The World of Franchising for Solopreneurs!

Mike, we are so excited that you are on the show today. This has been a little bit in the making, and we finally made it work. That was on our end. And I just think this is going to be such a great episode. We have not covered the topic of franchises yet on the show, and I think a lot of people, when they think franchise, they think fast food chain, that you need to have a gazillion employees or whatever. And that simply isn't the case. So I'm excited of how we're going to discuss it in the realm of solopreneurship. But before we get to any of that, I want to know what inspired you to start Augusta Lawn Care and kind of the lessons from your journey that can apply to solopreneurs who have niche businesses.

Yeah, so I actually started mowing grass when I was 11 years old. And I did that because I knew I was going to go go to college early. I wanted to become a doctor. So I ended up going to college at 13. I paid my way all the way through college, basically mowing grass. My brother and I kind of on the side. And then I thought I was going to go to medical school. Ended up after a couple months over in Africa doing medicine and then coming back to the US didn't really like what I saw over here in terms of a lot of paperwork. I didn't want to do the same three or four procedures for the next 40 years of my career. So I'm like, you know what? I don't know anything else. I'm just going to go back to lawn care. And so jumped into it full time when I was 18 years old, dropped out of medical school and started Augusta Lawn Care. And then fast forward five years, we franchised. And so the past five years we've been franchising the business. And we now have 155 locations around the world.

Okay, can we just.

It's a typical, typical, typical story, you know, I mean, you have college at 13, med school dropout and go mo lunch.

Like how often do you think compared to Doogie Howser? Because that is incredible.

When I would, when I would shadow a lot. So I shadowed when I was 14 through 17 in a lot of different physicians, different types of surgeries. So that's what they always would say to me. So I ended up having to look it up because I wasn't like in the movies or anything like that. Obviously it was a little bit of a dated reference as well.

Well, I feel like somebody at some point will be making a movie about You. So please let us know when that happens. I feel like your life story is a whole other topic we can get into in another episode. But for today, let's talk about the specific side of your life story. How did you navigate the transition, excuse me, from being a solopreneur to scaling your business into a franchise? And what are the first steps solopreneurs should even take if they want to scale like that?

Yeah, I think the first step is really determining whether or not it's actually what you want. I think there is this proclivity to think that we need to always scale. We should always keep growing, we should always keep hiring more people. But ultimately a lot of people are chasing on chasing this treadmill of success, quote, unquote, or bigger business was like, is this actually serving you? Is it actually serving your business or are you serving the business? And so this question as to whether or not it is serving you or you are serving it can only be determined by what are the goals for the business? Like how big do you need it to be to be able to actually hit those goals? Is an important conversation to have.

I just, you know, Carly, I cannot, I can't. I love that this is what we keep saying. It's like. It's not always about scaling at all costs. And especially if you're a solopreneur, if you're doing that deliberately, then you can't scale the way you could with employees. So there's gotta be something else driving you. Right. And I love that you just referenced back the goals, because that's what it all comes down to. What are you doing this for?

Yeah, and specifically too, like especially in home services I see all the time when someone's working by themselves, they can usually do 100 to $200,000 in annual revenue. Maybe not take home, but revenue. And then what happens is they start growing the business. They get one employee, two employees, three employees, four employees. All of a sudden now they're maybe doing $500,000 in annual revenue, but they have four employees. But no longer is their day filled with actually producing labor, revenue, revenue producing work. Instead it's focused on doing sales, it's focused on doing admin, it's answering the phone, emails. All of a sudden they're making just as much money in terms of profit and take home and at 500,000 in revenue as they were at 150 to $200,000 in annual revenue when they were much smaller. And this is what leads to a lot of wandering in the wilderness, a lot of Very unprofitable businesses and a lot of people completely wore out on their business at that size of three, four, five employees is because you make just as much if not less profit as you grow simply because you no longer are revenue producing team member. You're actually an overhead cost to the business. And so knowing what the goals are, is either a going to be like, yes, my goals align with a bigger business. I am willing to get to this financial pain that is required to scale or it is, oh, I actually really value getting home at 3pm every day and therefore I'm not going to scale. I'm going to keep it $150,000 in annual revenue. I'm just going to keep raising my prices if I have a lot of leads coming in and not scale up.

Really interesting that you. So you've got like a. I'm assuming it's like the trucking industry, right, where you've got a point where you can have one truck or you can, I can't remember the number. You can have 10 trucks but you can't really be as profitable with five trucks or two trucks because of the overhead factor. So is it the same thing in this business where you, you're here and then you come down and then you go back up and eventually you can start scaling but now you've got a whole bunch of employees. Is that fair?

Correct, it's fair. And, and I think the, the big thing is when you stop producing revenue, I, the most efficient person in your crew stops producing revenue and you start becoming a manager. You, your profit margins are much, much lower. As a solopreneur in home services at least you can have 60 to 80% profit margins which means out of every dollar you make, 60 to 80 cents is literally going in your pocket because you just have cost of goods sold is like some material cost, maybe fuel, some insurance, maybe other overhead expenses. But there's not direct labor. But, but as soon as you now have an employee working that might be up 30 or 40% of the revenue just in wages. And so now all of a sudden your margin gets compressed down to 10, 15, 20% instead of 60 to 80%.

Got it. And it's so it. This really is a compelling argument for a solopreneur kind of business. I love it.

So like where does, when should people start considering the franchise model? At what point is it like this will make sense for you, but you can still be a solopreneur, which is a common misconception for franchising.

There's, there's A lot of them. There's ones that literally take 17 to 20 million dollars to start something like a Hampton Inn. There's massive franchises in terms of like, hotels especially take a lot of capital, but there's also franchise that you can start, get started for like 5, 10, $15,000. These are usually going to be revolving home services like cleaning services, hotel travel agencies, etc. That don't require a lot of capital, don't require a lot of overhead, don't require employees. And so it's a matter of like, again, what's the goal of you starting this business? If it's to scale and grow massively, great. You're probably going to want a vehicle that you can grow a million dollar business. But if that's not what's required to make to reach your goals and ensure you're satisfied with what you're achieving, then like, there's lots of options for franchising. And the reason I would say someone should franchise is simply this. Let's assume a franchise has like 200 locations.

Would, would you be better off if you were a betting person? Betting on someone who had never started a business before starting a cleaning company, for example, or starting a cleaning company with a model that has been done 200 times successfully. Like if you just had to bet on who's going to be successful, which one would you put your money on? And that's when I think franchising is a very valuable tool when it comes to the predictive nature of like, are you going to be successful? Are you able to pay your bills? Are you going to be able to replace your 9 to 5? The likelihood of that is greater in my opinion. With a franchise that's been, that's been tested, proven, and other people you can go talk to when you encounter inevitable obstacles along the road.

Can, can I, can I dig in with a question before we, because before we move on? Because I, I just don't want to miss this. So the franchise companies do certain things for the franchise or does certain things for the franchisees, the people that are running the business and paying franchise fees to the franchisor that I don't. Because I've poked around on this a little bit over the years that doesn't, it's not always the same. It's not like there's a standard model of what they do for the money. And I remember I was looking at one one time to possibly go into and it was, and they weren't really doing anything. You know, I just didn't see where there was they had a name, it wasn't even that big, you know. So I mean, what should people be looking for as they look at these things? What kinds of things should the franchisor be doing for them and what kinds of things should they expect to do for themselves?

Yeah, absolutely. So if someone's thinking about joining a franchise, I think the number one thing is I want to be able to contact any franchisee. If the franchisor is giving you a targeted list of 5 people you can contact, those have been cherry picked. They're probably getting an incentive on the back end. So I want to be able to contact anyone. So if red flags would be going up, like, yes, here's the three people you can contact out of our 50. No, no, I want the list of 50 or I'm going to go just call them randomly and I'm going to get feedback. That's the number one thing I'd be looking for because there are a lot of bad actors in the franchising world. For $100,000 you can become a franchisor, set up legal documents and be ready to roll. For that reason, in 2023, last year, over 400 franchisors were started. Now, from a statistical standpoint, more than 90% of those will not be around in 10 years. And all the franchisees they sell will be completely screwed because there's people that will join at 1 location, 2 location, 5 location, 6 location, and then the franchise never gets to profitability because many times you need over a hundred locations to actually hit that. And out of those 400, statistically speaking, less than 8 of those franchisors will hit above a hundred locations. And so when you are a franchisee getting into a franchisor system, you, you want to have full confidence they are in this for the long term, they're well capitalized, they are sticking around. They're not just trying to flip this off to some other private equity firm. And they have your best interest at heart. And so do they have training? Do they have support, do they have coaching? Do they have a community, do they have events? Do they have brand awareness in terms of getting better pricing for you? Because you can save more than your franchise fee just in the savings of what you would otherwise spend on equipment, tools, machinery, supplies, ingredients, depending on your franchise as well as does the brand actually bring you in leads? When you are going into a new market, do you get ranked well on, on social media or on Google? Much faster because you're part of a domain online that immediately gets you the top of the rankings, these are all the things that you want to be looking at. Because if you're joining a franchise that has 10, 5, 20 locations, you're not getting brand awareness. No one knows about you. If you join, you're not going to the front page of Google within a matter of a couple weeks. It's going to take you 6 to 12 months like everyone else. And so as a franchise grows, the, the problem is when you join a franchise like Subway or McDonald's, they have so much brand awareness and they bring so much value in terms of just their name. The issue with that is they can start to strip away all the other aspects of a pot. A good franchise, which is training, support and other elements to. Because the brand itself brings in so many customers. And so a lot of times the legacy franchisors actually give a really bad name to franchising because they no longer need to provide support or training or any sort of development for their franchisees simply because their name is so well recognized. And so, unfortunately, in my opinion, you have the upper echelons of thousands of locations that sometimes treat their franchisees incorrectly because they have brand awareness and they do rely on that alone to sell franchises. And then you have the ones that have very, very few locations that give the, the industry a very bad name because they make up 95% of franchise that do not support. They don't have the capitalization, they end up going out of business. Everyone gets messed up. And so really that's, that's the struggle, I think, with franchising, and that's why it's got a bad name.

No, that's great. Great, great, great.

And gosh, I mean, Mike, you just, I mean, your franchise aside, like, you just seem like a great business owner. You know, you're doing, you seem very knowledgeable about running businesses. So for these solopreneurs who feel stuck because they're juggling so much, what advice do you have for them?

Yeah, like, I think it's important to stay focused on what actually is going to move the needle for your business. What I mean by that is, especially if you're listening to content, it's very easy to start getting into entrepreneurial seniors in terms of other things that you think you should be doing the business. For example, I think in home services, from zero to $200,000 in annual revenue, really the main role of an owner is that of a labor, like, go do hard work, do more of it, be efficient, focus on your tools, etc. From 200,000, $800,000 you start hiring people. Now your focus is that of a manager. That's your role, like your job is a great manager. And then at 800,000 plus in annual revenue is when I start seeing the role of the owner being that of an architect. That is when you're going to hire a manager to then manage the labors. You're also going to step away from the business and start to think about strategy, acquisitions. How am I going to think about a second location? What am I going to do in terms of financing? That's what an architect is. They step away from the business, they step away from daily operations. What I see a lot of solo operators doing is they are doing $100,000, doing $50,000, their weekend warrior, doing their side hustle and that's great. And at the same time they're trying to act like a million dollar business. They're going to conferences thinking about acquisitions and how they're going to scale multiple locations and who they're going to be hiring. No, no, let's focus on where you're currently at. And by doing that you'll be most profitable because you focus on doing the work that is required at your stage of business. And I think that's the part that many times we begin to drop, especially when we're inspirational, especially when we're inspired. We want to do more, we want to grow the business. But like today, how do I make more money? Is I focus on being a great labor? Absolutely.

Well, on, on the note of juggling all these things, you rely, I believe on automation and delegation for a lot of what you do. Where do you think solopreneurs should start with that?

Yeah, I think, I think sometimes, especially if you're an OCD type, that can be very detrimental to think too much about automation and software. And all of a sudden you have 20 different softwares for managing your day, your calendar, your to do list, email, et cetera. It's like, look, let's strip this down to one or two, let's keep this really, really basic because right now you have no leverage. And so what I mean by that is when I, if I can save 10 minutes in a day, but I have a thousand employees, all of a sudden that 10 minutes a day adds up very, very substantially in terms of the value of my time. When you're a solopreneur and let's say you're charging 50, 60, $100 an hour, you saving 10 minutes a day and is okay, but if it takes you a month to figure out that process and you're reading books and you're trying to figure out how to save the 10 minutes a day, you have no leverage. If you had 10 employees that were also making a hundred dollars an hour and you saved all of them 10 minutes a day by getting that special tool or that automation or that new software, then it starts to make sense. And so what makes sense for a large business that you might be listening to myself or anyone else that has a bigger business, like, oh, they said it was great, therefore I must do it. Be careful because they have leverage in the form of employees and other people working for them and them saving tenants for every one of their employees could make sense for you, it might not.

Great point, great point.

So smart. Just again, the difference between small businesses and larger ones.

What about, you know, outsourcing certain functions, like, you know, you outsource your bookkeeping and accounting or outsourcing, you know, content creation or something. How do you feel about those kinds of things for solopreneurs?

Yeah, like the thing that is interesting with solopreneurs, if you don't outsource, you are going to be doing everything in the business. And so the question is, there's two ways or reasons I outsource. Number one is I stink at doing the work. Like if I'm just not good at it, I'm probably take way longer at it, so I just don't enjoy it, I'm not good at it, etc. The second reason would be because I can make more money doing my primary task per hour than if I just outsourced that task to someone else. And this is ultimately when you start hiring employees down the road. But even if you're going to say solo, it's a matter of okay, well, if I can charge my customers 100 bucks an hour, if I'm able to get somewhere at 40 bucks an hour to do my bookkeeping, it makes more sense that I do the $100 per hour task and delegate the 40 per hour task. And furthermore, that person that does bookkeeping eight hours a day is probably going to do it in half the amount of time as you. And so all of a sudden, realistically, the effective hourly rate is 20 bucks an hour. And so I think as long as, as long as you are okay with delegation, you're okay with letting go of some of the reins, then absolutely try to outsource for anything that is either A, you stink at it or B, you simply your hourly rate doesn't justify doing it yourself.

Yeah. And Mike, the other question I wanted to Ask you just based off your experience. So you started just mowing lawns on your own, and then over the past, you said five years or so, have turned it into their franchise business. What mindset shift did you have to make that happen? I feel like a lot of people are like, okay, I can just like, as a solopreneur, I could just continue mowing lawns, make a living. At what point was. Did the light bulb go off and you're like, no, I can scale this. And here's how.

Yeah, so it's a little bit morbid, but I almost died. So I was on a. On a job site and got my hoodie caught in the PTO of a dump truck. So the PTO is the power takeoff. It's a thing underneath that spins in a circle and basically powers the dump truck. And so my hoodie got caught in that, and by the grace of God, I fell out. It bought all my sweater, my T shirt, and my undershirt got caught around my neck and then just. Just blew up and I fell out. But I was in the hospital for a while, was recovering for a few weeks, and I realized my business had no systems. It was all based upon me working 80 to 100 hours a week. I was literally on. In the hospital, on the bed, video, calling my crew out in the field to get the next project done. And so coming out of that, I started to share, you know, here's what I'm doing to change the business. I'm instituting how I pay my employees differently. This is how I do my estimate videos differently. I'm trying to create systems instead of it being all based upon me. And then from that, it kind of led into the franchise so I could do that with the owners and have skin in the game. Wow.

Yeah, that is quite the story.

Yeah, I wish you didn't have to go through that to get that lesson. But it seems like the lesson you took away from it has served you well in your business. But that is unbelievable. And so just thinking back to your younger self, if you could give solopreneurs one piece of advice to help them prepare for scaling their business while staying true. We were talking at the beginning around just staying true to the why and your goals by staying true to their values, what would that piece of advice be?

Yeah, I would say build it to scale. If you're going to grow the business, it's easy to do two things. When it comes to home services. There's two ways to grow your revenue. One, add more services. B, expand your service area, those are the easiest ways to grow, just serve more people. I'm willing to travel as far as possible to get customers or just add more services. Like, I will do that. Yes, I will do that, and I will do that. That's the fastest and easiest way to grow revenue. Now, when it comes to a solopreneur, is that how I should grow the business? I don't think so. I think we should build it to scale. Because eventually you don't want to keep growing so far out in terms of service area. You're unprofitable. Eventually you're doing so many services you can't train your employees. They're making a lot of mistakes. It's hard to find laborers that can do that work. So I always think about how can I create a systems centric business from the get go, even as a solopreneur? And that is, how do I build a system? Well, I build a system by doing two things. One, I can simplify and I can standardize. Well, what's the opposite of simplify and standardize? It's complexity and it's custom. And so whenever I am thinking about how do I scale my business as a solopreneur, before I go get employees, I'm going to think about how can I simplify the system, how can I make it really, really basic? Or how do I take even something that might seem complex, but standardize it? I do it the same way every single time. If you're able to create systems in the business by simplifying and standardizing, there's a much greater likelihood we able to scale the business profitably and find other people to plug into that system that it'll still have the same output. Because ultimately that's what the system is, is certain inputs with a specific output. And if you can do that over and over and over again, that's what allows you to scale a business.

So when you say employees are you're really saying contractors for a solopreneur, right?

Exactly. Like, whether that be contractors, whether that be employees, whether it be your outsourcing. It's just a matter if you're going to grow revenue and you're going to get more people involved, even if you're going to get more customers, like, even if you're, you're going to stay solo and let's say you're in a contracting model yourself or you're selling your time. It's like, yes, you can offer more services to your customers and you will get more revenue, but will you specialize in that Will you actually be able to charge more if you just focused on one or two services? If you standardized the way that you did pricing, if you standardize the way that you do delivery of your product or service, if you do that, you'll be able to actually get more, you know, clients in a day, even more efficient and ultimately scale the business.

Like, I could listen to you talk all day long. I just think you are fascinating. You're a great storyteller. You're a great business owner. I'm so happy we had you on today. And I. We ask all of our guests this question. What is your favorite quote about success?

Ooh. So I'll just say, what's top of mind right now? So I think that, you know, Alex Ramosi is a big inspiration to myself, his friend and kind of Coach and Editor, Dr. Cash is my coach. And so we share some similar beliefs. And so one of the things that he said recently, I think is super valuable, and I think, especially for solopreneurs that might have a lot of ideas and aspirations, is, I would rather have one bridge completely across the river than starting 10 different half bridges over and over and over again. And because of the shiny object syndrome, we constantly are jumping from one object to the next. One business, the next one service. I'm going to start this. Oh, this. And especially as solopreneurs. Cause it's so easy to pivot. We keep starting bridges instead of just being like, hey, for the next 10 years, 10 years, I'm going to do this thing. I'm going to stick with it. I'm going to stay focused on it. So really, you know, if I had to boil it down, it's just focus. Like, I think of the greatest entrepreneurs that we can all think of have done their craft for at least 10 years. And so why not just dedicate the next 10 years to the thing you're doing? And then you're like, well, what if it doesn't work out? Well, if you're 20, if you're 30, you have five, you have six more swings, right? Well, I'm 50. You still have two or three swings left. And I have a great propensity to believe that if you did something for 10 years, you'd actually get through the hardest years, and then you have the skills to be actually successful in that industry, and you'd be in the top 1 or 2% in that industry, and you'd be paid the top dollar. And no one, no one wants to do the work required to get to the year 10, but they all want to have that. And starting is not, is not the part where you actually see the results. It's the part where everyone cheers. Everyone cheers at the start, everyone cheers at the end. But it's the middle game of the marathon that everyone quits. Yep.

Mike, I want to be best friends with you. Where can people find out more information about you if they want to learn more?

It just go on YouTube. I do a bunch of free videos in there. We go do turnarounds. We fly out to companies and just try to help them go from, you know, on the verge of bankruptcy to hopefully turning them around. So we video all that and share it with other business owners.

Cool.

Awesome. Well come back anytime. We so appreciate you stopping by today. And listeners, thank you so much for tuning in. As always, please leave that five star review. Subscribe on YouTube anywhere you listen to podcasts. We'd so appreciate it and we will see you next time on the aspiring solopreneur.