the SECRET Journal of a Home Service Millionaire

I'm going to show some doodles and illustrations from the book. And how this works is I draw them here on my iPad and the media team makes them look a little more pretty. They take mine and kind of like move things around a little bit, but I made these illustrations for the book. And then shout out to Heather, shout out to Katie on the design team, helped me out, make sure they're looking all pretty. Like, we're going to go through these. This is going to be a long session, so buckle up, folks. These are some of the things that is inside the book, but in my opinion, express a lot of concepts of the book in a picture. So if you're like me, you're the more visual learner, this will be helpful for you. If you're a screenshot type of person, you will want to take screenshots on this one because you can refer back to these little doodles and illustrations and it kind of encapsulates an entire concept inside of it. So, here we go. Okay, this first example shows why so many people go back to being a solo operator. Because you enter this wilderness of profitability where all of a sudden you have $100,000 in annual revenue with a 70% profit margin because you do all the work. You don't have any payroll. You're the only employee. You don't— Everything is done efficiently because you're the— You're the owner. You don't have a lot of waste because you do everything efficiently. You don't have a bunch of insurance. You don't have a shop space. You're usually running out of your own office space or small storage facility. I ran my first shop as a solo operator out of a $40 per month shop space where I just parked a 6x12 enclosed trailer. So really low overhead. I didn't have an office person. I answered the phone. I got a VoIP, voice over IP, IP address, internet or phone line so I can get a different phone number from my cell phone. Cool. $100,000 in revenue, 70% profit. All right, total profit is $70K. Let's go. Now the hard part is on your journey to $800,000 and you're making $800 grand, you cross $500,000, we go through going through profit mode, raising prices. We have 6, 7, 8 employees now. And we're doing 20% margin. And you're like, "Man, we only make $160,000 in profit? It's only $90,000 more than I was making when I made 8 times less revenue." Like, I 8x'd revenue and I barely 2x'd my profit. And this compression of margin, compression of profit margin is why a lot of people will stay solo. When in reality, if I can build a business that is $160,000 in profit without me ever being there, the likelihood of me selling that business and the valuation of that business is far superior than when I'm making $70,000 in profit, 70% profit margins on $100,000 in annual revenue. And so, the copy and paste millionaire knows that real value comes in a business that runs without you, not in high profit margins. So if you're running a $150,000-$200,000 business and you're going on Facebook groups talking about all your 60% and 70% and 80% profit margins, I'm sorry, but like, you don't have a business. If you were to sell your business today, you would sell it at the cost of your equipment and maybe a little bit for your contacts, like your contact list and some customers. Like very little, there's no enterprise value. Whereas this other one, you would likely be able to get at least a few hundred thousand dollars for that business. Not for just the trucks and— Like, for the business, 'cause it produces profit without you being there. I would rather have the second business with the 20% margin compared to the 70% margin, but the $800,000 business has a general manager, 6 to 8 technicians out in the field, and runs without me there. Gets sales while I'm out there, 'cause I have sales automated with instant quotes and over-the-phone estimates. I have the admin side covered. With a virtual assistant, someone else that's answering the phone. I have a general manager taking care of operations and I'm running a 20% margin. Don't get caught up in the profit margin. Get caught up in the actual profit and more importantly, the level of work, effort, and hours that is required from you as the owner. Now, if you take that bottom one and you're like, well, I'm doing $160,000 in profit, but if you're working 60 and 80 hours a week, You technically don't make any profit because if you were to replace yourself with a salaried employee, you'd have to pay them $160,000 to work 70 hours a week. And so if you are the operator of the business, the reason I love the Copy-Paste Millionaire method is it doesn't let you hide. It forces you to confront the fact that we need to raise prices more. The vast majority of us don't raise our prices simply due to the fact that we look profitable as long as we're working 70, 80 hours a week. We're like the duck with their feet underneath the water and everything looks good above the water, but underneath the water they're treading. And that's the business that a lot of people are operating. $600,000, $700,000, $800,000 running $100,000, $150,000 in profit. take and go hire someone to run this business for you, you'd have to pay them $150,000. To work 70 hours a week. 'Cause you haven't simplified, you haven't standardized, you don't have the systems in place. It would require a huge amount of experience and a huge amount of hours every single week. And it would cost so much just to hire someone to do your job. This is why I'm a big proponent of building the business as if you were going to leave and as if you were going to sell it. You start thinking about the business differently. You start thinking about, okay, If I was to pay someone $150,000, would I actually be profitable now? Oh, I wouldn't be. So either A, I need to reduce the complexity of the business. I need to simplify things. Or I need to reduce the customization, i.e., standardize the business so that I can actually have someone step in and take the reins of the business. If you have key man risk and you are the key man or your spouse is the key man, you don't have a business. I'm sorry. Like, I'm not being— Facetious. I'm not being mean. I've been there before and it almost killed me, killed my business when I got stuck underneath a dump truck in the PTO and ended up in the hospital for 2 weeks. Couldn't come back to work. Almost killed the business. If I would have had a spouse and family that I was responsible for as dependents, I would have gone bankrupt in those 2 weeks. 100%. And so, if the business can't run without you for a couple of weeks, you don't have a business. I want you to target the second category with you out of the business. Because if you make what is currently— Some people watch this and like, "Oh yeah, I do that. $800,000. I make $106,000." But you work so many hours. If you were to replace yourself, you wouldn't be able to pay someone a nominal salary of $50,000 that you're taking out right now. You'd be paying them $150,000. And then you're locked to the business. These are the golden handcuffs. And any sophisticated buyer that's willing to pay more for your business is going to be able to sniff out the fact that, "Oh, if I buy this, I have to work 70 hours a week." Again, I sometimes come across like I'm speaking down to people. That's not the case. I want you to win and I know what it's like to be in these scenarios and I just desperately don't want you to be in a position where you're working 60, 70, 80 hours a week and you can't leave the business and you can't hire anyone to replace you because it's not simplified, it's not standardized, and you have no systems. Okay, next doodle. These are just like, these are completely random. These are doodles from the book and I'll explain them in detail here. Okay, this is a very chunked up version of how to pay a general manager when you're doing multiple locations. So, we take the average monthly revenue for a quarter. And so, let's say the first month was $60,000 in revenue, second month was $80,000. $70,000 in revenue and the third month was $80,000 a month in revenue. Well, the average monthly revenue for this past quarter was $70,000. Now I recommend in the 4L framework that you have one month of revenue in the bank at all times. Anything below that, I consider you starting to have a cash crunch of some sort. If you have over a month's worth of revenue, I now consider that distributable cash, i.e., money the business can distribute back to the owners. I would recommend doing this from day one because it gets you in the habit of knowing how much distributable cash the business is actually making. How much net free cash flow? How much cash can this business push out, suck out? Like, in a business like landscaping, painting, electrical, plumbing, we aren't getting massive valuations on revenue. It all depends on how much free cash flow this business— It's a profit-making business. We need cash flow. The boring businesses that we talk about in home services need to create cash flow because they don't make valuations. And you're not going to go raise a bunch of money on your $2 million business that's not making any profit. There's no one going to give you money. So in this case, if I have $100,000 of cash in the bank at the end of the quarter, I have an average monthly revenue for the past 3 months being $70K. The threshold of how much cash I need to keep in the bank is 1 month of revenue at $70K. That means I have $30,000 of distributable cash. That is money that can be distributed to the owner. That is the number when I do a GM over 6 to 8 employees doing $800,000-$900,000 annual revenue. That's what this business is going to do in an annual basis. In profit mode, no sales manager, no office manager, no fancy offices. This business is going to make profit. And I am wrong for some part of the population that they build their business differently than the Copy and Paste Millionaire method. I happen to believe it is single digits that should not use this method. Everyone will discount it and build their business differently, thinking that they are a part of that small percentage. In the book, I talk about the industries that I recommend not using the Copy and Paste Millionaire method, and I happen to know everyone that's registered for the Black Friday event and in my subscription list, I have gone through and like 95+% of you fall into the copy and paste millionaire method where you would make more money if you just built the business this way. You're like, "How much do I pay myself?" Pay yourself a regular salary and then use distributable cash. Why? Because then once you hire someone to be a general manager or you step out of the daily operations of the business, you've already established what your cash on hand or your working capital needs to be and you're in the habit of quarterly distributions. 'Cause the whole reason the business exists is to pump out cash. But we need to keep working off working capital in the business, and that's 1 month worth of revenue. If you wanna be more conservative, you can go to 2. If you wanna be more growth-minded, you could go 2 weeks. It's gonna be a little bit tight. There's gonna be times you're gonna be squeaky on cash flow, but 1 month of revenue, in my opinion, is a good threshold. Okay? Now, if I'm giving a percentage of that to my GM, 'cause now I've moved out of daily operations, I now give my salary to them, and I move to just the owner that's gonna get distributions, which, by the way, is taxed way better than your salary. The distribution of $30,000 or 33%. Sorry, $30,000 distributed cash. That's the difference between the threshold of $70K and how much money is in the bank? $100,000. $30,000 of distributable cash. And I give 1/3 of that or some percentage of that to my general manager. In this case, this location is giving 33% of distributable cash to the GM. 'Cause the GM is running every aspect of the business, has likely been there for 5 to 6 years, probably did not start at 33%, probably started at 15%, went to 20%, went to 25%, went to 30%, went to now 33%. They're gonna make $10,000 in quarterly bonuses as part of the distributable cash model. This is how I recommend doing a general manager of a location that's in profit mode using the Copy and Paste Millionaire method. It's gonna start to look different if you go the GM+ route. We have multiple managers at sales, operations, admin, and GM+ at the top. I'm probably gonna give them a lower percentage. I might give some of it to some of my mid-level managers. It's gonna look different. But for the copy and paste method, which is 6 to 8 technicians, 1 general manager that is, when it gets slow, actually out in the field, a working GM, My sales is automated as much as possible with over-the-phone estimates and instant quotes. And then my admin is remote until I, if I'm going to actually scale up and get an office manager in-house. So this is how we pay our general managers. This aligns the goals of the general manager with that of the business owner. Once you are remote, the only thing you care about is distributable cash. As a business owner, the only thing I care about is that I am making money every single month while I'm out of town, while I'm not there. And everything boils down to distributable cash, because if they're inefficient in the field, I'm not gonna make as much distributable cash. If their close rate's way off, I'm not gonna make as much distributable cash. Any aspect of the business that is off eventually leads to distributable cash. So if you want someone to be responsible for the business as the general manager, Give them a piece of the action at the bottom of the funnel, i.e., distributable cash. We build custom websites for home service business owners just like you, and you get a 15-minute free consultation about your website because our team, on average, when someone joins as a client, we increase the number of leads they get by almost double, 80%, within the first 12 months. In fact, if you go to our website, you can actually go through and see all the different websites that we build for a whole bunch of different home service businesses that have taken their business to the next level. Go check it out and book a free consultation Call today. So this is the profit and loss statement from November. Inside the book, I share the entire past year for this location, but this is the last month. Okay, so if you want to zoom in, you can. So it shows the income, $92,000. Again, this location has been in profit mode for several years, so they're right around that million, probably $1.1 million, maybe $1.2 million. And they're right inside. I think they have 5 or 6 employees right now. So, you can see all these— These are the numbers. You can see the rent and lease is $6,000. Too high. That's why we're trying to move out of there. It's not $6,000 for the month, it's 2 months in 1. But still not bad, $29,000 in profit. That's about a 30— What? 32% profit margin. Now, this month specifically, there was no profit sharing given because every quarter that money comes out. So, for example, in July, August, and September, in October, there's a big, big bonus to the general manager and to the team. So that would have brought revenue profitability down because the wages would have been way higher. That being said, in November, this is just a regular month and there was no distribute or no profit sharing given. So good solid 32%, 33% margin. It's going to be an average at this location between 20% and 25% because the months when we do do profit sharing and give out money, it drops down below the 20% margin. So as a blended average, 20-25% margin is what I'm going for. This month is higher. Cool. So there's the numbers. Here's the thing. When I get this report, I just look at one number. I just go to the bottom and say, how much money did we make? It's the only thing I care about as someone who I'm not involved in hiring. I'm not involved in their advertising. I don't even know what they're doing in terms of if they're running ads. I don't know what— they shouldn't be, 'cause they're sending out text messages and homeworks, but like, I don't know any of that. I should probably tell if I actually look closer. What are we doing? Advertising is $400. So I'm gonna go out on a limb and say they're doing Google Local Services and they just leave that on all the time. That's the $400. Okay, cool. So all of that to say, the only number I care about as the owner is the $29,787. $29,787. That's the only thing I care about. And I only care about the end of the month, at the end of the quarter, taking distributions from this business and giving the percentage to the general manager to run this location. Distributable cash. He gets a percentage. He gets a percentage of every dollar I take out of the business. Okay, this doodle inside the book represents why when you have a couple employees, losing one is so catastrophic. Because if you have budget hour capacity of 100 budget hours per week, so 33 for you, 33 for an employee, 33 for employee number 2. If you lose one employee, you just cut your production capacity by a third, 33% down. So you might have had 100, 95, 105 budget hours scheduled per week and you lose one employee and all of a sudden you are way behind. 'Cause you literally have 50 to 60 budget hours per employee, you and one other person. This is why it's so fragile when you have 1, 2, 3, and 4 employees. That's why I like having between like 6 and 8 employees for the perfect copy and paste model. 'Cause if I lose 1 or 2, it's not as jolting. Like if someone quits or someone walks off the job and I have 8 employees, hey, the extra 12%, we can absorb into the other 7 team members. Okay, so the reason I don't want to stop and optimize for profit at $200,000 business with 1 or 2 employees is because if I lose 1, I'm just immediately in chaos. Very hard to leave a business that you're 1 person walking off a job or getting hurt or something, and the business immediately is 30% behind schedule. Very hard to scale that business. Okay, this is the speed Sorry, the sales speedometer. So when we look at the close rate, that's accepted estimates divided by sent estimates. That determines my close rate or my close ratio. Inside the book, we have this demonstration of a speedometer, and based upon where your percentage is at. Now, if you're trying to optimize for growth, remember we have growth mode, we have profit mode. If we're trying to optimize for growth, I want you between 50% and 70% as a rule of thumb. Now, not every month, not every week, but on a quarterly or annual basis, I want it in 50 to 70%. There's gonna be times of the year where that increases or decreases, but as a rule of thumb, 50 to 70% is a great range. If you're over 70% on your close rate, you need to raise prices immediately. Why? Because you're leaving so much money on the table. And if you'd raise prices and lose like 5 or 10% close rate, it's likely that those lost customers, you could easily spend on marketing and recoup way more leads by just raising your prices enough to get under 70%. The reason I say this is because I already know that when I send an estimate, there's gonna be some part, percent of the population that like will not buy from me if I charge anything. Like, they're just not gonna buy from me. They're going after the cheapest. Like, that's 10%, boom. So I can only really sell 90%. So if you're closing 85, 90% of your jobs, of your estimates that are being sent get accepted, you're leaving a massive amount of money on the table. Raise your prices to the point where you get to 65%, 70%, and if the extra margin caused by raising your price is 15%, 20%, you're gonna be able to get way more leads if you just spent that extra margin on marketing. If you raised your prices by 15% and you're doing $50,000 a month in revenue, raise your prices by 15%, that's $7,500 in extra profit. Do you think if you went from 80% close rate down to 65%, like, oh my word, I'm less work, you spent 7— you got $7,500 more in profit. I guarantee you, if you spent a third of that, $2,500 on ads, you'd be able to get a whole lot more leads than the ones that dropped off. Oh, and by the way, the ones that drop off because you raise prices are your least Quality customers, the least likely to get upsells, the least likely to go throughout the off-season with winter services, the least likely to take on warranties or guarantees, et cetera. All right, so raise your prices if you're over 70% across the board, raise your prices by at least 15% if you're above a 70% close rate. If you're trying to optimize for growth, I'm going between 50% and 70% close rate. And if you're in profit mode, keep raising your prices when you hit capacity. Because you can't serve more customers without buying more trucks and hiring more people. So it's not a matter of even your close rate. It's a function of I need it to be within 30 to 50%. Here's why. If it goes below 30%, you're like, man, I just keep raising my prices. I have enough leads. I'll be at a 15% close rate. I don't want that. I want it to be between 30 and 50%. Well, what do you mean by that? I kept raising my prices and now I only have a 10% close rate. I want you to diagnose your sales process if you're under 30%, because there is an actual cost of estimates pouring in and 90% of them being rejected. Over-the-phone estimates, drive-by estimates, in-person estimates cost you money. Instant quotes, not so much. It's the one time, that's why I love instant quotes, you can be deep into profit mode and getting a very low close rate and it not costing you anything because it doesn't cost in admin time. It doesn't cost you driving there with an estimator, all the rest of it. Instant quotes, I give you the green thumb. I know that 99% of you don't have instant quotes. So you having a close rate under 30% is wasting tons of capital. In drive time, producing designs, admins answering the phone, going back and forth about the quote, creating the quote itself, tons of time and money and energy is lost. So what do you do if you're at 10%? Well, I'm gonna diagnose my sales process if I'm trying to grow the business. Trying to do better close rate, I'm going to make sure that I am getting speed to lead much better. Like, I'm trying to get to them faster, get the quote to them faster. I know that 70% of quotes are gonna accepted, go to the person whoever gets the job first. Estimate to the first, to the customer. So I'm going to focus on my speed to lead. I'm going to make sure I answer the phone when it rings, unlike 90% of people in this home service industry. I'm just going to answer the phone. I'm going to diagnose my sales process. Now, if you're like, hey, I'm in profit mode, I'm under 30%, what do I do? You want to qualify your leads more. So that on your website, you might put your minimum price. You might put your rates. Not for instant quotes necessarily, but to show people that you're not cheap. So that way you can disqualify 10, 15, 20% of people before they even submit a quote, before they call you, before they waste your admin time, they've been qualified by the fact that you've shown some pricing. You might disqualify some people by saying, like, reducing your service area. Whatever it is, I am trying to qualify the customer more if I'm in profit mode and my close rate is under 30%. So either way, whether I'm trying to grow and I'm trying to get my close rate up, or if I'm in profit mode deep and only closing a very low percentage of my jobs, great, you're probably winning, you're crushing it. I still think you can optimize by qualifying customers more before they get to you so you don't spend a bunch of time doing estimates for 60%, 70%, 80% of your jobs that aren't getting accepted. That is the sales speedometer. I will live and die by that bad boy. This is what we talked about earlier, and that is how I start multiple locations. I am not going to, unless I have plenty of capital. If you have over $100,000, you're rockin' and rollin' to go spend on a second location. You can start in a new area, start from zero. Expect 1 to 2 years of unprofitability if you're doing that. The more probable form of success, the most probable way of success when it comes to multiple locations is to extend your service area, Knowing that you probably won't be profitable in that new area because of the extra drive time. It might mean on pay for performance, you actually give a higher percentage for your team to go into that area because they will not make above base pay and they'll get mad at you. I'm willing to do that for a year to grow into this service area and then break it off into its own location once it already has a sufficient amount of revenue to keep the GM busy and potentially even one employee. From day one, if you can break that location off, immediately have 40, 50 budget hours worth of work, you can almost be profitable from day one on the secondary location. And the level of risk is so much lower because you've de-risked it by proving the market. You already know what ads work. People already are calling you for referrals. Your website is already ranking in that area. Now, if you want to grow fast and start multiple at the same time, you can do that. You'll just need more money, and you will go through a year or two of unprofitability if you start from zero and are pouring a bunch of gasoline on that market. So the most conservative form to do the Copy and Paste Millionaire method is as you get to 6, 8 employees and you start needing a 9th and a 10th, I'm going to expand my service area into an area and then break it off and get my location back to 6 to 8 employees and take one of my technicians, rise them up as the general manager of the location at my existing location that they just have to monitor operations, sales is, is automated and admin is delegated. Okay, that's the goal. So they can just focus on operations at the existing location. I then, as the entrepreneur, will go do sales and ramp up and do a bunch of ads and door hangers in location number 2 and take it from $20,000 a month back up to $50,000, $60,000 a month and copy and paste that method. Get the location, you grow it up, you go extend into the service area, Work there for a year, somewhat unprofitable, then break it off, make a new location. The secondary location goes into profit mode. And this is the copy and paste millionaire method. Copy and paste. Don't replicate or don't try to iterate and try to expand. Like, a $3 million business is a completely different business than $800,000. Completely different. 6 to 8 employees, completely different business than 25 to 30. The thought that you're like, "Oh, I'll just keep doing the same thing." No, you're going to have to learn management. You're going to have to learn mid-level management, compensation for sales, operation, admin. I cover how to do that in here. That's the GM+ model. And as long as you as the owner are there working all the time, it probably is the easier path. The harder path is what we're talking about. The Copy and Paste Millionaire method is the harder method. But if you can, if you can do it, you can take the exact same model and just keep doing it over and over and over and over again. And if you look at the most successful people that have done Massive chains, like for example, Raising Cane's. What's the other one? The Chinese restaurant, it is, oh man, I'm just blanking. Panda Express. They own all the restaurants and they've done it for 20 and 30 years, just one at a time, at a time, at a time, at a time, at a time, at a time. They just keep copying and pasting. They're not gonna reinvent how to make rice and chicken. They're not gonna reinvent how to create chicken fingers. They're just gonna keep doing the same thing over and over And over and over again. And you just keep moving the market. Fantastic. Copy and Paste Millionaires constantly tracking the efficiency score. Efficiency score is budget hours divided by clocked hours. This is going to measure how efficient my laborers are out in the field. Very important. It determines so much in terms of profitability. It determines who my highest performers are, my lowest performers. I can track so much of this inside of HomeWorks and inside of P4P software, they sync up together. The direct integration allows your crew to be able to see before they even start their day, a thermometer of all the jobs and what the revenue that they're going to earn the day. And as they clock the jobs and homeworks and complete, complete inside of the P4P, it fills up that thermometer and you can see how much money they're earning. Super valuable. Be able to have a dashboard, be able to have a scoreboard showing the efficiency of every crew member. And how much they're making on P4P and the ability to be able to recruit using that scoreboard, very valuable. Efficiency score, super important for operations. We talk about KPIs and metrics. It is the number one thing, efficiency. The only other thing I really care about when it comes to operations is quality. I need them to be efficient, but I need them to have high quality. 'Cause you can make your efficiency score really, really good by going really, really fast, but if you do a bad job, you're not gonna have any customers to serve very quickly. So a couple of the KPIs when it comes to operations is, is the work being done efficiently? That's the efficiency score. And are customers happy? Customer satisfaction. You can measure that, yes, through Google reviews, but Google reviews are not a great indicator. That's why I prefer surveys. So like from HomeWorks, you can send out a survey, 1 through 5 stars, and then if they put 5 stars, you can then send them a link to go to Google. But then all those 4, 3, 2, 1 stars, I want to see those. That's why as the Copy Paste Millionaire method, I want them to leave me a 3-star because I then can figure out and quantify customer satisfaction. That's why at HomeWorks today, we are literally doing an NPS score, net promoter score. It is essentially asking our customers, where are we at? How are we doing? It's a way for me to be able to benchmark, is what we're doing, are we headed in the right direction? And so when the NPS score goes from, in 2024, from a 1 to this year, a 62? Okay, we're doing something right. Keep doing more of that. And as someone, when you're running a business from afar, I need to see the negative feedback. I don't just wanna see Google reviews. I need to be able to make sure that the efficiency score, quantity, matches up with the quality of the work. This is the counterbalance that you need to have on pay for performance and any sort of compensation model is, Efficiency, productivity, quantity, but then I have to have a quality measure. Otherwise, your service business, if service is poor, will soon no longer exist. Hey everyone, inside of the book Copy and Paste Millionaire, I talk about the P4P system being so instrumental to be able to have the business run without you, where your employees are paid based on how hard they're working. If this is something you're interested in, this is the perfect time of year to figure out the software that makes this possible automatically. Within a matter of a minute per employee per day, you can pay your employees based on how hard they work and not based on how many hours they worked. Uh, so go check it out, pppsoftware.com. The first 30 days are completely free, so you can make sure it's working for your business. Set up a call with Lael, our support system here, to be able to make sure it's implemented in your business correctly. All right, Efficiency score speedometer. We have an efficiency score. What's a good efficiency score? Let's go over it. If your team is between a, is over 90% efficiency, which means they complete 9 budget hours in a 10-hour clocked day. So budget hours divided by clocked hours is something we track religiously in HomeWorks. Every single calendar view, both month and week and day, has how many budget hours is on the schedule. We show you if you're over the capacity. It's very important. And I didn't get through the list of everyone that's joined today, but thank you so much for all the support at HomeWorks. I see a lot of people joining for the Black Friday deal. It has 4 more hours. But inside of HomeWorks, we are going to make sure we track our budget hours religiously. Every single task, to-do, visit, estimate, meeting, job. Every single thing has a budgeted hours attached to it because that's how I figure out my efficiency score. And if you're over 90%, your team is elite. Keep in mind, efficiency score can be gamed. How? If your estimates aren't accurate, if your budgeted hours are not accurate, efficiency scores can be gamed. So if you just— you can really massively increase someone's efficiency score by just reducing the hourly rate and increasing the budget hours on the job. Price stays the same, but I reduced the amount of hourly rate from like $80 an hour to $70 an hour, and then just increased the budget hours by that same percentage. You can game the system for efficiency score. That's why efficiency score is much more a metric of comparison over time and comparison between crew members and crews. Do you figure out who my top performers are, my highest performers, my lowest performers, and compare the customers in terms of which jobs are underpriced and need more time allocated to them? Is my estimating accurate? That's what this was really for. Assuming that your budget hours are accurate though, assuming that what you actually put on an estimate is how long the job should take, and on average you are accurate, 'cause you're always gonna lose a little bit more on one job or beat the budget hours on another job, but as an average, if you're actually, accurate on your budget hours and 90% of your time is spent doing work, not doing drive time, load time, meetings, 90%+ elite, fantastic. I have yet to see a home service business that has accurate budget hours and efficiency score over 90% across the board that doesn't make profit. And usually 20%+. Now, an average crew is going to be between 70% and 90% efficiency. Meaning that there's 10% to 30% of their day not spent generating revenue-producing work. Drive time, load time, team meetings, fueling up, lunch, gas station breaks, et cetera. That's average. Generally speaking, on pay for performance, if they're over 70% efficient, they start making above base pay. Generally speaking. It depends on what you put your percentages and your base pay is at, et cetera, but as a rule of thumb, typically over 70%, they start making above base pay. If they're about 95%, They're usually crushing. They're usually making like 30 to 40% bonuses on top of their base pay. Now, below average is 50 to 70%. Again, the reason I need to have this number is that when I, as a copy and paste millionaire, am running a location from afar, I can see these numbers and not go and wonder what's happening to this. I know that this is a red flag if they're at 55%. I have yet to see a home service business where their efficiency crew, or sorry, their budget hours are accurate and their efficiency score is under 50%, I have yet to see anyone in double-digit profitability. Not a single one. Even the companies that have very high-ticket items like HVAC, electrical, et cetera, still, 'cause they also have higher wages, so like still, if they're not producing revenue for a minimum of 50% of the day, I have yet to see anyone in double-digit profit, so above 10%, And a lot of them lose money. A lot. If you go back on the Turnaround Show, Carter from Rough Cuts out in California, he was one of the few businesses where I told him, "Hey, you should scale back to being a solo operator and raise prices and reestablish the company." The reason? 32% efficiency score for his team. That tells me that someone, A, doesn't have the skill of management yet. They can learn it. But they don't have the skill of managing team members and making them efficient and training them. And/or you have really bad employees that you need to clear the deck. But you will not make money at a 30%, 40% efficiency score. All right, this is another doodle that I made inside the book. The first example is when you collect 30% upfront on the job. This is for deposits. This is why it's so important inside of HomeWorks to have a deposit threshold. In my opinion, I want to collect at least 50% of the revenue. Why? Before the job starts. Why? Because I want to make sure I cover the cost of goods sold so I can do the job without going in the red. What does that look like? You're like, "Oh no, no, I covered, I got 30%." Okay, you started doing the job, you got 30% upfront, but then you did the job over the course of a couple of months. It's a big project. It's a huge job. It's a, what, like a, probably a $50,000 job. "$60,000, $70,000." Look, this is a big project. This is like $100,000. Let's go. "$100,000 project, collect 30% upfront." So $30,000 the wages, all the materials, all the subcontractors, and ultimately I'm going to spend $70,000 on this job. For the vast majority of us, we would celebrate. You know why? We made $30,000 in profit. We are 30% profitable. In example 1, if I didn't show example 2, all of you would probably be jumping up and down on example 1 as this is a good job. I made 30% profit. It was a $100,000 job and I made $30,000 in profit. Let's go. That business in example 1 will grow their way into bankruptcy. Why? Because they went into the red by $50,000. Oh, sorry, their profit on this job is 20%, it looks like. Yeah, 20%. Okay, so $100,000 job, they made $20,000 in profit. Up front, they collected $30,000. They spent throughout the job a whole bunch of money on materials, all the rest of it. They came out with $20,000 in profit at the end of the job. Most of us would jump up and down, be excited. We made $20,000 on this project, let's go. But what you don't see is that you got collected $30,000, but then you spent $80,000 before you then collected the rest of the project cost, the other $70,000. So yes, you made $20,000 on this job. At some point in this job, you were negative $50,000. That means if you had two of these jobs going at the same time, you could potentially be a negative $100,000 in your bank account on two projects. That happens at the same time, you got a couple of employees walk off a job, you get a lawsuit, and then someone gets in an accident and your business is gone. All right, compare that example number 2. We're going to collect 50% upfront. Then midway through the job, we're going to collect another 30%. At the very end, we're going to collect 20%. We're going to do progress payments on this massive $100,000 job. I never go in the red. Same exact job. Same amount of profit. 20% profitable. I'm at $100,000 in revenue. At the end of the day, I walked away with $20,000 profit. But the difference in example 2 is my cash flow never went negative. It never went red. And this is how you're able to sustain cash flow. Same profit, same P&L. Everything looks the same besides cash flow. This is why an entire chapter of the book is dedicated to cash flow. This is a huge sticking point for why projects can sink your business. If you're not collecting enough money upfront to cover your cost of goods sold, which is your direct labor, your materials, and any subcontractors. As a general rule of thumb, I want to cover all of those things with the money I collect before I have to pay my customer, before I have to pay my employees, before I have to pay I have to pay my vendor, before I have to pay my supplier, before I have to pay for the equipment rental, before I have to pay for dump fees. I want all of that money from the customer. If you don't, you are financing these jobs without knowing it. And you're telling yourself based upon your P&L at the end of the year, you're 20% profitable. And then you wonder why there's times of the year where you have no money. It's because you're using example 1. This is why I'm such a huge advocate of having deposit thresholds inside of HomeWorks to where you can't even get the job accepted before they pay the initial deposit. I don't wanna have to be sending an invoice to a customer that's accepted an estimate. I'm like, "Okay, here's your, go ahead and pay this invoice for 50%." No, I want it before I even get notified, before I even have the opportunity to order materials, to schedule a massive piece of equipment for a rental for the day. Before I'd get anywhere close to that, I wanna have that money in my bank account so I can pay my employees, 'cause otherwise you are digging a massive hole. This is the power of deposits. This is the power of progress payments on big projects. It keeps you from negative cash flow. And you would be amazed if you actually thought through and actually did the math on some of your big projects, how negative you are at some period of time. And you take 2 or 3 jobs that you're running in a larger company and all of a sudden you're $50,000, $100,000, $200,000 in the red at some point in time on profitable jobs. And this is how you stay on the treadmill of I must keep growing, I must keep getting more leads, I gotta get more jobs. You're on this treadmill, you're robbing Peter to pay Paul 'Cause Paul is out here $50,000 in the red. So I've got to use the deposit from someone else's job to cover today's expenses 'cause I got to pay my employees today. I got to pay the vendor today. My customer is going to pay me in 3 or 4 weeks when I get this job done. Hopefully, hopefully they pay me. And what keeps businesses going broke and using example 1 is they go to the end of the job and they don't pay at the end of the job. They wait 30, 60, 90 days. That's why inside of HomeWorks, you can set it up. To where they get penalties and fees based upon 30, 60, 90 days or whenever they go overdue. Because I don't want them waiting 30 or 60, 90 days, especially if I'm going in the red because of bad deposit thresholds. I don't take progress payments. If I'm not doing that, I'm going in the red and then I'm letting 30, 60, or 90 days go by for the customer to pay me on an interest-free loan. I'm gonna have a card on file so I can charge them immediately. And if I'm not doing that, if I don't have ACH, I am going to definitely be charging my fee if they're going to be going way overdue. A lot of people wonder what makes HomeWorks different than any other CRM like Jobber, Service Autopilot, or Housecall Pro. There's a couple of big things. One of them is that we actually have an office with real support people from the US. They're going to answer phones, chat, and video calls throughout the day. The other thing is we're not owned by private equity. I own all the company. And I'm making sure that this tool is built for your home service business so you can take it to the next level. Another doodle. Okay, this boggles my mind because when I said collect card information, somebody was like, "There's no way I'm paying 3%." You know what boggles my mind? You know what boggles my mind? Well, first off, what boggles my mind is I cut a piece of my drawing off. That's such a shame. But when you look at loans and debt, that so many people will use when they're cash-constrained. Many times, a line of credit or some sort of bridge loan, working capital loan from your bank is going to be well over 20%, depending on the interest rates that you're currently in the environment. If you're using like a Stripe loan or QuickBooks loan, it could be well over 30% or 40%. Let's just use 20% like a credit card. 25% is probably what a credit card is right now. Here's the thing. It's amazing to me that someone would say, "I will not pay 3% in credit card processing fees." But yeah, I'm going to go get a line of credit and pay the bank 25% or 20% or 15% on a loan to bridge my cash flow. Why not just accept credit cards and pay 3% to get the money tomorrow in your bank account? 'Cause that's why you have the cash flow crunch. You're not requiring credit cards on file. Every single customer that ever accepts an estimate from me must have a card on file. And I did it by clicking a button inside of HomeWorks settings to where they can't accept the estimate without that happening. So I pay 3% for credit cards. I don't wanna pay 3%. On a $100,000 job, that's $3,000. Great. Inside of HomeWorks, we charge 1% for ACH and it's capped at $5. There's no one else in the market that will cap it at $5. So now you're gonna pay $5 to get the— get your payment right away. So if you're paying somewhere between 1% and 3% for processing with ACH or credit cards or whatever, why are we crying over that when we're all at the same time you're using your credit card, at the same time you're using a bridge loan, at the same time using a credit card processing loan, at the same time using a line of credit that is charging 15%, 20%. It's crazy. And it's all because We have bad cash flow. Fix the problem. Here's the solution. Accept credit cards. Every single car, every single estimate gets accepted. You push one button, HomeWorks, and that will never be a problem again. Like, what if it expires? Great. As soon as it expires, it sends them an email and sends me a notification, and immediately I'm going to be letting them know in 7 days that overdue invoice is getting more fees. Okay, when it comes to scheduling, the vast majority of us give this, the squeaky wheel gets the grease. It's a really bad way to be able to do scheduling. Instead, I'm gonna give a prioritization of scheduling jobs. I'm gonna prioritize recurring and time-sensitive jobs during the spring rush. If, like, first come, first serve is a horrible way to do scheduling. 'Cause all you're gonna get is a whole bunch of jobs coming during the spring rush, you're gonna get them all scheduled, it'll be crazy busy, and then you're gonna run out of work. So, I am going to prioritize only time-sensitive, meaning they can't wait a month or two, and recurring, meaning they're gonna happen weekly, biweekly, or monthly. Those are the only high-priority jobs in my mind when it comes to scheduling. If the job can wait, i.e., they're not time sensitive, but they are recurring, meaning, hey, you can push this bush trimming off for a few more months. They don't look horrible now. I am not making this a priority. Why would I put it on priority when all these leads are gushing in? I'm gonna put a job that's low priority, but it is, I'm sorry, not time sensitive, but it is recurring, so it's mid. The same thing is true with a one-time job, but it's time sensitive. If a project, for example, like a weeding job, overgrown, HOA's down their throat, it's a one-time job, but it's got to get done in the next 2 weeks. That's a middle. You're like, well, isn't it really time sensitive? It is, but because it's not recurring, I'm not going to make it a high priority when I have all these leads coming in. I need to have a filter for which leads come in to determine which ones need to go on the schedule right away. And the only highest priority is recurring, time-sensitive jobs. Now, low priority jobs are one-time jobs that are not time sensitive. These people I am trying to book out into the future. If I'm in spring rush and I'm drowning in leads, I am not going to schedule a paver patio from 3 weeks out from now. You're like, well, you're only 3 weeks booked out. I know I'm going into spring rush when I'm going to get a ton of recurring jobs and a ton of time sensitive jobs. I'm going to try my very best to schedule this job 3 to 4 months from now in July or August when I know leads are going to decrease and I'm not going to be getting a bunch of recurring jobs coming in. Got to prioritize the leads. Otherwise, this leads to high highs and low lows, and you give up during the low lows and you go way excessive when you're in high highs. We want lower highs and higher lows to stay more even keel and to make sure our lead flow is evened out throughout the year. The Trinity of the Trades, ladies and gentlemen, welcome to my pyramid scheme. Pyramid scheme here is the Trinity of the Trades. So the Trinity of the Trades, in my opinion, is how you build great culture inside of a home service business. Foundational element: pay for performance. In my opinion— ow— in my opinion, if you have 1 or 2 of the 3, your culture will still fail. I will explain in a moment why you need all 3, but let's first go through them. Pay for performance is foundational. You pay people, the harder they work, the more money they make. That's foundation. You got to do that. Table stakes for a great culture. If you do that, you also need to open up the books, which means you stop hiding things from people. Let's be honest. If you are not doing open-book management, you are hiding things from your team, including Jace out there at the media team. They see all the numbers. They get the profit and loss statement for the media team at the end of every month. Jace, have you seen one yet? I know you're relatively new to the team. Have you seen one? Yeah, cool. So I could probably a couple now, but like, share the numbers. You have nothing to hide. And you're like, well, what happens if they see I'm making a bunch of money? Then give them a piece of the action. That's the third one, profit sharing. So I was afraid to implement pay for performance. Best decision I've ever made. I went from making hardly any money to making $280,000 in distributions the next year. Open-book management. I was freaked out of my mind to open up the books. Within 1 year of opening up the books, I was profitable. Profit sharing. I was freaked out about offering profit sharing, but I was forced to do it because when I made a bunch of money and wasn't showing up to the office anymore, it felt wrong. And I wanted the team to still be constantly thinking about the bottom line, so I gave them a piece of the action. The crew out in the field, as well as the managers. Okay. Why does this not work if you implement 2 or 1 of them and not all 3? Because if I do pay for performance and everyone is able to make more money if they work harder, I need to open up the books so they don't think I'm fudging the numbers. I need to open up the books to be able to show them that there are people making more money when they ask for a raise. I need to have the leaderboard, that's why I have MP4P software, see how many yellow slips people are getting, See how much money they're earning. I need those open books so I can prove the person that's complaining about their pay and they're not making money on P4P, that no, other people are making more money. See the top performers? See what they— See how when they walk into the office in the morning, they take 5 minutes and they're out the door? See how they pack a lunch? See how they're not stopping 5 times for, at the gas station, 24 smoke breaks in the day? That's why they're making that kind of pay. So do more of those things and you'll get that kind of pay. That's what P4P is. But I need to open up the books to be able to prove to them that I'm not fudging the numbers and I'm not playing favorites. That's why I have to open up the books. Also, if you had the choice of working for someone you liked versus someone you did not like, who do you think you would work harder for? Who do you think you would have discretionary effort given to? As a boss, who would you give it to? The person you did not like or the person that you liked? I would happen to believe the vast majority of us would work harder for the person that we liked. What's the number one way to make sure that someone doesn't like you? Hide things from them. How do you know that? If your spouse is hiding something from you and you find out, how do you feel? If you're hiding things from your team, like the revenue on a job, the budget hours on a job, how much money you're making, eventually they will find out. They will find out how much you're earning on a project because they see the estimate sitting there. They'll see the invoice. The customer will pull it out in front of them and ask them about something on the invoice. And all of a sudden they see $6,000 in this project. And in their mind, they're doing the math like, "Wait a second, I'm making $300 and boss man is making $6,000. That ain't fair." But you're to blame as the owner because you haven't opened up the books and shown that there's also insurance, there's fuel, there's rent, there's payroll taxes, there's sales taxes. There's a whole bunch of expenses they're not seeing, and they just think that you're making a bunch of money off their back. So open up the books and show them otherwise. If you're struggling and you're not making a lot of money, open up the books and prove that you're not making the money. I can guarantee you, especially if you're growing and putting every dollar back in, you might be in debt. You might be working 60, 70 hours a week, not pulling hardly any money out of the business 'cause you're just trying to grow and put the money back in. But the team members look at you buying the more trucks, getting the more equipment, and you see that as debt and like more stress and more anxiety. They see that as, "Oh, the boss is flowing. They're making tons of cash." So if you're not making money, open up your books and prove your team wrong and show them that you're not making money and show them the books and rally the troops like a head coach during the halftime in the locker room, jazzing up the team when they're 24 points down at halftime. That's what the motivation and the culture needs to be is like, we've got to turn this thing around. We're in this together. We're going to work hard. And now when they see you rolling in, at 6:00 AM and rolling out at 7:00 PM, working 13-hour days, like, man, boss man's crushing it. Like, he's working hard and we know he's not rolling it in. We know we're making more than him right now. Now, on the flip side, if you're making a bunch of money and you're hardly showing up, I know what it's like to be there and you need to open up the books then as well. It's a little more scary because, like, what happens when I stand up in front of my team, I made $300,000 in distributions, and they're making between $30 and $40 an hour, and they're working, slaving away every single day. Now, what they're not gonna see is potentially the 5 years of you in growth mode trying to get the business to that point, but they don't care about that. They're not gonna see that, and that's not really up to, you know, they're just not gonna see it. They're not gonna give you the benefit of the doubt that you worked crazy amounts of hours and slept in a closet for years to be able to afford where you're at today. They're not gonna take that into account. What they're gonna see is you made $300,000, I made $50,000 or $60,000, "That's not fair 'cause you showed up to the office once a week." So what do you do? You do profit sharing. You have to do all 3 of these things. You give them a piece of the action, so their goal is still to make that bottom line profit as high as possible. So that when you leave, they still want that number to be higher. They want to make more profit. They also bring the team together and as a unifying function that now when Billy Bob runs over a trimmer and breaks a $500 piece of equipment, we know that's an expense that just came out of everyone's Profit sharing. And we can see on the open books that there was extra expense on the equipment because we had to replace that. And that comes directly out of the profit sharing for this entire team. So P4P is individualistic. The more money, the harder you work, the more money you make. Profit sharing unifies the team around the common cause that we need to have high quality, not mid-do damage cases, and the business needs to make profit. Because we're all together are getting a piece of the action. All right, another drawing from the book. The percentage of revenue spent on total admin costs. So, when I look at admin expenses, I am thinking about all of your rent, all of your wages, all of your furniture expenses, all of your utilities that go into your office space. So, if more than 20% of your revenue is going to your rent, your utilities, like your internet, your water, your sewer, paying your admin person, your office manager, paying for the equipment, like your computers, furniture, cleaning the office, all this other stuff. If it's over 20%, I have rarely seen a home service business make money. If it's between 15% and 20%, not good. No bueno. The goal is to be under 15%. 10% to 15% is okay. 5% to 10% is very, very good. You're running a very tight, Very efficient machine. And the most elite businesses I have seen in home services, under 5% of their revenue goes towards admin. Almost always, those companies have been in the Copy and Paste Millionaire method. They have 6 to 8 employees, a general manager. They have no office staff. They have a remote virtual assistant or agency that's like answering their phones and doing per-minute tasks. And their sales are completely automated. Following the only companies I've ever seen be at 5% or less are the ones that follow the Copy and Paste Millionaire systems religiously. And that's our goal. Total revenue, looking at admin, being all the wages for your office person. As soon as you hire an office person full-time, let's just call that $6,000 a year. That's $72,000 a year in, like, assuming we have like some benefits, we have some overtime or paid time off, we have taxes. You're going to be looking at 6 grand a month. Easily, easily, for a good office manager, 100%. If you're running a business at $700,000, that's 10% of revenue, just like that. So, if I pay an agency a couple of dollars per minute to answer the phone, yes, during the spring, I might pay them $6,000 or $7,000, but during the off-season, when I don't have the phone ringing and I'm paying them $500, that's a winning formula to get down to closer to 5%. Actually, if you look back at the P&L from my location, that was $3,000, I believe, at Command Center that they paid for the, to do all the admin. And then they were 9, so it was about 4%, 4.5%, probably 5%, right in that area of admin. And Command Center does all their admin and the general manager does all the operations and all of the sales is instant quotes and over-the-phone estimates. All their phone calls are answered, emails are addressed, payroll is done, pay for performance is ran, everything inside the admin side is done. The general manager focuses on operations, managing the team, training the team, making sure all the equipment's ready to rock and roll, filling the schedule, working on scheduling and invoicing, that's what they focus on. All right, technicians to admin ratio. I love the top one. It's very actually hard to get to 1:10. Let's be honest. I'm just showing an example of ratios. I'm always tracking this ratio as I grow the business. And that is, what is my ratio of technicians to admin staff? I have seen this time and time again where someone has like one office person in the office, they have 10 technicians. Let's go. And all of a sudden they grow the business, they have 30 technicians, but 10 people all of a sudden being admin. That's crazy. Now our ratio is down to 3:1. Is that a horrible ratio? Maybe not. For some industries like HVAC, you need a salesperson and a support person and maybe 2 technicians or 3 technicians. Okay. I'm still tracking the ratio. So just get me, like, get the spirit of the law here. This is not a hard and fast rule. I'm not saying you need to be 10:1 ratio. I'm saying track this ratio and as you grow, don't let admin bloat happen. So if you have a 1:4 ratio and you rush to grow the business and start to become a 1:2 ratio, we got a problem. We have admin bloat. We shouldn't be having more admin staff as we scale and when we should be having economies of scale, better training for admin staff, etc. Here are the ways to give an estimate. The slowest way to give an estimate is in person. I'm constantly trying to move towards the right-hand here, towards instant quotes. In between that, I have in-person, I have drive-by, I have over the phone, I have instant quotes. Faster the better, because I know that 70% of people accept the first quote they get from a home service provider. Stat from Angie and Invoca, a research firm. I just want the quote as fast as possible to them. Now, here's the problem. It's the inverse when it comes to accuracy. So the most accurate form of doing an estimate is in person. Then drive-by, like seeing the property, seeing all the variables of what's going on. Then over the phone is a little bit less accurate. Instant quote forms, the least accurate. Again, I just want to make a comment. 1% of Augusta Lawn Care instant quote forms have to change their price, and it's the least accurate. Why? I'm just trying to improve my speed. 'Cause I know if I improve my speed, I will get more jobs, I will get more customers, I'll get the highest quality customers, and I'll make sure I have the card on file immediately. And it doesn't take any of my admin time. This is what the Copy and Paste Millionaire does. They automate sales as much as possible. He's like, well, some of my jobs kinda gotta be done over the phone at the very least. Okay, then your person that is going to be answering the phone, you're getting charged by the minute on, they'll answer the phone for you. So you don't have to get a big fancy office space. Like, man, I actually gotta do drive— I gotta see the property. I get the property cleaned up. The variables are just too great. I'm going to have my crew drive by, go on the Field Force mobile app from HomeWorks, record a video for me, and then I at the office, I'm going to view that video and send the quote out. I'm going to avoid doing in-person estimates where I send the most expensive person, the estimator with the most experience, inside of a vehicle driving 20, 30 minutes, talking to customer for 30 or 40 minutes, driving back 20 or 30 minutes, and all of a sudden I've wasted 2 hours, which is you're charging $100 per hour for a technician, let alone an estimator. Far more valuable, you just wasted $200 on an estimate that you might close 50% of the time. So in reality, the cost to your business of getting a new customer is $400 in just the cost of getting delivered estimates. That's crazy. So the Copy and Paste Millionaire is moving towards the right-hand side here. Instant quote form as much as possible. On services, I'm trying to do over-the-phone estimates. If I can't do that, I'm doing a drive-by. At the very worst, I'll do in-person estimates. And there are some jobs and big projects you're going to have to do in-person estimates on. And I give up a little bit of accuracy in order to get the job out faster, knowing that I will close the vast majority. I'll have a higher close rate. I'll get the highest value customers and I can sell them more things down the road. At the very worst, adjust price because it was done over my website on instant quote forms or over the phone from my admin.