The Admin Lie Keeping Home Service Owners Stuck

All right. Today I'm going on a rant because there's something that is keeping so many home service business owners small and they're doing it in the name of efficiency, trying to save money, and it is keeping their business from growing. Yesterday I was talking to a business owner that was doing $150,000 in revenue and he had a landscaping business and he had read the book Copy and Paste Millionaire, where I talk about delegating the business in the order of least leverage. In other words, first I'm going to delegate admin tasks, and after that I will then delegate my operations tasks, doing the work, and then I'll delegate sales. And so he was like, I got to delegate admin. So what did he do? He went out and he got a VA. All right. Virtual assistant. And I think he was paying them something like $1,200 or $1,500 a month. Okay. And then I asked, I said, you know, how much revenue did you do last year? He's like, about $150,000. How much did you do the year before that? About $150,000. And so he's hitting up against this wall of $150K, and I asked, what do you do on a daily basis? And he was basically just doing sales, not in the field at all. And so the part that he missed was also in the book, I say that up until you're doing $750,000 in annual revenue, the profitability of the business is almost always determined by how much revenue the owner or general manager actually produces. In other words, them doing operations, being on the truck. Everyone's trying to rush to get off the truck and just focus on sales. And because of that, they jump off the truck at $300,000, $400,000, in this case, $150,000 in annual revenue. And in doing that, starve the business of all profits. Because if you just look at a $300,000 business, okay, if you as the owner or the general manager are producing, let's call it $120,000 of labor revenue, there's a good chance that that equals your profit margin. So if you produce $120,000 in labor revenue, that's probably about what you're going to profit on a $300,000 business where you're the owner-operator and you're out in the field producing labor revenue throughout the entire day. So what happens is people are like, I'm going to grow a big business. I'm going to work on my business instead of in it. So what do they do? They get rid of them producing labor revenue and all of a sudden, aren't making any money. And so what this business owner had done was hire a VA. Now, I agree that even as you're growing from $150,000 to $750,000, the first thing I want to do is delegate admin. The things in the, in the office, like answering the phone, answering email, doing your QuickBooks and running payroll. All these are admin-related tasks that should be done by someone other than you as the owner. Because at the very least, if I can get pay them, I don't care if I have to pay them $30 an hour. If I can go make $100 an hour doing operations, I would make that trade every single day of the week. The problem is most people try to get out of operations too soon and move up to sales and then they lose all the profits in the business. But I want to rewind because this rant is actually not about people getting out of the business too soon. It's about the fact that I actually think getting a VA or getting some part-time help in the office at $150K is not a bad idea. It's going to be the thing that allows you to get to $750,000 is by you focusing on operations and delegating admin. But what I think he made a mistake in, and I think many home service business owners make mistakes in, is they go cheap admin because they look at admin as an expense. And so he went cheap, he went remote and paid someone about $1,200 a month to do all of his admin. The problem was when I asked him what he was doing on a daily basis, he said, I am managing my operations manager and I am managing my admin. That I pay overseas. And I realized that there was a huge skill gap because he went really cheap on his admin person and his operations person, and therefore at $150,000 in annual revenue, had to be full-time managing those people. Everyone goes after cheap admin because they think they're an expense. And on paper, yes, they are an overhead expense. But if you go cheap on admin and you immediately go overseas or like, I'm just going to do remote immediately, you could potentially be spending more time managing them than just doing more work out in the field. And the same thing is true as you begin to grow up the business and you even have a million-dollar business. If you have a really lousy operations manager, you're like, I'm working on sales full-time, but you spend most of your time just managing your operations manager. So when you delegate these things, I want them to be fully— I'm just delegating admin 100% and I'm just focusing on operations. And then as I get past a million dollars, I start moving towards $1.5 and I'm doing just sales. I'm making sure my operations manager has everything thing taken off my plate. And the problem is, if you get a cheap admin person, you're spending way more of your time just managing them. For example, the individual I was talking to had to teach them English, had to teach them all about the industry and about lawn care and about landscaping, about all the different types of materials they use because they didn't even understand the language. No diss against them. It's not their fault. It's his fault for thinking that admin is an expense and I'm going to go cheap on it. In my opinion, saving $2,000 or $3,000 a month for this owner on his admin bill was costing him 3 years stuck at $150,000 because most of his day was just managing the admin person versus having someone who's more capable, paying them more, and then allowing him to go focus on operations and probably produce $120,000 of labor revenue himself. That alone would almost double the business. For everyone out there that looks at admin as an expense, you are looking at it wrong. And I think that when I go back and I look at what people get out of the Copy and Paste Millionaire, which I rewrote the thing 9 times, but as I hear from people as they read it, they constantly look at admin as an expense to cut because I talk about trying to get it under 15% of your revenue and ideally under 10% of your revenue in the form of all admin-related expenses, including your rent, your utilities, and sort of lease that you have, all the wages for your admin. Everyone does race to the bottom to cut prices, but they forget that by trying to save themselves $1,000 or $2,000 a month, they're potentially handicapping the business from growth because the owner or the general manager has to constantly manage the person they just delegated something to. So they delegated phones, but then you're listening to voicemails. They delegated email, but you still have email on your cell phone. And so I think that the vast majority of home service business owners would be better served to pay more when they delegate things in order to be able to not have to constantly be micromanaging or double-checking or managing the person you just hired to be the manager. When I look at admin in general, there's sort of different layers here. You kind of break into 3. You could break it down a lot more, but I kind of look at it as we have The worst possible is voicemail. Someone calling in, they hit your voicemail. I don't want that. So there's 3 levels above this you can go, and they get more expensive as you move to the right. So first off, we can do AI, and this is the craze. Everyone's like, "I'm gonna automate everything, and everyone's gonna call in, and everything's gonna be automated." I promise you that you will spend more time trying to hack together code or try to work with AI tools or duplicate work that AI creates if they're doing like voicemail transcriptions or lost leads that you don't even know about, or people that hit AI and they leave. And trust me, that's about 25 to 30% of people will not talk to AI. Once they know it's an AI agent, they will be mad. So you're losing those people. But let's just assume you're like, I want to be super efficient. Great. If you increased your leads by 25 to 30%, what would that do for your business? Is that worth paying an extra couple thousand dollars per month to get the phone answered? And so people are cutting $1,000, $2,000. Like, I gotta cut my admin expense. And then they're allowing something like AI to step in for a few hundred dollars a month and take care of it. And they're forgetting that they're spending $5,000. This, this is a true thing that happened 2 weeks ago. $5,000 a month on Google Ads and Facebook Ads. But then they're allowing AI to answer every single phone call and they're, they're trying to figure out how to increase their ad spend and spend more money on ads. I'm like, if you just paid a couple thousand dollars, for someone to answer this phone whenever it rang instead of AI, you would increase your number of leads by 30%. Okay, so just real quick, I think there's a big weakness of many entrepreneurs, including myself, and as we constantly focus on marketing, advertising, promotion, driving more clicks to our website, getting more awareness, more attention, and we don't think about the fact that that doesn't actually pay the bills. What we need is paying customers, and to get paying customers, we need them to convert once they get to our website. And so at Home Service Web Design, The thing that we really focus on is getting more leads, not driving more traffic, not spending thousands of dollars on advertising to a site that might get, say, 1% conversion. If we need to get that to 2% or 3% conversion, we would double or triple the amount of leads without spending a single extra dollar on advertising. And so if you need help, go to homeservicewebdesign.com/call. You can book a call with my team. It's completely free, 15 minutes, and we'll just tell you if worth working with us, or at least give you some consultation in terms of optimizing your conversion rate so you're not wasting, flushing down the toilet thousands of dollars every single month on advertising. I'm like, if you just paid a couple thousand dollars for someone to answer this phone whenever it rang instead of AI, you would increase your number of leads by 30%. Not only would you increase the number of leads, you would increase the likelihood of upselling them because people will be much more inclined to get an upsell from a human than AI. And you'll increase the customer satisfaction because across the board, when people talk to AI versus a human, they would rather talk to a human across the board. There's like 10 or 20% that would rather talk to AI and awesome, you can have them as a customer. But we have made this mistake and that was we moved years ago, back in 2022, too soon to AI and forgot about the fact that there's 20 to 30% of people that will just not want to be a lead. And the people who do become leads are less likely to have an upsell. And so the next step up from this, if you're moving up the continuum in terms of cost of admin, is going to be a contractor or some sort of overseas 1099. The 1099, I'm gonna put /overseas. Okay, at least now we have a human. The trouble I have with this one, and there's pros and cons to every single one, there's either cost, there's trade-offs for every single one. But for this one, the challenging part is going to be the fact that I have to manage them way more. Way more Zoom calls, screen recording, tracking clicks, educating them on English, educating them on how things are done here, et cetera. Way more management, okay? For AI, I think we can say customer friction, 'cause some people don't like it, and they're less likely to upsell, okay. We move up the continuum because this is better. At least you have a human. At least there's someone that can be doing things. You're not spending your time trying to hack together some code that checks QuickBooks and then like brings the numbers over here and all of a sudden you're paying more money in AI credits than just like having someone do the work in 5 minutes. And it just, it boggles my mind that people in lawn care and landscaping are trying to hack together software when it's like you are spending 10 hours a week doing something that takes 30 minutes per week. This makes no sense. I think the vast majority of us would just be better off focusing on the few things we're good at and making more money versus trying to save pennies on things like software or our admin person or even our rent or our insurance. People are chasing pennies and they're skipping over the fact that doing so is keeping their business plateaued. And so if you want to grow a business, you will spend more money on things like admin. You will spend more money on getting a good operations manager that you don't have to micromanage. All right, let's continue up the chain here. The next step here is going to be in-person, or if you are remote, that's fine, but you're going to be W-2. So this is an employee, you're going to pay taxes, you're probably going to have to pay benefits, you're going to pay them overtime, but this one's going to be the most expensive. Okay, so this is the cost one. So all of these— AI, 1099 overseas, or in-person W-2— is going to have a downside. For AI, customer friction. For 1099 and overseas folks, you're gonna have way more management. And this one could actually end up costing you more than this one because your time is the most valuable thing in the organization. If you're the owner and you could go out and do work out in the field, your time is worth $80, $90, $100 an hour. If you're a larger business, like a million plus, and you're being brought into managing these 1099s or overseas folks, you are likely burning $200 an hour. And yet you're like, oh no, I'm gonna save money for my in-person, and I don't have to get an in-person office. I don't have to get, again, you are tripping over pennies and therefore causing the business to plateau. And so do I encourage everyone to have an in-person W-2? No, but realize that you're, this is an investment. And so if I spend going from voicemail free, by the way, if you have a, your cell phone, it's free. AI, let's go call it $300, $400 a month. You can get an AI assistant, can be answering phone calls, taking some things off of your plate. Not like a lot of stuff, but like they can't like run payroll for you yet, but like it can absolutely answer a call and take some lead information. There's gonna be some customer friction. However, I wanna upgrade, maybe it's gonna cost me $1,500, $2,000 a month to get a 1099 or overseas person, maybe part-time. I'm not opposed to these things, by the way. You might start here and be able to move up the chain as the business grows, but realize that this is gonna cost you 3 to 4 times as much as AI. And then you make another upgrade to in-person or W-2, Probably another 3 to 4 times increase in cost because you might need an office space if they're in person. W-2, immediately 30% more in taxes and the fact that you're gonna have to abide by labor laws and overtime laws. And so it's very possible that this now costs you $4,000 or $5,000 easily by the time you take someone's wages, taxes, benefits, and if you have to pay for any sort of lease or office space or their computers. So this is the continuum and I would encourage you if you're currently plateauing in your business, whether it be $150,000 or $750,000 or $1 million, $1 million, ask yourself, are you skimping on admin, operations, or sales? Are you cutting corners and you are trying to save pennies by spending nickels? And nickels in this case is using your time. You're spending time managing people. You're spending time going after customers that are unsatisfied with the AI, or they canceled or they dropped off. They got mad or whatever. You're spending all your time doing this. You're going after and trying to train people on English instead of just doing more work yourself. And you're like, I don't want to pay someone $1.50 or $2 per minute. To answer my phone. That's crazy. And yet you're going to go spend hours every single week double-checking the email that you paid someone else to do. You're going to double-check all of the voicemails and all the phone calls, and you're going to keep it on your cell phone after hiring someone else to do it. So recently there was another post I saw from Marco. Marco's inside of Augusta Lawn Care. He's been a part of Augusta Nation for about a year, and he took a screenshot of his command center bill. It was $1,600 for the month. It was during an off-season month. I think they did probably $30,000 to $40,000 a month in revenue. And his location this year will probably do almost $1 million in revenue, probably $800,000 in annual revenue. But their monthly bill during the offseason was $1,600 at Command Center. Command Center is where we charge the owners of Augusta Lawn Care on a permanent basis to do their admin. We have in-person, we have people overseas, we have people locally in the US. We have all of these. We use all of these. Again, I'm not saying any of these are good or bad. They're useful in certain scenarios and for certain tasks. And so we use all of these. But he paid $1,600 a month. The difference in mentality, though, is he screenshot that as a positive thing. I see people posting that they're paying $1,600 and that's crazy. That's insane. This is horrible. And they're looking at it as an expense instead of the thing that allows them to be able to focus on higher leverage tasks in the business. So by you hiring an agency to do your ads, is it dumb to pay $500 or $1,000? Yeah, it stinks. I don't want to spend that money. It's straight overhead. But by doing that, you don't tinker around your Facebook ads and your Google ads for hours stores every single week or accidentally spend a whole bunch of money retargeting the wrong audience in the wrong service area. Like, that's a waste of money and it's a waste of time. And if you just spent that time doing the work at a small business and at a larger business, spent time doing sales and an even larger business recruiting people to be managers, if you just spent your time doing that task, your business would grow. And so if you're plateauing, assess whether or not you're tripping over pennies. Trying to find the little tiny things in your business to save money on and therefore spending all of your time doing all these other tasks besides the highest leverage task, which is sales, finding people, training team members inside of your operation. And this is the reason I thought of this kind of gone to rant into it was I saw an owner post on the HomeWorks Facebook group and no shade to them at all. They were wondering like, hey, is it really worth spending $85 per month on RingCentral? Okay, so let's wipe this all out. $85 per month on RingCentral. He's like, I got an admin person and I just don't know if it's worth $85 when I can just get another phone line for $10 a month. So we got $85 per month for RingCentral. Now, by having RingCentral or any sort of other phone service, you're likely able to spend more of your time doing operations instead of worrying about your phone ringing. About routing calls between the office and you, having all these rules set up versus just having RingCentral where it's not on your phone, you don't think about it, and you spend more time out doing operations and selling more jobs. That $85 is likely what, like 1 hour of revenue? If you spent 1 hour in the entire month out in the field doing work instead of managing the phone, doing routing stuff, trying to forward calls between you and the office and your cell phones, and all that craziness, you would make sense of the $85. Now, as a stress test, let me be clear. At Command Center, we pay $300 to $400 per agent. And this has been higher, by the way. We've had almost $500. We have some economies of scale as we get 60, 70, 80 people in the office. We've been able to negotiate with some of these vendors as an enterprise client, but we now spend over $300, almost $400 per month per agent on just software. So that is like the phone service, the email security, password security, AI, AI transcription, the screen recording of their— like on their screen, we record the screens. Like these are all things that it's very easy to be like $300 or $400 a month. That's insane. But you know what's crazy is the person that this individual was talking about paying in the office was going to be about $1,500— they're part-time— $1,500 to $2,000 per month in the office. He's over here wondering, should I spend an extra 5% to make them more efficient? I'm over here spending $300 to $400 per month because I realize that software, if it can make my agents 50, 60, 70% more efficient because I have every single phone call being transcribed by AI, it's giving them coaching after every single call. It's sending reports to their managers. It's It's automatically screen recording everything they're doing to make sure that every single second is efficient. These are all the little things that I know I'm happy to invest. And is that fun to spend $300 to $400 times 60 to 70 per month? No, it's not fun. I look at that sometimes. I'm like, that's all of my profit. Also, if I didn't have those things, I would likely have to hire twice as many people and I would have a huge negative profit. And so many times the things that you are trying to skimp and save on is the exact thing that if you just made these an investment, it would allow your team to be not just 5%, 10%, 20% more efficient. It would allow them to be 50%, a double, a triple. That's why, like, in Pay for Performance, P4P, and we do the software, it's like $100 a month or $200 a month. If you can make your team that you are spending $30,000 a month in payroll, if you can make them 30% more efficient, which, by the way, is the average for P4P, pay for performance. That'd be $10,000 of saved wages. If you can make them 30% more efficient and people are tripping over $100 or $200 per month in software costs. And so I say all of this just to remind you that the constraint to growing your business is likely not on your expense list. It is likely on your calendar. And because we are constantly looking at our expense list and looking at every little penny and skimping and squeezing it, because we spend our time doing that and our calendar now is spent time towards that defensive action instead of the offensive action of growing the team, training the team, doing more sales, strategically leading the business, that's why we stopped growing. Not because we don't have enough leads, not because we can't find employees, because our calendar is out of whack. And our calendar is out of whack because we're skimping and trying to save. And that mentality of skimping and saving has served you well in the past. It's the thing that got you from being able to make it at your minimum wage job when you're first getting started, you dropped out of college. It has served you well in the past to skimp and save and watch every penny. And as you grow a business, that exact same thing that served you well holds you back from growth because you stay so defensive in your mind instead of being offensive and focusing on things that actually allow the business to grow. And then you beat your head up against the wall wondering, Why can't I grow this business? And so the things that have served you well in the past and that you look back in the past and say, I did well, I saved $10,000, I put aside my first $5,000, I was able to drop out of school, I was able to quit my 9 to 5. And the thing that served you well in the past is currently holding you back. The thing of saving every penny, looking at admin as an expense, looking at the cost of your operations manager as an expense, looking at the profit sharing that you give to your team as an expense. Is what's holding you back. And if you just took what money you now have and deployed it towards freeing up your calendar, and if you got to pay $40, $50 an hour for a great operations person, if you got to pay $25, $30 an hour for a great admin person, that's a steal of a deal so you can focus on sales. And when you have to pay a salesperson $70 an hour, $80 an hour because they're high-performing and I'm giving them a profit sharing and I'm giving them bonuses and I'm giving them a rev share, super worth it when you're building a $2, $3, $4, $5 million business. And so instead of skimping and saving, ask yourself, how can I take money, this tangible piece of paper that means absolutely nothing, and exchange it for time so I can focus on higher leverage tasks in the business? If you do that, it'll serve you well and you'll grow your business more.