Quitting School for Lawn Care, Remote Work Balancing, Americans are Broke

Welcome back to the Mike Andes Podcast, where we discuss the ins and outs of owning a small business. If you're new here, the Mike Andes Podcast is all about taking your business to the next level. We have some really cool content for Mike today. Everything from why remote work will ultimately fail you to why the engine that runs the US Economy, AKA consumers, is starting to sputter. Before we dive into that, we have a clip for anyone who's juggling between being a student and running their business. As always, you can find all this and more over at the Mike Andes YouTube channel. But let's get into it. Should quit school for a lawn care business. Let's find out.

Which years are you in?

Senior year.

Very nice. Are you gonna grow it up next year once you're out?

Yes.

Very good. Good for you guys.

And so I have the mom question.

Okay, go.

What are your thoughts on continuing education?

So, first and foremost, this is my honest opinion, regardless of whether your mom is here, is if they're. If your parents are paying for it and you accept it, you have to do it. If you're gonna live under their house and they're gonna pay for your bills, you have to do whatever they say. That's my opinion.

When I dropped out of school, I was still living at home. And that was the moment on I said, okay, either I move out or I'm paying for everything. So my opinion is if you're gonna get paid for, you do whatever your parents say. The asterisk next to that is you can always go back to school. And so if you have a good thing going with the business, and I'd say you need to prove yourself a little bit more than 20 customers to prove it's something that can actually provide for yourself. But if you do that, you can always go back and get a degree. I could always go back and become a doctor if I wanted to.

Right.

So.

So I have six years of post high school education. Honestly, I learned more in my first two years of growing my business. And so if you're really going for it, I would say that a very valuable skill. And you can always go back and get a college education. It's always there for the taking. It's the most expensive it's ever been. But if you're gonna get stuff paid for by other people and you gotta do what they say, they hold all the cards. So I don't know if that's what you wanted to hear, but I really.

Wanted your honest opinion because it's taken me a while to come to the I'm older. I grew up in the generation that go to college. And so it's taken me a while to say, okay, if that's not what you want to do and you want to grow the business. But my question is, like, what about tax law? What about these things that you do learn in the classroom that it's hard to learn outside of the classroom? Would you do some online studies?

Of course.

I hear, well, Mike Andes has this thing on. You can just invest in Mike Andy's. And I'm like, well, it was Mike Andy said he's interfering in my life. But I do appreciate the content that you're putting out there. And I've actually started to watch it. So that's just kind of where I am. And I want to guide them and encourage them in the right way. I want them to grow their business to build it. They've been kind of limited because they're in school. And so when you enter, when school's back in session and you have 25 lines, it's hard because you're dealing with darkness and stuff. But I just want to point them in the right direction.

The thing is, all those things can be taught in an educational system, and that is law, tax, finance, et cetera. What can't be taught is the ability to sell, the ability to create customers and run a business. Hire people that cannot be taught in a classroom. So if they get those skills and they ever need the other, they can always go back and get them more. Yet, though, you can hire all that out. I'm not the best at a lot of those things, but you grow the business to the point where you can hire a cpa, you can hire an attorney, and they get those things taken care of. Those are all commodities that can just be taught in a classroom the same way that chemistry and biology can be taught in a cat classroom. And you just don't need those skills to be a business owner. Now, if you're going to become a lawyer, yeah, you got to go to school. If you're going to become an accountant, you got to go to school. If you're a doctor, you got to business owner, you just don't need it. The defining factor is whether or not someone has the work ethic to make up for their lack of education. With growing a business, if that stalls out and you don't have the work ethic to put in 12 hours figuring things out, you won't be able to catch up when you don't know things. But if you have the work ethic, you'll figure it out. Like you will YouTube balance sheet and you'll understand the law and you'll call the department of labor of licensing and like figure out how to license in your state correctly. You'll just do it because you're hard working. And so that's a skill that can't be taught and that's work ethic. So as a parent, if I was a parent, I'd be looking at like, is the work ethic there? Because if it's not, I'd be concerned. Right. So if my child was like, I'm going to become an entrepreneur. And I didn't see like their ability to grind and hustle, that'd be concerning to me because they're going to go fall flat in their face and have nothing to show for it. And they're probably not even getting skills because they're not going to push themselves to learn. Whereas if they're going to push themselves and even they fail, but they grow their business and they learn all these skills that cannot be taught in a classroom. Then they go get their education in their 30s, let's say. But they come out as an incredible executive. So I would just focus on that, like as a parent, that's what my thought would be like. If they have the work ethic, I'd give them a pass. If they don't get in school.

Yeah.

Okay. And so if you had to go, go. But my next question is they're ready to buy a new mower. I mean, they've been working using the same one for. I don't know, but it's like a residential mower. It's not a commercial. What would your thoughts be on what their next step would be? Because he's all like, we gotta get a new mower.

The old.

The existing mower is starting to show.

Yeah.

What size mower? It's a 54 inch.

Okay.

How big are your most. Your properties? I know you're in Louisville, that you live here, like a smaller residential or you do commercial or what do you do?

Okay, how long did you take to mow?

Yes. I wouldn't get a 54 inch. I would take half that money. I'd put that towards marketing. And then the other half is get like a 32 or even a push mower at 30 inch. Because if it's only taking you 15 minutes to mow, it means that seven and a half of those minutes or eight of those minutes are weed whacking and blowing and you're really only spending about seven minutes on the mower. And if you go from a 54 to a 30 inch push mower, you're literally going to go from seven minutes to like 12 minutes. And that extra five minutes is time. But you have lots of time right now. Take that money, the extra five grand, six grand, seven grand you're gonna save, put that towards marketing, and you'll go from 20 customers to 100. Right. Like the guy that walked up here today said he had a $35 customer acquisition cost. Let's assume you have $50 customer acquisition cost, which means you have to say, spend $50 for every customer. If you can make $5,000 and go spend that on marketing, that would be 100 new customers. So getting a new mower is not going to produce you 100 new customers. It might make you feel good and it might be a little more reliable, but I think you could get away with right now saving that money. Put that towards marketing because that will take you from 20 to 100 customers and 100. 100. 100 customer business is something to talk about. That's something where you look at your mom like, I can do this outside of I don't need college.

Right.

So where would you recommend, like our.

Number be for the amount of customers.

Like this next year? I think you get to 100. I think you get to 100. Yeah. 100%.

Right.

So let's look at March, April, May and June. That's four months. It's 120 days. In the, in those, the spring rush, you need a customer a day.

Right.

And the reason you need a customer a day, you're going to lose some customers.

Right.

So if you shoot for a customer day, it's like, okay, I'm going to knock on doors, I'm going to put door hangers out until I literally get a customer. And that might mean you put door hangers and knock on doors for two hours a day. But if you do that for three months, you'll have a real business. You'll be hiring somebody. You'll really have a real something to like point to and be like, there's a reason I'm doing this. So I ordered, I think I have 500 cards. I got the lawn care media with.

The instant quote on the back.

Oh, yeah, lawn care media.

Yep.

Cool. Yeah, I'm planning on using those. Yep. Knock on the doors and then if, if you ever get in a negotiation with your mom about college, have a number of customers you have to hit in one year, next year you're, you're off. Like, let's just say, okay, instead of taking my break here, my year, between college, I'm going to go build this business and if I get to this level, I don't want to hear about college anymore.

Right.

But then you've got to hit it. And it should be probably 100 plus customers. And that's going to mean a real business that you can actually provide for someone, the road. Right? And then you just gotta grind for it. Like literally it's a matter of like, okay, what do I need per day, what I need per week? And if I'm not hitting that, I'm gonna literally just go knock on doors. Right. Like I remember knocking on doors Friday and Saturday, both days for 12 hours. I remember that several times. When I was first getting started, I didn't have any money to spend on marketing. And Google Ads don't get in the wrapped up in all the Facebook garbage. You're not gonna throw money and say money appears. It's not happening. You're gonna have to grind. Right. So just have the numbers know exactly you need and just go for it. Yeah.

Well, I was going to ask.

Like on the online side of marketing.

Like what areas would you go? Yeah, like I would start off small, like depending on what your budget is. But like if you save say 4 or $5,000 from not buying the big mower and take that money and put it towards marketing. If you do that, number one, you get to 100 customers, you can now afford the mower. Not a problem. Okay, but then furthermore, if you do that, I'd be putting a small amount towards Facebook. I'd be focusing on like every door, direct mail, the printed stuff more. Because you're gonna get better bang for that buck. And you have time, not money. Right. If you had 50 grand, we'd be talking about like Facebook campaigns and Google Ad campaign and YouTube and TikTok, like we'd do all that. You don't have that money, so you gotta be really efficient with it. And that's gonna be more like, you know, pounding the pavement and knocking on doors, talking to people, doing the instant quotes. That's probably gonna get your best bang for your buck. But in terms of online, I do a little bit. Maybe on Facebook. Google, definitely Google Ads. So do you have a Google listing, Google business account?

Not yet.

Because we're not. I saw you raise your hand. I saw that.

When you said who does not have a Google? My business account. Yeah, you did. I saw that.

They're still under. He's still underage. Yeah, mom is protective.

Yeah.

That's fine.

But they're planning on opening up. Don't worry. I didn't have a Google. I didn't have a Gmail account until I went to college. So we're planning on opening like an llc.

Yep. And then when that's open, I'll put, like all my information in there.

But just, just go ahead and get started. Get started. You know, try to get the business listening up, because once you do that, then you can create a Google Ads account and run ads for Google. And again, like, this is the determining factor of whether or not you need to go to school. And that is, can you figure out how to make a Google Ad without having to go to school? 100%, yes. In 20 minutes on a. On a YouTube video. The question is whether or not you figure that out. Right. So, you know, you can watch some of my stuff, but like literally how to make a YouTube video search by the last two weeks to make sure it's the most updated one and watch that video and follow along.

Right.

So thank you for your time.

Absolutely. Let's do it. Let's do it. Man, I'm in trouble.

Cool.

Thanks, guys. Absolutely. Appreciate it.

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More bosses order workers back to the office as job market shifts. So I'm going to talk about my experience with working from home and what we did last year in terms of hiring almost 40 people virtually for our command center. Answering phone calls, sending out estimates, emails. We do payroll for our franchisees. We do like 40 different things. Everything from their cookbooks to invoicing to scheduling. It's a whole list of things that we do. And last year, 2022, at the beginning of the year, I was very bullish on hiring people from across the country to be our virtual agent. So we're going to look at this article from the Wall Street Journal and I'm going to give my $0.02 based upon the experience that I had last year because we're changing up the way we're doing things. And I agree with some of the things in this article, but not all of them. All right, so more bosses are wanting people to come back to the office. Honestly, you saw this across the board everywhere from, you know, places like Tesla and Apple requiring people to come back in the office a lot sooner than other companies. You got Paycom now, big payroll type company, Vanguard offices, financial services. But let's dig into this a little bit more. Is there a little bit of a tug of war right now going on? Said David Garfield, global head of industries at consulting firm Alexi Partners, who has worked with executive on how to approach return to office discussions. Employers are not having easy time of it. For much of the pandemic, companies took a fairly soft approach to policy enforcement theory that a too rigid stance on in office work could harm morale or lead a turnover. Executives and advisors said so this is kind of true and that is that there was definitely a point in time when it was so hard to find people that if they wanted to work from home, you kind of have to deal with it. However, that's not why we decided to go and hire people virtually. We hired. We decided to do this because instead of going after a very small pool which is our local county and maybe 1520 minute drive from our office, we decided look, why not just expand the net and be able to hire in the entire country thereby if the percentage of people available in our markets goes from 5% to 1%, well great, I'll go get 1% of the entire country. And that's what happened. We literally put up job ads in a matter of 24 hours, had hundreds of applications for a position that we were paying 30 to 40% less on and they were working remotely and we still, we offered them a stipend from their them to be all work from home and pay for their Internet and pay for their office so they could spend $100 a month on their Wi fi and any sort of office stuff like their computers, anything like that, their headphones, et cetera. However, the biggest thing that I did not foresee is the fact that quality is much harder to keep track of when they're remote and at home. And some people like well you should just record them and record their video of them or you can have tracking software that tracks what they're doing on their computer. I don't like that. I personally wouldn't want to be an employee if I knew that every motion that I was taking was either being recorded on video or was being tracked on the software. Like, you know which pages you're opening and searching your web browser. And you know, like, I just personally don't want to have to deal with that as an employee. Therefore, I do not want, as an employer, want to do something that I would never want to do if I was working for my company. And so therefore we decided not to go that route. And that is tracking every movement. However, the problem is if you have one bad performing person or someone that is trying to rig the system and they're trying to take advantage of the system, that means that you've got to create a system that prevents it for the entire system. That was a lot of system words. But what I'm saying here is if one of the 40 of those people were doing a bad job of quality, that means you have to record every single phone call, which we paid to do. We can record all the phone calls. That's easy. But now you got to, you got to actually listen to those phone calls. You got to spot check them. You got to do extra training. But the thing is, are we going to really listen to every single phone call? Because then it literally wipes out any sort of savings. I might as well just pay someone else 40, 50% more and then train them more and have them in person and pay for the extra cost of an office space, utilities, et cetera. Like, there's a lot more cost of having someone in person because you have payroll expenses, you have medical, we pay medical insurance, we did profit sharing. There's a lot more cost of having a big office space and utilities like restrooms and Internet and all these things you got to pay for. And so it makes a lot of sense to have people remote. But why in the world are all these employers trying to bring people back into the office? Says as the job market shifts under threat of a recession, employees leverage over companies may be slipping. Human resources advisors say empowering bosses to push for changes in work styles. So I actually personally don't think that this for me was a, a monetarily driven decision. This was a quality decision. And when you start affecting quality for someone like myself, it means I'm going to throw a ton of resources at making sure quality is upheld. And because of that, it actually made it less efficient to have people working remotely. And it cost us way more because now there's way more oversight and management of that labor, for example, you can usually have eight to 10 office people with one person in terms of a lead, team lead or manager. When you start thinking about having a workforce that is spread out across the whole country, different time zones, different skill levels and you have to manage them without being able to hear, overhear what they're doing. See when they clock in, like walking, like walking in the office, there's just way more oversight and management and you might be able to get three or four people to everyone, team lead or manager in that case if they are remote because there's way more oversight that you have to do in terms of upholding quality and without in my opinion, being invasive of their privacy. So what we started to do was doing certain types of services that only could be tracked and recorded via recorded phone calls. So like most of our virtual staff now only does recorded phone calls instead of anything else that could be potentially, potentially them being malicious with in terms of tracking too much time or doing a poor job. It's like we know that we record phone calls and that is seems like a pretty fair synopsis and we're able to track that time and they get paid based on how many minutes they're on the phone. So they want to work slower, they can. If they want to take more phone calls, they can. So we still have a virtual team. But it's not something that I am super gung ho about doing anymore because I realize that training them is harder and ensuring their quality standards are high enough is also substantially more management intensive. So we scroll through this. Some of the things that it's saying is that others are asking employees to work full time in an office. These are employers at Oklahoma City based workplace technology Paycom company Paycom. Some members of the technology team were told recently that they would need to work in an office five days a week beginning as early as January. According to a memo viewed by the Journal. At Paycom, nearly 80% of the company's employees are already working five days a week at the company's headquarters. Headquarters, a spokesman said. So you can see people are coming, having to be brought back in the office. And some people don't like this. Some people like to only work from home. And I do believe that there are certain jobs that can be done from home, especially salaried positions where it is less based upon production because it's easier to take someone's roles and responsibilities. Like hey, you were responsible for getting X, Y and Z done in a given week and we're going to pay you X amount per month. X amount per week is your pay as your, your salary. And we just expect these, this checklist of items to be done. It's a little bit harder to do that when it's based on unit measurements, like you're charging people by the minute or you are giving people money and incentive based upon completing certain projects that could potentially be skimped on or quality could be reduced if there's not enough oversight or management, which requires therefore more management in order to keep quality standards high. All right, so Again, this roughly 40 person company worked remote early in the pandemic. Although burnout increased and productivity slipped for some employees. That's something that I think is really interesting too. I think it's so individual and unique to every person. What is their best and unique working style? I truly believe there's some people that would do better working from home. In my personal opinion, the thing that we want to build over the next few years is a somewhat of a hybrid approach. This is going to be better for the team and it's going to be better for the business. Let me explain. What our plans are to do down the road, because we're not there yet, is that the first six months, potentially even a year, they have to work full time in the office. That gets them up to spec in terms of quality, standards, training, the culture, they understand all of that. And I think a lot of the companies, they did really well in terms of moving remote. Were the ones at the very beginning at Covid, like, oh man, like this was, this was easy, this is great, we get more, we're more productive and all the rest of it. Those were the people that were in the office, office and move to remote. What's a lot more difficult is taking someone off the street that has never been trained, that doesn't know the culture, doesn't know how things operate. And getting them up to speed is much more difficult to ensure that they are actually brought up to a certain standard if it's done remotely. So in my opinion, getting someone up to speed, 612 months they're in the office and then having the option, the option to be able to work two to three days a week from home. So this is something that a few years down the road we'll probably implement at command center. And the reason is better for the employees, give them better work balance, work life balance. Some of them would probably like one or two days at home, especially if they're, you know, just not doing well or not feeling well. They could, they can stay home, they can work from there and we expect them to know the standards, have great training, the quality be there, and we should be able to trust them because we see them in the office and we're able to still track certain elements of their performance. However, what's not going to happen is brand new, fresh out of the gate, people learning from remote. It's just very difficult to encapsulate the culture of what the company is doing and ensure that the person has trained up the standards we expect. So whether that's right, whether that's wrong, I think that's the going concern here, is that training people from brand new is a whole lot different than what happened at the beginning of COVID when everyone's like, productivity is through the roof and no one's distracting me. Right, because you were trained in the office, you know the culture of the company. When you go into your slack slack channel or use direct message, somebody inside the office, you know who they are, you know all about them. I think that's going to be a lot different for someone that's brand new. And I truly believe a lot of employees are going to bring back the workforce that was once remote. They're going to bring them back in house once they realize that training and developing new talent in a remote environment is much more difficult. Especially if you're not going to invasive things and start tracking people's devices and whether or not their mouse is moving or have a recording a video on them all day long. I don't like those things. And to avoid those things, we're going to ensure in the future that we have some sort of remote and we train them in person at the beginning and then let them work remote down the road. Now you might be saying, I don't have an office space. I do lawn care, I do landscaping, I do some sort of construction. The same thing is true when it comes to your trucks, and that is allowing them to go home with their trucks versus coming to a centralized shop space. I think this is a great option for potentially having someone your truck instead of having to have a big shop space. This is the benefit of having remote. You don't have to have a big shop space, a big lease, a big office. You don't need those things as much if you have some of your employees working hybrid or working remotely. The same thing is true when it comes to your trucks. If you're having them take them home every single day. You don't need as big of a parking space, you don't need as much of a shop space as storage. If that equipment and those trucks are being stored at their houses. And a lot of employees enjoy the ability as a benefit to have that company truck, that company van, that company vehicle sitting in their parking lot to where now they don't. They're not commuting 30, 40 minutes to work. Rather they're going directly from their house to their first job, potentially say giving them 40, 60, 80 minutes a day of commuting time back and forth in their shop. Great benefit for them, great for the company because more efficient to get the guys to the job site much faster. And it's better for the business because they don't have to have a big shop space, office space, storage, all the rest of it. The downsides in my opinion is the upfront. It is getting them onboarded, trained, making sure that they have a quality standard, they understand the culture. And doing that efficiently and effectively is very difficult for brand new talent. But I truly believe that after someone's been in a culture for three, six, 12 months, that's potentially an opportunity to be able to start cutting back on overhead, giving them more autonomy and allowing them to have some benefits to something close to remote work or working from home. And that would be potentially taking the trucks home to their own house at night.

Hey there guestination. We really hope you're enjoying this content. But if you're new to running a lawn care business or you're looking to revamp how you do your business, Mike created Lawn Care Business Course specifically for you. This is Mike's personal lawn care oriented course directly from his experience growing Augusta into the successful business it is today. It's a step by step resource showing you how to grow your monthly revenue into over $100,000 in just three years, including over 30 plus lectures and tons of bonuses to dive into. These lessons aren't the same ones that Mike puts on YouTube. If you want a full picture on how to run a growing lawn care business business, this is the perfect place to start. You can find out more@landscapebusinesscourse.com that's landscape businesscourse.com so consumer spending is absolutely crashing. But Mike says the writing has been on the wall for a long time. What's making Americans so broke? Let's find out.

The US consumer is starting to freak out. The flush saving accounts and cheap credit that helped keep American spending at high rates since 2020 is disappearing. No kidding. That's what happens when you stop, you know, printing money. That's when you what happens when you stop, you know, giving people money from doing absolutely nothing and not working. When we needed workers the most. That's what happens. The engine of the u. S. Economy. Consumer spending is starting to sputter. No, I, I really hate the fact that we kind of get lumped into the fact that our economy is. Has to do with consumer spending and not production. Right. I, I hate the fact that we are. We have a. We're a net importer instead of an exporter. We have so many resources, materials, technology that we could export, but that is a different topic. All right, let's keep rolling on. Retail purchases have fallen three of the past four months. Spending on services, including rent, haircuts, and the bulk of bills was flat in December after adjusting for inflation. The worst monthly reading in near year sales of existing homes in the US fell last year to their lowest level since 2014 as mortgage rates rose. The auto industry. This is crazy. Posted its worst sales year in more than a decade. It a stark turnaround from the second half of 2020, when Americans lifted the economy out of a pandemic, helping the US Avoid what many economists worried would be a prolonged slump. Okay, so this is exactly what happened. It says here they kept spending government stimulus, flush savings account and cheap credit even as inflation picked up. So this is what we're dealing with. Check this out, though. This is the personal savings rate. If I try to zoom in here, let's see if I can't. Can't get closer. There we go. This is the personal savings rate, Seasonally adjusted annual rate of people saving money in the United States. Check this out. All right, 2020, 2021, 2022. Look at this. Before COVID you can see about nine, nine and a half percent of people's. People of income was being saved. Then you get this spike all the way above 30. Almost 35% at the beginning of COVID was the first round of stimulus checks. Everyone's freaked out of their mind. And it's funny. What's crazy to me is that it takes fear and panic for people to start saving money. And like, oh, I should probably not buy this third outfit, the third different color, because I don't know if I'm gonna have a job tomorrow. And so it's amazing to me that bad times and horrible economic fear is what causes us to have good behavior. It's incredible. It's literally like we need a spanking in order to be able to act appropriately financially and make fiscally wise decisions. But that's what happened, you know, early 2020, Covid hits. Everyone's freaked out. People are losing their jobs. No one knows what's going to happen. But literally within a matter of a couple months, that savings rate plummets because people realize that the government's going to step in. They're going to not pay your rent, they're not going to make you pay your mortgage, they're not going to kick you out of your house, you're not going to have to pay any sort of student debt. You're not going to, you're going to have to get more money for staying at home and you're going to get a stimulus check as well. It was absolutely insane. So people put a lot of money aside because they're fearful. Then the second and third stimulus check comes. But by then we kind of figured this out, like, hey, the government's just going to keep giving us money. So the savings rate didn't spike as long or as high as it did prior. And now here we are at 3.4% savings rate for the United States in December of 2022. I don't think this is going to get any better, honestly, because a lot of people are going to get a whole lot less on their income tax return this year simply due to the fact that they don't get their child tax credits and they don't go to a lot of other credits that came last year. And I really think this is going to continue to go down, potentially down to two and a half percent or less. And in doing so, you are putting yourself at massive jeopardy. Like, there's so much risk if you have a $50,000, 50,000 per year job. Okay. And that would mean that you're putting about fifteen hundred dollars of that aside in savings every year, every year. And I know it seems out of touch, say, oh, 1500 is not a lot. I understand that. But when you take a percentage of someone's income and realize that it used to be 30%, 35% just a couple of years ago, and now we're struggling to save a tenth of that 3%. It's incredible. I think the, the moral of this entire story to me is don't allow the government or any other exterior extraneous circumstance or force predict or tell you how you should be spending your money, both in a like as spending as if there's no tomorrow, like we did in 2020 in 2021, or like there is now. It's like conserve, don't spend, don't buy a house, don't invest, don't start a business. That's the kind of rhetoric we're going to be hearing over the next six to 12 months. Check this out. This is the share of US adults whose monthly expenses were more than their income by household income. So this is basically if you are making more than $100,000 between 50 and $100,000, or if you make less than $50,000, if you're making less than $50,000. Now, 7.2% of people are spending more than they're earning. They're upside down. Like they're every month they're going backwards. And that's a very scary thing. And the bottom line is we've been doing this literally since COVID started. However, because of the free money, it didn't matter because we could keep the gravy train alive, but in doing so, this is what's crazy, and this is why it's going to crush the middle class, is because by giving everyone money and us all having this inflated savings rate, and then we just completely spent all the money, by spending all that cash, it created the cost of goods and services to go up, I. E. Inflation. Because when you have massive demand and then restricted supply by shutting down a whole bunch of the supply chain and manufacturing and factories, you do all that, guess what, Price goes up, demand goes up, supply comes down. Both of those, it's like a double whammy. Either one of those things would drive price up, up, but when you combine both those, like, we didn't cope with COVID that's why we have hyperinflation. Things go through the roof. And now at the same time that inflation is its highest, we now have people saving the least and having the least amount of surplus money after their expenses. It's incredible. Annual inflation as measured by the Consumer Price index remained above 5% in December for the 19th straight month, the longest streak since the early 1980s. Spending Consumer spending accounts for roughly 70% of the economy. All right, this is, this is incredible stuff. One factor making forecasting very difficult while an unemployment is trending at a half century low. Big companies like Amazon, Goldman Sachs, Microsoft, you can list it off Google. Write down the list. All of them are cutting massive amounts of jobs. Just last week, 12,000 jobs lost at Google. One thing that I'm very happy about, I can't say happy. It's not a good word to say when people are losing their jobs. One thing that is interesting to me is that right now the job losses are happening from massive companies. But you know who needs workers more than ever before is small businesses. Look at the amount of people that are cutting jobs for these, the likes of Google and Amazon and Facebook and these tens of thousands, hundreds of thousands of people are being laid off and being fired. However, at the exact same time, at the exact same time, small businesses in America need workers more than ever before. This is my. I was screaming about throughout 2021 and 2022. And that is when you looked at these jobs reports. All the jobs are being sucked up by these massive companies. And people were bragging, politicians were saying how many millions of jobs we added this quarter and all the rest of it. But when you looked at the actual labor statistics and when you looked at the actual numbers, 95% of those jobs were going to massive Companies, companies with 500 or more employees and small struggling to get anybody. And I'm. I'm somewhat relieved by the fact that some of that pressure is going to come off of us as small business owners now, because these massive companies aren't just using cheap money from Wall street and pumping into hiring anyone that has a pulse, therefore making it very difficult for us as small business owners to find anyone to hire. Very interesting. I'm not happy about it because whenever someone's losing a job, it's never good. But it's interesting to me that the dynamics of this. This has changed. The positive layoffs, he said, is part of the crunch that I am having to consider now what's going to happen if I no longer have an income. This is what a recession looks like. High inflation. People are not saving money, and people are borrowing money at all time highs. There are. There are signs of labor market weakness. Employers are shedding temporary workers at a fast rate, and people who lose their jobs are taking longer to find new ones. Meanwhile, the number of hours worked a week has declined for two straight months, according to the Labor Department, resulting in a slowdown in workers take home pay. Because guess what you do before you usually lay off people. You start to reduce the entire workforce's hours. This is something we have worked with, even in my businesses, is like, do we cut everyone's hours or do we lay off a section of people before it picks back up? Whether it be seasonal workers or whether it be virtual workers or whether it be out of state or remote. Those might be the first people you cut or you reduce their hours prior to a layoff. Things are slowing down again. I don't think it's a bad thing.

We're.

We're kind of getting back to what normal looked like before COVID messed everything up. You know, this is a small business owner doing tattoo shops. I've been doing this for 15 years now, I've never seen that people calling up and saying they don't have the money to spend right now or can only afford an hour because their current situation is pretty bad. For now, first class tattoo isn't like this. Prices because the baseline level of demand remains strong, some 250 clients are still on the waiting list. Also weighing on many consumers, the rapid increase in rates in the past year tied to Fed tightening has pushed the cost of all types of debt higher. Mortgage rate roots of 20 year high last fall. 20 years by the way is before the crash of 2007 and 2008, some 57 of consumers were concerned about making house payments. Get this 57. Almost 2/3 of Americans that are homeowners were concerned about making housing payments in the fourth quarter according to survey, up from 48 in the third quarter. This is incredible. This is what's going to lead to the massive shift in my mind in public perception and public fear around the economy is when housing starts to take a plummet. The increases are gradually starting to slow down consumer spending, though it may take a while before the effect is fully realized. So I truly believe this is going to be a very interesting time. I don't think we're going back to 2007, 2008 where houses were 50 down, but we were absolutely seeing the air come out of the bubble that we created with 2020 and 2021. In all markets of the real estate market, the labor market, the stock market, all of this we're seeing simply a correction back to the mean. The previously generous jobless benefits and direct federal payments to households caused the share of income tax Americans save every month to hit new highs in 2020. Since then, the saving rate has fallen to roughly 3% of monthly income for more than 30% at the start of lockdowns in 2009. In 2019, sorry, the year before the pandemic, the rate was 8.8. So we are saving less than half of what we did before COVID And this is the problem is we got also used of three stimulus checks and years of like literally years of not paying on student debt and mortgages and rent. We got so used of that that we are not as Americans very good at doing one thing and that is cutting spending. Not only do we have a really hard time with this in the personal sector and personal finances, our government cannot do that. That's why no one will get elected that wants to say we need to cut, cut back on expenses, we need to balance the budget, we need to create a surplus Instead of a deficit that will never be popular politically. And Americans are horrible at saving and cutting out the things that they want to buy. And so once they've been put on that morphine, once they've been put on the drug of you can buy things, you don't have to pay for stuff, you're gonna get free money from the government. We will never, we will never be able to have the restraint to say, I don't need to buy that. I don't need to buy the new iPhone. I don't need to buy the new Tesla. And now people are freaking out. Oh my goodness, my Tesla is now 20% less than it was just a couple months ago. It's like, like, well, like, yes, it is. And you're not going to be able to afford the payments because now the interest that you just had on that loan is now twice as much as it was a year ago. That's what's going to happen. And unfortunately, we as consumers are very poor at being able to change our psychology around money and realizing that in a time of abundance, yeah, you can go spend government give you an extra $1200, you can go spend that money. That's fantastic. Get a little extra vacation, get a little extra here and there. But when you start to get addicted to spending money, it will drag you down for many, many years. And breaking the habit of spending money is extremely difficult. Proof is this article right here because we got so used to free cash and now we are literally saving less than half of what we are we were saving prior to Covid. Debt goes up, saving goes down, and we enter into a recession. That's what happens when those two things collide.

This has been the Mike Andy's podcast. Now you have some ideas on how to take your business to the next level. And if you liked what you heard, we have tons of lectures, interviews and more over at the Mike Andy's YouTube channel. That'll be right up your alley. That's all we have for you today. We'll see you next time.

Sam.