resignations are KILLING small businesses.... KEY METRIC TO WATCH!

Guess what? Small businesses are struggling right now. Not because there's not enough customers, not because there's not enough leads, but because we can't hire and find and retain employees due to the fact that these massive companies are sucking up all of the talent.

Hey, everyone, My name is Mike Andes. And for the vast majority of small businesses right now, the challenge is finding and retaining good employees. Now, across Augusta Nation, we have over 90 locations around North America, and over half of them have either constricted or turned off all new leads. There's so many leads coming in that it's not. That's not the problem to growth. The growth problem is only solved by finding more employees. And that is the challenge. Getting more laborers, more employees that are willing to work out in the elements doing lawn care and doing landscaping. Now, when you look at the jobs reports from the United States over the past several months, I've seen very, very troubling data. And this data is the fact that everyone's celebrating that we're adding 400,000, 500,000 jobs every single month. And that's true. However, if you look at the breakdown of where those jobs are going, it's extremely alarming to me, the fact that the majority, 90 to 95% of those new jobs being created are going to companies with 1,000 plus employees, which means small businesses are absolutely getting obliterated right now because we cannot compete with these massive companies for labor. So when we look at people that need frontline employees, FedEx, UPS, Amazon, McDonald's, Walmart, all of the rest of them, every single massive company, but also every single small business, guess who's going to win that game? Because when we talk about Target and Walmart and Amazon and FedEx and UPS, they can absolutely increase the wages because they have to hit quarterly numbers. And if they have to hit a certain quarterly growth target, and guess what they're going to do? They're going to spend billions of dollars to make sure they're able to get the employees required to fulfill demand and actually get the work done. Whereas small business just can't create money. We can't just create a bond and sell it to the market and immediately get enough cash to inject into raising wages and in order to just grab up market share, we can't do that. And so the question is, what is it going to take for us as small businesses to actually be able to compete with these behemoths, Fortune 500 companies that are sucking up all the labor right now? Literally in the past few months, if you look at the jobs report. There's been months where there's been negative jobs for small businesses employee that employ less than 50 people in their businesses. Small business in America is struggling massively and it got a big band aid slapped on it in the form of PPP loans. When they did the paycheck protection plans and were able to actually give these loans out to people and forgive them, that was a nice little band aid. But guess what? Small businesses are struggling right now. Not because there's not enough customers, not because there's not enough leads, but because we can't hire and find and retain employees due to the fact that these massive companies are sucking up all of the talent. Now the question is what can we do about it and what is going to fix this problem? In my opinion, the only thing that will actually fix this problem is a recession. Now I've talked about recession over the past few months and warned about one coming late 2022 and into 2023. I've warned about this for a very long time and I've talked about how you can prepare for that. Check this video out here for more information on how to prepare for the next recession and take advantage of it instead of contracting your business. But what I wanna talk about today is the fact that during a recession is when unemployment actually goes up. And you'll have an opportunity now to actually hire people that are willing and want to work and you can afford them. Because in a big recession, because in a recession, those Fortune 500 companies that right now are sucking up all the labor literally start to lay off hundreds of thousands of employees and that floods the market with a massive amount of labor that then can be picked up for pennies on the dollar by small businesses that now can afford it because that labor is now cheaper. So I think it's extremely important for us as small business owners to not only be able to attract great talent, but also how do we retain talent? Because this is the important part and this is the part that I'm so afraid of right now, that small businesses are losing employees so fast. Because when I look at a general home improvement business, the average business, in my opinion, and when I say average, I'm just talking middle of the road, kind of an okay business in this industry, believe it or not. But if you have a sizable business, and I'm Talking about like 4 or 500,000 in annual revenue or above, the average business does about 15 or, sorry, 10% in profit, okay? I always have said if you're at 15%, you're doing really good. And if you're doing 20% or above in profits, again at half a million or more in revenue, you're doing very good. And especially if you're talking about a million dollars plus in revenue. But you could even kind of bring these numbers down to 5, 600,000 revenue. But these are the profit percentages that I see as reasonable and kind of standard in this industry as a company hits size and scale. Now, 10% profit. This is the theory I want to introduce today. If this is our revenue graph over the course of time, this would be 10%. Okay? So 10% right here is a profit. So everything above this line is revenue. And we might be doing revenues up here, whatever it might be great. But this is our actual profit, 10% of that. Now my theory today is this. Looking at the average tenor of your employees, frontline staff, and what I mean by that is, if you have five employees. All right, I'm not going to try to draw, it's going to be atrocious. But if we have five employees here, what we got to ask ourselves is what is the average tenor of these employees? Maybe one been with you for, for five days, maybe one's with you been for two weeks, maybe one's been with you for one month, one's been with you for six months, and one's been with you for 12 months. Alright? Now the average tenor of all these employees, if you average it all out, is somewhere in the realm of like two months. That would be the average tenor. So average tenor, and that's what I want you to start thinking about in your small business is what is the average amount of time that my employees have stayed with me? Cause this is my theory, this is the average small business, the average home improvement business does 10% in profit. And for every month that their average tenor goes up, they gain 1% in profitability. So what that means is if my average tenor is two months, my average employee, if I average it across all my employees is two months, that would then mean that I would go up to 12% in profit. And the reason I say this, cause if you can keep employees, this five day employee, this two week employee, probably very inefficient and very unprofitable for the business. But as you get people that stay six months, 12 months and beyond, they become much more efficient, much more profitable, especially if they're on Pay for performance. P4Psoftware.com, check it out for more training. That's free. But if you keep employees longer, it absolutely will adjust and affect Your profitability. The same can be said if you're losing employees. This is why, I'm sorry, so, so worried about small businesses right now is because as our average tenor goes down because they're getting sucked up into large companies, all the labor is getting sucked up. What's happening here is this is putting massive pressure on profit margins for small business because the average tenor of all of our employees keeps going down and down and down. And I've talked to literally business owners in the past couple weeks where their average tenor was less than two weeks, which means the vast majority of their crew had been hired in the past few days or last month or two. That is extremely, extremely difficult to build a business that has systems in place and gets work done efficiently when your average tenor is so low. So how do we retain these employees? That's a completely different video. But this is an important fact. The reason I'm making this video is for you just to understand how important it is to keep employees. That's why this year we've instituted healthcare benefits, paid time off, we reduced the amount of working hours per week that our employees have to do dramatically at Augusta Lawn Care simply because our goal is to retain these employees. And that might make us less profitable. It absolutely will make us less profitable this year than last year. I will not be able to take out the same percent of distributions that I did last year, But I have to invest that money into the company if I have any chance of keeping employees and having this average tenor be sizable enough to where they're not getting sucked up in these massive companies that are willing to pay more and more signing bonuses, more and more cash per hour in order to get this labor. So the question is, well, what if I can get like a 5 month tenor average tenor average, which means if you have someone at a month, 2 months, 6 months, 12 months, 24 months, that's still an average. 10 will be like 5 or 6 months. So the average, you got to take all the. Of all the number of months that someone's been with you, all your employees, divide those out and figure out what the average number of weeks are. But for every month, I believe that increases your profitability by 1%. So if I have an average of five months as my average tenor, I believe that the same business that would otherwise be doing 10% will jump all the way up to 15% profitability simply because they've been able to retain employees for an average of five months. And the same can be true for a place of business as a small company. That is able to retain people for like 8, 9, 10 months on average is almost unheard of now because of the way the labor market is. But if you were able to do that, you might be able to get all the way up to 20%, not because your business is better, not because you have better systems, but simply because the average tenor of your employees has increased. Now, what am I trying to encourage you to do? Focus on retention. The cost of constantly burning through employees is more than you think. It's bringing your profit margins down. And so if you are an average of 10 months tenor, and now you've gone down to 3 months tenor in this model, you would have gone from a 20% margin to a 13% margin. And so I encourage you, whether it be looking at healthcare benefits, whether it be looking at reducing the number of hours per week that the employee has to work, whether it be offering paid time off, these are things we've done just to make sure that we're able to compete against the Amazons of the world that are willing to pay whatever, because they basically have an unlimited amount of money to pull from in the form of Wall Street. And that's the only way we'll be able to compete in the small business world until a recession happens and hundreds of thousands of employees will be dumped on the labor market. And that is the opportunity of a lifetime for us as small business business owners to be able to take that talent for a cost we can afford finally and be able to grow our businesses. Now, recession is very scary. A lot of businesses will get wiped out during that time. But if you want to prepare for a recession, watch this video here where I talk about moving your fixed expenses into variable expenses, becoming very lean and making sure you're able to take opportunity of a recession when it comes or just a slowdown in work coming in. Check it out right here.