The Leadership Dilemma at $1M

Hey everyone, it's Mike Andes. Welcome to the Home Service Millionaire podcast. We talk shop for all the seven figure business owners out there that are in the home service industry. And today we're talking about the leadership dilemma at a million dollars in revenue. So if you're coming up to a million or you've passed a million dollars in annual revenue, this podcast is for you. We have five questions about the leadership dilemma that come from you as the listeners. So let's go ahead and jump right in. The first one says, I feel stuck between working GM and full time gm. How do I know if I'm actually not ready or just scared of losing control? I will say losing control. You don't really lose control from working GM where you're out in the field, you're doing all the sales, you're doing, you're doing mostly everything in the business beside admin and full time gm, because full time GM you're still doing all the sales. You're just, you've hired an operations manager and you've hired someone in the office. And so if you're scared there, you're probably crossing that like 1 million, right? In that phase, I would say you're probably scared of losing control because you don't have systems. And so I would probably slow down and ask yourself, okay, before I try to keep growing all the way to the point where I hire an operations manager. Cause like if you're at working gm, you probably have an admin person and that's it. I would look at that admin's role and make sure they do everything in admin. Because I see over and over again that you're still doing the payroll, you're still doing the reconciliation of accounts at the end of each month. Those are admin tasks. So I would first try to get 100% of admin tasks delegated. And if you did that and you had systems for all of it, and even the things that only happen once or twice a year, like your taxes or, or quarterly reports, all of those things that you still kind of do on admin, make systems for those. If you do that and now you start to see that person being able to take real accountability for admin, you'll probably have more confidence to be able to go find an operations person, knowing that you will feel a little bit out of control at first, but then you will start going through their role exactly the same way. And anything that you're still doing in operations, like leading team meetings, hiring, training, you will then be able to delegate for them and that leads to where down the road you'll do the same thing for sales. But a lot of times the reason people are afraid to go get an operations manager is because they're more expensive than an admin person. They need more skill, they need more leadership training. And your role now moves into straight sales, which is do you have enough work to even facilitate you working full time being an estimator? So I would do two things. One, I would make sure that my admin role is actually doing all the admin that you're not involved at all. That will give you more confidence to go to an operations person. I would also really dial in my systems for sales so that I have the confidence I have enough leads to actually do it full time. Because a lot of times what actually pulls you into full time GM where you're doing full time sales is you have so many leads coming in. And so instead of being worried or concerned, make it where it's painfully obvious that the constraint in the business is I can't get to all of these new estimates. I have so many leads pouring in. So that's what I would do. Because right now I feel like you're probably struggling to create systems around operations. You will get there, but first let's really make sure admin is taken care of. Then let's put pressure on you by getting so many leads by really dialing your ads, your marketing, your funnel, your websites, clicking all cylinders. And now your highest leverage task is to go do that. Even if the operations manager that you're going to hire in order to go from a working GM to you now being a full time GM doing just sales in order for that to happen. Yes, there will be things that will drop through the cracks. Yes it will. There'll be errors, you haven't dialed that position in. But down the road you'll do what you did for the admin role, which is actually look at everything they're doing and make sure you're not stepping into operations at all. But to do that, you gotta convince yourself that you actually have a full time sales role by getting so many more leads. And you'll see this on the turnaround show sometimes where someone actually needs to raise their prices. But I will actually focus on getting more leads because I know if they get so many new leads, they'll get immediately pushed above capacity and they'll have to raise prices. And so instead of like, you should raise prices, although I think they should, I'll just say, go get more leads, let's dial in your marketing let's improve the conversion on your website. Like if you just like we see this all the time at long care web design and home service web design. We see the traffic coming in and we're like, okay, we will not get any more traffic. Let's assume we don't get any better SEO. Let's assume that we don't get any better ranking on Google. Let's assume that for a moment and you get the same number of clicks because we don't do any SEO. For example, if you just optimize the conversion from 1% to 2% of the traffic that gets to your website, you would double the business, you would double the number of leads coming in. And so I would focus on things like that. Huge leverage on the business before you start trying to optimize every little aspect of the operations person. Because this part you know really well and in order to step out of it and actually allow someone to go take ownership of operations, I need you so focused on getting leads out and that'll push the business forward again. That's a very high growth strategy and that is gas it. Get leads, push yourself to have to delegate operations and then pick up some of the carnage later on because there's going to be some things that you forgot to systematize on your way out the door. Number two on the docket. Every time I try to step out of the field, I end up pulled back in. Is that a systems issue or an identity issue? So I struggle with this a lot. I still struggle with this, honestly with, even if it's not in like in the field, quote unquote. And that is, I feel like as a leader I should be doing the same work that my team is. And so I struggle with this a long time. I was two to three years into franchising Augusta and I would still go to my local Bellingham shop for meetings once a week and, and once a year would still get out in the field and do work with the guys. And this was a lot of like me feeling. I didn't want to be disconnected. It all came from good intentions and me wanting to try to feel one of the team and contribute on their level and connect with them. But ultimately as the business scales, it is a bad use of your time and actually hurts their career because you're not actually driving the business forward. So you stepping back in the field and helping them on a job might feel like the nice thing to do. And, and let me be clear, if you have 8, 10, 15, 20 employees, probably a good thing to do that occasionally. But as you get multiple locations, as you get larger in business, you have to realize that you stepping out in the field and leading by example has limitations and actually could hurt the other 95% of the people on the team that need you to lead. They needed to be focused on higher levered tasks like sales. And as much as it hurts to be like, I'm not going to step into that role, I'm going to pull my operations manager to go help them on that project or, or running behind, okay, we're gonna work overtime for operations. I understand that desire to want to go out and lead by example. But leading by example has its limitations because you can only lead so many people. Eventually you have to create systems. As the architect that doesn't step in and manage the building, they don't tell the person where to put the nails. They don't tell people how to hang up the sheetrock or paint the walls. The architect steps away from the building and never enters and, and is looking for areas of weakness. They're looking for systems that need to be improved. They're looking for ways to improve the overall system so that every single person on the team, every single person that goes on the job site, every single manager involved, makes their job easier as a collective, not an easy thing. And if you've come from the field and you really started from nothing, it's very difficult to break yourself away from this notion that I need to get my hands dirty, I need to get back in with the team. And I think that is a useful frame. Until you get to 10, 20, 30 people and above that you really start to asking yourself, is this the best use of my time and am I actually helping the team or am I helping one person at the detriment of everybody else and preventing everyone from moving forward, making more money, getting the next stage of their career. Because I'm so focused on really having this identity crisis of still want to be out with the guys out, still in the field. And it's a tough dichotomy to manage and it is a fine line to walk. But I think as you grow to multiple locations and having a general manager, having an operations manager, you want to start asking yourself if there's a problem and I want to jump in and solve it to be able to show that I am still approachable, the question needs to be asked, why didn't I do my job in the first place and prevent that problem from happening? Because I should be creating systems as the leader of the organization, I should be preventing Those problems from happening in the first place. And am I just throwing a band aid on it by going out and helping them, or going out and working the extra hours out in the field, or jumping back into operations, or when someone goes down, I go out and do it. Am I just throwing the band aid on the thing that I, as the surgeon, should have solved a long time ago? And sometimes the answer to that is yes. Now, this is a great question. And one of the things that constantly I see getting owners pulled back into the field is when it comes to projects. Now, I'm not against projects. Projects are great to fill in around my recurring jobs, and I need them to grow the business, especially during the slow season. For me, projects are like property cleanups, mulch installs, small landscaping jobs instead of just mowing. But here's the problem. A lot of times this handcuffs people the business because you as the owner got to be there for material pickup. Also, you got to be there for any sort of equipment rental. And you gotta do the dreaded walkthrough. The problem with the dreaded walkthrough is the fact that it's gonna take you 20 or 30 minutes to walk around the property and just show the crew the job. Now, I used to do these project walkthroughs with my crew every morning. And it made as I got the business to 800,000, 900,000, a million dollars in annual revenue, I started hitting that cap. I started doing three or four of these every single morning. And what's crazy, I was just driving to the job, so showing the crew the job, walking around the property. And then Mr. Jones would come out, the customer and see me. And guess what? They want to talk to me the rest of the day. If anything went wrong, they wanted to talk to me. I became the bottleneck. And furthermore, it wasted two to three hours every morning, me just driving around doing walkthroughs. All of this was solved using estimate videos. And that's why inside of homeworks, you can take a video from the mobile app, automatically attach it to the property or to the visit, and then in four, six weeks, we when the job is accepted, your crew just pulls it up and watches the video. This will save you as time as an estimator and prevent you from getting pulled back into the field time and time again. Also, the customer can see that video on the customer portal if you want them to. And your admin staff inside the office can also see that video so they don't have to send you as the owner back to the Job site. If something goes wrong, go check it out. Today, go to home works, schedule a call with the team, and see if it'll allow you to to grow without breaking number three on the docket. I feel guilty when I stop doing what I'm good at and start doing what the business needs. How do you deal with that shift without feeling useless? So let's say, for example, you're really good at operations. You love working out with the team in the field, getting projects, customers are happy. You're like a great project manager type. And now you're like, okay, I know the business needs me in sales. I. But I really enjoy this other thing. Okay, that makes sense. How do you deal with that shift without feeling useless? I think it's really coming to grips with what does the business require and am I willing to sacrifice in the short term of what I am good at in order to be able to sacrifice to the business what is required for it to grow? And then the question becomes, do I need to grow the business? Because if you're happy and if you're satisfied with the size of the business and where it's at and what your current role is, what, why keep growing? Like, the thought process that you need to keep growing a business is crazy unless there is a goal that requires the business to grow. Like, if your goal is to be able to promote technicians into general managers and have multiple locations, you need to grow the business and you'll have to create a bunch of systems. If your goal is to have a $10 million company, you will need to figure this out and grow past a million. However, there's a good shot that most people would probably be very satisfied with an 800, $900,000 business. Never have to delegate operations to an operations manager and optimize for profit right around a million dollars. Absolutely. And that would usually meet the goals. When I asked him, like, what do you want? Like, well, I want time with my family on the weekends. I don't have to think about the phone ringing at 8, 9pm okay, why are you trying to grow for a $5 million business? That can be achieved at a million, that can be achieved at 900,000. And that might take you a little bit longer to systematize, delegate, simplify your services, reduce your service area, optimize your prices, but you can get there. And so I would first ask, what's the goal of the business? And then what size of business do I need to actually build it to? Because I think a lot of people are gonna stop doing what they Love in order to grow the business. And they do grow the business, only to realize they're not happy and they have no idea why they're sacrificing what they actually enjoy doing in the first place. I've seen some entrepreneurs, very few enjoy the admin and organization and systems and processes and like the backend side. Great, keep doing that. You're just gonna either have to find a great operations person and a great salesperson, or you're gonna keep the business around, you know, maybe one or two employees. Cause you're not going to have the bandwidth to be able to do admin operations and sales of a company that has 20 employees. Figure out what you're good at, what you enjoy doing. Ask yourself, what size of business do I need to be able to achieve the goals I have in life monetarily? Whether you're trying to save up for college education or a new house or whatever you're trying to do, work backwards from that to what size of business I need. And then based upon the size of business, what roles will I have to delegate? And if it's really a big business, you will potentially have to sacrifice 6, 12, 18 months when you do something you don't really enjoy doing. But if it's in the purpose of growing the business, it might be worth it in order to reach the goal number four on the docket. How do you know when your old leadership habits are the thing keeping you from the next stage? Good question. As a rule of thumb, if I hit a plateau in the business and it feels like there's like this invisible hand holding me down, in other words, I'm like trying to optimize my sales, I'm trying to optimize operations, I'm trying to optimize admin. And I feel like there's good progress. And when we look at the 4L framework, it's like, well, I have plenty of liquidity, I have plenty of leads, I have great labors, I have good leadership. What's wrong? It's almost always leadership. Leadership has a cascading effect because if you have great leadership in the 40 framework, you will usually be able to attract and retain better laborers. And if you have better laborers, you will probably get more leads because they do a higher quality amount of work and do better at upselling. And if you have great leadership and you have great labors and you have great amount of leads, you'll probably make more money. Liquidity. And so leadership is a trickle down effect. And most of the time we as entrepreneurs, myself included, are not self aware enough to realize the gaps in our leadership abilities to be able to actually identify that as the constraint. It is very, very rare that I walk into a business and they're like, yeah, the leadership is the constraint of us growing this business. Like, I am the problem. It's very, very rare. So if you have, you feel like this invisible hand and you keep capping out of a certain size of business, it's almost always your leadership skills. And I say that as someone that has hit capacities and hit limits and then had to have like hard conversation. As to the fact like, oh, my pride is getting me in the way of me delegating this part of the business. Okay. My pride is getting in the way of actually stepping out and letting someone else handle this or scaling that part of the business because I have too much pride in it and managing it myself. And so almost always it is a leadership problem. If you feel like you're growing, you feel like you're doing so much work, but there's like no revenue growth, the same amount of customers, you, you're not getting any more leads, even though you're like spending all this time on marketing, you turn off the ads and you get the same number of leads as when the ads were on. It is almost a leadership problem almost always. And I see that as hitting probably two or three plateaus in my career and then realizing like I had to make big changes in order to be able to get the business to the next level. And so how do you know when? I would say it's when you keep plateauing out. You can't keep growing the business and you don't know why. You've tried everything you've tried to optimize, sales, operations, admin, your leadership team, everything. And it's usually the things they're not telling you. And you're going to need some sort of outside counsel or help or coach or a spouse to be brutally honest with you and be like, here's actually why people don't want to work with you. Here's actually why your close ratio is so low. Here's actually why people don't want to do follow up phone calls with you and no one accepts the estimate. Here's why your communication method stinks. And when you meet with customers, they're constantly saying no, that's gonna be some brutal truths. But if you're open to it, that's why getting third party help once you've hit a plateau is really, really valuable. And that person, that coach doesn't have to Be like, way ahead of you in business. They just have to be given the freedom to tell you exactly what the truth is. Cause I've had people say things to me that are not quote unquote, big of business as me, but I gave them the freedom and the latitude to say what exactly they're thinking about my leadership style. And they were right. And so you don't necessarily need a coach that's super expensive, or you need a peer that can look at you as a third party and simply diagnose what the problem is. And a lot of times it's just yourself and your idiosyncrasies. And I have the same issues and same problems. And my leadership style is likely the thing that keeps Augusta lawn care and homeworks and everything that we're doing the size it is now. And so that's why working on yourself, humbling yourself, finding great leaders that are able to also do that, is likely the constraint of the business. As you pass seven figures number five on the docket. I've outgrown the operator role, but I haven't grown into the CEO role. I don't know when I should step in and train the team or correct them if they are doing something wrong. Okay. So I would try to use as much as possible metrics to. To determine whether or not you step into the business. Because if you do it based upon feelings, you're gonna make the wrong step. I've done this. I did literally this last week. I stepped in based upon having limited data into a situation and said, this is wrong and this is bad. And like, turns out I just didn't have all the data and we didn't have great insights on seeing those metrics for me. And so I think the biggest leap when you go into CEO is having the metrics and the data to be able to not need to jump in and yet feel like you know what's going on in the. Because if you're like me and you're a bit of a control freak, as you begin to grow the business and you have done every single job in the business and you know what things need to be, what. What need, what good looks like for every single role underneath you, it is very tempting to jump in every single time you see someone do something wrong. And so the ability to be able to say, okay, I'm not going to micromanage them, but I am going to have numbers and metrics and dashboards that track their performance. And then we will agree on the KPIs as to when they are bad. So if your close rate goes under 40% bad, meaning I am not going to analyze your sales calls, I'm not going to hound you about your close ratio, but if the number goes below 40%, we got a problem and we agree on that prior to you getting into your role. And so every role having metrics of success is very important. For technician, probably efficiency score for a salesperson, likely close rate as well as on target. Like did they actually hit budget hours on the projects? For someone, the admin, it could be how many seconds someone is on hold before they get answered, what percentage of the phone calls get answered, how fast do we get back to someone in terms of voicemail? These are all metrics you can set up and then be able to track hopefully automatically or from a dashboard or inside of homeworks to be able to see exactly what the business is doing in each department without having to step in. Now if you're in the kind of seven figure range, like a million dollars in revenue, it's likely that you still have a role in the business, likely sales and you have someone in operations admin, what that means is you are driving around all day long doing estimates and likely seeing your crew occasionally on the road. And sometimes they're not on the road, they're at the gas station, they're taking a break, they're on lunch. And so again, having systems like pay for performance prevents me from having to step back in because I look at the dashboard and I can see their efficiency score and I don't care if they're on their phone scrolling through TikTok, as long as they're above base pay, it's up to them. How hard they work determines how much money they make. And so I want to create as many systems as possible that don't require me to be in the business looking at people all day long. The more I can be able to run this through my run my business through the synthesis of I build it to be able to leave, the less inclined I will feel like I need to step in and tell people what to do or correct them or ask for more information. If I just had the data and I have simplified the systems enough and we have agreed on what metrics are considered successful and which metrics, if they hit a certain threshold, are considered a failure. If we see this number, you will see me walking in the office. Until then I will simply look at these numbers like profit, profit margin distributions. But when these numbers, these leading indicators like close rates and my efficiency score, my team, I will then step in. Once we agree to this number going below this threshold, then we have a common understanding that when I will step in based upon leading indicators before it becomes a lagging indicator on the profit and loss statement. All right everyone, that's been the Home Service Millionaire podcast I mentioned. Homeworks the brand changes coming up soon. Copilotcrm.com for now, sign up so that you can be able to run your business when you're not there and have the metrics you need to be able to scale and grow past a million dollars. I'm Mike Andes, Home Service Millionaire Podcast signing off.