspect. How are you Going to handle a doubling of your leads compared to last year. If you're growing your business, you're like, I'm going to double my revenue. There's a very good chance you're going to have to deal with double the amount of leads. So if last spring rush you got four or five estimates a day, expect there to be 10 to 12 now coming in during this time. All right. The hardest part about home services is the seasonality of it. And that is we have massive rush during spring and then we typically have an off season. It's the hardest thing because you have to manage those three elements, sales, operations and admin, during that seasonality. And cash flow is massively impacted because of that seasonality. Here's the key. During spring rush, your customer acquisition cost, the amount of money you will need to spend to buy one more customer, will be at its all time low. Compared to the rest of the time of the year, it is at its lowest point. Why is that? Because demand for our product and service that we sell in home services is extremely high during the spring rush. When you have demand that is very, very high, you can expect that you can get leads much, much for a much lower cost. If you were trying to get mowing, get a mowing quote, get a mowing lead two or three months ago in the middle of the winter, you're going to spend hundreds of dollars likely to close an actual customer during spring rush, they're going to be pouring in. Why? Because the grass is growing. If you're in the mowing industry. But for the vast majority of home services, this is our time when demand spikes. The companies that grow the fastest in home services are the ones that continue to be able to spend money on marketing during the time when the customer acquisition cost is far lower in terms of seasonality. I would venture to believe that between 20 and $40 customer acquisition cost, if that's what you're going to get during the spring rush, that during the off season that could very well be 100 to $200, which means you have a five. You can get five customers for the price of one. Talk about a deal. If you ever went into a, into a store and like, hey, this, this next couple months only you're getting five for the price of one. We like stock up, baby. And so the, the ability to be able to stock up on customers during the spring rush comes down to your ability to plan for the massive spike in leads and the effect that it has on sales, operations and admin. You can't just think about One of those assets. Oh, I'm going to do. I'm now going to work out on the business. I'm going to do sales. Great. You fix one problem. What's going to happen to operations now that you're not able to actually help the guys throughout the day? They're going to need better training. There's going to need be training for your new team members that are joining. Oh, and the admin, it's going to triple the amount of calls coming in. When you get all these new leads getting accepted, what's that going to do? Do you have redundancy? Do you have video recordings of the work being done in your office so that if someone gets sick for a week during the middle of spring rush, the business doesn't get stopped or you have to go back in the office and answer the phone calls? These are the type of things that allow a business to grow. And when customer acquisition cost is at its lowest and demand for our services is at its highest, the person that can spend the most amount of money on marketing during that time will grow the fastest. I understand that's nice to be able to spend money on marketing during the slow season to drive leads to stay busy. But that cost of that lead is usually 5 to 10x higher than if you can spend that same amount of money during the spring rush. All right, let's go ahead and take our first caller. The area code is 8, 6, 5. Welcome to the show. Thank you for coming on. Can you hear me okay?

I can. How are you, Mike?

Good. How are you doing? What's your name?

My name is Parker.

Parker, how's it going? What can I do for you?

So my question is I started in August, I went full time in August and did about 40k from then until December. And in 2024, my goal is roughly 3 to 350k. So I'm trying to decide, should I buy used equipment to try to get the other crew started or should I do like a third man crew to build up capital until I can get the used truck and everything like that for the second curve?

So is your question getting another crew versus another truck or is it the question of do I get a used versus new?

So the question is really is.

More or less, should I go ahead and buy used equipment to get a second crew started or should I just add the third person in the same truck with me for like the first two or three weeks through spring rush to try to get them trained up and get them running and then branch off and add them to the second crew.

Great question. This really comes down to where you're at in terms of a capital and liquidity on hand. So like, do you have enough cash to be able to buy the truck and still be able to sustain the business and market services throughout spring rush?

So I already have a second truck and trailer. The only thing I'm needing is used, either used mowers or new mowers. So that's, it's liquidity is kind of low right now.

Yeah. So like I would say, I would say I would give you the green light on this for one reason. It sounds like you have 80% of the assets required to start a second crew. And by having the second crew, you basically are going to almost double your revenue capacity. So if you're able to do say 15 or $20,000 a month with the one truck and the one crew, you could probably 35 to 40,000amonth at full capacity running these, the two trucks. It sounds like you have the truck, you have the trailer, you just need the equipment. There's a high likelihood that getting the mower, even if it's at 0% down and you, and you finance it is a good move because honestly you, you're probably going to spend 2, $300 per month for that equipment if you had to pay if you have to finance it. And then that way you keep cash on hand to be able to market throughout the spring rush and fill the truck as fast as possible. And so really my answer comes down to your confidence in your ability to be able to fill the truck with leads. And it sounds to me like the way you got started last year, you probably going to be able to do that pretty quickly. And so what I don't want to happen, and the reason I give you the green light on even financing is I don't want you to max out the first truck. And all of a sudden that truck goes down for just one or two weeks in the middle of spring rush and now your business basically grinds to a halt and you have three employees, which likely means you have like 100 plus customers. And you can't afford to have the truck go down. And so you already have the truck, you already have the trailer, you already actually have all the assets mostly required to get the crew started. I just go ahead and either finance the mowers or if you can afford it, pay with cash. And then if you. The only reason I say finance because I need to make sure you have enough capital, actually go advertise and fill the truck up. Does that make sense?

It does. How much capital do you think I should set aside for marketing to do 350 or so?

How many. How many recurring customers do you have now?

So currently I'm doing 40 lawns. That was solo. Uh, but now I added a person.

So you'll probably need at least 120 to 150 if you keep the same service mix in order to be able to hit that goal. So in terms of the 300,000 for the year. And so, you know, I just come up with that Math based upon 150 customers, average of $2,000 per, you know, customer per year. And assuming that some do mowing, some do some projects, cleanups, mulch, etc. And so in order to get there, you can just run the math of, okay, well, If I have 40 now and I need at least 100 more, and let's just say I'm going to spend, to be conservative, $100 in customer acquisition costs. That would mean you'd need to spend $10,000 in marketing. And so if I was you, I would work that math backwards. So I'd say, okay, I need to have at least $10,000 to quote, unquote, burn, and anything besides that I'm willing to spend on equipment, trucks, etc. But I'd also be making sure you have enough working capital because you're going to be getting all these employees, et cetera. So I like to see at least one month of revenue in the business right now. That's only probably around 10 to 15,000. So I'd be looking at like, say $15,000 a month as working capital, plus keep liquid, keep, you know, dry capital. $10,000 for marketing. Anything above that, I'd say, hey, you can go ahead and spend it, but if you start dipping into that number, that's why I say potentially use the financing on the equipment if needs be.

Okay, sounds great. Basically, just I need to hold about 10 to 15k as capital, and the rest decide if I want to finance or buy used equipment.

Correct? Exactly. I would. I would personally hold $10,000 set aside for marketing to be able to scale the way that you're thinking and then have at least another $15,000 in working capital. So. So really, my perfect answer is like, I'd be looking to try to keep at least $25,000 in the bank. If you have to tap way into that, like 10 or 15 grand into that for this equipment, then I'd go finance it.

Okay, sounds great. Thank you, Mike.

You got it, brother. Take care. Have A good one. All right, next caller is coming in from Texas. Five one, two. Welcome to the show. I think this is Sam, am I correct on that?

Yeah. Hey Mike, how's it going?

Good. How are you doing, brother?

Doing good. Hey, really quick question for you. So we're starting our second location, officially starting it here in about three weeks.

Good for you, man.

We already have about hours for that location to start off with. My question is a two part question. How do you ultimately define success for a general manager within their first year and then what kind of KPIs are you primarily tracking within that first year?

Great question. So the two major ones that you really, from a macro perspective are looking at when you come to a first a new location is growth and profitability. Like in the short term you want growth to be the focus because they're not going to be able to be profitable in the first year. And so if you're doing sort of comp plans, et cetera, give them, hey, here's your profit percentage or distribution percentage, however you're working that. But that first year especially, I would give them significant incentive based upon revenue goals because they're not going to be profitable because there's just so much that goes into getting all the new leads and going out and getting the customers and spending on advertising, buying more trucks. There's not usually a lot of distributable cash. And so we typically have had it where it's benchmarks like hey, if you hit above 20,000amonth in revenue, because that's kind of like we want them to get there as fast as possible, hopefully within a month or two. Anything above 20,000amonth in revenue, we start having tiers of monthly bonuses based upon just straight revenue. And so you could, you could really just have your profit sharing or your distributable cash percentage that you want to share with them as like, hey, this is the North Star where we want to go. You're going to make a lot more money here. But in that first year we're going to do benchmarks based upon revenue. I think keeping it that simple is better than trying to do it based on like close ratio and number of leads and a whole bunch of other things. Especially when number of leads is mostly going to come down to how much you spend on marketing. And so it just becomes a perverse incentive of them wanting to spend more and more in ads.

Gotcha.

Any anything that you're kind of like wrestling with that though in terms of like creating that either compensation plan or just kind of KPIs?

No. So we, we had a plan of going 50,000 salary and then 15% distributed or distributions and but I like the idea for that first year.

We kind of already had like some KPIs that we wanted to track in terms of like new customers and close rate, stuff like that. And what kind of responsibilities, what kind of reporting responsibilities does your GM have for that first year? Like if we do like monthly leadership meetings.

Yeah. In terms of the reporting, like getting the actual numbers and the metrics, I put that on my regional manager in order to be able to find those numbers and make sure they're, they're clean and pure because they're, it's their responsibility if I have a regional manager now, if you are serving as the regional manager, I would still take reporting as your responsibility because you ultimately need to know what the business is doing and you're going to anyways. So why like have them do it if you're just literally going to do the exact same thing to double check their work? And so I would take reporting on as still your function as you are serving as the quote unquote regional manager. And then the reason that I like using just revenue like growth and profit is because all the other KPIs lead into those two things. So if you're trying to grow really fast, having a high close ratio and more leads is going to lead to higher revenue. Right. As time goes on, efficiency of labor is a huge driving factor of something like profitability. And so instead of trying to take all the leading indicators of success, I'd rather just go after the ones that are easy to track and it's lagging and that is my revenue and my profitability. And so I would, I would say what, what's your right now, I know you already have some budget hours of work being done there. What's the revenue per month do you think as of right now, like getting started, like without any additional.

Probably 6,000amonth starting off of that first or second location.

And are you involved in Daily Ops, the second location at all?

No, I won't be.

I, I would, I, I just, this would just be my personal recommendation to you, Sam, because I know you and I know how you roll. So I'm willing to go a little further with this. I would recommend going more than 15 distributable cash as a, as a profit share for them. It's not going to be enough meat on the bone in year two for them to actually get excited about it because let's say in year two you get this thing up to, let's be conservative, let's say $300,000 in annual revenue for 2024. Okay. Probably not going to be super profitable. You're going to have a hard time convincing them going into year two that 15% of profit is going to be exciting for them because they're going to look at them be like, okay, let's say we do 500,000 in year two, and let's say we're 20% profit. That's a hundred grand. Am I really going to push my brain like I have for the past year for $15,000? That's usually unlikely. What I would say is make that so juicy that after year one of the massive growth and, but not being profitable now, they see this path to like 30%, potentially even of distributable cash. Right. And again, that assumes you're completely out of daily operations. But I just, I'm not saying that's what you should do. I'm just saying think about that, because I see a lot of GMs getting kind of lost after that first year and leaving because there's not enough meat on the bone to actually make the business profitable. Because it's not easy. Like that second year is when you really start to actually make money and have distributable cash. And if they're not getting a big enough chunk of it, like, ultimately they are the driving factor to whether or not the location will be successful. And so I just make sure that's as, as like, juicy as possible for them from a retention perspective as well as just like motivation throughout year one when it's brutal. It's just so difficult as a GM to be running the location.

Right. Yeah, that's, that's really good. Is that what you do for your GMS is around 30?

Yeah, we, we do 35% if it's brand new. And it goes down. If they're joining a location that already has, I think it's like at 20,000, 40,000, 60,000amonth in revenue, that percentage goes down. But we do that Exactly. Start at 35% and it works its way down, I think all the way down to 10% depending on the amount of revenue they are stepping into the location with.

Got you. Awesome answer. Thanks for your time, Mike.

Absolutely, brother. Take care. Bye Bye.

You too.

All right. For some reason, my video kind of got choppy there. Next call is coming in from 330. Thank you for coming on the show. Welcome.

What's up? Mike Andes. How are you today?

Good. Who am I talking to.

This is Justin from Akron, Ohio.

Awesome, Justin, thanks for calling in, brother. What's, what can I do for you?

Absolutely. Hey, one question. Through the winter time here I have, I, I've had a full crew. We did a360,000 last year. I had a two man crew that I basically hired on April of last year. I did a layoff for one of the guys going into November, was able to sell enough snow contracts to keep a guy on full time. However, did not have the, the workflow to really justify a salary guy through the winter time and was kind of looking for your opinion on what to do next year to kind of keep guys on call to, you know, show up for snow events but also incentivize them to, you know, actually show up when we need them.

Got it. And so you're, you're thinking right now about next snow season because this snow season I assume was pretty difficult with just having the one person.

It. We were able to sell seasonal contracts that we were able to take care of our overhead as well as wages for that employee as well as, you know, keeping me as the owner taken care of through the wintertime. I'm just wondering, is there a better strategy moving forward to what would you do in that situation if you had no contracts and needed a plow guy but don't have the, you know, the hours to really put forth? Just put them on salary is basically what I did this winter.

Got it. So I assume the salary kind of eats a hole in your pocket throughout the wintertime when you don't have a ton of work.

The difficult thing that I see is yeah, we're selling out the money, but in, in some, in a lot of cases, you know, we're basically looking out the window waiting for it to snow.

Right. And so this is, this is when it comes down to if you doubled his hourly rate and you offered that to people to be more on call type scenario and said, hey, instead of paying you, let's just call it. I'm just gonna make up a number. Let's just say you're paying $1,000 per week, right? So it's 200 bucks per day.

Say, hey, you're right on the, yeah, you're right on the money with that.

Yeah. So, so let's say, let's say it's a thousand bucks a week. You know, in 200 bucks a day if you're someone's on salary five days a week of work. Let's assume though, what if we went out and we said hey, would you be willing to be for $400 per day if, if you have to come into work to get 400 bucks to go through snow, would you be willing to do that? I'm not saying it's necessarily this person that's on salary because they, they've gotten used to this lifestyle and that's fine. But offer.

Potentially as a, as a, as another job offering, like, you know, position, be like, hey, you're going to be on call and you're only going to get X amount of time, but when you come in, I'm going to give you 500 bucks per day. Now all of a sudden, it's a matter of they're super motivated to come into work, they're on call, and if it doesn't snow for three weeks, you didn't pay $3,000 for someone to do absolutely nothing. And so I'm assuming a couple things.

Yeah, that's a tough one to. Yep.

And so I think I'm assuming, first and foremost, there's people out there that would be willing to make 40 or 50 an hour to be on call, which I think there's a market for that. Secondly, I'm also assuming that there's absolutely nothing for them to.