We Need to Change, Hot Tub Hunt, Two Sides of a Coin

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 Andes Podcast is all about taking your business to the next level. We're coming back to the variety format we usually do today and we've got some information packed segments that anyone can learn from. First off, sometimes you have to take stock of what works in your business and what doesn't. Here's a couple things we're changing about how our local shop works. Next, Mike goes in for his real estate broker's license exam and finds a cost effective hot tub. Which one's harder? You beat the judge. And finally, everyone wants to grow their business. And Mike always hammers on about raising your service prices, but you can't do both at the very same time. We'll talk about how to pivot between those two states. As always, you can find all this and more over at the Mike Andy's YouTube channel. But let's get things rolling. Here's what we're changing about our local shop immediately.

So last night at the managers meeting, we made a bunch of decisions, especially for the local shop. The reason we spend quite a bit of time working on the local shop is because it's like our guinea pig and our test rat for everything at a destination. So we'll throw things at it that don't even seem correct or intuitive, but it's to make sure that it works or does not work before trying to roll it out across the entire franchise system.

The day after the managers meeting, I'm actually watching the video prior to going live and I wanted to add this because in the meeting what was really interesting is they actually proposed something to me that for a solid 45 minutes I listened to and was like, no, no, no, in my head. And to shut my mouth up, I just kept eating the fries.

One of the things that we tried this past spring did not work and we have to actually change it back. And what we had tried is basically to do where there's only one person at the top of the organization as the general manager does, all the estimates, all the communication with the crew, basically everything hiring, firing, marketing, everything besides the calls and what's going on at command center, they do all the payroll, the email, management, et cetera. But what we decided and what we came to learn is that it is not possible to run a 1.5 to 2 million doll organization like the local shop. With that model, we decided that anything above a million dollars still needs a second non revenue producing employee. And that was the goal of the experiment was to see can you run a 1.5 to $2 million organization with only one general manager. And what we found, it's too much. And Marcus pulled it off. He's an incredible gm, but with him moving down and starting his own location now, we cannot expect to find someone like that that can take the kind of hours, especially during the spring rush. March, April, May and June are. It's like 70 hour weeks that are being worked. And it takes a very special, very special person. And we're just not gonna find people like that consistently, especially if we want that location to grow, which I think it will now that we're not gonna keep cutting out services and raising prices very quickly like we have the past few years, which has caused our growth to kind of stagnate in terms of total revenue at that location. And so now what we're doing is we're having a two person team at the top of the organization. Gm, and then the office manager. Sort of back to when Liz and I were in the operations of shop, she was the office manager and I kind of ran a GM type role. And there were certain things that I would not do. And I would say, okay, that's Liz's role. You have to talk to her. So that's what we're going back to. And so today we're actually trying to talk to those two people, make the implementation, and within a week they'll be training and ready to roll.

So he'll like most likely be the general manager. But what we're trying to do is take a lot off of that person's plate because it's basically impossible.

Everything.

Right. Especially Spring Rush.

Especially Spring Rush.

Right.

Oh, yeah.

So our sort of proposal is that you would be that role.

Okay.

It's not something you have to take.

But it's something because it's very different than command center type of position.

Okay.

But I really need someone in the office that really does what you do every single day at Command center, but for just the Bellingham location. Okay. Someone who's dedicated to that location.

That's all they do.

The Bellingham location is kind of out of the system simply because it's so much larger than all the other locations.

Right, right. I feel like I would, you know, do great in this, that I would excel at this. It doesn't bother me if I'm in the office by myself or if the guys come in and out or whatever.

So we had a meeting last night. Marcus Lee, Lonnie, are you okay with that you were the unanimous choice by everyone.

Really?

Yeah.

That's amazing.

We went over pros and cons of multiple people, and you were the only one we all felt could fit in this role.

I think I could get to my spot where I'm comfortable with everybody enough to say something like, hey, I'm not your mom.

So everything about it is better. You're like me. You would excel. We trust you completely. You're loyal, you'd make more money every year, and you get profit sharing.

We've just had massive churn, and I don't mean massive. Every year we're getting a new general manager.

I know what that's all about.

And mostly because.

Mostly because it's like they're.

They're young, hungry guys and they go.

Start their own location.

Oh, yeah, right.

So it's like Lee, he moved up, then Marcus, he moved up.

So we're trying to get like a.

Team of people that want to be there for four or five years or more. And that's why there's a steady increase in compensation. And like, that's why we want it to be more.

Yeah, I'm not going anywhere.

So not going anywhere.

So within a couple months, Marcus is moving down. So we'll get them trained up, make the transition, and I think it'll be a positive thing. We are still using one of the local team members that started this past spring to be the gm. And sure enough, it's one of our youngest team members. And that's been. And the consistent theme, I think, throughout Augusta is I just do not care about your age. I do not care about anything besides. Are you willing to learn? Are you willing to put in the work? I don't care if you have a lot of experience. I don't care about those things at all. Are you willing to learn? Are you willing to improve yourself?

Do you come to work every single.

Day hungry to become a better person? That's the person I want to employ. That's the person I want to promote. That's the person I want to become the example in front of the team that I am running a business for.

Okay, so yesterday I booked my real estate exam down in Everett, about an hour and a half south of us. Tomorrow morning, it's at 9am I'm cramming right now because I haven't been looking at anything real estate related for a very long time. Two or three weeks. So right now, this is a multiple choice question. Comment below. A, B, C or D XYZ Realty listed a property and ABC Realty had a buyer who made an offer. In the counteroffer, the seller would be the comment below. A, B, C, or D.

All right.

It'S been a while, but we are.

Down at the Mount Vernon shop. And now the fence is completely finished. The tiny house is basically ready to go in terms of being furnished. Looks like they have now planted some seed filling in where the utilities went, the trench.

But we had to put more gravel.

Here just so they could access the dumpster. And then this is the gate that will get the crew into the back where the Augusta shop is at. See there looks like signs from the old shop pinned up against here. And then, sorry, it's a little bit dark. It's Friday night, a little bit late. Then over here, we got the tiny house. They put the bottom skirting on. All the utilities are now hooked up. And this is where the parking will go. And then if you can see here, this light will come on. It's motion detection light. It comes on light just to provide a little extra light. Probably put some planter boxes in here, covering up the front part of the tiny house. They're working still on this, finishing this up. Got a hose bib they're gonna put in here. Got the gravel. This already has all the seed that's been planted. You can see they've been watering it. And Augusta came in here and did that. I think they also probably cut these brain. Oh, this is next week.

I think next week they gotta cut.

A little more of these branches back off of the house. Built some steps going into here. They still gotta stain all of this. If we go inside. Utilities are now hooked up. See here?

This light will come on.

Nope.

All right, so we're now on the inside of the tiny house. See, things are starting to take shape.

Look pretty cool.

Heaters on. Very nice. They've already put all this together. I have not been here for a couple weeks.

Interested to see if that's actually working.

I think what they did actually is.

They tapped into that outlet to make.

That little light that was out just.

Outside there that has the motion detection. See if these lights work. I don't turn the light on. There it is. So.

Looks pretty cool.

It's pretty spacious, honestly. They still gotta paint some of these areas, but now it's not that matte finish. Semi gloss is easier to clean. A lot of this stuff has already been here in terms of furnishing. Oh, yeah, there's the bed. The other thing is huge. So it's looking good.

This is pretty epic. People were Giving me all sorts of flack about how this was not gonna be private. It is so nice back here. Obviously the shops on the other side.

Of that fence and for a few.

Minutes each morning there'll be a little bit of disturbance. But it is so nice back here. It's gonna be awesome.

And once we get the back done.

With the sauna or with the hot tub, the fire pit and some string lights, this back area here is gonna look great too.

So I'm really looking forward to it.

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Alright, it is Saturday morning, I am driving down south for my real estate.

Broker'S license exam and I have not.

Studied for this thing enough.

In this state you have to study.

For 90 hours and you can kind of fudge the numbers a little bit because you get to record your hours manually online.

So I've probably studied for this about.

Five to six hours in all.

And I'm really just leaning on the fact that I actually know real estate pretty good.

I've done a lot of real estate.

Transactions and I know a lot of the basics. I'm gonna miserably fail on these random little terms. Terminology.

I'm gonna just miserably fail on that part. So gotta hope that I can get at least 70% and pass this exam. I had to pay $210 for this.

Exam today and I had to pay.

$300 for the state lice education course. So let's see if this works.

This could go very wrong.

We're looking for suite 208. 208. Ah, look at that. PSI Examination Services.

When we build the headquarters, as we're building the headquarters, this is what we're trying to avoid. Certain size buildings. Anything above one story requires an elevator.

Okay, psi, maybe part of the exam is just if you can find the place to take your exam, you pass it's. Like a maze at the end of it. It's just like you've been successful finding the examination area. Here's your final.

Is this your first time?

It is, yeah.

Oh, congratulations.

You're gonna be a broker when you leave today.

Well, that's the goal.

Yeah, got that right.

All right, so the test is complete. I passed the national broker exam, and I failed by two questions on the state exam. So it's all one test. There's 135 questions, and they're all mixed up, but it stinks. I gotta come back to Everett just to finish the test again. But the national part I got like 80% on, but you gotta get past 70%. And on the state part, I missed it by one or two questions. So coming back here probably later next week.

Honestly, I wish they were open up on Sundays because I'd probably come back tomorrow. You have to wait 24 hours. But I'd probably just come back tomorrow and sit it and just kind of cram for one part. The part I know I didn't do well on is transfer of title. That's the one part I know. There's at least three or four questions.

There I was just guessing on, so.

I can just study that part a little bit more and come back and do it. But I don't know if the.

The.

The exam center is open tomorrow or not.

So I spent a couple hours looking for hot tubs for the Airbnb. And the place I went to locally.

Literally, like the cheapest ones were $8,000. And so I ended up just going.

For a cheaper model just from Costco.

They're 3,500.

Another lowest base model, but it's going to be sufficient. And if I have to buy a.

New one every five or 10 years.

Because they're a little cheaper, I'd rather do that.

So that's the plan for the Airbnb.

The deck needs built with treks, and we'll do it like a couple feet tall, so that way you can just easily step into the hot tub and not have to go up a bunch of steps.

So I just finished a run. You can see it's almost fall. You got leaves on the ground now. But last week I was talking to a couple members from landscape businesscourse.com and they just finished watching all the videos over the course of like three or four weeks. And they had said, hey, lots of great information, but we're still, like, at loss of what to do first. So this afternoon, I'm going to spend the afternoon making A video. And it's gonna be the 60 days of starting a business. Like from day one. What exactly you need to do to get started every single day. So if you're in landscapebusinesscourse.com or if you are an mbaforantrepreneurs.com either of those courses, there's gonna be a long form video walking you through those first six days. And everyone always is shocked by my first seven days. Because you don't even need to get a business license. You don't need to get insurance. That is not the first thing you should be doing. You should be getting customers. You do not have a business because.

You have a truck.

You don't have a business because you have a weed whacker or mower. You have a business because you have customers. So find them first.

See the reason why most people will.

Buy the tools or the equipment required.

For their business and then think that somehow they're in business.

It's because it's tangible. It's easy to be able to look.

At it and say, I'm in business. Or a piece of paper that says they're now an LLC or a sole proprietor.

When in reality, wealth creation and business creation is not in the form of buying assets.

When you look at the balance sheet of a real of a business, like.

On the public stock exchange, let's say.

They have a billion dollars worth of assets.

If they're only worth a billion dollars.

They'Re literally what's called worth book value, which is you sell the assets, you liquidate everything, and that's the value of the business.

There is no real wealth created there. There is nothing that is created when you think it means making something out of nothing.

And when you go buy a truck.

For $10,000 and you take $10,000 of cash and you turn $10,000 of cash.

Into a hunk of metal and rubber and wires, that is a truck.

You just created $10,000 of cash and you turned it into $10,000 worth of an asset. That's not a business. That is simply moving the asset value from cash into something on your balance.

Sheet in the form of a physical asset.

Creation of a business or wealth is when you take something like a hundred and you go get five customers, that's $20 for customer acquisition cost. And those five customers generate $5,000 in revenue. And that $5,000 in revenue creates $1,000 worth of profit. And so you just took $100 and turned it into $1,000. That is creation. You took $100 and you made it into a thousand.

That is what a business is.

That is where real value and enterprise value of a business comes.

Using inputs I.e. customer acquisition cost, advertising and marketing and then taking that customer and taking a profit percentage, a profit margin out of those transactions.

That is where wealth and business value is created.

Not in buying more trucks, not buying more equipment, not getting flashy shiny offices.

Or anything like that.

It is simply in taking arbitrage of a customer and turning into profit. That's why price to earnings in the.

Stock market is what is everyone benchmarks and based upon what is your profits and giving you a multiple on that number.

Let's go.

We got our new manager hired and the current manager literally got engaged last night.

It's the weekend and typically I don't come in the gym to fix these sort of things, but this dispenser broke for the soap inside of the shower here. And you can see here this little tab broke. So fortunately I was able to get putty knife and scrape all of this stuff off. I get a little bit more off and then let's pop a new one on there.

So usually I don't come in here for this sort of thing, but the.

New office manager just got started today and so figured I'd drop by and lend a hand. Good, it's new. Let's go ahead and get a refill for it now. It's Purell.

What's this one, Gojo? There it is.

Oh, this is the wrong refill for this dispenser.

All right, wrong one.

Let's try another one.

Okay, so we do not have the correct refills for that size dispenser. But one thing we do like to use here is these, these bad boys, these little things, they go in behind the toilets and they kind of passively absorb odor. Odor eliminator. So let's go ahead and put these bad boys in here. Lindsay is the new office manager and she's gonna be here soon for her first day solo. She'll clean everything up. One thing I noticed I'm taking out the trash here is these are starting to peel off these window clings. It's mostly because it's like in the heat of the sun here and these get so incredibly hot. But just these two pieces, everything else seems pretty good. But yeah, these two are going to need replacing. It's just going to keep peeling off. It gets so hot in these back doors. Doing a little bit of cleaning here. Cuz the gym is completely empty. It's Labor Day, so I guess everyone's busy stacking up calories instead of burning them off. A couple tips where the dirt really hides inside of a gym. First place is underneath elliptical.

Okay.

So when you look under here, this is where dirt hides right into there. Also at the end of treadmills, underneath here. Because all this constant spinning is people's feet and dirt, all of it just ends up right here, right along that strip behind treadmills. Lots of dirt. And then you're looking for the constant path of where people walk. So they come in the door. They almost always come here. They go to the cubbies, and then they go here. This is the main traffic all along here. And over time, like 10 years, you'll see actually in the carpet.

It'll just.

And they go to the bathrooms. So that. That is the main thoroughfare where traffic is at. So I'm vacuuming that right now. It's a long weekend. Staff isn't in, but Lindsay will go jump on this tomorrow and keep cleaning. I haven't vacuumed here in a very, very long time, so.

Been good.

It's a great gym. It really is. When I first bought this place, I had been an employee, and I'd been a trainer here. We've completely changed this whole club. Putting in all the mirrors along the.

Sides really opened up this whole wall.

Putting in the decals, the purple wall, painting this back wall. We blew open this entire back room. This room used to be closed off. We blew it open, took all the walls out and made this functional fitness area with the purple turf. And this is where a lot of the training happens. Yeah, we've done a bunch of work here, and it's a nice club, ultimately. Now it's like I enjoy seeing members of the community here here. A lot of customers from even Augusta lawn Care. The older members, I know a lot of them and just fulfilling. I. I like to work out at the gym. I get to be able to control.

What equipment we're buying.

We just bought this split rack, split squat machine. It's pretty cool. You put a belt on right here. You put a belt on, and then you do a squat. So that way all the weight is over your hips instead of over your shoulders. So it's pretty cool. Last year, we bought. Bought this entire rack here while the gym had to be closed down for Covid. So, yeah, got some cool stuff. We have to order more medicine balls. These ones are falling apart on us. But here's your gym update.

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This morning we had a really great.

Mastermind with our franchisees and we talked.

About specifically when you're raising prices and like, when should you raise your prices? Like we have some people have raised them already two or three times this year. Should I raise them again?

And one point that was really, really good.

And that was, isn't it kind of a waste when you spend money customer acquisition costs, you have marketing expense and then you raise prices on this person within three to six months and you lose them because of the price increase. And you've now laid on the table thousands of dollars worth of lifetime value. That customer could have potentially been a customer for four or five years.

That's true.

Here's the thing. The only way you should be raising prices is if you don't have the throttle, full throttle, trying to grow and expand. So there's two different sides of the coin here. One, if you are growing your business and you're trying to maximize growth, that is when you're spending money in marketing and trying to grow the company. Do not restrict that by raising your prices aggressively. You might do it price once or twice a year, stay up with inflation, cover the extra costs, etc. But if you're trying to maximize profit, it's very difficult to do that while you're also growing very quickly. You need to choose a path that you're on. Either you're growing very quickly and you're willing to take a little bit less in terms of margin and have a high close rate ratio, or B, you're going to do a bunch of price increases, maximize profitability and put a damper on your close ratio. You've got to choose those. It's very difficult when people are like, I need to raise a bunch of prices, but I also want to grow and have like a 90% close ratio. Like you can't so you've got to figure out which one you're doing. And that's why I don't get why people spend a bunch of money on marketing, but then they're also raising their prices really quickly.

It's like, look, if you're spending money.

On marketing, you're probably in growth mode.

You want to maximize the dollars that you are getting from these people by spending money and then getting as many of them to close as possible and become customers. So don't go raise your prices a bunch. But on the flip side, if you're just booked out to wazoo, you can't get enough trucks on the road, you can't get enough employees, you better be raising your prices. And whether or not that customer came from a $10 ad that you put.

Years ago doesn't matter.

Or even last week, if you got the customer and you spent money on them a couple weeks ago and now you're just overloaded with work, you should raise prices.

Why?

Because now you're going to get rid.

Of that bottom profitability of customer and replace it with another customer that's willing to pay a higher price. So raising price is a good way to actually harvest your best customers and let the bottom 10, 15% leave and then replace them with new customers. That's why I don't think you should turn off your leads unless literally you simply don't want to grow or make more money. Keeping your leads on allows you to raise prices. Cut the bottom 10, 15% by raising the price. Some people are going to get unhappy, they're going to leave, but then replacing them with new leads and new customers that are willing to pay that higher price.

Today is the first day I've worn.

A sweater in a very long time.

The one risk you can have when you are bringing up people inside the organization and then promoting them to being a manager is there's a big transition for that individual when it comes to being part of the team and part of the guys and one of the crew to now being their manager, that can sometimes be some friction there, especially when you're taking someone that is not our most experienced or older, oldest individual on the team.

So the general manager role being the estimate side of things, the hiring side of things, and really like the person is my point person and sort of like a Marcus is now, but then having another person that can do all the office side, so that way it is not as long out.

Yeah, you do work a lot.

Just instilling the confidence into Dylan, like as he becomes general Manager, they're like, hey, biggest thing you're going to need to learn is like you're still part of the team, you still want to be part of the guys, but now you are a manager and like that means you're going to have to lay down the law. Sometimes you're going to say uncomfortable things to people, you're going to have to hold them accountable for things. And that's a very different job description.

I think my biggest concerns are you and April are both not used to cleaning a place. You get to like lay the law down and like really go after people. And there is definitely parts of the job where you might not see markers.

Have to do to much but like.

There are times you are, you tell them they're fired, you tell people that they have to pick up the slack.

Or else they're gonna get fired. That sometimes the downside of promoting within is that individual has to switch their whole mindset and the relationship with all their previously co workers. Now they are their manager and they're going to tell them they have to.

Do things and they're going to tell.

Them they're wrong about certain things.

It's easy in the crew to be like part of the guys. And when you come manager, it's not that you don't want to be friends with people, it's just a matter of there's this delineation. I'm your manager and I am going to tell you to come back to.

This job, not come back to the shop and work after two jobs.

And like that is what I have to do in my role.

That can be difficult, especially if someone's not the one that is sort of the alpha and the one that is the leader naturally. But when I am looking for a gm, I'm not necessarily looking for the most experienced or the oldest or someone who's been in the industry for a long time. I'm looking for the person that is willing to work on themselves, do hard work, has a track record for being on time and never missing work. Those are the things that are like the number one most important. The person who comes back from a long days of work out in the field and is asking to help other individuals, asking the manager if there's extra things they can do coming in on the weekend when they're not really asked for it, they know their needs, they step in without even asking if it's required. That's the type of thing I'm looking for. And that's why someone like Dylan, even though he's young Even though he doesn't have a ton of experience, even though he has a lot to learn from a management side, he's gonna do great in that role because he'll do the hard work on himself as a manager to improve and the team will respect.

And furthermore, like, I know there's going to be some pushback or potential question.

Marks for the people who are more.

Experienced, who have been around for a.

Longer time, like, why was not.

Why wasn't I picked as the general manager?

And ultimately, from a new manager's perspective, that you have to let that go.

And let your actions be the proof.

For myself, as the owner that made that decision, I want to take the burden of if there's any blowback, I want that to come to me because I made the decision. I don't want that person or even the previous manager to be put in this position of, like, I made the decision. I'm the one that has to deal with any blowback or people like, I deserve that or whatever. The bottom line is, the local shop has seen in the past few months two people be promoted to general manager.

I'm not the longest tenured person here, and you're not either. And, like, why do I deserve this? And things of that nature. But we decided for the reason, don't ever feel like, you know, you don't deserve it. Because I felt that a lot when I started, and I was just so.

Much worse for it.

Slewed my words at the team meeting. And I did make those decisions to hire and fire. We had a, you know, the team culture kind of took a bad turn last year.

One person is leaving and starting their own business. There's plenty of opportunity to grow inside the organization. There's no one there that's worked there for, like, five years and not seen a promotion. So it's just a matter of time and dedication and evolving yourself and changing yourself as a professional. Before in an organization like Augusta, you're gonna get promoted, you're going to see another opportunity, and you're gonna be able to move up in your career. So that is the entire antithesis and goal of Augusta that I feel like, if anyone felt left out, it's like, just stick with it. Just keep doing what you're doing, keep putting in the hard work and keep improving yourself, and there's going to be opportunity for you. It's just a matter of making sure you constantly are improving.

Until that point.

They're a very sophisticated way of sharing files here at Augusta Lawn Care on the back of a car Dropping files. That's how the vlog is made.

Hey, everybody.

We're actually at the conference center where we are having Landscape Summit 2023, January 5th, 6th, and 7th. Three days where you can bring your staff, your employees, and make an incredible event. We're gonna have a support track specifically designed just for employees, managers, spouses.

It's gonna be a great event for them. They're gonna do a breakout session two of the days.

And then this is the main event.

Center where we're gonna have the stage set up. And it's gonna be an incredible event. Probably 300 plus other landscapes, lawn care professionals.

You definitely want to make it.

Make sure you book your tickets.

This entire hotel is gonna be filled with landscapers.

This is the bus. You can literally get right from the Seattle airport directly to the front lobby.

Pretty epic.

Gonna be doing a live interview right.

Now on Tommy Mello's podcast, the Home.

Improvement or home industry expert podcast. So he has $150 million garage door business, but he's gonna be interviewing me, so definitely check out his channel and.

His podcast for my full episode.

This has been the Mike Andes Podcast. Now you have some ideas on how to take your business to the next level. And if you like what you heard, we have tons of lectures, interviews, and more over at The Mike Andes YouTube channel that will be right up your alley. That's all we have for you today. We'll see you next time.

Sam.