The Confession Booth With Mike Andes | Episode 2

Ladies and gentlemen, welcome to another episode of the Confession Booth. We tried this last week and we had like 10 or 12 really good calls. So I'm opening up the phone line again. How this is going to work is if you call in, you do not have to say your name. You do not have to say your business name. We will garble your voice using AI so no one will know who you are. I will not say the first 3 digits of your phone number. The objective here is that you can anonymously share some of the issues that you might be facing in the business. And I have been on other talk shows or Q&A, and you're always trying to make sure it's like, well, do I hurt a customer? Do I hurt a team member?

Do—

if I bring up something personal, am I hurting someone else? And so the objective here is to be able to get the real answers that you might be looking for, but you're too cautious to talk about. If people knew your voice, they knew the name of your business. And that's why we built the show. So the confession booth is where you can come spill tea anonymously and be able to get the help you need. And so we already have someone in the call queue, but if you have a question, just go ahead and call 361-733-3332. And again, I'm not going to say your name. You do not need to say your business name. I'm not going to say the first 3 numbers of your phone number. And your voice will be garbled. So anything I can help with, the objective here is to be able to reduce the walls that we build up as business owners. And it's very difficult to find people that you can just openly share. And I'm trying to emulate that for those that might not have that opportunity or have a close confidant or a circle of entrepreneurs they can share with their struggles. This could be problems with a job. This could be problem with customers. Be a problem with your employees and some kind of like messy stuff happening, it'd be very difficult to help you in this setting if you were sharing your name, etc. And for one-on-one personal calls with me, people book them a couple times a week. I open up slots for it. It's like $2,500. And so the objective here is for those that cannot afford that and do not want to spend that time, you know, they don't need 50 minutes, but they need a question answered about how do I deal with this problem with the employee or a customer, or my spouse is not understanding me, we're not on the same page, or we're going through a rough time, uh, I want to be able to offer this opportunity for you to be able to call in and no one know who you are. So without any further delay, let's go ahead and bring the first caller in. Welcome to the show and thank you for coming inside of the confession booth.

Yeah, hello Mike, can you hear me?

I can. How's it going?

Oh, good morning, man. How's it going?

Very good. Very good. What can I help with?

Yes, sweet. So, um, I'm not gonna say my name. Um, so I'll just say my name. My name is Dennis. Um, I'm based here in Vegas. I run a super small family-owned business over here in the Vegas Valley. Um, under $100,000. My dad's been running this for, for a few years now, but come to the realization that he doesn't know how to scale it. And me as a son, like, I'm coming into this, I'm like, What can I do to help them scale? Recently I partnered up with a few agencies to like, obviously like Sales Cheers Off to like bring in more leads, help with the sales process, all that kind of stuff. And I started working, working with them last month, back in April 5th. This, wow, few days ago I was doing my calculations. I realized that I spent a total of $3,000 to work with that agency. And in return, I've only— I've generated close to $5,000 to maybe pushing $6,000. I'm breaking into ads, but from here, I just like— I guess I want to hear your expertise because I'm doing this all alone. Like, what can I do to help me scale to the point where consistently I'm bringing in 5 figures a month with obviously monthly recurring revenue with monthly maintenance, plus like those big extra jobs that obviously help bring in more revenue.

Okay, so just to be clear, so you spent $3,000 on the ad spend, or is that on the management fees of the agency?

Yeah, so, so the way it kind of works, I guess you could kind of call it digital knocking, right? They send out blast SMS messages to like homeowners in the area, and then any, any responder that does reply back, they charge me $65, right? So you could just imagine that fee of $3,000 has gotten me about close to 38 to 40 clients, right? But out of those 38, um, not a lot of them respond, right? Because it's cold outbound, right? Like, I'm reaching out to these people, some of them do respond, some of them do respond, do, do respond. And the guys that do respond, like, we go out, make the job. But again, when you're spending $65 per lead, it's like your minimum has to be $300. And sometimes these homeowners are just looking for, like, weed removal. Right? We're like, it's like, dude, we can't do that. Like, I'm gonna lose money if I do something like that. So I want to hear like your expertise on what I could do differently. Um, I started with an ad agency as well, like around the same time. I spent a total of $300 in ads. Um, it's been, it's been all right. I think I do have to improve my ad creative. It's not the best, but I, I am more so leaning on ads and, and wanting to replace that digital door knocking because, you know, The return on investment just isn't there. And I wanna hear like your expertise on what I could do differently to like obviously scale consistently, like for sure hit that $100,000 mark this year.

Okay, so you spent $3,000 on, let's call it ads, but really this is like SMS tokens. What was the management fee on that? Or is that the management fee, the $3,000?

Yeah, that's kinda like the manage— so there really isn't no management fee. So the upfront base was $500 for 3 leads. Confirmed, and then like any lead that they give me was $65 on top of that.

Okay, so $500 for the first 8 leads. Okay, all right. And then right now, do you have a website that you're sending people to, or are you just doing it all on like—

I don't. I think I have a pretty good sales process, to be honest with you. I've been in sales all my life since I was 17 years old, so I don't have no website. I call as soon as possible. Any estimates I do, I have a 50% close rate. So out of 10 people that I see, 5 of them are for sure gonna own their business and we're gonna run their stuff for them. So I don't have no website.

Got it. So the thing that I would say is when we look at kind of the sales process, I'm gonna go ahead and agree with you that you're really good at sales. But here's the thing. Right now, we have prospects and then right now we're paying a bunch of money for them to become leads. You're really good at turning them into, like, through sales, turning them into customers, but the problem is we don't have any engine right now besides paying for $65 per lead to turn prospects into leads, and I think that's the part that's broken because you paying $65 per lead is actually not incredibly bad. What's bad is the fact that you are, if you turn that lead stream off tomorrow, you'd be at zero. And I want you to be able to build more of an organic path through your website. And so, if you're spending $3,000 on ads, I would spend some portion of that and just go build a great website because if you do that and you get 100+ reviews, you're gonna start ranking and getting leads for free. And that's ultimately the long-term game. The short-term game, yes, like, we can make this math work. And if you're closing, let's just call it 1 out of 2, well, now your customer acquisition cost is, let's just call it $130, and then I'd be saying, okay, great, now that they're a customer, how do we do an upsell process so that we can get customers to pay us more than $130 in the first week or two? That would be the first thing to do, but I also think about long-term. I don't wanna keep being on this IV drip of $65 per lead to this other agency.

Yeah. 100%. 100%, yeah. And that's also a thing, so in your personal feeling, it's like, Don't spend so much on that agency and cut half the price, spend it on the website, improve it, get those Google reviews and all that kind of stuff.

Well, I don't think it's necessarily an or game as much as an and game. Like, you can keep doing this assuming you have sufficient capital. This, this math is okay if you convert half of these leads into paying customers and then you get like, let's just call it $500 in the first 30 days. And so I would do two things. First, I would focus on the upsell process of new customers because right now they are going to be low-quality leads. But if you're saying you're closing 50% of them, I still have a cost per, cost per customer of $130. I just got to figure out a way to upsell them and create an offer where I'm getting $500 in the first 30 days. Otherwise I'm going to have a bad cash flow problem if I'm paying $130 for a customer that has a $200 service and I'm 20% profitable on it. That's a, that's That's a losing formula. And so, the first thing I'd be doing is focusing on my upsell process. The second, more long-term thing I'd be doing is trying to solve this lead flow issue of you having to pay for every single one at $65 to where you are addicted to this lead source. Because what happens is if you scale this, if someone gave you, you know, $50,000 tomorrow, and you went and got a bunch of leads, you'd build this infrastructure, and then build this business, and then all of a sudden, you would find yourself having to pay more and more and more in the top of the funnel to get these leads, simply due to the fact that if you turn it off, your leads go to zero. And I don't want you to be held captive to them.

Yeah, I'm also, I'm gonna be honest, I personally feel like spending $3,000 to only make close to $5,000 to $6,000, I feel like that ROI just isn't there personally when I have been looking at ads and I'm like, add, um, a lead cost me $10, and let's say I get like a super basic job for like $150 weed removal, like the return on investment isn't going to be a lot better than a $65 just to even consider them. And then, then just tell me they're just looking for a weed quote, right? So I do, I do want to like completely cut off that agency, just not work with them at all no more, because I personally don't see that return on investment. Just double down on ads and then eventually Not eventually, but as I'm running up on ads, as I'm fixing my ad creative, as I'm growing my social profiles, break into like SEO, get the website, rank on Google, all that kind of stuff. Like, what are your thoughts on that as well?

Yeah, like ultimately when we started Augusta Leads, for example, this is why we did not charge a per lead basis, is because now I'm just arguing about the quality of leads all day long. And so you are always at odds with this agency over the quality of leads because you're paying per lead. I would rather, before you go turn them off or reduce their budget, go figure out, like, right now, spending $3,000, making $5,000, yes, you're never gonna make money doing that. However, if you're able to spend the same amount of money, $130 to get a customer, and instead of making $5,000 on those customers, you made $25,000 'cause you 5x'd the amount of the lifetime value of that customer, now all of a sudden the exact same lead source makes sense. And so before we just discount the lead source and turn it off, 'cause you're very new, cutting off your lead source right now is like saying, you know, take off the wheels off your car. It's not going anywhere. And so before you start thinking about that, and if you're like, hey, I can go get leads for $10, then yes, by all means do it, but prove that before you go cut out your agency, because I think most of us, there is no agency I've ever talked to, there's no business owner I've ever talked to that hires an agency that loves them forever. 'Cause eventually you just expect the cost per lead to go down, when it's actually the opposite when it comes to marketing. And so, when you're chained to this cost per lead, I wanna first figure out the downstream funnel of making sure that the customer's worth so much that I make sense of spending $130 per customer. I was looking at someone's numbers the other day, they're spending far more than that, but because they sell 3 or 4 services in the first month, and make $500 plus, they can, recoup the customer acquisition cost within the matter of first 3 to 4 weeks. And so I would rather you fix your downstream and then go fix the upstream, because the upstream is always the thing that looks easy to fix, and then you're gonna get into it and realize, okay, like, those $10 leads are also not that great, and I've gotta have a better website to drive them to, and I've gotta be better tracking, and make sure that I'm, have the analytics to track all this in Google Analytics, and now you're spending all of your time doing that instead of just focusing on creating an upsell process that makes a $200 customer, a $500, a $1,000 customer.

Mm-hmm, okay, okay, makes sense.

Fantastic, well thank you for coming on. Someone's gotta break the ice, I appreciate it. Next caller is coming in. I'm not gonna say from where. Welcome to the show, thank you for coming on.

Uh, yeah, this is Aaron. I just had a question about picking a GM properly. Right now we have two guys that are both very good options and I'm just having a struggle with who to pick, if that makes sense.

Sure, maybe since this is nice and anonymous, give me kind of a synopsis of the two and then we can kind of break down which ones we might want to prioritize.

Yeah, so one of them's been with me for 3 to 4 years and he has been, he's been good. He's managed everything well, but he's not super systematized, if that makes sense. You know, he struggles to log the property notes sometimes and mark things. And then the other person I have is relatively new, less than a year, but he does well with the system side.

Okay. And so right now, what's the role you're trying to fill? Is it general manager, you said?

Yes, yes, because we're approaching 500 this year.

Okay, and are you trying to step out of daily operations?

Um, yes, I would like to step out of daily operations.

Okay, and are you gonna still do sales or are you like moving away?

I would like to do sales and admin and just delegate the operations.

Okay, and this year being at $500,000, um, do you think the business has enough cash to be able to afford this general manager or are they gonna be working in the field like 70-80% of their time as the quote "general manager"?

I would like them to also be working in the field for probably half at least, I would say. I think that would be a fair amount.

Okay, so I'm going to go out on a limb and say what you're actually looking for is an operations assistant, not a general manager. Because you being in sales and you doing admin, there's no way in the world you're going to let this GM actually run it the way they want. You're still going to be in the daily operations. Like, you know, might not be in operations doing the work, but you're daily involved in getting more jobs, answering phone calls, setting up the crew for success. Like, I would consider this much more of an operations assistant. And if we do that lens, you might tend to give this guy more grace. The person that's been around with you longer knows, knows the systems. If you're not required to be a general manager, in my opinion, a general manager runs the business. They're the person that, like, when you leave the country, they run the business and they're over sales, operations, admin. But if you're going to still do sales and admin, the only thing you need them to help you with is operations. And that's going to be much more of an operations assistant. And I would say that if you continue to scale and you want to see $1 million, $2 million, maybe this person becomes your operations manager. And then this person, the person that's newer, in a few years though, becomes their operations assistant. Underneath them. And so I would just get clear about the language, 'cause if you call it a general manager, they're gonna expect to literally never do work unless you make it very clear otherwise. And they're also gonna expect to manage generally, like general manager, sales, operation, they're kind of over everything. And so if you really just want them to be like, hey, I just need help managing the crew, getting the shop space set up in the morning, make sure everything's on deck. If there's complaints, I want you to manage those. That's an operations assistant. And be careful with I've done this mistake many times, especially on the early, like giving titles out that people do not deserve. And then you end up paying them more, they feel entitled, and it becomes an absolute mess because I simply gave someone a title they did not deserve or the business wasn't ready for. And at $500,000, you're only hiring a general manager if you're not going to be there. If you're gonna be there doing sales, doing admin, there's no way in the world you're hiring a general manager. Especially if you're just getting help in operations, that's an operations assistant. Next caller, welcome to the show, thank you for coming on.

Hey Mike, how's it going?

Hey, how's it going?

So right now I'm looking to hire a lawn maintenance technician, and I was just wondering what approach you would use, if I should go on Indeed, or if I should try Facebook, or what method do you think works best?

Is this your first one?

Second.

Okay, so yeah, right now Indeed is where we're seeing most applicants. I would highly recommend running your job, uh, description through AI. Talk to AI. Don't just like, I want a lawn care technician, uh, you know, job description. Much rather explain the size of your business, what their role is going to look like, what their comp is going to be, where the business is going, the objectives and goals and missions of what you're trying to build. And what you're looking for in the ideal candidate, and then ask AI to build the correct job description. And then what's— where, uh, I'm not gonna ask that. Uh, depending on where you live, you're going to either— there are places right now they're getting overwhelmed with applicants. And so if you're going to put up an application and in 24 hours get 50 applications, then we need a process to hone that 50 down to 5 or 10. And so I would say it's your second one, you probably have not done a lot of Indeed ads, if you run an Indeed ad and you get 10 applicants, you're gonna go through all the resumes, you're gonna set up a couple appointments. If you get 50 in 24 hours, applications, then we've gotta figure out how do we reduce that number, 'cause otherwise you're just wasting 2 days setting up appointments and 2 or 3 people show up. And so the first thing we wanna do is create the ad, optimize it with the AI, don't just tell it to give you a lawn care technician, or, you know, a techs, a job description. We're going to give it all the information about the business and then ask for it. And then we're going to see what happens in the first 24 hours. Because if it's a lot, if it's over 20, I want you to build some sort of process of like, hey, send me a Loom, or here's a link to a Google Form, fill this out. And you can very easily weed out 90% of people that are just kicking tires. Does that make sense?

Yes, and should I promote the base pay? I do implement the P4P too, so. I follow Marco with Augusta, so I see how he kinda promotes that too, and saying like if you're like a rockstar basically, you can get up to like $30 an hour, so should I do it that same way too, or until I filter everyone out first?

Yeah, what you wanna be careful of is most people joining have two things. One, they are very used to hourly wages, that's how they're comparing against everyone else, And secondly, they've been told that every job they've ever been to that they can make a lot more money. And they've never seen any proof of that. And so they are already jilted on P4P. So how we usually frame it is we want our base pay to be competitive or on the higher end in the market. And then we want them to, I would just wanna give them the facts. Here's what our average hourly wage was last year. And like, we give the real numbers. So like, instead of just saying, hey, you can make up to $30, I would rather say like, our top performers last year made $32.46 per hour. And that would be more believable for them, but the base pay is still gonna be the thing that you're judged on because it's easiest for them to compare apples and apples against other competition. Next up, welcome to the show, thank you for coming on.

Hello?

Hello, hello, what's up?

Can you hear me?

I can.

Hey, what's going on? This is from Keith, I'm from Texas. I just, I didn't, I don't really have a confession, but I just wanted, I mean a confession that I did, instead of hiring other people, I hired 2 admins. I had 2 people answer phones and that freed up my space. I don't know if anybody else needs to hear it because work is hard to come by. I have 3, I have started a company last year and then, and you know, got on, did Worker Comp, got everything I needed to do. But my best, my best help is having, I hired a lady who was a CPN who was like, I'll be a desk clerk basically. And she sits in the office, takes all the calls and it's been wonderful.

Awesome. Well, thank you for dropping the words of wisdom. I appreciate it.

No worries, man. Any advice? I'm at a— I'm a very small company, but we're at 325 regulars now. Any advice?

So you have 325 recurring customers, is that correct?

Yes, they're all just mowing.

Okay, and did you say you have 2 people in the office now?

Yes, I have 2 people in my office now. They handle scheduling, they go out and do estimates, and they're 2 ladies, they're wonderful when they go out and do estimates. And then one just handles calls and she, you know, ChatGPTs my routes and sends them out to me. And I've, it's been, it's been wonderful. I've been able to, you know, do my job.

And are you trying to grow right now or is this kind of like the size you wanna optimize for profit around?

Man, I, I've been, I've been thinking about growing cuz I'm in, uh, North Texas DFW and it's, You know, we have new neighborhoods everywhere. I would like to grow, but I don't know the next step. I feel like for 2 years I'm okay money-wise, payment-wise, everything, you know, if it still continues, it's still growing, but what's my next step?

So, do you have anyone right now, when someone calls out for the day, one of your employees, they're sick, are they calling you right now?

Yes.

Okay, so—

No, they call up there, but it's— Go ahead.

You're fine. Sorry. Throughout the day, for example, if something breaks down, are they going to contact you if like a truck breaks down?

Yes.

Got it. So the next step, if you continue to grow, which by the way, I'm a big fan of being like, hey, this is a great size business. I'm happy. I'm making money and being okay with that. But if you want to keep growing, you have essentially delegated your admin. You have two really solid people, it sounds like. And it sounds like they're actually kind of doing a little bit of your sales, like some of the estimates, like their drive-bys. The part that's going to unlock you to get past let's call it $1.5 million, is going to be getting operations delegated. And that's getting someone likely in your current operations, your crew, and elevating them to where they have the systems and the resources to be able to make calls for the crew out in the field, whether that be broken equipment, customer complaints, calling in, like, who do I report to? They become a buffer between you and the crew. And that's very difficult to find that person. And I'm going to guess, though, that you've been in business long enough to have someone that's probably pretty solid in the field that could step into that role. Is that correct or am I off on that?

No, you— I do. I have, I have 3 other crew members that are great that do step up. But also, too, I'm very— I barely hit a year. I started, I started last year.

Fantastic. So then I think when you're growing that fast, I think knowing what the operations is, the next thing to hand off is one thing. Having the systems to where when you put them in that place, they actually are successful is another. And so I would highly recommend asking yourself throughout your day, what are the things that you're doing that are in sales, getting more work? What are the things that you're doing that are operations, getting the work done? And what are you doing in admin? And as like answering the phone, text messages, payroll, workers' comp stuff, all those things. I want you to list out what you're doing in each of these categories. And I want you to look at the ones in operations, 'cause I'm gonna guess this is your longest category, and then create systems for each of those tasks so that you can hand it off to someone else and they have KPIs for each one. So when it says like, hey, make sure that we have an efficient crew, like that's part of an operations person, like make sure we have work on the schedule and the crew is efficient. Great, what does that look like? Does that mean we need to be booked out 3 or 4 weeks? Does that mean we need to have 70% efficiency? These are the things that you wanna nail down and create a system for, 'Cause then it allows you to hand this off. 'Cause otherwise, handing something off, like, I'm delegating. Well, what are you delegating? It's a mess, and you're setting this person up for failure. And so, right now, given the fact that you've grown so quickly, I would first organize yourself, create systems for the things that you want to delegate, and then, as time goes on, you'll be able to delegate those things off to someone else.

That makes a lot of sense. Awesome. I appreciate you answering.

Oops, sorry, I dropped you. If I drop any, don't be offended. It's just, we try to keep moving on. All right. Let's go. We'll move to the next caller. One quick thing. If you would like me to come out in person, it's completely free. You can scan the QR code or in the links in the description, you can sign up for a turnaround show. It's MikeAndes.com/turnaround. We have filled up this month as well as the beginning part of June, but we have a couple more spots, I believe, this summer available where I will fly out to you in person. I'll do what we're doing here, but in person so I can meet your, your crew, see your full operations, and hopefully help you get your business to the next level. But let's go ahead and jump back into the confession booth. Welcome to the show. Thank you for coming on. Next caller.

Hey, Mike, can you hear me? I can.

How's it going?

Good. How are you?

Fantastic. What can I do for you?

Yeah, I'm trying. I'm currently have one mowing crew and then a project crew that I drive for. I'm looking to get to a second mowing crew here soon. Currently just looking for, I guess, the crew lead for the second mowing crew. Um, what should I be looking out for, like, within my current guys that are mowing right now? Because I've got a few people that are possible candidates for possible driver. I'm just not quite sure which one I should be looking forward to, like, being a lead. One has more experience, um, but He, uh, yeah, just one, one has more experience, but he's not as good like talking with customers. And then the other one's less experienced but very good at talking to customers.

So are you looking for someone like, do they both have a driver's license? First off, they do. Good. So they're both candidates to be a crew lead. You're wondering like which one should be. I also think like, can I simplify the business to where I don't need high-level skilled people to be able to do the job. And so there's a very good, very good chance that if we have the right systems and training, both of these people are great candidates and it's just a function of which one do you do first? And so I think when it comes to like, for example, talking with customers, can we train that in team meetings enough to get the first person that isn't great at that skill to be able to at least be able to communicate enough with a customer if they came out of their house. But the thing is too, sometimes we overblow this. Like the amount of customers that come out and talk to a mowing crew is what, maybe 1 out of 20? And so—

Yeah, maybe even less than that.

True. And so I would, when it comes to operations, I am more thinking about do they follow systems? Do they do the work efficiently? Because if they do the work efficiently, I make money and they make money on pay for performance and profit sharing. Secondly, if they are doing it You know, that's if they're doing it efficiently. If they're following systems, I can teach them how to do upsells, make videos attached to their mobile app, be able to look for opportunities to upsell the customer, give them bonuses, and I can incentivize what I expect. And so, I think this decision much more comes down to who's the best fit in the moment, but both of them ideally, we'd get the systems of the business to the point where either of them could become, 'cause the only thing that's holding the first person back is that they're, You're afraid they're not going to talk to customers very well, right?

Right. Yeah.

Does that person work more efficiently as well?

Um, yeah, I'd say he's a bit more efficient as well.

If these two guys were working together and you showed up on the job site and there was a project, not, not mowing, but a project, which of them is going to be the person that comes up and talks to you about where the project's going? Um, that's usually a good—

I would say the one that had less experience.

Got it. So that's usually indicative of a good leader. And so for us, we don't have crew leaders. We try to get everyone up to the same level, and then they might have leadership in other areas, like for example shop maintenance or equipment maintenance or trainers. But we want everyone at the same level so that we can move them from truck or crew, it doesn't matter. It creates less operational drag if someone goes down. And so I would say, especially for a mowing crew, I don't necessarily need a leader unless there's only one person with a driver's license or like one login to the software, for example. But assuming that everyone has the same tools and the same training, I should be able to put them in and out of trucks as I see fit. And for something that's low skill requirements like mowing, I encourage you to go in that direction because otherwise it just creates a bunch of bottlenecks for the business when it comes to scheduling. Like, I can't schedule those customers 'cause so-and-so is the crew lead and he's out for vacation. I would rather just get them all trained up and there's not really leaders. Like, what's the reason you need a quote leader on the crew? Is it a matter of someone holding someone accountable?

Um, no, it's really just, I guess, keeping the workflow efficient. And yeah, I suppose keeping the rest of the crew accountable. Yeah.

The thing is like, I would really encourage to create a system for this, like pay for performance, for example, or giving some sort of incentive around efficiency gets them all on the same page immediately. And they will tattletale very quickly if there's someone that's not efficient on the crew. And so a lot of times we create these roles because we don't have systems. Like you need a crew manager to basically watch over the crew and make sure they're efficient versus just being like, why don't we just create everyone the same, have the same tools for everyone, And then we make the objective the same for everyone, which is be efficient, get these jobs done to a high degree of quality, and don't have yellow slips. That's why pay for performance, or like some sort of level around making sure that you have incentives around efficiency, is so important. Because no longer is it, okay, we need rank and title. It's more a function of the system runs the incentives, and the incentives are going to produce the outcome I want, which is efficient work at a high quality level.

Okay, okay, does it make sense? Yeah, perfect sense.

Awesome, best of luck to you, brother. All right, next one up is coming in. Welcome to the show, thank you for coming on. Hello, hello, hello, what can I do for you?

Hey Mike, quick question here.

Go for it.

How do you deal with negative reviews?

All right, is this on Google right now?

Well, it might end up on Google. Yeah, we're having a little discrepancy with a customer. Um, I think it's a lot of communication stuff going on, but, uh, I mean, the dude, he was like, yeah, we have— he was like, I got a Google review drafted, a Yelp review drafted. BBB review drafted. I mean, it's like, you can't— everything we have tried to do to please this guy, it's just not working. I've gave him a $2,000 discount. I've gave— I've done so many things to try to accommodate for this. And, uh, um, unfortunately I haven't heard from him, you know, in the past 4 or 5 days. But I mean, he seems like the type that just isn't gonna let whatever is bothering him go. And I'm trying to get to the bottom of it and, uh He's just picking at every little thing. I mean, it's just one of those customers like you cannot please them.

So is this a project?

He might potentially leave you.

Is this a project install?

Yeah, we did a project. Yeah. So what we did, I have a gutter company. I've talked to you a couple of times before. I think you even made a YouTube video about my company, like using my website and stuff. But, um, so what we do, we installed gutter guards for him, cleaned his gutters, built his gutters. We did underground drain work, uh, repairs, uh, replacing and stuff like that. And, uh, he just, he just, like I said, it was a lot of miscommunication. He thought we were gonna be there for like 4 days. I've been in business for 6 years and never been on a job for 4 days. Um, what I told him was 4 to 5 hours and he, I guess he thought it was 4 to 5 days. Um, and then like what's really bothering him is we were there for, we were there for about 4 or 5 hours and he keeps breaking it down. He was like, well, you made like $2,000 an hour or $1,500 an hour. Is he, is he complaining about the The work?

Is he complaining about the work quality?

Not so much that he's complaining about, like, he doesn't think it's worth what he paid for the time. I said, well, sir, you had every chance to get other estimates and so forth. I said, we do not work by the hour, we work by the job. If we work by the hour, we wouldn't be in business. He is so caught up on, like, he will— it was like $1,500 an hour. Lawyers don't even make that. And I'm like, we do not charge by the hour. We charge by the job.

Yeah, a lawyer sits inside his office and does not have a whole bunch of trucks and shop space and insurance and workers' compensation and trailers and equipment. So like, you know, the comparisons go back and forth. You will always get customers like this and it's so easy to get in this knickknack back and forth with them. And more importantly, all the mental energy you have spent just thinking about this. The bottom line is a negative review from this customer will not impact your business in a negative way. The reason is, is 'cause if the customer's only complaining about price and you are transparent about your prices, no other future customer will care. If he went on there and said that you did a bad job, very different, right? And I would say that if you've tried to give money back, you've tried to accommodate, like, you've done everything you can and you're gonna make mistakes, but in this case, you have not made a mistake. The quality of the job is fine. They mostly have buyer's remorse because they, figure out the fact that you make money. And that, so—

Right.

Go ahead.

Go ahead.

Ultimately, when it comes to an online review, the only thing I'm caring about is the future customer. I do not care about the existing customer because I have already likely exhausted everything possible to make them happy. And assuming you have done that, which you have, you gotta just let the chips fall where they are because if they go online and spew, your response to them is not gonna be bringing up everything you've done, all the refunds, you're not gonna do it. You're gonna be responding with the future customer in mind that's going to read that review. And as a customer that would read that review, I don't care if that person thinks they overpaid. If the quality of work is good and I'm looking at my estimate from you and it is saying that it's going to cost $1,500 to do this task, I am judging $1,500 versus the problem that I have and your solution. And so there are going to be some people that will not understand that they are paying to solve a problem. They are not paying you per hour. They're gonna be people like that. Yeah, do not worry about their online review.

Yeah, and that's where— yeah, I mean, this dude's probably gonna put— because his emails are like, like 2 books long, man. I mean, it's crazy. And he's probably gonna put like a 2-book, you know, review. I mean, and like, there was like a little drip coming from the gutter, like he took a picture of that when it was like a heavy rain. And then like, like stupid stuff that he's just nitpicking on every little thing. And then he was sending me pictures of this stuff. I'm like, dude, you gotta be kidding me.

Yeah, I mean, I would let it go. I would let the chips fall where they are. You've done everything you possibly can. At the end of the day, there's going to be people you cannot make happy, and they will always hate the fact that you make money from them. And at the end of the day, they don't see all the expenses. There's no way you could ever justify this in the eyes of that customer. That customer is gone. They're never coming back. Let's not try to save them and their relationship. Let's wait for the review because most time they won't leave a review. But if they do, Just make sure your review response is with the future customer in mind, not them. It's very easy, especially because you've gone through all the drama with them, to when they post an online negative review, just to start spilling all the tea, talking about all the bad stuff they did, the pictures that were not correct, the fact that you gave them money back. Don't worry about that. It's just a function of we want to think about the future customer, and the future customer wants to know, does this company back up their work? And so being able to notice, hey, the response back to this person freaking out over 2 pages, like first off, when I see a review where someone's left like 3 pages of text about a home service business, that person has too much time on their hands. Especially if it's around a small job that you did in 4 or 5 hours, they have too much time on their hands. Immediately, as a customer, I don't even have time to read the review. And if the future customer is the type of person that reads a 3-page huge review and then believes that person when they never said anything bad about the work that you did, but just simply the fact that you made money, I don't want that customer. And so it's actually sometimes a good pruning mechanism to keep bad leads out of the system and prevent people like this from ever getting back into the business. And so, you know, there is many, many bad reviews about Augusta Lawn Care and specifically a couple websites where negative reviews are bound, they all aggregate to one account because they type in Augustin and like it pops up. So like every bad review is in one spot. And if I wanted to be on the constant negative mindset that just drains me and like keeps me awake, I just have to open up that one page and I would immediately lose sleep. I would immediately not be thinking about how to improve the business. I would immediately not be thinking about my team, the next customer, the next person I can serve, or creating opportunities inside my, the organization. And so focus on what you can control, 'cause what you can't control is the Karens of the world and the Kens of the world that will just constantly bombard you because they just love sapping you of your attention. And so you're gonna have to cut ties with this person in terms of, if they're gonna leave an online review, fine, let 'em, but don't let it take over your psychology 'cause it'll prevent you from doing a follow-up. It'll prevent you from pushing through someone throwing up a random, like, I gotta think about it. You won't push through those things and those objections because now you're on your, you're playing defensive, you're on your heels. And so don't allow something like that to prevent you from being on the offensive and think about the growth of the business and the growth of your team and the growth of you being able to solve more customers' problems because it's debilitating. And if you, the reason it's debilitating is 'cause you care about the customer and you feel horrible about it. And the fact that you have $2,000 back, I'm not thrilled about 'cause it's probably all of your profit. However, it means that you care. And so just keep caring, but don't worry about the 1 out of 100 that you're not going to be able to make happy no matter what you do. All right, next caller. Welcome to the show. Thank you for coming on the confession booth.

Mike, can you hear me?

I can. What's up?

Awesome. Hey, um, so you might know who I am. But I've got a situation with a shop where I put— I gotta confess, I bought land, put $40,000 down. It wasn't— it was supposed to be where I could get my money back out of it, like my initial investment, and pay myself back. That didn't work out. It all changed. I got started and I got into this because the small city I'm in, just outside the big city I service, at the time the administration wanted to say that the owner didn't have it zoned right. And now I've got this place built and it's like right at final inspection. And I was having my— I was gonna have my crew leader of 10 years move in there. And then it's just like I got to like looking at numbers because now this shop, like the city administration says that I can be here, but the owner, he's been trying to sell it and that's another reason I built, but he wants way too much for the land that I'm on. It's about 3 acres and he want— and it's got just an 1,800 square foot Kwanzaa hut with one door. It's actually— we're so close to $800,000. It's like I want, I want to just keep this place. I like, but that payment would be probably, I think it was $3,500 last time I looked, um, and that would be even more down, uh, 20% down. But it's just like, if I go where I should go and be close to my service area, everything's at least $3,000 to $5,000 and it's not as big. It's I just, I'm scared like I can't operate it, operate out of there. Um, this guy says that he'll give me 1 year on a lease, uh, and raise my rent from $1,200 to $1,600, which I'm okay with that because of the security. I think, um, it's still not that long, but it's a problem I need to solve. But at my size, I'm trying to you know, the office person, be in sales, train Tracy, you know, my guys, 10 years. And, you know, I've got a virtual assistant. Last year we did P4P, Service Autopilot, and I built this place. The good side, it's got a hundred— I should have about $100,000 in equity, um, but it's just, I kind of created a mess and it's like Yeah, I'm trying to find the best path out.

Okay, you're talking about equity, but then also the owner. Do you own the shop space right now?

Uh, so there's two separate shop locations, the one I built and the one we've been in for 3 years, the one that you came and visited.

Okay, and so right now, why would you not just— if If the landlord pulled out from underneath you and said after a year, hey, no, we're out, why could you not just go to the second shop space?

Because it's not zoned correctly. And I guess I forgot to mention that. It's ag. Okay.

And so that's the one you bought.

I don't think that—

That's the one that you bought.

Yup.

Okay, and so can you get rid of that one? Is it useful? Like, can you use that one or not really?

I— so what it is, is, uh, okay, so that payment will be $3,200. It's— and it gets my guy of 10 years that he says he can't afford himself to move 45 minutes closer. He moved away like 4 years ago. I tried telling him, please don't do that, but he might have been spending on exes and I have no idea. But now he's paying for it like crazy. We could keep it, he would pay $1,000 a month rent. That was like the original plan. And then my rent's only $2,200. And then it's like, if I run fully out of there, I'm just waiting, I'm a target for somebody to complain.

So why did we buy that land? Was it just a function of we didn't know that we couldn't operate from there?

I just, I made a bad decision at the time and rushed it. And it was either go pay $5,000, $6,000, uh, in a whole new area and then have to drive further, like, from my house, like, to a shop that I'm not set up with, or it was like 3 minutes from my house, buy some land. I know that I could have this issue and now I'm paying for it. Like, it was just honestly a dumb decision.

Okay.

Uh, but I was rushing it and it's like $3,000 versus $6,000.

Right. Well, here's the thing. Right now, your rent is actually $4,400 a month. Because the utility that you're actually getting—

Yes, that's what hits the books.

Right. And so, in my opinion, I would cut loose of number 2, the ag land, as fast as possible. Because you know you can't use it, and even if you did rent it out to this employee, it's like 1/3 of the cost that you're paying on the mortgage. It's like, you're already upside down on it. And then it's a function of like, well, worst case scenario is we lose the shop space that we currently are at for $1,200 a month. And what's going to happen? I'm going to have to go spend $3,000 to $4,000 a month on a lease in another part of town that's probably closer to my service area. But guess what? You're already paying $4,400 per month.

Yeah.

So like the worst case scenario is that we—

go ahead. It wasn't. Oh, oh, I'm sorry. I was going to tell you originally the plan was I thought I was going to be kicked out of this one, and I was going to plan to move everything there, fly under the radar as long as I can. And I knew that I, from the deal I've, I've done, I should for sure get my money back. I probably won't see $100 grand, you know, profit, but it— and it's like, I don't even care about that. I just want out of the situation pretty much.

Yeah, it's still going to take some time, but I'm I would sell it as fast as possible. You can't use it. You're never going to rent it out and make a cash flow. So, it's not like it's an investment. And you're never doing agriculture. That'd be another distraction. So, like, I'd get rid of that as fast as possible. I would also just double down on growing the business because this is right now sapping your mind space. And it's like, what happens if in a year, my rent, I can't get the $1,200 a month rent? The worst-case scenario, if the landlord doesn't renew your lease, is that you go get another shop space for $3,000 to $4,000 a month, which is already what we're paying right now. But it would be in a better part of town and probably closer to our market and our customers, which by the way, even going from $1,200 to $4,400 a month, you can run the math very quickly. It's okay, that's, well, that's what, $3,000 more, $3,200 more. Well, if you have, let's just call it 6 employees, we could very well have a, make a lot of sense of actually spending $3,000 more if we're 15 or 20 minutes closer to all of our customers. Just in terms of drive time. And so I think the worst case scenario is not that bad. But the thing is, right now you are fighting a dragon that doesn't exist. And doing that in the past and crossing a bridge before you got there is what caused you to buy this land. And so instead of fighting the dragon in front of us, we fight the boogeyman that we can't see. And to fight the ghost that we just think inevitably is gonna happen down the road, and what we do is we make dumb decisions because of it. So you went and bought this ag land because you were afraid this rent was going to go away, this shop space. It didn't. And so let's not double down on that by getting concerned about keeping this land when we know we can't even use it. Cut your losses by the fact that we fought a boogeyman that didn't exist because we still have this shop space. And I happen to believe if in a year it comes this time and the landlord's like, hey, I want to get rid of you, and you say, hey, can I give you $1,500 per month, i.e., a 25% increase in rent? They'd be like, you know what, let's go ahead and renew that lease. And now all of a sudden this does not become a problem. And so many times, if we even break this down to— let's look at this. So if we have $3,200 per month right now is the— like our whole problem. The worst-case scenario is this landlord kicks us out and we have to go to another shop space. And that is $3,200 per month. Alright, so if we run $3,200, we times that by 12, that equals, let's see here, $30,000. $36,000, $38,400. Is that right? $38,000, something like $30,000, something like this. This is the worst-case scenario of you getting kicked out of your current spot in a year. You have an $800,000 annual revenue business, right? $800,000, meaning this constitutes about 5% of revenue. Meaning I would be building the business in a way which I just need to raise prices by 5% and this This whole problem goes away if I can raise prices by 5%. And so the vast majority of us are facing issues inside of our business that if we just built a better business and then were able to raise prices because we had better service, we had better quality, we had a better website, better systems, better procedures, better software, answering the phone, better communication. If we just did those things, this would not be a problem. And this is the worst case scenario. And by the way, I also think you'd probably end up saving about $20K just in the fact that this new shop space, in the worst-case scenario, would be closer to your customers. And you'd save in payroll and extra time driving back and forth from the shop space that is currently far away from all your customers. And so, many times when you play out the worst-case scenario, it's a small fraction of the percentage of your business. And so, that's why I just focus on growing the business, making it more profitable, having a better team. The simple stuff. Because the actual boogeyman that you're facing is 5% of revenue. 5% of revenue. I have seen people add whole lines of service and build out new brands and build out websites and whole new ways of doing their business, and it adds like 3, 4, 5% of their revenue versus just focusing on the majority, wherever all the good stuff is happening, and just making it better so they can raise prices. Making it better so it's more efficient. Making it better so they retain their team more. All right, great, great call. Next one coming in, coming in hot. Welcome to the show. Thank you for coming on.

Hey man, how's it going? Um, yeah, so we built our first location, um, and, uh, it took me like 4 years to get to—

Oh, you're breaking up a little bit. You're breaking up a little bit. I don't know if you can get to a better spot. I can hear you. Yeah, go ahead. Let's try it again.

Hello? Okay, can you hear me now?

Yes.

Okay, so first location got to $900K, um, and then we just built our second location, and within the first 4 months we hit, um, this month we'll do $130K in the second location within the first 4 months. Um, the goal is to get to $11.2 million in revenue. I guess my question is, like, with production at like around a million dollars in revenue, um, do you think there's a way to do it without a production manager and just keep that profit? Like, I'm just right now kind of in between, like, either systematizing it to the point where it's like just super efficient without a production manager, or like I hire this overhead guy, which we have in the first location, as a production manager. So I'm kind of stuck in between that right now. Um, and what's the most efficient way to do that, you know?

So if you don't have a production manager, who's going to like lead the crew? Who's that?

Yeah, I guess my thinking is like, these guys should be able to lead themselves in a sense of like, if they're getting 20% of the job, you know what I mean? Like most of them are making $45 to $50 an hour right now. Like my thought was like, what is the production manager actually doing? You know, 'cause in our first location we have one and he's great, but it's like, If the system was set up so proper, would they be actually able to do the same thing without that overhead guy?

Here's my question on that first location. I have two questions. First off, do you think the current production manager at the first location increases the efficiency of the crew by 10%?

Yeah, of course. Yeah.

Okay. So that was like an of course. So I was looking for how much you reacted to that. That's their wages. And so although you could create a system to probably get rid of the production manager, I have a feeling that removing that production manager from location 1 would reduce efficiency by less than or more than 10%. And if you do that, that's $90,000.

Yeah.

And especially when it comes to technicians, regardless of how much they're being paid, like we have seen consistently a great manager can get 20 to 30% more discretionary effort from that team. And so it sounds like you have that person.

Yeah, okay, so the next question is—

Go ahead.

For that production manager, the, 'cause I'm bringing, I'll bring a guy up from a lead tech to a production manager, but the issue is right now he's getting 20% of the job, right? And then the production manager, like, I just wanna find a really good incentivization structure for when we go to like 10 locations. For the production manager itself. So one thing that was working well in the budget was 10% of overall revenue. Like, it does kind of work out. I know you probably hate that for a production manager, but like, how do you incentivize the production manager the same way that you incentivize the tech so that he's put— like, you know what I mean? So he's pushing it too.

Yeah, the challenge becomes if there is no one to do quality control Because if everyone's incentivized based on revenue, you will make more revenue. But what can hurt is the long-term brand equity of the business. And so it also can hurt the long-term profitability of the business. And so like right now on the $900,000 first location, what's the profit percentage per year average?

Yeah, the profit, like I would say like Around like 22%.

Okay, so that's the number that you care about. When you leave there every day, the only number you care about is that profit percentage. And if the production manager is a huge piece in the puzzle as to whether or not that location is profitable, I want them thinking about profit and I want the techs thinking about revenue. 'Cause I want the technicians thinking constantly about being efficient, doing high-quality jobs, there's not callbacks, but I need someone thinking about profit in terms of, equipment maintenance, in terms of shop and overhead expenses. Otherwise, those things will just go on a tear. Like right now, how is this production manager being incentivized in terms of bonuses?

So the first location, he's like, he's, he's at, um, so he's at a salary plus, um, plus 10% of the profit of the business, um, paid quarterly. So The only thing is, in the second location, I'm just thinking like, I'm going to take this tech from, you know, 20% like production pay, right? He's making like probably $8,000 to $9,000 a month right now. And then I'm going to drop him into something where it's more of a quarterly thing. So what I was thinking is just tweaking that to monthly. But yeah, the first guy gets paid 10% of profit and then he owns like 5% Phantom stock and then he gets paid around like 75 grand a year.

Okay, so phantom stock is, is sometimes tough with home services if you're not going to exit. Are you planning to exit down the road?

Uh, to be honest, man, it was more of a thing where I just really wanted him to feel like he was part of it, you know what I mean?

Okay.

Um, so it was, it was more of that kind of thing. I would say I'm not sure about the the 5-year plan if we want to exit. But I do want to make it to— our goal is $11 million in 5 years.

So yeah, so the 5% Phantom, I think I would explain that better to a, a production manager because right now to them that doesn't mean anything. They don't even know what that means likely. And if they do, it doesn't actually move the needle for them because unless you're planning to exit, Phantom Equity does absolutely nothing because they have no ability to make decisions in the business in terms of from an equity perspective. I would say this.

I think he knows that.

Cool. So like, I think you have a great model and I think trying to tweak it would be crazy if you're doing 20 to 22% profit margin and in 4 months you're able to spin up the second location, which we consistently see. This is where you start having trouble because like now you leave the first location and you get a second manager. That's always the hardest hire because now that person will be compared to your first production manager and now you have to become a leader of leaders, which is now 2 people, not just like someone underneath you in production management, like, but the fact is you have built a model that gets you to $120K per month in 4 months. Is that mostly recurring revenue?

It's no recurring revenue, it's just soft washing roofs.

Okay. Like, okay, so I think you've built an excellent model, and if you're able to figure out making it more recurring revenue, it would be phenomenal. Like, really, really good. Because right now, you've been able to figure out how to get to where they can make profit quickly. The biggest problem is if it took you 4 months and you did like $15,000 a month in revenue, there's no profit to give the person. And when it comes to like going from quarterly to monthly distributions, for example, or like profit sharing, that comes down to whether or not you're consistently profitable. And if you're consistently profitable every month, then I'm cool with monthly distributions or monthly profit sharing. If there's ups and downs or there's 3 or 4 months of the year where you're negative, that's where it gets really hard to give monthly distributions because they just all of a sudden don't see a bonus for 4 months and they're used to that monthly bonus and you don't plan on it, but they plan out from a budgeting perspective of what they think their bonus per month is going to be. And so I would only switch from quarterly to monthly profit sharing if you're consistently profitable every month. But at $120,000 per month, that's really good. It comes down to whether or not you're making, you know, $30,000 or $40,000 in the winter and all of a sudden you have negative months.

Yeah, yeah, that makes sense. Yeah, so another question I quickly, quickly, quickly had for you is like, what's your thoughts on like the CAC being high and then raising like an average ticket, like adding like gutter guards or something just to raise, raise the average ticket so you can spend more for the customer?

Yeah, I'm a fan of that.

Would you increase average? Yeah, yeah, yeah, like average.

Yeah, I, I love increasing average ticket on any project. What I would prefer is we increase the quality of the revenue. I would rather you do $70,000 a month in revenue, but it's mostly recurring, or a big chunk of it is recurring, compared to $120K per month of one-time projects. Because it's very difficult to give— like, if you're going to start duplicating these and copying and pasting this model, like, you prove that you can scale quickly, but can you figure out a model where after 4 months you have $120K of one-time projects but you also have $20,000 a month of recurring revenue that you've been upselling customers on where you come back annually and do cleaning or maintenance or something of the sort, because that business is much less likely to have downturns during the off-season and it's easier to find the operations manager that's not constantly on the hunt for new jobs. And so although increasing average ticket would be, would be awesome, the highest leverage thing to do is to create recurring revenue in this model.

Yeah, and then for, for Augusta, you guys are just— is it just like, uh, before sales process? Like, it's just you guys are hitting them with the recurring revenue ask, like, every part of the sales touchpoint, like the sales motion?

Yeah, so if someone's asking for a one-time project, you could in the estimate give them the option for the maintenance of that, or annual inspection, or tie the warranty to them getting on the annual inspection. It's like, "Hey, we come out annually, we do this office cleaning, and if you do that, you also get a warranty, no money asked, no cost to you, we will replace whatever on the work we did originally." And so you sell it as a warranty, you sell it as a guarantee, you sell it as maintenance that they're going to need so they don't have to do it again in X amount of years. And you can grease that at the very beginning of the process when you are making the original sale. When you are giving them the price for the one-time job, but most of the time that's gonna happen after they've paid, they're happy, you've proved that you do a good job, and then you show them the math of, hey, doing this every 5 years, here's what it's gonna cost you. Doing it every year is gonna cost the exact same, but now you're gonna have a warranty, we're gonna have a guarantee, it's gonna look good, you don't have to wait for it to look bad again, and now you have some resemblance of a recurring revenue model. And so if you have a $5,000 job, I'm just making stuff up. If you've got a $5,000 job, the customer just paid for, my whole objective, this business gets 3 to 4 times more valuable and much more scalable. And you'll have way more confidence in copying and pasting this. If you can turn this $5,000 job into a $499 annual inspection, when you come back, like, that's crazy. Well, if the gutters are going to last 20 years, and I can make $500 per year on that, I made $10,000 extra. And so although I could, you know, try to upsell this $5,000 person to gutter guards, get them to $7,000, the real moneymaker in the long term is tripling the amount they give me from $5,000 to $15,000 because I get them into this annual package. Now, I would love to get them to quarterly. I'd love to get them into monthly. I'd love to increase their occurrence as much as possible, I'm just giving the example of the quality of the revenue is far more important to me than the average ticket. And this whole model that he's built is phenomenal. The fact that in 4 months you get to over 6 figures per month is just keep doing what you're doing. Don't figure out how to try to cut out your production manager, just keep doing what you're doing with the 22% margin business. Copy and paste this. However, there's this big asterisk when I see one-time work because that can dry up very quickly. It can be a recession, this production manager going down, them losing the ability to sell, them getting distracted with something in life, and all of a sudden, if my revenue drops in 3 weeks, it's hard. My revenue can drop on a recurring location, recurring revenue model, it can drop over the course of a few months if my general manager starts to check out. It can. However, it can't happen in like a week of them being bad, which is the case when I have to kill to eat every single job. If I have to keep killing and eating $5,000 jobs, I'm just on this constant treadmill of customer acquisition cost, sell 'em a $5,000 thing. Customer acquisition cost, sell 'em a $5,000 thing. If I can instead get the customer, sell them something that they constantly are coming back for, I can get the next customer and build on top of that revenue. And yes, it'll be slower. You're not gonna build $120,000 per month of recurring revenue business in 4 months. But if you can build this as one-time jobs, but then sell them into something else, You can sell them into recurring maintenance. You can sell them into a warranty or a guarantee and get this to $20,000, $30,000 a month in recurring revenue. The quality of that $20,000 or $30,000 a month revenue is far higher than $100,000 of one-time projects. Next caller. Welcome to the confession booth. Welcome to the show. Oh, it's still coming in. It's loading. Incoming. The confession booth is taking— There it is. Welcome to the show.

Hi, how's it going?

Fantastic. What can I help with?

Yeah, so I have a couple, a couple questions. Um, if it's okay if I just kind of lay some framework down for you, uh, first, is that all right?

Go for it.

Okay, great. So I, I'm going to be hiring an office manager or a virtual assistant, assistant, super qualified, starting June 1st. Right now I have 2 full-time guys and 2 part-time guys. And we're running one crew a day pretty much. And then sometimes I say probably twice, three times a week, we'll run two crews or myself or one of the business partners will get out and run a crew for projects or overflow mowing or whatever's left. We're doing between, I'd say, 14 to 20 properties a day, four times a week. Right now we're generating somewhere around $750 to $1,000 in revenue a day for mowing. We're usually doing one larger project coupled with a few smaller sort of like bed cleanouts that I contracted at the beginning of the season. A large part of my question has to actually do with these contracts because I feel like it's time to raise prices. We're kind of in this place where our asset capacity would allow us to run 2 crews pretty consistently. We don't have the manpower and I've held off on sales. I felt very comfortable selling jobs, not having any trouble finding leads, closing leads, and, and kind of getting the ball rolling on that side. But, um, my concern is Should I completely pack out asset capacity first, um, or should I raise prices? My concern with this is that our current books are showing that we were somewhere around 30 to 40% profitable last year with, uh, right at $300,000 in revenue in our first year. However, we don't have the money to show for that. We don't actually have that money sitting and available to use or utilize. We're, we're a cash flow business that's floating somewhere around, I would say, $2,000 a week from week to week after payroll and after, you know, salaries are paid and all that jazz. My hopes are that adding this VA is going to free up time for me to sort of get double down on focusing on systems and sales, etc. But no, with where we're at right now, it's smarter to go ahead and just jack up our prices and lose those customers like I know you talk about often, or should we— we should be focusing on on, you know, capacity.

How do you— so right now, how much cash do you have in the business right now?

After payroll this week, we'll have probably $3,500 sitting there that's free. Um, and we have roughly, uh, I, I know that, you know, on this call I should know this, but I say I think we have about roughly $1,000 to $1,500 in monthly expenses between CRM, uh, tax and tax accounting and bookkeeping, and there's another fee there that's escaping me now, but it's roughly $1,500 in expenses.

So this all comes down to your risk tolerance. If you're pro-growth, you could do it. Do I think on a $300,000 annual revenue business with $3,500 of cash in the bank, we should be spending that cash for growth? No, from my personal risk assessment. But if you're like, hey, I just wanna grow this thing, and I got tons of leads and I just need to go get another truck, you could probably spend a couple thousand dollars on a truck and a down payment, get some debt. That'd be very pro-growth and very pro-risk. And so it really comes down to when you go to sleep at night, do you worry about how much cash you have to make? I would, but you might not.

Yeah, I definitely am. I mean, I've got— it's myself and two other partners. One of the partners is taking a salary because of his investment, but isn't always available to actually generate revenue. I am the managing partner. I'm operating everything, hiring, firing, most of the systems are built on my back. So cash flow is super important to me to kind of get ahead of that. My concern with raising prices, and I think that raising them 20% to just try and be aggressive, you know, would definitely help us. But at the beginning of the season, I used, we used Jobber, and at the beginning of the season, I took the optional line item tool and basically created a menu of optional services for our customers with everything that we offer on it. And I've got, you know, probably 160 active customers. I would say 90 to 100 of those are recurring. And there's a lot of services on there such as winterization, startups, bed maintenance, um, some, you know, light tree trimming, just like maintenance services that are on that list that I'm feeling are, are probably underpriced. And some of our timing has been off, waiting a little too long to get started on some of those projects. Or just getting bogged down with, you know, people getting sick or whatever that might be, because we're obviously a young business. What are your thoughts on raising prices on all those services? The contract doesn't say anything about a price lock, but it also doesn't say anything about our freedom and ability to raise prices if we want to. And I'm just not— I'm just curious your thoughts on whether that's a disingenuous thing to do, if it's a smart move if we wanted to go that route, and what you think.

Yeah, like to me, I say raise prices across the board by at least 20%. The reason for that is this. You are saying we are, we are, we do, we have plenty of demand. We have plenty of demand. So we have demand over here. We're getting leads like crazy. I'm going to go on a limb and say you're booked out. And if you wanted more work, you get more work tomorrow. Is that right?

Yeah, absolutely. I have a sales background. It's very easy to do.

Are you currently spending money on marketing?

Very, very, very little. I built our website, it functions, we get a couple leads from there, Facebook, and then we pay for Thumbtack, but I have it on the lowest budget possible, so I'd say we spend maybe $300 a month on advertising, maybe. If that.

Okay, so right now you are supply constrained, meaning you need more trucks and equipment and employees to be able to make up for the fact that you have so much demand. And so, the only thing to do in this case, if you don't increase supply, is you must increase price. And so, whether or not it's in—

in—

in— disingenuous or all the rest of it, it's like, these are the basic principles of economics. If demand is higher than supply and you cannot increase supply, price must go up. Because the alternative is, you are saying no to customers, demand, leads, that would otherwise be happy to pay you the— the higher price, but you have to say no to them because you're stuck at the amount of supply you currently can afford and you can't serve more customers. And so you need to raise price to be able to get rid of some customers, reduce your close rate, and make room for better, higher-paying customers. And I understand the connection with customers or, you know, they supported you in the past, you know, they got you to where you're at, but like the thing holding you back from where you want to go is trying to serve the customer that's your lowest paying, that you are not making money on, and it's keeping you from growing the business. And if you have a $300,000 annual revenue business and $3,500 in the bank, from a 4L Framework perspective, your constraint is liquidity. And so you can solve that very quickly on a $300,000 annual revenue business. If you raise prices by 20%, that's $60,000 of profit going to the bottom line. And we can only do that because we know that we have plenty of demand that even when we raise prices, supply will be— that's fixed. Demand will be just fine. Like, assuming you raise prices and you still believe you get more customers, there's no reason not to raise prices. And so for some reason, this industry, it's just amazing how much we overthink price increases. And I'm guilty of the same thing. You get to know the original customers, you're thankful for them, you want to serve them. You got to know them. You don't want to lose them. But it is amazing to me that everyone that says that in home services also in the past year has almost for sure had a price increase from Microsoft, had a price increase from Google, had a price increase from Netflix. And we haven't batted an eye. And they're making 35 to 40% profit margins and they're making billions of dollars of profit and they are just fine raising prices. And yet we working our butts off making $300,000 in revenue with $3,500 in the bank, and we are questioning whether or not we are gonna raise prices. And yet, Netflix is able to just increase prices by 50% on their subscription, and no one bats an eye. And so, we have to get more confident in raising our prices. Like, it's such a vanilla thing to do, and a lot of times when I say it on like the Turnaround Show, people, they say, ah, it's so simplistic, you make it, you're just dumbing it down. Meaning, so, you're saying the same thing all the time. Yeah, like, because the vast majority of home service businesses, their problems would be solved if they just raised prices. That's the fix. If you serve the customer well and you have more demand than you have supply, you need to raise your prices. A lot. Not by 5%, not 3%, not a price increase for the adjustment of fuel. 15% minimum. And while at the same time we get worried and concerned, we wonder why all these big, bad businesses, the reason they got big, the reason they make so much cash is 'cause they raised prices when they realized that people would stay if they just did a good job. The reason people don't cancel Netflix is 'cause they are okay with spending the extra $5 a month to get unlimited shows. 'Cause going to the movies is gonna cost 'em, let's just call it $20. So they're okay with paying $20 a month for unlimited movies. Value, price. And so many people inside of home services are providing a very high value to customers and charging way too little. And we're so afraid that if we raise prices, they're gonna leave. You're not. As long as value is higher than price, they will stay. And so, like, when I started, when I started HomeWorks and the software side of things, it's just amazing to me how much they think about price increases and optimization of price. And yet in home services, we freak out over raising prices. And then we wonder why they make money. And they're so bad. No, they figured out price optimization. And when we have a bunch of demand and we do good service, we can raise prices and people will not leave. And if we take care of the customer, when we raise prices, they'll understand the fact that fuel has gone up, insurance has doubled, cost of wages have gone through the roof in the past few years. And so why would you not raise prices? And they want you to raise prices. We recently, Brianna and I, we turned down a bid because it was like, they're so low, there's gotta be something wrong. Are they gonna steal it from our house? Recently I talked to Jonathan Patoschnick on the Home Service Millionaire podcast, and he mentioned when they moved their house, The contractor they hired was doing 1099s, and one of the movers stole $80,000 worth of their stuff. Do you think in the future someone like Jonathan is gonna be price sensitive on who's gonna be their mover? "Let's get the cheapest person, honey." It's not happening. It's $80,000. So I'm going to pay a little more for the company that has W-2 employees and a professionally wrapped truck and hasn't changed their name 4 times in the past 10 years and make sure that their employees are trained and uniformed. I'm gonna pay more for that. And yet all of us are trying to provide that value and service the customer without charging the prices required to do all of those things. It costs money to have software. It costs money to answer the phone. It costs money to have uniforms and trained employees. It costs money to have insurance. And yet we're trying to compete with people who don't and think that somehow we're supposed to have the same prices as them. It's ludicrous. All right. This is the confession booth. We got a lot of people in the call queue. I'll be hopping to the next call in a second. But if you would like me to fly out in person to your location and do the turnaround show, scan this QR code down in the description. There's links. Submit a quick video. I'd love to come out and see you in person and do this live at your shop space. All right. Next caller is coming in live. Welcome to the show. Thank you for coming on the confession booth.

Hey Mike, can you hear me?

I absolutely can. What can I do to help?

Perfect. Um, I knew this is confession booth, but this is Phelps. Um, and I had a bit of a situation this past weekend and it's kind of thrown me in, uh, like just to kind of grow up and want to get some advice. Um, so I got reckless driving ticket, and my court date's coming up in about a month. But, um, I had to fire one of my guys this morning just because he wasn't hitting any of the benchmarks for doing the service. And I really want to grow this thing, especially now seeing that it can't really run without me. I don't have a guy, and I might not be here, uh, depending on how the court goes. Um, so I have a couple questions. How can I grow to $500K as fast as possible? I want to do the copy and paste method. I read your whole book and that's what I want to do. Um, but actually getting there, um, I'm not sure with where I'm at now. Um, I'm going to be hiring another person here within the next couple of weeks. And my plan is to have a full mowing crew. 2 guys be in our mowing truck and then that will allow me to go out and do more sales and more landscaping type things. Um, I will say up front, I'm not great at sales, do not have a background in it. So I am getting better, but definitely the reps are not there.

How are you going to do the landscaping jobs and focus on sales if you can't drive?

Right, so when I was in the policeman's car, he said that I could get like a working, uh, like suspension so I could drive to work and then drive out work, but I can't do anything but that. So if I can't like, you know, go to the gym or church or whatnot, but, um, he said that there's a little bit of leeway he can give on that. So it kind of is up in the air depending on how everything goes.

Yeah. So I would cross that bridge when we get there in terms like we have a month to make the business better.

Right.

Right. And so I wouldn't worry about copy paste. I wouldn't worry about projects. I wouldn't worry about sales. I would worry about one thing and is getting a great employee ready to go. And I wouldn't be hiring them a couple of weeks. I'd be hiring them as soon as possible. So in the next month, you can really make sure that they understand the systems, the procedures. I would also have a second employee that's in my back pocket that might be willing to work part-time or fill in the gaps. Because if things go bad in a month and you're not able to get that work, that extra permit or whatever, we want to make sure that the whole business doesn't come collapsing down.

Right. And right now I have— I had the full-timer that would help me. Monday through Thursday. He's not here anymore, but I've got another guy that works, uh, Thursday through Saturday, um, and he clocks his 40 hours in that time. Um, so I do have to still hit him. I'm mainly just looking for the other guy. Um, my— but I guess my question is, should I hire that one guy now for full-time and then get another full-timer to Join him in the truck?

I think right now it's a function of if you had enough demand, yes. But I think by getting a full-time person, you have a month to basically put on your sales boots and focus only on recurring revenue. 'Cause any building of projects could be in jeopardy. You could put the business in a really bad spot if you sell out 8 months, or 8 weeks worth of projects in the next month by having a second employee in the truck and all of a sudden you come up to this court date and you can't drive. And so I want to mitigate risk by simplifying services and making sure that if that were to happen, the business continues. And if we get past the month and like you got a solid employee, you got another one that's ready to go, great, put them in the truck, you're able to drive, do the landscape thing, do sales, etc. I just don't want this to be a cataclysmic failure if what we think is going to happen doesn't happen.

Right, right. Yes, sir. And my projects are more like property cleanup and mulch install, not like hardscaping. Yeah. But my, I guess my follow-up question of that, with doing door hangers, as of now I don't really have the time to do that. Do you think I should hire someone specifically to pass those out? Or like, how should I go about that?

Right now, how far are you booked out in terms of work?

Uh, we have mowing Monday through Wednesday or Monday through Thursday, and then we do, uh, we have about a week or two for projects.

Okay. Yeah. Like I would say if you were to get a full-time employee right now, you would still need to be in the field somewhat, kind of like you are now. Is that right? If you were able to replace this one that left, you'd be still in the field a little bit. Is that correct?

That's correct. We would, I would be in the truck with them doing the mowing route. And then technically we have 3 guys on Thursday. Yep. And then Friday, Saturday, I have the other guy that helps.

Yeah, so the way to scale is eventually gonna be having another employee that replaces you in the truck and you go focus on sales. Big fan of that after this month. We need to pass the month thing, make sure that we can actually drive before we go sell projects. And I don't want you to be put in a bad spot where you get one employee, you train them up in 3, 4 weeks, and then he leaves you right before this, now we're in a really bad spot. So I wanna build more conservatively for the next month, and that is get this employee as fast as possible trained up. And then if this month comes by and like, hey, we're in the clear, great. Then you get another employee, you have a solid 2-man crew doing all the lawns, you go focus on projects and getting sales, I'm fine with that. But we gotta build the business to avoid catastrophe. And so whenever I hear about something like this at this size of business, I don't want to build the business in a way that could potentially put you completely out of business. And so for now, for the next month, I would lock down the first— replacing this employee as fast as possible, training that person up one-on-one, even having a backup to them. It sounds like you got the Thursday to Saturday guy, so that's great. And then once you're past this month suspension thing, or like you have— you're in the clear on that, then I give you permission to like, okay, replace yourself in the truck and go focus on sales. And does that mean doing door hangers? Yes. Does it mean Maybe spending some money on ads? Yes. Does that mean focusing more on automations and follow-up phone calls? Yes. That's what sales is.

Okay, perfect. That answers my question. Thank you, Mike.

Thank you, you have a good one. Next caller is coming in hot to the confession booth. Welcome to the show, thank you for coming on.

Hey, how you doing, Mike?

Fantastic, what can I do to help?

So, I have a company now, We've been in business for about 5 years and I do about, about a half a million in revenue, uh, which projected this year. Um, and I have no problem getting leads and work, uh, and selling the work. Uh, my problem now is almost like, I guess, just like, I wonder if I should simplify my services. Um, on the landscaping side, I have one mowing crew and one landscaping crew. And the mowing crew is really profitable, uh, but my landscaping seems to really only be profitable sometimes. Um, every job feels different and it's hard to kind of price profitably for me because I don't— I like that pricing for some line items but not all of them. And, uh, it seems hard to train guys to do them properly. Um, so I feel like I've almost taken on too much work. Um, you know, we're booked out for a good 2-ish months right now. Um, and I've started to raise pricing on landscaping to— and we've dropped our close rate to probably like 40%. Um, and that's helped a little bit kind of weed out some of the, um, jobs that I may have priced incorrectly. Um, but I'm, I'm starting to think like, okay, I don't really need to say yes to every single service every lead that comes in, you know, I can start choosing what I want to take on and reduce the headache of, you know, callbacks or, um, not as good profit from pricing incorrectly on my end, uh, by scaling back the services. Or, um, you know, maybe hiring somebody with a little bit more experience on the landscaping side, which I'm a bit weary because I feel like that's, um, kind of hit or miss because right now I have two landscaping guys with me, uh, and I'm on the landscaping side and I just feel like I can't leave for more than like a few hours. Um, because they're both inexperienced, unfortunately. And that's another thing is like, I probably should have not hired two inexperienced landscapers to work with me. Um, but regardless, down the line, I feel like simplifying services. I think I've heard you talk about it before, uh, but I couldn't find any resource on it. Um, And I was curious your opinion on that, someone on my side.

Yeah. So when it comes to the landscaping side, it's actually pretty rare that someone says what you just said, which is like the landscaping side, we don't make money. The mowing side, we make money. Usually the tempting part about landscaping is the fact that you do make more money and then people keep building around it and they keep adding more and more services and more and more complexity and bigger size jobs. And so you're definitely on the path. That's correct. Which is simplify and standardize. Now, the reason I say this is when people hear simplify, they mean they think it only means they can do simple, basic like jobs that someone could do within an hour of training. The other thing though is standardize, which is taking what you currently do and just saying we're gonna do it the same way every time. And so, for example, if you're planting a hedge, you only plant 2 different types of trees for the hedge. And I can guarantee you 2 trees in your market would suffice for 95% of jobs for a hedge. Same thing is true when it comes to pavers, walls, et cetera. And so before you go out and say I'm gonna cut off the entire landscaping division, I'd ask myself 2 things. One, What are the jobs that you could leave your crew doing and they'd be okay with it? And you probably know, okay, it's like these 3 or 4 different types of jobs. I can leave them there, they will get done on time and on budget. Those are the, that's the first area I'd focus on. And I potentially would say cut everything else. But if you're not gonna cut everything else, it's gotta be standardized, which is we're not gonna offer custom work every single time. Custom types of materials, custom types of trees, like custom colors. It's gotta be the exact same thing every single time. Usually, you can go back in the work for even the past month or two and just look at the jobs that you lost money on or that you were constantly called back to and have a pretty good understanding which services you need to cut out completely.

Yeah, that's good. I guess like right now too, let's say I look back on some of the jobs that we completed this year and last year I had a very experienced landscaper. He had like 10 years of experience and I felt like we did, um, pretty good. I would say anywhere between like, I don't know, 30 to 40% on landscaping, um, for our labor revenue rate. Uh, mowing is usually around like 30%, maybe sometimes lower. Um, but now with these two guys I have this year, we're literally like— and maybe it's like because I have three guys in landscape crew and doesn't justify it, but It's where, I mean, on some of these jobs we're at like $50 an hour. We just did like a $20,000 install and I think I calculated our man-hour rate after and it was like $63 an hour and I'm like, I can't do that.

Right.

And so you're saying like if not cutting back, then at least standardize things to where it's not so custom every single job.

Yeah, exactly. So like before I cut walls and patios completely, We went down to, there was one block that we installed for walls, and there was one block with one design and one color for pavers. And it's amazing, as long as you present it correctly on the sales side, you can still sell 95 to 98% of those jobs just by standardizing. I will also say, we did that for a few years, and then we realized we can still cut this out as long as we replace it with recurring revenue. So if I was you, and you're in the camp of, hey, I'm making a bunch of money on mowing, which by the way is higher quality revenue by the way, All your time and attention and your late evenings and weekends thinking about the business is spent on these landscaping jobs. If that was all deployed, that discretionary effort was deployed towards your mowing crew and your mowing jobs and getting more mowing customers, you're advertising for them and upselling those mowing customers into simple projects, you could probably keep your landscaping crew busy with just the mowing crew upselling landscaping jobs that are simple, like mulch installs, bush trimming, property cleanups, pressure washing, like, all these little basic things that you could potentially add to the business in terms of upsells, you could probably keep this crew busy after cutting out 50% of their revenue of jobs that were complex and custom. Which, by the way, complex is the opposite of simplification. Custom is the opposite of standardization. And so right now, anytime I hear custom, anytime I hear complex services, those are things that I know are very difficult to scale. Are they possible to scale? Yes, but way more difficult. And I'd rather do things that are easier in life to make more money. And so I'm not gonna take the path of most resistance, which is complex services. They're custom, every single project they're gonna be different. Guess who's gonna be the one that has to be on every job? You. Guess who's gonna have to manage the project? You. Guess who's gonna have to order the materials? You. Guess who's gonna have to teach the crew on every single job how to do the new design of the pavers? You. Guess who's gonna have to hop on the excavator 'cause no one else has done the drainage this way exactly before?

You.

And so you become the bottleneck. It's very hard to scale any business where you're the bottleneck. And so what I would be doing in this business, I would be looking at what are the services that are constantly pulling me back into the job? Usually those are also the ones that go way over budget, by the way. And so you can very quickly identify, and for most people, you don't even have to look back. You like immediately off the top of your head, list off the 3 or 4 services that you just know you're gonna go back to. And you do not have the confidence to price the job within 10% budget hours. Meaning, if it's a $200 budget hour job and it takes $400, that's 100% increase or overage on budget hours. There's no way you should be doing that service. If you can lose your shirt and do twice as many budget hours, or in your case, you're probably doing half the amount of labor revenue that you would make mowing grass, you're out doing a project hardscaping job and making $50, $60 per man hour. You're not making any money. And so, cut those things out knowing that if you cut those things out and it gives you time to focus on mowing or the thing that's making money, like, insert any service we've just talked about with the thing that is currently not making money but taking all of your time with the thing that is making you money but you're not spending any of your time on. If that is existing and you just cut this out and you focus more on this, you would make more money. Furthermore, I will say if you cut out 40% of your revenue on these big projects and these big jobs that you're being pulled into, it's sucking all of your time and energy. If you just cut all of it out, 40% of revenue, and spent your time training your mowing crew, creating upsells, text messages, email blasts to your existing mowing customers, you would probably fill the landscaping crew with the simpler services that they can install and it would fill up their schedule now with work that they can do without you and It's profitable, and these customers have a lot higher lifetime value, and you're able to recoup the customer acquisition cost of Mowing customers faster. So what do you do? Go spend money on marketing for Mowing. Great question. Next call. Welcome to the show. Welcome to the confession booth. Thank you for coming on. Check, check, 1, 2, 3. The Confession Booth is live. Can you hear me? All right. Sorry, you've been waiting for a while. Okay. Next caller. Coming in hot. Welcome to The Confession Booth. Welcome to the show. Come on.

Hey, Mike. Really quick question. How would I go about throwing my name in the hat to be a speaker at the Blue Collar Summit?

Oh. We have Blue Collar Summit, the website's being built now. In probably a couple weeks it'll go live, and then basically what we're going to do this year is probably have it where for everyone that shows up, they're able to apply to be a speaker. My objective this year is to, we had a conference last year with just Augusta, and we got so much good feedback, and I enjoyed it thoroughly, and that is hearing operators that might not be professional speakers, but they have just like raw, like they share the way it is. And I really enjoyed it. We got a lot of really good feedback. So I wanna kinda emulate that this year. And that is have a lot of people from the community be speaking. And people probably had never heard of before, not big name speakers. And so I'm really looking forward to it. So what we're going to do is when you sign up for a ticket, you'll be able to, if you're interested in speaking, you'll be able to apply to speak. And it'll probably just be a quick video that you shoot and talk about what you're going to— you're thinking about sharing. And then I will probably reach out to some people too if there's certain topics I want covered inside the community. But that is the plan. Next call coming in hot. Welcome. Whoops. Nope, nope, nope.

Here we go.

Welcome to the confession booth. Thank you for coming on.

Hey, Mike, can you hear me?

I can. What's up?

Yeah, so I was calling. So, uh, we have a very short season. I currently have 3 employees, uh, 2 full-time, 1 part-time. We're trying to, uh, basically go from about $200,000 to about $400,000 to $500,000 this season. Uh, the biggest struggle right now is kind of understanding, understanding the hourly rate, production targets, and, uh, all that while we grow. Oh, so basically we have about 2 to 3 weeks to kind of, uh, really get our recurring work and recurring maintenance. And I was thinking of maybe doing a mowing crew and then a landscaping, a small landscaping crew crew on the side, and I kind of— me and one other guy take over the landscaping crew. I just kind of wanted some feedback and kind of, uh, direction on like labor targets, uh, structure pricing, and the crew setup at this stage.

Yeah, like what's your long-term goal? Is it to have more recurring revenue? Like you have a short season, so what are you doing during your off-season?

Uh, so we do snow removal in the off-season, but that's kind of hit or miss. We kind of can't really bank on that, especially with the last couple seasons, they've been kind of iffy.

Yeah, so like I'm assuming—

Yeah, the goal is really just to kind of step out the field. Sorry, go ahead.

I'm assuming you're trying to— during those months, you're just trying to like get as much project work or recurring. It's like whatever comes in, you're willing to do it. Is that right?

Yes, pretty much.

Okay. And so when it comes to going from, you know, 2 or 3 employees to the next level, what likely happens is you start spending less time in the field. And so like right now, is most of your day spent out in the field producing revenue?

Yes. So like currently right now, like I said, with the short weeks, I'm kind of trying to fill up the schedule. We're about a week and a half booked right now. I'm— yeah, I'm in the field with the guys for a couple of days and I'm trying to, you know, maybe one or two days kind of try to book the schedule and sell. But that's kind of where we're— where I'm at right now.

Yeah. So as you go from $400,000 to the next level to call it $600,000, you're going to see more of the shift of demand to your time outside of the field where you're working on the business, you're working on sales, you're hiring, you're training and doing these other tasks. And so what we want to be careful of is that as you spend less time in the field, what a lot of times happens is you go from, let's just call it $400,000 and $100K in profit, and then all of a sudden you're doing $600,000 in revenue. But because you're not in the field anymore, you're doing $80,000 in profit. And this is mostly just because you stop spending time in the field producing revenue and spend more time working on the business, doing sales, getting more work, doing everything else with running the size of the organization. And so what I would keep in mind in terms of like, quote, pricing and making sure your margins are protected is that you increase prices somewhere in the middle of here when you hit capacity. So like, for example, it might be this year when you're like, hey, we have so much work. "I got 2 full-timers, I got a part-timer, but the trucks are out rolling all day long. We don't, like, we can't take any more work on." When that happens, if you raise prices just one time by 15% to 20%, that will put you in a good spot to where now when you make $600,000 in revenue, you'll make still $150,000 in profit and not less than what you're making now. Because a lot of times at $400,000, the amount of money that you make in the field in terms of labor is your profit. And so when that goes away, I don't want the business to stall out.

Okay, so basically just, basically just fill the schedule now, you know, because like I said, we're at the $200,000 last year, and then this year is kind of the first time because last year was just me and a part-time guy. And so this is my first time kind of having, you know, multiple people. So basically just kind of stay in the field with them as much as possible, fill a schedule up, and then raise prices once we get to capacity.

Yeah, and if you had tons of cash when you hit capacity and you're like, I'm just going to keep growing. Great. Fantastic. However, if you have cash constraints or you're running a little on cash, there's a little bit of pressure. You're like, I don't know, going into the offseason with this much cash, it's iffy when it comes to snow. Then I would just say hit capacity, raise prices, build up that cash reserve, and you can always go on the offensive again down the road. All right. Next caller is coming in hot. To the confession booth. Welcome to the show, thank you for coming on.

Thank you, Mike. We're currently about 6 weeks out on landscaping projects and I'm trying to strategically build out our first like full-time mowing division. I got 4 guys and without hurting our landscaping production right now, you know, I'm trying to avoid making that mistake. What would you say if you were in my position, how would you structure and scale the mowing crew while still keeping the landscaping side running?

Yeah, like right now I'm assuming landscaping makes up the vast majority of the revenue?

Yes, sir, about 90%. Just this year we started implementing mowing.

Cool. The first thing I would do if I was you is actually think about landscape maintenance before I even think about mowing. And that is, how do I get recurring revenue from the one-time jobs by just selling them a recurring maintenance package for whatever I installed? Because everyone in your database that you install a project for, I would be—

go ahead. Yeah, that's exactly what I would— that's what the 10% or so makes up. We have more maintenance accounts than lawn mowing accounts.

Got it. Makes sense. And so right now, for 6 weeks booked out, Are you starting to get customers saying no to your landscape jobs just because you're so far booked out?

Yes and no. Our close rate's around 28 to 30%, you know, so I would lean towards no on that. Okay. But yes as well, I mean.

And are you spending money on ads right now?

Yes.

Okay, what's the budget on that per month right now?

All 1,500.

Okay, so I would set some sort of target, and you know this better than I do, is when do I switch from landscaping ads to mowing ads? And I would do that based upon how far you're booked out. So for example, hey, like, you know when you start getting a backlog of X amount of days, where you start to feel a little bit uneasy. And I would just go right above that, like let's just say it's 4 weeks. When I'm above 4 weeks being booked out on landscape jobs, I'm immediately gonna go spend this money on mowing. The ads are all gonna go towards mowing. I will also say this is very time specific, and so you're gonna get a lot of leads for the lowest customer acquisition cost during the spring for both landscaping and for mowing. So sometimes you have to actually determine What am I trying to focus on with the business model? And when I have $1,500, a limited budget, I'm going to spend money on advertising the product or service that I want to scale in the long term. And so, for example, if you have warm season grasses, you know, you still have a June, July, and August where you can go advertise for mowing and get a ton of customers for $1,500 per month. And so I would, I would, if I was you, trying to move the quality of revenue or like shift it towards recurring, I would just say, how far out do I need to be with landscape jobs before I'm confident enough to just go turn all my marketing budget towards mowing?

Okay. And then at what point— so you say you get 30, 40, you know, accounts, and then you have 4 or 5 weeks booked out on landscape projects with the same amount of guys. How does that look like from a production standpoint without going into debt and, you know, getting more guys and that kind of thing.

Like, yeah, how many—

that makes sense.

How many trucks do you have right now, 2 or 3?

2.

Okay, and so do you need— you need probably both of those trucks to do the landscape projects, is that correct?

Yeah.

Okay, and I'm assuming the business is a little cash constrained right now.

Yeah.

Okay, what size of lawns are you typically experiencing, like the turf square footage? Is it like 15,000, 20,000 square feet? Are they smaller lawns?

We're sticking to the smaller lawns. Okay, cookie cutter, like top, top 30 minutes max, 30, 45 minutes.

Okay, so I would do one of two things. Either A, um, if you're more pro-growth, I'd say go get a small truck and even if you have to finance it to be able to spin up the mowing side because you already have a lot of the fixed expenses like shop space, insurance already covered. So the revenue that you get for this is going to be pretty profitable. So you can afford to take on a little debt. That's more pro-growth. Let me go more conservative. That is, let's go ahead and say right now you're 6 weeks booked out. If everyone's working 5 days a week or 40 hours per week on landscaping, let's now relook at the schedule. If I take 1 day a week and just go do mowing with the same crews, Now all of a sudden you're 8 weeks booked out. And so I think the more conservative approach is like, I'm going to constrain my capacity per week of budget hours based upon assuming that I'm going to spend 1 day a week doing mowing. And then as time goes on, that's going to become 2 days, 3 days, etc.

Yeah, right now we do 1 day a week of mowing. Like we every week we do 1 day of mowing or maintenance stuff and the rest of the time is projects. And so right now, you know, as we build that up, you know, it's going to become more and more days.

Totally. So what's nice though is with recurring work, as jobs come in, it doesn't completely change your schedule overnight. Meaning on that one day you currently have maintenance, how many mowing customers do you think you guys could take on without having to add a second day?

Right now, 10 to 15.

Oh, awesome. Let's go. So there's, there's definitely a world in which you could get 10 to 15 customers by spending this ad budget on mowing, fill that day, and then there's going to come a time like we cannot get any more mowing jobs done. Great. We're now really resetting the expectation of how many hours we can get done in a week of landscaping. And so instead of trying to get 32 hours worth of projects and 8 hours of mowing, All right, we're shifting that. Now we're gonna have one crew on Thursday, I'm just making this up, one crew on Thursday on landscaping, one on mowing. Instead of just both crews on Friday doing mowing, we're gonna do one crew on Thursday and two crews on Friday for mowing. Therefore, needing less landscaping projects to keep yourself booked out over the four-week threshold. Right. Does that make sense?

Yeah, that makes sense.

Okay, cool. Awesome. Well, thanks for coming on. I appreciate it.

All right, thank you.

All right, next caller coming in to the confession booth where we spill tea anonymously. Welcome to the show. Thank you for coming on. Oh, it looks like someone's talking. Oh, coming in. Hello, hello, hello. Earth to the caller, welcome to the confession booth. Are you there? Earth to the confession booth. All right, we're moving on to the next caller. I think it sounds like they're chatting it up. They're chatting it up, they're chatting it up.

It's important. Yeah, yeah, okay.

Yeah, I wish so. Yeah, keep the bushes but kill the weeds. It's important.

No, I don't think there's any selective for honeysuckle in the wild.

I don't think so either. I don't think there's any selective.

You just gotta pull those vines.

Nope. Yeah, definitely not.

Yeah.

All right, well, I think this person wandered into the confession booth by accident today. All right, let's take a couple more callers. Next call coming into the confession booth where we spill tea anonymously. Welcome to the show. Thank you for coming on.

How you doing, brother?

Fantastic. How can I help?

Hey, so, uh, I guess I'm in a little bit of a dilemma here. So I hired an office lady on. So we do about— probably on pace for about $1.2 million-ish this year, somewhere around there. Did about $580,000 last year. Year before that, we did like $100,000. So we've been picking up pretty quick. Um, and I'm kind of in a dilemma because I essentially, I hired a lady in who had worked at, you know, like a $5 million landscape company previously. So she had a lot of experience and I hired her in to take over the admin roles for myself. Didn't work out. I got rid of her, partially my fault because I didn't have any SOPs or anything set up from her. However, on the other side, um, I hired her specifically because she was supposed to come in and bring her experience to make those SOPs and everything. So That just didn't work out, but I'm kind of back in the spot where I'm trying to figure out if before I hire another office person, if, um, I wait until there's really enough workload for them to take it on, or if I just delegate it now. Quite frankly, it adds about an hour and a half to my day because we have so many automations set up in HomeWorks, and like 90% of our services are recurring. So it's not necessarily a ton of work and upkeep you know, dealing with the clients. And it is work that I genuinely do enjoy doing, but I do realize, like, in the long term of things, especially as, you know, we continue to grow, that I need to delegate that at some point. Like, am I punishing myself by staying in that role and continuing to do it? Because to me, I'm like, $50,000 a year on Google Ads rather than $50,000 a year on an admin person when it adds an hour to my day. It's just kind of hard to justify. Until, you know, I can delegate it correctly with all the SOPs and workflows and like Loom videos and all that good stuff.

Yeah, so first off, if hiring someone full-time is only gonna save you an hour a day at your size, I understand the apprehension. I would also say there's a few things you could do. One, you could just not hire someone full-time and they could just do a couple hours worth of work a day. The second thing is, I believe there's probably other things they could delegate. You could delegate to them to say more like 4 or 5 hours a day. But it requires them being a very good player. And so this is where it's very much of a catch-22. It's like, you could go get a VA or someone part-time, probably work 3 hours a day and do everything you need and get it off of your plate. I will also say hiring an all-star rockstar admin will probably unlock twice as much of your time because they will actively be looking for things to be taken off of your plate and they'll do more than save you an hour, an hour and a half a day. And so I agree with the sentiment that you might have like not set up for success. I will also say if you hire an all-star, one thing that I would really recommend, you might have done this, and that is in their job description, make it clear that they are supposed to be setting up the SOPs.

Because that was— yeah, that was made clear.

Okay, yeah, so then it's a function of, I think, what are the lowest hanging fruit of tasks that can be taken off your plate? And if those are a matter of an hour, an hour or two a day, like, I would probably just get a VA or a part-time office person, and then keep your eyes open for a rockstar that you're gonna pay 3 times as much, but they're gonna give you most of your day back, and that's what gets you from $1.2 to $3 million.

Yeah, yeah, no, I 100% agree that my only issue with trying to get somebody part-time is really there's so much that's automated now. And it's like, I got an operations manager, um, the guy that's been with me for 4 years and he's running everything in the field awesome. So I'm at a point where I'm just dealing with essentially phone calls coming in and, and, uh, like he's taking over scheduling and all of that. So I feel like it's like those Phone calls, it's kind of hard to delineate whether they're for sales or they're for support, and hiring somebody part-time that's only there a couple hours a day, you know, there's no way to know when the calls are necessarily coming in. So that's always been the reason I was kind of apprehensive to get somebody part-time and hold off until I could justify a full-time more so.

Great question. So this is why I'm a huge fan, especially when it's things like phone calls that you mentioned, to hire someone by the minute.

Yeah.

And this is a function of either A, hiring someone— Call center. A call center, or even someone that you literally say, I will pay you by the minute, and it's gonna be like $200 an hour, but you're only gonna get a few calls a day. The thing is this, right now you are underestimating how much distraction these reactive tasks are taking from your day. And it's gonna keep you from growing the business because that phone ringing 4 or 5 times a day is keeping you from growing the business. It's keeping you from staying focused on the higher leverage tasks. And even though the phone call might be 3 to 5 minutes, it's taking 15 minutes of your time because you got back on your phone, you noticed 4 other things, you got on Facebook, you saw an email come in. It's the 30 interruptions throughout the day that are killing you. And you're putting them all together and like, oh, it's an hour and a half, when I believe if those were all actually off of your plate and you then time blocked when you'd react to them, because you're like, well, I still have to respond, it's the sales function still. Okay, I'll go along with you on that. But now you're going to block, okay, I'm going to spend 30 minutes from 9:00 AM till 9:30, and I'm going to spend from 2:00 PM till 3:00 PM doing these tasks. And what you will get done in an hour and a half is technically taking you 5 hours right now. It just, it's spread throughout the entire day. And so the ability to be able to time block comes after you've taken reactive tasks and put in, put some sort of barrier between you and the customer. So that you get to react on your own time. And now you go into your day being like, I will work on sales during these hours. I will then, I will respond to the tasks that my admin, all the tickets they put together for me, I'll respond during these hours. And you're like, oh, it's gonna slow down how fast my communication is. Yes, it will. It will also allow you to triple the size of the business. Because like, right now there are 5 to 10 things you're reacting to in a day that if you could just time block them, you could get them done in 30 minutes. But they're kind of spread throughout your whole day right now. And so this is definitely where I think a call service or some sort of permanent situation is probably helpful. And then down the road you can get a part-time person for some things like payroll, all this other stuff, but you've probably already farmed a lot of that out. And so I would really be thinking about anything reactive. Anything that buzzes on this phone is something I'm trying to get rid of.

Okay, fair enough. So I guess Obviously I don't want to make the— I need to learn from mistake, have SOPs and workflows and all that set up. Um, should I build the plane while I'm going or, you know, maybe hold off for a couple of weeks to a month, really get that position built out and all the training material for that position built out and then go ahead and hire for it. Cause I also think realistically in the next month, now that we got an ad agency and we're just, you know, funneling money into, uh, into ads that will be able to also pick up enough work to justify the added overhead within even just the next month or so.

100%. And if you add in your automation, just one extra step for this admin person, which is like calling them within 60 seconds, that alone could pay for this person. And so these are the type of things that right now you don't do because it's your time. I get it. And so I think there's two ways to do this. One is very violent, which is in 24 hours you talk through each of your processes when it comes to answering the phone, what to say, how to upsell. You could talk to it with AI and it will create the quote unquote SOPs. The other way to do this over the next 30 days, whenever you're doing an admin task that you know you eventually want to hand off, you just record it, do a Loom video, take the Loom video, take the transcript, drop it into ChatGPT, and it'll give you the SOP with the checklist. And so I would— I'm more in that direction if you want to do it passively. If you're like, I need to get this off my plate today because we're just growing so fast, then you could very well probably talk to AI for 4 to 5 hours and create SOPs for every single thing. Keep in mind, people don't follow checklists. Like, no matter who you hire, if you show them what to do though via the recording, that is usually more effective. And so I would be in the camp of over the next week, anytime you're answering email, answering a phone call, you're simply recording everything. And even if you get like, for example, on voice memos, it gets transcripts right away on iOS. On Loom, you can drop any video or audio, it'll immediately get you the transcript. Drop that stuff into ChatGPT and allow it to give you the script for upselling. Allow it to give you the script for when you're selling over the phone. These are all things that you can create SOPs for quickly, but then have the video in Loom or some sort of, you know, screen recording for that person to follow along with.

Yep. No, that sounds, that sounds great. So yeah, I'm, uh, I appreciate it. I'm just in kind of weird spot where I genuinely love working 6 50 hours a week and, uh, I have no intention to stop doing that. So it kind of makes it hard to want to give those things away, even though obviously making the effort, you know, I tried and, you know, it burned down, but you know, I'll shoot for it again. But, uh, no, that's definitely a good plan. I just want to make sure that I was kind of on the right track of not necessarily pushing it off for too long, but making sure that next time I go about it, there's more structure to it. So it, uh, you know, has a different result than it did the first time around.

Awesome, man. Keep crushing it. You're doing great. All right. Yeah. So this is a great point about reactivity. It's so easy to say, oh, I get this done in an hour, 2 hours a day. But when you take those tasks and it's 2 minutes here, 4 minutes here, 8 minutes here, 6 minutes here, 3 minutes here, 1 minute there, that distraction is a tax on the business that keeps you from growing. And he's running up against it like most companies do once you hit around 7 figures. And I'm okay with it. I love doing admin. Totally fine. I just don't want you to be reactively doing admin. I.e., the phone rings and I jump on it. I'm in a sales meeting with a customer and the phone rings and I have to go to answer it. Either A, I'm gonna jeopardize the sale if I answer the phone, or B, I'm gonna jeopardize the lead that's coming in because I stay with the customer that I'm talking to. And so being reactive through your day is costing you and doesn't show up on the P&L. But I can promise you it's a whole lot cheaper than paying some phone company to answer the thing at 2 or 3 bucks a minute. It doesn't matter what the cost is per minute, 'cause it's costing you way more in distraction when it's reactive. I would rather him keep doing the admin tasks, but don't be reactive. Have them create a ticket and you get to plan and schedule when you're going to take those admin tasks on instead of being reactive to whatever customer wants to blow up your phone that day. That's a recipe for chaos and eventually hating the business. All right. Couple more callers. First one or next one coming in. Here we go. Welcome to the confession booth. Thank you for coming on. What can I do to help?

Hello?

Hello? This is the confession booth calling.

Yes. Hello, Mike.

Hey, how's it going? I can. Yes.

Yes. Hello. My question is around capacity, like personal capacity. Okay, so I've been doing a solo thing for about 5 years. I had to do it under the table due to some like citizenship related stuff, and I'm just my first year doing it professional with like LSA setup and everything like that. So I'm really feeling a lot of the personal capacity stress coming from just the loneliness on the truck, kind of. So I'm just wondering how you would like— when did you decide on based on that? Like, because I feel my personal capacity kind of lessening honestly throughout the days and Just maybe having somebody on the truck feels like it would be the solution. I'm just wondering what you have experience with that.

Yeah. So the tough part about personal capacity is also the best part, and that is personal capacity will limit the size of your business every single time. It's actually the reason why all of us, including myself, don't grow a bigger business is because of our personal capacity. The good news is that you can change it. And so identifying why your personal capacity is the limit to your growth is the hardest part. And so when we talk about personal capacity, I have to ask, is it a skill that you're lacking? Is it the stamina that you're lacking? Is it just keeping your head in the game? What's the actual thing that is keeping you from being like, I want to keep growing this business. I want to keep putting more work. What is it? And have you identified that already?

Yeah, I'd say it's definitely keeping the head in the game. Like, I'll go and like Monday I'm motivated, but then by Friday afternoon it feels like, you know, rat-racy kind of. And I've had part-time guys on like for one job and one or two, and that gives me a lot. Just having— going through with somebody, I feel like, is a lot of what I need to do. I feel like I'm going through a lot of it by myself. Mm-hmm.

And when you say by yourself, when you have that employee, does that make it feel better for you?

Yeah, I feel like— yeah, no, definitely. I feel like my personal capacity raises quite a bit. So what I was wondering though, because right now I make around $8,000 a month from the business with about $4,000 of that coming from maintenance. So my risk is like, I think it would— hiring someone on the truck would help my personal capacity, but I worry then it'll affect my— like, I'm not there yet in the business is what I worry about. Mm-hmm.

Right now, do you have enough leads? Like, do you have tons of leads to where you could hire someone else or not?

I think, yeah, I've been getting pretty consistent leads, about 3 a week. So I think right now in this business, I could hire someone on and it would start part-time probably, but I don't know if I can hire someone on full-time right now with the amount of leads.

Totally. So what I would love for you to be able to do as an intermediary step before hiring someone, from just a business perspective for a minute, I would love if we can get that to $10K at least per month, which would probably mean raising your prices. And most of the time, the reason people, when they hire someone first, it is lonely being out solo all the time, but then you get that employee and all of a sudden you're making $12,000 a month, you pay their wages and you're making less than before, and now you create financial stress that actually makes— now loneliness sounds pretty good. You know, it's like, I'd rather have that than not be able to pay the bills. And so I don't want to exchange one stress, which is the current stress you're facing now, with another stress, which is financial stress. And now having to figure out how you're going to let this person go because you don't have enough work. And so I would love for your prices to get more in the range of $80+ per hour and making at least $10,000 per month. I would love that to be the case first. I will also say, um, the— there are certain times in the business that you just have to push through. And you've already increased your personal capacity by going from under-table to being pro. And I believe that you're probably only 6 to 12 months away from being able to afford what we just talked about, which is hiring an employee and building a team. This might just be part of the time where it is lonely and you do not want to buy yourself companionship on the truck that is going to put the business in jeopardy. And it might just be that for 6 or 12 months it's going to be lonely so that you can build the cash reserves to be able to afford the team member. And the only way to get through that point is to have a reason why you're doing this business in the first place. And so I would go back to that as the anchoring point as to you're running out of steam throughout the week. I understand that. Start off Monday, high energy, let's go. And then Friday, you're like, I just got to get out of here. I understand that. And the only way to keep your head in the game at that point is to have a why. And so, like, if you don't mind, like, why? Why even have the business? Like, what are you trying to provide for? What are you trying to accomplish?

Originally, the business started from the thing that everybody says, freedom, that freedom view of it. But really, the business now, I see it as an investment in myself. It's something I do enjoy doing. I do enjoy doing the growing of the business, and it is something I think I can do. So I don't know if that's the why. And then I do it for my family too. But really, it feels like a good way for me to build the life I want. And it's like something, even if I don't end up succeeding in, The amount of skills I've learned throughout the process. So that's— I don't know if that really answered your why reason, but that's kind of where I come from.

What does that version of you that you're trying to get to, how does that differ than the current version of you?

Yeah, that's the thing. Yeah, that's what I think. That's the question I need to ask right there because I don't have an answer to that.

That's fine. I think the reason I push so hard on this is having clarity is what keeps your head in the game when times are tough. And so there are— and this doesn't go away, by the way. As the business grows, the problems get bigger. There'll be times you will doubt yourself more and you'll have more evidence as to why you should quit because the problem is harder to conquer. The problems are bigger, they're more expensive, there's more people involved. Now when you get 3 or 4 employees and they're all turning against you and they're doing a revolt against you, they all don't show up. Now we have bigger problems. And so having a reason why you show up is what keeps your head in the game. And there's been plenty of times I want to quit and it is the easiest, the path of least resistance is just to give up. And so you're feeling that way on Thursdays and Fridays right now, but that doesn't change as the business grows. It just means I have to know why I'm enduring this pain. Like I go to the gym. It's not fun. I don't love lifting things at 4 AM. Up like hundreds of pounds and it hurts and I'm sore. But I do it for a reason. And so having a lot of clarity as to why you're doing this many times will be the thing that allows you to be able to endure the pain that is inevitably going to come. And so instead of trying to put a Band-Aid on it and say, oh, this will fix it, and like, let's go hire someone, and then just prevent causing that hemorrhage to show up in a different place, which is gonna be financial stress down the road, I would just get really clear on why you started this this business, and like, you're like, I wanna become a different version of myself. What does that person look like? 'Cause when you're really low, I've gotta keep, I gotta remind myself that it is worth the pain I'm going through to become the person I want to be. And having clarity around what that person looks like will help. That could be financial, it could be financial relief, it could be paying off a debt, it could be being able to provide, not just for you, not just for your family, but for the people that you love. You gotta have a reason why, and then I get it really clear what that's gonna look like. Does that make sense?

That makes 100% sense. Thank you so much, Mike.

My pleasure, brother. Take care. Best of luck to you. All right, next caller. I think this one was the one that dropped a little while ago. Let's pull this one in here. Welcome to the confession booth. Thank you for coming on.

Hey, hey, Mike.

How's it going?

Good. How are you? Thanks for taking my call. Sorry about earlier when I— You're good. —had to jump into a meeting. What can I do to help? So— so— today was the first day when I was ready to give up after 5 years of my business. And I just, uh, I don't know if I'm just, you know, it's a bad period or I should just scale back. So last year we did $1.5 million, we profited about $150,000. We're definitely in the growth mode. At the beginning of the year we had a month's worth of cash in the bank, so everything looked good. I was kind of ready to turn, turn things into profit mode. But then things fell apart real quick. Just a couple of tires and just bad decisions on my end. So right now I have $150,000 in loan and about $50K cash in the bank. Uh, and so we'll have more than enough work to handle, and on paper we should be able to turn a profit on them like on 40-45% margins. However, all those mistakes and decisions that happened earlier this year, uh, now I'm kind of trying to Somehow get out of there. But at the same time, I kind of pivoted from hiring less experienced guys hoping to train them to let's just hire like actual like experts and on a higher rate. But I just feel like I'm like maybe I'm 3 months late. I should have made this decision earlier.

Why? Why do you want to quit? Why do you want to quit? Is it the cash being low? Is it the fact that your margins have collapsed? Or was there some mistakes that were made? Like, why do you want to quit?

Um, um, so I'm getting emotional. Is just— you're good, take your time. I just don't know if I have, have the skill or have the I keep going.

Is a lot of that pressure coming from the business's cash position, or is there things happening inside the team or at home that are causing that desire to want to quit?

A mix of everything. Obviously cash positions are great. Employees, I mean, I'm not kidding, in the past 4 or 5 weeks, every single Monday, I have minimum one guy calling for, I would say, understandable reasons. But at the same time, I'm like, well, thanks for letting me know 9 AM in the morning. So now what? Uh-huh. Elvis, I'm trying to, uh, I'm trying to keep things together, but definitely it's affecting things at home.

So yeah, so, uh, I think a couple things. I think first and foremost, a lot of this pressure is actually caused from the last part, which is the pressure at home. And I understand you want to grow the business, but I have to ask, would a business that does half as much in revenue but only has a couple employees and you make way more profit and you're able to pay them more and they show up more on time, they're more reliable because of that, is that a business that serves you and your family more? Because I just don't want you to know.

I mean, I just, I just don't want you to quit. Yeah, as I said, like, beginning of the year, things look really good. So it's just kind of like, yeah, I mean, we were supposed to be on track of $2 million this year, and right now be a month behind every single, like, month. So, you know, I have— oh, I could pay off that loan, uh, with the receivables that I have easily. It's just like constantly have something hold us up where I'm like, okay, we cannot finish the project, we're not gonna hit billing cycle, therefore I gotta wait again. Uh, so it's just like I feel like I'm every month I'm getting thrown back to that same spot where I was a month before and, um, to get out of it, uh, so my mistake was that I, I thought I can hire like less, like less costly on an hourly basis employees, train them up in a few weeks to do our way, and then you know, they will be able to produce the work. But, uh, I was wrong. So then I was like, okay, I have the demand still. I mean, uh, so I got— I need guys. So then, okay, let's find experts who've been doing this for at least a decade. Yeah, they're gonna cost $40 to $45 an hour, uh, but they, they have the experience. And I mean, it seems to be working out just, uh, because it's been like maybe 6 weeks when I turned things around to, to go this way. I feel like I, I kind of miss—

Yeah, I'll say this though, you're just gonna have problems with this too, because like when someone has 10 years of experience, there's other problems that show up. You might not have to micromanage them on the job, but now all of a sudden there's cultural issues, there's expectations on wages. There's now financial pressure because you have to pay them twice as much. They're harder to find. So now it becomes stressful to get more employees. They're trained incorrectly because they came from another position. They're expecting things like in terms of management that you can't offer. And so the way that you're feeling, the temporary Band-Aid, many times people think, I just need to hire people more experienced. But they wake up in a couple of years and realize now they just have other problems. Mm-hmm. And so what services are you providing now? Like, what's, what's the business's services? Plumbing and heating. Plumbing and heating. So that is very technical and that is where skill is going to be important. Yeah. I would say when you were doing, because like, here's the thing, at the end of the day, you build a $1.5 million business over the course of 5 years. And less than 10% of people that start a business will get to where you're at. And I don't know why there's pressure to build a $2 million business this year and it's so much pressure, like we're one month behind, when you have done something what most people will never do and you're not negative profit. It's a profitable business doing over $1 million. And so I don't know why there's this expectation for you to keep growing on this treadmill, 'cause this treadmill's exhausting you And I just need you to get off this treadmill of expectation that you need to keep growing this thing so fast. Are you comparing yourself to someone? Is there pressure to keep growing? Because like, I see this as you have done very well. You've grown this thing extremely fast and growth sucks cash. It creates loans, it creates pressure on profit margin. But in 5 years you build a $1.5 million business and there's nothing wrong was saying, I don't need to get to $2 million this year. Why is there that pressure?

Yeah, it was kind of an organic, so we didn't— I wasn't, let's say, planning to. It's just based on the demand we have from current customers we have. It was basically like, okay, all I gotta do is add one or two people and then just keep working the same people. I don't have to like network my way into new places or anything. So it wasn't like a, oh, we must do this, just more like the opportunity is there, uh, therefore, you know, and those customers are all happy with us. Um, so it was like, let's let's just go and keep going. And honestly, around $2 million, that was my limit. Like, okay, I'm gonna stop here, make some money, and then figure out if I wanna keep going towards more or just, you know, netting 20, 25% at the end of the year and just, you know, live my life.

But what I want you to do is get clear on how the business serves you. When I hear someone say, that because there's customers that are happy and they keep trickling in and we just kind of kept growing. I hear one awesome, they do great service. I also hear you are serving the business. I want the business to serve you. And being really clear in terms of how many employees does that mean? Like, what's my personal capacity? You could be an amazing $1 million operator and stink at $1.5 simply because you don't have the personal capacity yet to get there. And be able to manage that size of a business and handle the stress that comes with more employees, more loans. You should not grow the business because employees trickled along and opportunities showed up. There's opportunities to go climb Mount Everest. I don't do it. It's too high risk. It doesn't align with my goals. And so if the growth of the business and more opportunities and customers trickling in leads you to have moments like you're having now, it's not worth it. The business should serve you. And so I would strongly recommend talking to your spouse and getting on the same page of like, what do we want this business to do? How many employees does it have before I start getting overwhelmed? Because I can guarantee you, if you had less employees, you'd spend more time with them. You'd train them better. You wouldn't feel the same level. You'd be able to afford a little bit more to pay them if you raise prices by 15% or 20%. And you're like, "Well, I'm not gonna hit $2 million." Who cares? You're gonna hit zero if we throw in the towel and we give up, if there's enough moments like this. And so I'm giving you a little bit of tough love, but I just want you to know that there's no one expecting you to build a $2 million business. And I guarantee if you talk to your spouse, she could care less. It doesn't serve you. And getting off this treadmill is potentially the most liberating thing you'll ever find. Is you do not serve the business. You built this business for you and for your family. Over 5 years, you built it to $1.5 million. There's nothing to hang your head about. You're doing a phenomenal job. Statistically speaking, you're in the top probably 5% to 6% of entrepreneurs. But there's no reason to stay on this treadmill if it's going to cause you to die. Like, it's going to cause you to give up and throw in the towel. And if it's causing struggles at home, personal relationships, personal health. Like, it's not worth it. It's, it's not.

How do I feel? It's because obviously I have, uh, I have the loans, I have obligations, I have a certain amount of overhead that I can just like— my— what I'm like I wish there was a plug that I can just unplug it and okay, it's done. But at the same time, I just feel like it's a little bit more complex than just okay, from tomorrow we are targeting 1.5 and then, uh, yeah, not worry about all those decisions that's been made in the past. It's just I feel like there is no I don't see the way out of this, like, in a couple weeks, let's say.

Yeah, I get you. So first thing we got to do, and I know it sounds like, hey, like, this doesn't change anything tomorrow, I agree, but the first thing we have to do is change our expectations. Because the reason you want to quit, the same reason why most employees quit, is because expectations don't meet up with reality. And so they quit after 2 or 3 weeks, they just, they leave. The same thing is true with yourself. You don't need to build a $2 million business to be happy and have everything you want in life and for your family to be happy. You don't. And so expecting yourself to build a $2 million business, you're going to drive yourself into the ground. And it doesn't mean that down the road you won't build a $2 million business. It just means right now you don't want to build it because it's going to cause you to want to quit. So that's the first thing. It's expectations. Now let's get into like the nitty gritty details because like you do have loans. How much is the total principal and what's the monthly payments on the loans?

160,000. And I pay a little bit over $8,000 a month. It's a 2-year thing because Mike Andes was like, okay, all I got to do, just collect receivables and I'll pay it back in a couple of months. But Since then, I'm having these issues with like last-minute calls, last-minute like, oh, something happened, oh, we gotta go back because whatever issues happen.

Just so I'm clear, did you say $560,000 in loans?

$150,000, I mean $160,000, sorry.

Okay. One-six. One-six, okay, got it. Okay, so right now, When it comes to the work that you have on the schedule, how far are you booked out?

We are pretty much full summer. Okay.

And right now, what's your close rate look like?

Since we have kind of added customers, we work with a lot of general contractors. So I would say like 100%, but obviously they know our prices. So projects being priced away with our rates. So it's not a competitive bidding or anything.

Okay. So why— like, we have to raise our prices. And I know that's scary because it's contractor relationships, but like, if you lose one or two of them, it doesn't matter. The reason we need to raise our prices is because I genuinely believe you raise your prices by just a little bit, you wipe out this monthly loan payment very quickly. If you raise your prices by 10%, that's going to be more than $8,000 a month. The bottom line. And that would take a little bit of stress off. It would also allow us to be able to pay employees more. That would allow us to be able to expect more of them because they come more qualified. And so if you're— if we're closing 100% of bids, how many contractors, like, let's just call them customers, do you work for? Is there only like one or two, like major contractors, or is there— do you have more?

No, it's about, I would say, 8 to 10. Okay. But we work with like 3 or 4, like almost on a week-to-week basis. Right.

So we have to do a price increase. We have to. I understand that might be scary, but like at this point, if you lost 3 out of the 10 but we raised prices by 15%, you'd still do $1.2 million, but you'd be more profitable.

Yeah, it's— I mean, I have no issue raising prices. It's more about Oh, should I say, for example, today this is the second week I call on this customer that you're not showing up last minute, so, and here you go, actually we are charging 10% more because— and I mean, I feel like from their perspective, and I know I should not care, but it's just like, okay, you're charging me more but your service is just degrading, like, how's that? How does it make sense? And he's not the only one. I have several customers now we've had to do this in the past few weeks quite frequently, more frequently than I would like. I mean, they understand, like, okay, life happens, but it just seems to be happening way too frequently than it used to be.

This is part of growth though. If you have 100% close rate and they're still not saying no, they're voting with their dollars that they still see more value than than the price that you're charging. And so, I actually need some of them to say no, 'cause I want you to have less employees. I want you to be able to feel like you have a handle on quality control, 'cause you're a perfectionist, you love these customers, you wanna do great work, and it's killing you right now when you get bad reviews, when customers say stuff like that. That's what's sapping your energy, 'cause you're a perfectionist. You love doing great work. And I want you to focus on that instead of trying to get to a $2 million arbitrary number than having stuff like contractors saying that stuff about your work and then you just feeling gutted. I need some customers to leave. I need you to have less employees so your personal capacity, you can grow the business with inside of that.

Mm-hmm. Okay. And I know I'm taking too much of your time, but how do I speak to the team that like You already know, you already know one of these employees that you're hiring that you need to let go.

The one that's causing all the grief. You cut that person immediately and you're like, "Oh my goodness, what am I doing?" You're going to go raise prices and lose a couple of customers. But now you're going to make more profit on the customers you do keep. And you're going to have a smaller team that you feel like you can manage and have high-quality standards. Without all the drama. Mm-hmm. There's no pride in having a whole bunch of employees or a bunch of trucks or getting to $2 million revenue if you hate the business. I want you to fall back in love with the business as to why you started it 5 years ago and why you've grown in 5 years to $1.5 million is because you do great work. Mm-hmm. And right now you're letting these certain employees that you have that you know you need to let go You're tied to them because you're trying to hit this arbitrary $2 million marker. And so the third thing is we just going to— we're going to cut the employee like they're making you resent your job every single day. We're going to get rid of them. You're like, well, I'm not going to have enough. I'm not going to have enough guys to do the work. No, we're going to raise prices to reduce the amount of workload that we have. And now you're going to be able to pass some of those extra money back down up to your team. And they're going to be higher compensated, higher skilled people that you love working with, that love working for you, and you're going to go out and now not have this cloud over your head of contractors calling you saying you're not doing good work and all the rest of it. $160,000 in debt on a $1.5 million business is not a death sentence. This is you have fell out of love with the business. And the moment you do that, it's a slippery slope. And I just want you to get off the treadmill of you gotta grow this thing and get it back to where it's underneath your personal capacity. And my friend, you will win. Alright. Alright, brother. I'll be rooting for you. I appreciate you tremendously calling in and my thoughts and prayers are with you. Oh well. Okay. Well, that is why we have the confession booth. But I think it is a good example of for anyone that's doing less than $1.5 million and like, if I just go to a $1.5 million business, all my problems will be solved. Not true. Building the business that you love, that has systems that can run without you, is the reason you build a business. And if you have a $1.5 million business that goes bust because you hate the thing, it's left with a whole lot more collateral damage in terms of employees, debt, and a lot of problems. And I just encourage everyone to get off this idea that you need to keep growing your business. Like, if I grew 50% last year, I've got to grow 80% this year. And have I got a good— Then I gotta grow. Why? Like, the whole reason you started this business is to provide for your family or to be able to take a vacation or to be able to put your kids through college. And you've done that. And yet you put yourself through all this extra stress and hassle and wanting to quit, wanting to give up. It's causing damage in the relationship at home when it's just like, it's simply a matter of expectations on yourself versus like, my personal capacity is here. The business has grown too far. I am going to reduce the size of the business so that I can feel more in control and not quit. Because you will want to quit. In the long term, if you exceed capacity, you will want to, you will burn out. Long term, you will burn out if you're running a $1.5 million business and your capacity personally is to manage 3 or 4 employees at a million. And for people that think that I always tell people they should stop growing their business, and I see in the comments, "Oh, he says to stop growing their business at 6 or 7 or 8 employees because," He wants them to just not grow and he wants to take all the customers himself for a gust. That's a bunch of hogwash. It's the fact that when you start getting a larger business, this happens. And I hate seeing people at this point and I want them to be able to grow the business that serves them and their family and the whole reason they started the business. And so the fact that someone can be in the top 5 or 6% of entrepreneurs and still feel like they wanna quit is crazy. And it's crazy because we put pressure on ourselves to keep growing the business. Instead of asking ourselves, how big of a business do I need to build for it to serve me? And for the vast majority of us, that is 6 to 8 employees, be able to manage them ourselves, be able to still go away for a week vacation, and we don't need to keep growing to $2, $3, $4 million. Not everyone needs to do that. And no one building a $5 million business is any better than the person that does $800,000 with a few employees, is able to take vacation, makes really good healthy profit margins, and is living a good lifestyle. It comes down to success is determined by whether or not you are content. And if your level of what you need to be content is lower, don't be ashamed by the fact that you don't need a bigger business. Determine what you need to be successful and achieve your goals. And then work backwards in terms of how big of a business do I need to build in order to achieve these things? Personally, I wanna change the level of professionalism in the industry. That's gonna require a billion-dollar business. But if your aspirations and goals are not that, You don't need to do it. You will run yourself ragged. You'll want to quit. You will likely end up in div— This is why billionaires have like 3 or 4 wives and none of their kids wanna spend time with them. It's 'cause they just sacrificed everything for this one objective and then they get there and realize like, oh, actually what I wanted, the whole reason I started this business, the reason I clawed my way out of poverty was to provide for my family and now my family doesn't wanna be with me.

All right.

Let's go on to the next caller. Um, again, this is the confession booth. Your voice is garbled, it's completely anonymous. If you would like me to come out and do a turnaround show, you can scan the QR code here, go to mikeandes.com/turnaround. The links are down in the description, and I'd love to come out in person. We have a couple more spots this summer. We're full up for the next couple trips, but we are— we have a couple more spots this summer. I'd love to come out and help. It's completely free. And it's all from all of your support. The show, everything we do here is because of those that support at HomeWorks, the software, the franchise, Augusta, and Home Service Web Design on the media side of things. So, all right, next caller is coming in to the confession booth. Welcome to the show. Thank you for coming on.

Hey, what's up, Mike? What's up, brother? What's going on?

Not much. What can I do to help?

So I have this one. This is— I've been in business for like almost 8 years. And I have, um, oh, so I haven't really been paying my sales tax. Okay. All right. I, I made payments, but I owe, you know, maybe like, uh, I don't know, $45 on it. And, um, yeah, that's just— I just don't know. And now, uh, I can't register my trucks and, um Yeah, they're just, uh, they're just coming out. They're trying to come, or they're trying to get me to pay the money back, right? So that's really my— how do I get out of the situation of owing this much money to the state? So first, I can't drive my trucks. I mean, I, yeah, I have, but without registration because they don't allow me to re-register, right? So now I have to get a new vehicle.

Yeah. How much revenue did you do?

Yeah.

How much revenue do you plan to do this year?

Man, like $250,000. So yeah.

And so I assume it's been several years that they're going back and trying to get all your sales tax.

Yeah, about the past 5 years. Okay. So, and I made payments here and there, but there's just quite a bit to I haven't. Yep.

And what kind of payment plan have they proposed? Have they given you any sort of payment plan offering?

Yeah, so that's the thing. I went on a payment plan a few years ago, did well, and then it wasn't. So I wasn't— I don't know what— I don't even remember what happened, but I couldn't make the payments. Can't. Right. So, well, I didn't make the payments because, you know, sales tax is charged to the customer. Right.

I'll come back to try to solve this, but just to be blunt, have you considered bankruptcy?

What kind of bankruptcy?

Well, like dissolving everything. And like, have you talked to like a divorce— or not divorce, but a bankruptcy lawyer at all?

No.

Okay. I don't like going that path, and I do think there's ways to solve this problem still, but like, it might be worth talking to them. The alternative is we put our heads down, we grow this business, and we make it really profitable, grind for 12 months. But like, what's the monthly payment if you were to go back on the plan? Or are they not offering the plan anymore? It's like, hey, you crossed that line, and now we want $45K.

20K and then we could get on the plan. Or now it's probably like 25.

Okay, so 25. But I don't have that amount of profit over. Right, I got you. So 25K and then what would you think that the monthly payment would be if you had to guess?

Probably like $1,000 or so. Okay.

And on the $200,000 in annual revenue, has that been consistent the past few years?

Yeah, yeah, for sure.

Okay, and what services are you offering?

Basic maintenance, small trucks, I mean, just the basics.

Okay, and do you have your trucks paid off right now? Yes. Okay, and what's the value of those trucks?

Maybe like $4,000 or $5,000. Okay. But the thing is, because they have a hold on the registration, I can't sell it. No one can register it. So I'm forced to get a new vehicle, which is going to happen like, you know, like within a month I'll get another one and register in my wife's name because I can't— if anything is in my name, they will put me on the hold and I'll be in the same situation.

Okay. I would recommend talking to a bankruptcy lawyer, mostly because he's going to have a better understanding of your state's legal parameters of what you can and can't do. I will say this, you— I would not recommend running from it. Like the whole registration thing, bouncing around, this is going to become a cloud over your head and the worst thing that can happen is you become successful and you just know you can't do it all legitimately. And everything's hidden. Um, and at the end of the day, we're talking about $25,000, which is, I understand, a lot of money. It's also what you make per month in revenue. And if you can somehow swing that and then get $1,000 of payments— and so what I would highly recommend, this is going to be crazy, but it's going to be the thing that potentially gets you out of this— is giving an offer to your customers to pay upfront for services. And getting a whole bunch of cash up front, but then you got to be ready to deliver on that work and the money won't be coming in because you have given it to the government and you have to work your brains out.

Yeah, I'm already there. Okay.

Like if you went to your customers right now and said, hey, for the next 12 months, you know, last 12 months you've paid me $2,000. If you— if I'm giving 20% off if you pay upfront for the next 12 months for the services that we— here are all the services, and I'm going to get $1,800 from one person, $1,500 from another person, $1,000 from— if you can do that, now keep in mind, you're not going to get that money over the next 6 to 12 months. You're going to be working extra hours to make up for it. But the objective is to get the $25K so that you can— because you can afford $1,000 a month. You can afford that. Yeah, yeah, definitely. But I would highly recommend being vicious and violent with this, and that is immediately going to your customers, if they're on maintenance and recurring revenue, and you can look back at the last 12 months and say, hey, you spent X amount, we're now offering this discount if you pay up front for the next 12 months. Some percentage, 15, 20% of people will take you up on it. And that's all you need, about 20% of your revenue, or 20% of your customers to say yes to this, for you to be able to get enough revenue to capture the $25K and start on these monthly payments, and then you're going to have to put your head down and grind for the next 12 months of performing on work that all that money is going to go to the government. But I would much rather you build a business where you're not constantly running from the government, putting things in different people's names and licensing and registration, and people are coming after you and then you can't buy this piece of equipment and you can't get a loan. Like, that's a messy way to live life. It's a messy way to run a business. And the best case scenario is you somehow outsmart them for a couple of years, but they eventually find you out. And so, first off, huge kudos to him for calling. This is why we have the confession booth. There's no way in the world they're going to call in and say your name if this is the type of thing. And I will say this, if you are currently underreporting your sales tax, this is a very short-term thinking strategy that you are currently experiencing. There is no big business that is doing this. Like, "Oh, this is one competitor in my local area." There is no company that is running hundreds of millions of dollars that is legit, that lasts for decades, that is underreporting on sales tax, not trying to get around employees tax. Like, for us, if it's a gray area, it's like, great, make them W-2, pay a little extra taxes. I will sleep better at night, and by me sleeping better at night, I'll be able to deploy discretionary effort and energy and ideas towards growing the business instead of running away from the government. Bad strategy. So kudos to him. I highly recommend just tackling it head on. It'll be 12 months of pain, but make an offer that customers cannot refuse. Collect the cash up front, pay off the $25K, start making the monthly $1,000 a month payments. You're gonna be working on Saturdays, you're gonna be working Sundays, you're gonna be working evenings, and you're gonna need your wife to get bought in on this because she's not gonna see you very much 'cause you're gonna be doing a whole bunch of extra work to be able to make this up over the next 12 months. Next call coming into the confession booth. Welcome to the show, thank you for coming on.

Hello, hello, hello.

What can I do to help?

Hey, all right, so, um, I have a Christmas light business. We've been in business for 5 years now. Um, we did, uh, $263,000 last year. Uh, my big thing is, uh, obviously my off-season, um, starts about March And then it's a struggle all the way through until I get to October when we start doing lights again. And, uh, you know, so the last few years, uh, I racked up some debt going for this big commercial job that we were supposed to do last year, um, that they ended up, um, not paying on. So looking at my monthly, my monthly bills with my fixed costs and the debt, we're at like $7,000. And with the customers that we have on quarterly payments that they pay, uh, throughout the year, we bring in about $20,000, um, every quarter. So like, we are just, just getting by. By the time like October comes and we have our clients who didn't want to do the quarterly payments, but they've already said that they're coming back Um, did we get like a big flush of cash then? But like until that point, it's just— I just watched the meter drop, you know, month after month with all the, uh, cash going out. So I'm just— I know you got to book the, uh, for the offseason, but mine's kind of like flipped from what, uh, everybody else's. So I'm just trying to figure out what, uh, any advice you got for me.

What else could you sell these customers off the top of your head? I have a few ideas, but like, what else could you sell your existing customer database?

So, um, we dabbled in the permanent lights. Um, I started focusing on doing that maybe more for commercial. Um, I kind of got away from residential because it— I don't really want to sell to my, uh, my current customers. Um, and advertise that I do it because I get that recurring revenue year after year with them. Um, but then it'd be, yeah, like I'd get a little bit more money that first year, but then I'd get nothing from them. And, uh, my clients, um, about 90% of them have stayed with me over the last 5 years. So I have a really good return rate. Um, so I don't really want to scare them off, or not scare them off, but lose them by doing just one one-time job. Um, so we've— I've dabbled and thought about doing more, like aiming more for like commercial jobs, uh, uh, uh, the auto, like auto stores and bars and stuff like that. And then the other one I've, um, um, started looking at and looking into doing is, uh, like event lighting and like for graduations, parties like that, putting up the bistro lights, um, and for weddings. That's kind of my idea, but I just haven't really acted on it yet.

Okay, so a couple ideas come to my mind. First off, I agree about the permanent lights when it comes to your existing customers, and I would ideally like to sell to your existing customers. Have you ever thought about something along the lines of window washing or gutter cleaning?

I, I have, but, uh, the gutter cleaning kind of runs right into, um, the same time we'd be installing lights for the, uh, for the fall time. So that I, I wouldn't want to take away my— because it's a low ticket item for us, or it would be. Our, uh, our average residential job is about $2,300 for the Christmas lights, so trying to get something around that same price point is what I was thinking.

Yep, okay. Okay, then the other thing is to sell something that's not tied to Christmas, and I like the idea of doing events, things like weddings, graduations, et cetera. My sister actually had a a light business for weddings where they do like the Edison bulbs. Okay. Have you done any of those or advertised that at all?

No, that's, I actually just, I just got done reading your Total Business. Turnaround? The Total Business one. Your Turnaround, yeah, thank you. I keep wanting to say makeover, but I know it's not a makeover. Feels like it though. But yeah, so I have the email template that I just worked on last night, so I haven't sent it out to my current clients. Uh, that's my next thing I was going to do today, and then I seen that you guys went live, so I hopped on here really quick. But what I'm going to be doing next—

yeah, like, ultimately, I, I don't like adding new services if they do not have an inverse demand curve, right? So if, if, if gutters are going to be right when we're doing the fall installs, then we don't want it. I think we could push it forward a little bit, but to your point, if we're only going to make a couple hundred bucks, it's not going to move the needle enough. And so I'd be looking at the next— in the offseason, we talk about the next— the third one is adjacent services. That's the third cure. And I think an adjacent service is ideal, assuming that it is in the same vertical but it is at a different time of the year. And the nice thing about events, when it comes to weddings, no one does it around the holidays. Holidays. It's always during the summer and during the spring. And so I would really love to be able to have, whether or not you rebranded or you changed it to a slightly different brand that was more events, both for commercial events and also for things like weddings, et cetera, graduations. So more celebratory and then more corporate. And like, like, uh, you know your brand name, but like whether or not it can currently do both, or if you have to change out and do a new brand, I'd be in favor of All Things Lights does this, which is you have celebratory, you have corporate, and then you have Christmas. There's your 3 C's, right? And so celebrations are things like graduations, Easter, what's it called, gender reveals, all that. Corporate is very much like, hey, we have this dinner, we have this, fundraiser. These are the type of events you can absolutely do things like Edison lights or like the more moody lighting. I think that'd be a great opportunity. And what's nice is a lot of times you can rent these at the price where you can make up for the cost of goods sold in the first rental. Okay. Yeah. Yeah. So I think, I think a lot of it comes down to rebranding or even just making a new landing page and driving traffic to it. Like, if you're like, why, I just want to like dip my toes in it, great. You could sell— because what's nice about events is a lot of times they're planning 4, 6, 8 months in the future. And so you could start marketing it now knowing that they're going to be the last-minute people for weddings, which by the way, they're extremely price insensitive, uh, for June, July, and August. That's when people are having their weddings. You could run ads to a landing page, not even have the— a business name up, not even have a new brand, just build the site, drive traffic to the thing, and just, just see what happens in terms of customer acquisition cost before you even go buy lights.

Okay. Does that sound— that makes sense.

Does that sound like something you can do?

Yeah, the only thing that I worry about is more the advertising, because like right now Like what I said, like with our payments, like I don't really have any extra cash to like put towards marketing or like doing like doing a DBA and like the paying like for legal fees and stuff like that. So that's like my only concern with that. That's what's kind of held me back and made me resistant to doing it.

So two things, you can build a free landing page on just about any site right now. It's not gonna be complicated. It's gonna literally be a form and showing some pictures of weddings. I'd go after weddings. If I was you, I'd go after weddings. Weddings, people are price insensitive to wazoo. I would go after weddings. It's your lowest hanging fruit. You can spin up a site pretty quickly. I will also say you likely have, like, how many contacts do you have in your database? Not customers, but contacts do you currently have in your database?

Uh, let's see here, 496.

I bet if you made a really solid email that said ABC Christmas Lights is now offering ABC Events and we are doing lighting for weddings, graduations, and parties this summer, and as an existing customer, we're giving you $300 off your first event, click here or fill out this form, I happen to believe you might get your first 4 or 5 customers from that list. 'Cause we all have an event of some sort coming up this summer. And so, and if they don't know, they know someone else who is having a wedding, they forward it over to them. Hey, and you can just say like, send this email to anyone you know that's having a wedding this summer and they'll get $300 off. Now they get to send it to someone, they get to save their friend $300 and you get the customer without spending any money on marketing. And I wouldn't go get a DBA, I wouldn't set up an LLC, I wouldn't do any of that. 'Cause you can sell these way in advance before you even buy the lights, before you have the event. You can get these shipped in within about a week or two. Yep. Yep. My sister would buy the string lights from Costco and then the very first install, she would be able to make more than the cost of the lights, the cost of goods sold, 'cause she would install them. So she'd buy 'em for like $500, rent them out for like $2,000, and within the first time she'd be able to install them, 'cause no one doing their wedding wants to string up lights. It's always a chaos, it's over, but she knew how to do it, and so she was able to low cost of goods sold, $500, sell it for $2,000, meaning I don't need cash to grow this business. I don't need to be spending money on marketing. Alright, ladies and gentlemen, it's been 3 hours, so I'm gonna go ahead and cut the confession booth. I apologize. The call queue is completely filled. We will do this again. I appreciate everyone for calling in today. Um, there is— if you want me to come out in person, I do this for free. It's a turnaround show. You can scan the QR code, go down the links down in the description. But I implore you, whether or not you call into the confession show, find a community of people that you can share things like this with. We've talked to several people today that are going through really rough spots despite having big businesses. Big businesses does not mean easy life. It is still a lot of trouble. There's a lot of problems, and the problems get bigger and more complicated and more complex, and the stakes are higher. And so find a community of people that you can share this stuff with, because the last thing you want to do is quit. And the reason we do the turn around, or we do the confession booth, is— and we garble everyone's voice. You're like, why does it sound robotic? Because we don't want— we want it to be anonymous, and we want people to be able to share what they're actually going through. And this is the type of content I always wanted to have. And so if you would like me to come out in person, we do have the Turnaround Show and we document that for everyone else that's also trying to learn and grow their business. The whole objective of the content is to help home service business owners become rich. And I believe that money in the hands of you and entrepreneurs like yourself in the local communities does a lot more good than the coffers of other corporations or the government. So that's why I do what I do. I love you all. Appreciate all of your support that makes all of this possible. To everyone in the call queue, I'll drop you out for now, but we will try to have these more frequently. But thank you for another episode of the Confession Booth.

Take care, everyone.