The Brutal Truth About Success (Most People Can’t Handle This!)

This video will give you the complete guide to starting and growing your home service business to a million dollars in annual revenue. This will prepare you for the skills you need at every stage of growth and what holds 90% of home service business owners back from hitting seven figures. My name is Mike Andes. I'm the founder of Augusta Lawn Care. We have over 170 locations around the world. And what's unique is I get to see about 50 locations start every year. So I know what's working right now when it comes to growing your. Alright, so I call this the skills leverage framework. And this is what it looks like. On the left hand side I see all the different stages of revenue. From 0 to 200,000, 200,000 to 500,000 annual revenue, 500,000, 800,000 and 800,000 plus. Now, each stage of revenue there's going to be different roles of the business owner, certain stresses that you're going to experience and certain skills and traits you'll need to be able to grow the business to the next level. At each of these stages, if you have these skills and if you have these traits, you, you'll apply a certain amount of leverage to the business. To simplify, think of leverage as the more you get out based upon what you put into the business. Let's get started. You're just getting your business started. You're between zero and $200,000 in annual revenue. Now the role of the owner is that of a laborer. You're actually doing the physical work yourself. And in home services, you're the one raking the mulch, putting in stripes on a lawn, taking the shingles off the roof, fixing the plumbing, all of the actual doing of the work. And you're usually going to to be stressed out physically because you're working 10, 12 hours out in the cold, in the heat and it's physically exhausting. You're going to come home every single day and you're going to be stressed out physically. I'm saying you need to wave to people and be friendly. I need to be more friendly. You're not being friendly at all. You stand out in the rain after you're not eating for two days and you be friendly. Going to sell a job. Now from a skills perspective, what is required to pass this stage of growth is effort. You simply have to do more work. And the vast majority of home service businesses will actually never even get above 200,000. And many times the reason for that is simply the amount of effort that the entrepreneur is expending on the business. Now, at this stage, the leverage, if I have to put this into a number, is 0.9. What that means is, is I'm working in the business. And as you work 10, 12, 14 hours a day, you're not necessarily going to be 100% productive. You're going to have a diminishing return. Eventually you get tired, you get exhausted, you make wrong decisions. So the leverage and the impact you have on the business I quantify as 0.9. There's diminishing returns as you start working above 10, 12, 14 hours a day. Now, the trait that's required to pass this level is discipline. Disciplining yourself to expend enough effort and be able to get to the stress physically that you as a laborer are experiencing. Now, as you grow the business past $200,000 and you have employees, the role of the owner is really that of a manager. You're getting your first couple employees. You have to learn how to do one on one meetings and hiring and interviewing. That's the role of a manager. Now, the same thing is true even from 500,000 to $800,000 in annual re. Your role is just simply managing other people. And instead of you being the laborer, you are managing other laborers. The same thing is true from 200,000, 800,000 in terms of stress. And that is you have financial stress. Why? Because back when you're below 200,000 in annual revenue, you did most of the work yourself. And because of that, your Profit margins were 40, 50, 60, 70%. Because almost all the revenue you generated for the business was in your pocket. You didn't have any payroll, you didn't have a shop space. You don't have other trucks and liability insurance and payroll taxes and all the extra overhead of associated with getting employees. And so because of that, now you're maybe making 10, 15, maybe 20% profit margins. And because that compression of margins, many times you have financial stress. And in this moment, a lot of people have to raise prices because they realize they were only making money in the labor stage because they were working 10, 12, 14 hours a day and artificially propping up the business once they hired employees, that financial stress broke the company and made it less profitable. Now, from 200,000 to 500,000, the skill that's really required from you as an owner to get past the stage is efficiency. We're constantly thinking about how do we make things more efficient in our day? Because if we can spend more time in the field doing actual producing labor revenue, the business will make more money and so if it's taking me two or three or four hours to make one estimate versus two or three minutes, I do it over the phone. I am going to spend way more time doing admin and overhead work. So it's all about efficiency. Now, the leverage here is 2 to 3x. You can take the same worker and compare this to someone else that is two to three times more efficient, more efficient and getting more done. They have the same 12 hours in the day that they're working, but one person gets 2 to 3x more done. Why? Because they have their notes app, they have a calendar app, they have a CRM, they have an email management tool. They're making sure everything's organized. They have automations inside of their software system. They have a website that produces leads instead of everyone having to use their phone. By simply creating these systems, this manager could be extremely efficient and actually spend time out in the field doing labor and creating more revenue for the business. That's why if you're efficient at this stage of 200,000 to 500,000, you can be way more profitable is because you actually are out in the field producing labor for a good chunk of your week. But if you're disorganized and you don't have software and you don't use a calendar app and you don't schedule things appropriately, and you're always constantly running after the phone and emails and being extremely reactive, you're not going to be efficient, you're not going to be able to produce any labor revenue for the business at this stage, and you're going to run yourself ragged. Now, the thing that's required at this stage to actually unlock efficiency is humility. Because at this stage, you'll have to look inwardly and say, I don't know everything, and I'm going to need to use a software tool. I'm going to need to get a coach to actually diagnose what's making me inefficient. I might need to listen to content, I might need to read a book. I might need to go to conference and figure out why am I not efficient in my business. This is adopting new software. This is adopting new ways of organizing your equipment. Maybe you move your shop space, but it takes humility to realize that you're doing things wrong in the business. And because you're doing those things wrong, it's causing you to be inefficient. And that inefficiency is causing the financial stress that you as a manager are facing. As we grow the business past $500,000. We're still a manager, we still have lower margins than we did back in the day, and it's still financially stressful. But at this stage, we really have to hone in on the skill of employees because they get to 500,000 in annual revenue. Assuming you're really efficient, you might only need a couple employees. And a lot of times people will usually use their friends, family, people that they know and trust. And so getting those first couple employees, not as difficult for most business owners. But as I grow past 500,000, I need four, six, seven employees. And it's going to take me learning how to employ people, how to find them, how to attract them to my business, and then how to retain them. And so do I use, indeed, do I post on Facebook? How do I get people to actually apply for my business? And then how do I interview them? What questions do I ask them? And then once they submitted a job offer and they accept, how do I train them? How do I onboard this employee? That's the skill required to get from 500,000 to 800,000. Now, the really cool thing about gaining the skill of employing people is that I get a 6-8x multiple on level leverage. The reason I use 6-8x as the multiplier of leverage is that the average manager is able to effectively manage about six to eight employees. Now, this is why I'm a big fan of having a general manager not have to manage 15 or 20 crew members. They're usually not going to do a great job. That leverage is beyond this skill set and this size of business. But if I can acquire the skill of employing people, it means that if I spend one hour effectively training them and making sure they're working hard, they could be doing six to eight times much work simply because I've employed them to do the labor. Now, the trait that's required at this stage of business is organization. This is usually where people start to fall apart when it comes to being a manager because they're so scattered. You have to create standard operating procedures, systems, video training for your crew so that way they can take on things if you're not there. If the manager is not there, there should be some redundancy. And the only way redundancy is created is if you are organized. You have systems and procedures. When a phone call comes in, there's a script on how to answer it. When an estimate is sent out, there is a TEMPL template of exactly how it is sent out and how to do the pricing. If you're not Organized, you'll spin your wheels at this stage because you simply can't manage more than six to eight people because you're so disorganized. As you grow past $800,000 in annual revenue, the role of the owner becomes that of an architect. Now if you're building a building, you're going to have laborers, you're going to have managers, and you're going to have architects. And the architect doesn't actually do a lot of physical work. This is usually what we would say. They are working on the business. They step away from the building and they start to diagnose, they start to see what the plans are. Are we actually building this corre think about strategy. They think all the plans for the business in the future and they're usually going to then have a manager underneath them that manages the labors. That's the role of an architect. Now the stress that happens at 800,000 plus is psychological. Now everyone wants to build a million dollar business. But when you're at that size and you have a bunch of employees, every single day that you wake up, an employee is calling out. An employee is having a calamity in their family life, customers mad at you, a partner of yours in terms of the business or a subcontractor is revolting and saying something stupid online. This happens every single day you wake up. And now it's a psychological stress of always thinking that something bad is going to happen and it does a lot. And that can be very taxing psychologically and emotionally as you scale the business. So everyone thinks like the grass is always greener. If I just get out of this smaller business, I'll be able to get to a better place. When in reality you're just exchanging physical stress for financial stress and then financial stress for psychological stress. Now the skill that is required to grow the business past 800,000 is the skill of being an executive. Now some people think that a manager and executive are the same thing. The difference is that the executive needs to be able to lead the managers, also known as mid level managers in a larger organization. Now what's cool is because an executive can usually manage six to eight direct reports, those six to eight direct reports are no longer laborers, they are also managers. And so if they if each of those managers have then 6 to 8 direct reports as laborers, to them, you have 16 to 64x leverage on your time. Because I can have up to 64 employees in the organization. If I have six to eight managers that all have six to eight people underneath them working out in the field producing revenue. Now, what's really required in terms of the trait at this size of this to grow past 800,000 into seven figures is going to be that of vision. Because at this point point, the only way for me to retain and attract great managers is to have a vision of what the business is going to become. And I made this mistake in the past and that's not sharing my vision with the team of what the plans and the future and the goals were going to be for the company. And by doing that, I handicapped myself from attracting great talent at that mid manager level. And so the question is, okay, this is a great chart, but how does it help me? What can I do to ensure I go to the next stage of the business? There's a few things I want you to take away. The first is everyone immediately thinks they want to be an executive. Everyone always immediately thinks they want to be an architect, they want to work on the business. But here's what's crazy. That can take years of learning that skill. To actually get proficient at being executive and leading with vision and having a vision that's large enough for other people to fit their vision and their goals inside of that can take a long time. The thing that you can actually do the fastest today to be able to grow your business is focus on the things at the top. So the skills at the very top being effort and efficiency, those are usually the ones that people fail at. And the reason I know this is because more than 90% of small businesses will not get past a million dollars in annual revenue. And the vast majority won't even get past 200,000 or higher. Their first employee. Why? They lack the skill of effort. They lack the discipline, the trait required to be able to unlock the next stage of growth. And even if they get one or two employees, they lack the ability to have humility and diagnose whether or not their day and their schedule is actually efficient enough to continue growing the business. So the thing that I'm always actually looking at first is not how do I work on the business and think about strategy and planning and acquisitions. No, I'm going to the very top and asking, can I change the skill of effort? Because here's what's crazy. Even if you're an executive, even if you have 100 employees below you, if you're able to use the leverage of effort and you can double your effort, you will double everything below you. It is a compounding effect. So the fastest way to move the needle is to simply put in more Effort. Now, the average full time employee in the United states for about 1892 hours per year. If you increase your output by 50% and just work 12 hours a day instead of 8 hours a day, you would effectively have a 50% increase in the output for the business. You'd essentially be working around 3,000 hours of production every single year. If you're like, well, that's not enough, I want to keep going, I want to put more effort. Great. Increase your output by another 50% by simply working on the weekends. Because every single week there are two weekend days that you could be working Saturday and Sunday. That's 104 days per year. The average employee works around 200 days per year. I'm adding another hundred, another 50% increase in production. That's going to put me from 3,000 hours of production all the way up to 4,500 hours of production. Now, that is a 2.38 multiple of how much more production you are doing compared to the average worker. You didn't have to work smarter. You have to gain more skills. You have to go get a certification or meet the right person. You simply put in more effort. Now, one thing that you can do to be able to accelerate how fast you move through these stages of growth is find someone else, whether it be another entrepreneur or coach in the next stage, not five ahead of you. They're not running a $50 million business and you're just getting started. Someone in the next stage of growth, and I want you to listen and watch what they're doing, because whatever they're doing today is what unlocked the previous stage of growth. If I'm in the effort stage and I'm trying to work hard out in the field, I'm going to keep my eye. I'm going to watch someone else that is in the productivity stage. How do they set up their calendar? How do they set up their schedule? How do they do the routing, their scheduling? Do they have systems? What software are they using? Because that's going to be the thing that unlocks the next stage of growth. Now, you likely cannot afford to hire someone that is way ahead of you. Because the ultimate hack here is like literally hire someone and have them work on your team when you're first getting started. As you're going through the stage of growth, you can't afford to pay hundreds of thousands of dollars to get someone ahead of you on this curve and pull them into your organization. What you can do is pay to be around other people via a conference, a podcast, a book, and figure out how to get around people that are in the next stage of the Skills Leverage Framework. They can be ahead of you or in your current stage trying to figure out the next unlock that gives them the next stage of growth. Now, if you can't afford to go to a conference or buy books or buy expensive courses, I'd recommend going to my website mikeannies.com there's four course on there completely free and they're going to walk you through the skills of finance, marketing, hiring and all the different skills you will need to level up in the Skills Leverage Framework and grow your business.