Mike Andes warns service business owners about growth mistakes that will tank them when the economy shifts. Over-leveraging during boom times, expecting valuations to keep skyrocketing, and assuming fast expansion is sustainable all blow up when interest rates rise and markets correct.
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Welcome back to the Mike Andes Podcast where we discuss the ins and outs of owning a small business. If you're new here, the Mike Andys podcast is all about starting, maintaining and growing your small business. Today is one of Mike's call in shows. We have lots of great questions in this one, but the main focus is everything you want to avoid like the plague when you're starting or scaling your business. If you want to get in on the action, you can Text Landscaping to 360-227-6362 to get notified when Mike goes live. As usual, you can find the video version of this over on YouTube under Mike Andes. As usual, you can find the video version of this on YouTube under Mike Andes. Let's go ahead and get into it to see what may lead you to going out of business.
Listen up ladies and gentlemen, boys and girls, we are live today. We're talking about how you can actually grow a business incorrectly. And this is a post I actually made on YouTube not too long ago. And it, it was in relation to the fact that during times when everything is going well and everything is going up in value and everything economically is going fantastic, you can get a lot of people that are just their boats are floating and everything is fine until they realize when the tide goes out, you realize that people don't wear any pants, they don't have anything on, they're completely naked. Because what we're seeing right now in the economy, in the recession that is basically as of last week, a technical recession, what we are seeing right now is the exposing of a lot of bad advice in the entrepreneurial community over the past, what has it been 15 years since we sat, lost last saw a real recession. And so I just encourage everyone out there to look at a few things. Number one, boring businesses that produce cash flow don't grow doubling and tripling every single year. Things that did go very fast tend to not go down very fast. And in the service based business, which is 98% of my audience, whether you're in plumbing, electrical, lawn care and landscaping, whatever it might be, our business is not sexy. It is not going to triple and quadruple year after year after year, you're not going to have a valuation that is a hundred times earnings, let alone 100 times revenue. And furthermore, going into deep debt works fantastic when interest rates are low, when we are having a massive bubble in terms of equipment and trucks going up in value instead of down in.
