Where Do You Put Your Money?: Small Business vs. Stocks vs. Real Estate

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. Today we have another one of Mike's special Q and A episodes. This time with one big question to answer. Where's the best place to put your money in the future? There's plenty of options to discuss. As always, you can find these lectures, interviews and more over on the Mike Andy's YouTube channel. Anyways, let's let Mike get into it.

Hey everyone, it's Mike Candies. Today we're going to be talking about whether you should invest your money in a business, a small business, specifically stocks or real estate, and looking at the difference between the three when it comes to returns. If you're wondering where I'm at, you're going to find out in like a week on the vlog. So I'm not going to say where I'm at exactly, but I am out of town, I am overseas and I'm in a place where there's horrible Internet connection. So I apologize if the video starts to lag or anything like that. I'm in just a horrible spot for Internet. I don't know why it's so bad here at this, at this hotel. Try to jerry rig it as much as I can. But let's go ahead and get started. I do want to answer questions today, so feel free to leave comments and I will address those. I don't have enough bandwidth to a call in show but I can absolutely do comments. So feel free to comment if you have any questions. But today I want to talk about where should you be investing 5,000, 10,000, $50,000 if you have it when it comes to a small business, real estate versus the stock market. Now the big boogey boogeyman in the room. I apologize if I'm like somewhat disheveled and tired. I flew overnight for the past 24 hours and so again you'll find out where I'm at in the vlog in next week. However.

One of the boogeyman in the room though is the fact that so many small businesses do fail. And number one reason why people would invest in a, in an asset that returns less in terms of return is going to be stability, right? Do I believe that the Fortune 500 companies and the S&P 500 and the Dow Jones are all going to collapse and go to zero within the next month or two? Very unlikely. And I mean collapse in terms of going down 95 to 99%. Like it's not going to happen or go down 100%. Same thing with real estate. Do I believe that in the next 10 years we might have a correction in real estate? Yes. Do I think it's going down to zero and everything's just going to go completely flat? No, because everyone needs a place to live and therefore it's almost impossible for there to ever be a complete wipeout of that asset class. Now, in small, when it comes to small business, you can absolutely have a complete wipeout. You have where 80, 90% of small businesses won't last five or 10 years. The reason for that is because there is more risk. They usually don't have as many systems, they're not as large, they don't have access to capital. There's a whole host of reasons why a small business is, is so risky. However, with risk comes more reward. And so the part that I'm talking about today is the reward part, the return. The reward, the return on your investment. But keep in mind that a small business also is going to have more risk. And so with most, most investments in general, the more risky the asset and the investment, the more, the greater the return is if everything goes well. So again, if you have questions on this stuff, comment below and I can answer those and I will do so after I just do a little bit of teaching. Okay, so when I look at the S&P 500, the stock market, right, because the reason the stock market is so easy to compare is because we have years and years of, of tracking it over time. And again, I don't believe it's going to go down 99% or 100% tomorrow. It's like it's going to get wiped out. And if it did, if the stock market got wiped out to zero, there would be some sort of cataclysmic event that would be far worse than, than losing your money. All right, so if we like nuclear war, if like Earth was hit by a meteor, like crazy stuff like that happening, you're probably not going to be super worried about your stock at Apple at that point. So I'm not super concerned with that. But let's just assume for a second that we're going to invest in real estate. Let's compare it. Okay, let me go ahead and pull up this other screen. I'm going to compare compounding interest. Because everyone's like, Warren Buffett said compound interest is like the best thing since sliced bread. So I should definitely focus on that. Okay, great. So let's just Assume that you have, you can just run this like this, bazillion calculators like this. But let's just go ahead and run like, let's say you have $25,000. Okay, let's just run $25,000 as an example and let's say that you're going to invest, I don't know, let's do like 800 bucks a month for the next 10 years on an annual basis into an account and let's assume that you do this into a broad based index fund like the S&P 500 Vanguard Total World Index, etc. Whatever it might be. Let's just assume we have like an average return every year of like 8%, which is good. That's like slightly above average. And you can see here, over the next 10 months, over the next 10 years, I should say that we're going to significantly, we're going to double our money. We're going to literally double the amount of money that we have in terms of what we invested versus the interest that we make or the return on our money. So If I put $25,000 in an account today in some sort of index fund and over the next 10 years contributed $800, oops, monthly, I made that mistake. I would over the course of 10 years go from $25,000 all the way up to $193,000. That's pretty cool. Okay. And that is inclusive of all of the principal and all the interest. Now again, this is the asset value going to assume here that there was no dividends. We're not going to assume that there's any cash flow necessarily, because when you're investing in the stock market, unless you pull the money out, which I don't like to do, because then you have to pay taxes on it. Let's just assume this is like staying in the same account and I'm just again, paying $800 per month. But this is the thing. The, the alternative to this right here, this is the one that everyone talks about when they talk about investing is put money aside in the stock market, et cetera. But the alternative to that is putting that $25,000 into a business and then, and then installing or continuing to invest $800 every single month into that business for the next 10 years. I have a good feeling that the potential of that business is going to be much greater than $193,000. Okay, so if I take $25,000 today, it's literally going to get you what, like a truck and maybe some equipment and be able to do probably 50 to $100,000 in annual revenue in your first year. I truly believe over the next 10 years, if you invest 10, $800 per month into the business, you're not taking anything out. We have to keep that constant because like the stock market's like, don't touch your money. Okay, great. Well, I'm going to do my business. I'm going to assume there's no, no further, you know, distributions. I'm not taking money out. If I put $800 into the business every single month over the next 10 years, then I'm going to potentially have a much greater asset value than $193,000 compared to our example here. I think over the next 10 years, if you're putting that kind of money into the business, taking a small salary from the company, I believe you'll wake up in 10 years and have a business that's worth 5, $600,000 at least in asset value. And furthermore, not only is the asset value worth 5, 6, $700,000, furthermore, it's probably pumping out a hundred, $200,000 in cash flow to use the business owner at that point. Okay. Which that stock portfolio is not doing, by the way. It's not pumping out that much profit and take home pay for you. Okay, now the next, next asset class we have, and I apologize again for the Internet, I'm out of country and the Internet's horrible here. Now the next asset that we want to compare against is homes, right? Buying a house, you could rent the thing out, become a, become a landlord. Okay, let's go ahead and compare. Now everyone is potentially saying, oh, you're like trying to boost up small business because that's what you do all the time and you want people to invest in their business. This is just the bottom line. Higher risk assets, like running a business are going to have greater returns. So it's not to say that one's right or wrong. It's simply a matter if I have 5 or $10,000 the chance of me 100xing that is going to be much better with business compared to other asset classes like stocks and real estate. Okay, let's go ahead and compare. So if we buy a house right now for, let's just call it $500,000. I think the average house in America is not like 400 something. So just assume $500,000 is the purchase price. Now we're going to assume some sort of an FHA loan. And so we're going to do like what? Let's just call it 5% down, right? So 5% down. So if we 5% of 500, that means our down payment is going to equal $25,000. So we're trying to keep it consistent with our example of, okay, $25,000 in a business, $25,000 in stocks, $25,000 in real estate. Which one's going to do the greatest return? Okay, now that's our down payment. Boom. Now the question is, what's our mortgage going to be on this type of house? Again, I'm going to assume I have an FHA loan, so I'm going to have to have property mortgage insurance. My mortgage on this is going to probably be $3,500 right now. Okay, three, five hundred dollars per month. And you could even say if you get like a USDA loan or something, this would probably go down like 3,000 per month. But let's just assume 3, 500, because you have property mortgage insurance, which you PMI, which you need on an FHA loan, you do not put 20 down. But even if you put 20 down, your mortgage is still gonna be like 3, $3,000. Okay, if interest rates like 5 and a half percent, you know, which is very common right now, 5%, 5 and a half percent, your mortgage is $3,500 per month. Here's the thing. If you go rent that house right now, it's very difficult to get $3,500 per month. You're probably at 3,000. You'd actually be losing $500 in terms of net cash flow every single month. Let's assume, though, that you can just rent it out for the same price. There's still extra costs like maintenance, fixing things up, property management, taxes, all these other things that are going to go into this. And you're not going to make cash flow from day one. And you're probably going to take a year or two to actually get to where your rents are generating free cash flow. Especially if you're not managing the property. You know, 10% of your rents are going out the door right away to property management. So again, you're not see any cash flow for probably a couple of years on this deal. And again, let's assume in 10 years, this asset value goes up, like on average. By the way, real estate goes up 3 to 4% a year. It does not go up 20 and 25% like it has the past two years. That is what you call a bubble. All right? That's because huge amounts of money came into the system. And furthermore, interest rates went down to zero. Right? So when that happens, of course asset value goes through the roof. Okay, that's not going to happen. That is not consistent. That is completely unsustainable. And you're typically going to see about 4% appreciation on a house. So let's go ahead and pull up the appreciation side because we talked about cash flow, right? If we look at cash flow, you're probably not going to make any cash for the first year or two. You have to wait for rents to catch up. You're probably going to actually lose money the first year or two because of property management, fixing things up, improving the house, etc. I'm just saying. But let's go ahead and determine what the future value of this, this house could potentially be. Because everyone's like, oh, like you get appreciation. That's like why you should get in real estate. I agree with you. 100. And you get leverage. Like you get a 20x leverage you to put 25, 000 down on a 500, 000 asset. That's epic. Okay? Real estate, that's why it's so awesome. However, let's go ahead and look at the real numbers when it comes to home appreciation. Okay, so we've got $500,000 house. Let's assume it goes up 4% every single year in terms of annual appreciation. And 10 years go by, that home is now going to be worth $740,000. Okay, so $740,000, okay. Now some people like you made $240,000 in your, in your, what's it called, net worth. Now, you do have principal pay down and other things, but let's just assume, let's wipe out the fact that you're going to be doing principal pay down because you have all these other expenses like property, more property, mortgage, insurance, your property management. You have repairs, maintenance, all these other things that go into being a landlord, by the way. So let's assume you're $225,000 became 240,000. That's pretty awesome. This is why real estate's great. I literally had a $500,000 asset. It became worth $740,000 ten years later, and I only put down $25,000. That's literally a 10x return. I went from 25,000. That was, I put down on the initial payment and I got $240,000. Let me write this out. $240,000 in appreciation. Okay, so that is equity. Okay, so a 10x. I got a 10x over the next 10 years. Here's the thing I truly believe, if you put $25,000 into your business today, that in 10 years, again, it's going to be greater than 240,000. Right? So using this comparison that we just have used stocks got what? Let's just go ahead and pull this back up. We got.

Here got stocks at $25,000 invested with, whoops, there you go. With monthly contribution of $800 going back into the business. Okay, so this business was not like stale. After 25, you kept investing in the business for 10 years, every single month. $800 present value at the end of 10 years, $193,000 real estate, $240,000 appreciation on a $500,000 house over the course of 10 years. Again, assuming that principal pay down kind of wipes out the fact that you're going to lose money the first couple of years on renting out that property. Okay, that's a 10x. Now the question is, if you built a business today and you start with $25,000, would you in 10 years have an asset that is worth more than 250,000? If you cannot get a 10x return on your initial capital over the next 10 years in your small business, you should probably invest in the stock market or real estate. Okay, now, I generalize numbers. I know people are gonna poke holes in those numbers. I tried to simplify them so we can all understand the fact that both of those examples had approximately a 10x return over the course of 10 years. The question is, can you beat that in your business? Okay, over the next 10 years, can you take $25,000, invest into a business, and make an asset that's worth 250,000? Here's the key. The kicker at the best case scenario, the beautiful thing about real estate is the fact that in 10 years, this piece of real estate, this rent, is probably going to be now like four or $4,500 per month, and you're going to cash like $1,000 a month. You probably make $12,000 per month on rental income. If you rented this out after 10 years and the stocks, you might be lucky to make a couple thousand dollars a year in dividends. Here's your small business. Not only could you easily 10x the value, the asset value from 25,000 to 250,000, you could also, at that $250,000 level, when you have an asset, also be cash flowing after 10 years in business, 100, 200,000 in profit a year. And that is absolutely possible. So that's why I'm Such a big believer in small business. I think it's something that we can easily beat the stock market, real estate, and it's just a matter of how confident are you in those returns. Right. Because that $25,000 invested in the stock market or real estate, very unlikely to go to zero. In a small business without systems with someone has no experience in the industry that potentially can go to zero. And that's why you should expect higher returns in small business because the risks are so much greater. Okay, let's jump into some questions.

We got some hellos. In small business you can get better returns, but once your business is sold, take some of that income and place it and use it other places. Yeah, like I, I don't really like selling any sort of asset, to be perfectly honest with you. Because you're taxed on it, right? So if you're going to tax 30, 40, 50 on any of your returns. I don't like to sell assets. Assets go up in value.

You don't. You do not get taxed on equity, you do not get taxed on appreciation. You do not get taxed on when your asset, whether you stocks, real estate or your business, go up in value. I would much rather build the asset and then take a loan against it so I don't have to cash out if at all possible. Now there's a bazillion ways reasons why you'd still want to sell a business or any sort of asset class. 1031 exchanges, improving other assets that you are owning, etc. I have 10 grand looking for a safe place to put it, thinking ETFs, but so still trying to get another rental. What do you think? I think if you have ten grand and you don't have a business, if you have a business 10 grand into that is probably going to have your best return. If you have just 10 grand, you don't have a business to invest in. I would say you could potentially go try to find a property. If you're in a really a rural area and you're looking at a Property maybe for $200,000 or less, then you potentially go to FHA, loan $10,000 down and start to build equity there. $10,000 going into an ETF, like it just depends on your goals. If you want to put $10,000 in, in something and get it out in 20 years, like $10,000 is going to become maybe $30,000 in the stock market.

Like you don't got, you can't touch it for the next 20, 30 years. I don't want to do that.

I think you can. You can beat those returns in so many different ways. And look for arbitrage. And arbitrage comes in the form of business. When you take a product or service. For example, you sell lawn care. You're selling a service to a customer for 80 to $100 per hour at a price that you are getting from labor in terms of 20 to 30 dollars per hour. 20 to 30 dollars per hour for labor. And you're selling that labor to the customer for an arbitrage. That's, that's how you make a, make a return in.

In real estate, you can go look for a property that is beat up, needs help, is, is under market values and buy for a really good deal, do some creative financing or even not fix it up and improve the value, improve the equity of the house. So you're always looking for arbitrage. That's how you're going to get your best investment returns. I'll probably sell some stocks here soon to get another truck, grow some more than buy some back. The real estate and the stock market are both scams and rigged. What you interpret as gains is really inflation. That's not true, actually. If you look at the rate of inflation over the past 20 years versus asset values, it's very different. ETF are good, but I also like whole life insurance. Whole life insurance. My opinion total scam is there's plenty of evidence. I used to be a certain insurance agent and I literally told the person I was working for, I only worked at State Farm for like eight months. I told him, I said I cannot sell that product. I cannot with good conscience think that is a good product. And even though. Because on whole life insurance, as an insurance broker, we made so much more commissions compared to just term life insurance. Term life insurance. My commissions were squat compared to whole life and the other annuity products they sell.

Still new to that. But seeing more on it, I would recommend looking at your life insurance policy as an investment. I'm happy to get in a debate on that if needs be because it's a bad investment. This is what my dad was talking about. He wanted me to learn that I also have my lawn business thing and you keep inspiring me. Keep it going.

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For 5% on that home loan. Yeah, I was being conservative by doing 5.5 because if I did 6.5 the the mortgage would be like 4 grand a month. So I was trying to be conservative because of the natural rule. Yeah, interest rates are going up. Wholesaling homes are best. You know what's funny is my very first house.

Was a wholesale deal and I got burnt on it honestly. But I bought with all cash and because of depreciation in the area, the deal worked out but I messed up. My first real estate deal was a mess when I was done. The build out like the after repair value, the ARV was maybe $5,000 more than what I had put into the house in terms of construction loan. But my first one, I learned a lot and I learned like what wholesaling was and I was at the time confused by like the person on the site when I was signing the deed wasn't the same person as the owner. Like I was concerned, like confused on all sorts of things. But I learned it all now and I'm actually going to be sitting my real estate exam here pretty soon. Flipping only works in a boom. It's not working right now. You can get burnt. Yeah, flipping is simply. You gotta be good at the game, right? You gotta be good at where you get your capital. You gotta make sure that you know exactly where interest rates are going. And so yeah, like right now over the past three to six months, flippers have been really hurt. It's just you can ride a market can go up for 10, 15 years and you can ride that, right? So there are plenty of people, people who have been known as flippers and they've really created a brand for themselves over the past 10 years. And the problem is in when the market switches, you need to immediately switch as a flipper. You have to stop. And most people, they just start growing and growing as they keep investing more and more into more and more flips. And then they hit one bus cycle, maybe six or 12 months and it can wipe them out. You'll be very careful. What's your thoughts about crypto? I've been pretty consistent on this. I went, I went to about, I think the highest I ever got was about 6% of my portfolio was crypto. And I still have some. I bought more bitcoin. I was completely out and then I bought more when it was at like 18,000, 19,000 in Bitcoin. I don't invest in anything besides bitcoin and Ethereum and it's complete speculation. I got a bed, I'm at a hotel. So.

Not true. Iron. The price of homes are dropping. If you can buy them low, you can sell them high.

Yeah. Like, you have to remember that the reason prices of homes fluctuate so much is because of interest rates. Because it's not about. No one looks at the value of the house. They look at what's their monthly mortgage payment going to be. So when you take interest rates from average around 2 and a half and 3% and you move it to 5 and a half or 6% like it has over the past six months, when that happens, you're taking a. This same payment, the same mortgage that we were just talking about, this one right here, that was, you know, $3,500 a month. That would be 2,200 or $2,300 a month if you were at a two and a half percent interest rate. And so when, when you have that kind of affordability to the monthly payment, people are willing to pay much, much more in the asset value, the price, because their interest rate is so low. So people say, oh my goodness, we're going, we're in this big bubble, we're going to crash. And prices are coming down. Yeah, prices are going to come down because interest rates have gone up to the point where affordability is low. Right. And this is why last October I said, I said, hey, I think that prices are going to come down, but rents are going to keep going up because the actual affordability of the houses are getting less and less and less. I saw a stat the other day on a chart that home affordability is like the lowest it's been since even before the last recession. Because it's not that prices are going up, it's the interest rates have spiked so quickly that you cannot afford a house. And that's why prices have to come down. Like, there is absolutely no question or doubt in my mind that prices of real estate is going down right over the next few years, few months. There's not even a question or doubt. And just mark my words, in three to four months, people are like, the housing markets crashing. It's down 20, 25%. Yeah, of course. Is because interest rates have literally gone like doubled. And so the, the payments on these houses have got 40, 50% the monthly payments. So.

What would you recommend as a price increase percentage for snow removal? I think it really comes down to your market. I think again I have yet to meet anyone in the past 24 months have raised their prices and really regretted it. Especially the past 12 months since, since inflation became a word that people know about in the public. It's been a good time to raise prices since last summer when everyone started to know the Suez Canal. And then now like with, you know, the cost of fuel going up and inflation, inflation and now what in the world is up with this inflation reduction act? Isn't that the biggest joke you've ever seen your whole life? Oh my goodness. Let's, let's, let's give, put more money in the economy and stimulate like more spending in an inflationary environment and call it an inflationary reduction act. Oh, it just hurts my head so much.

Starting a longer business. Shimo lawns and, and such for a lower price or higher price. The only thing I'd care about when you're first getting started if you want to grow the business is close ratio. And if you got a lower price at the beginning, that's totally fine. That is not a bad deal. You know, I was thinking about yesterday.

I was thinking, I was on a flight all day yesterday. I was thinking no WI fi. It was so stupid.

Like very frustrating. I did not have WI fi for literally 30 hours. And so. Well, I shouldn't say that I had two layovers so I was able to catch up. But what they're saying, oh yes, I was thinking on the plane, I was thinking what about a model? And this, this would work by the way. This would 100 work. It's a matter of whether or not someone is willing to forego profits for the first couple years. And it's a matter of.

You'Re risking your brand if it's not already established. Let me explain. I, I think that potential way to scale a business if you have plenty of capital is to do what so many businesses do where their first month or three months is a discounted price and, and doing it as an entry level offer and selling it to the customer and saying hey, your first month it's going to be 15 a cut and then after that it goes to 35. Now everyone's gonna hate me in the comments for this, but that would absolutely work. Here's the problem. Two problems. One, you're gonna lose money for the first bit while you scale up. Number two, you risk the if you do not have an established brand, you risk the potential of your brand becoming a discount brand where everyone just expects you to be lowest price and you can never charge a premium price and have higher margins. So what's your thoughts on bandit signs? Hey man, you gotta get scrappy. Do whatever you gotta do. I think it's a good thing. Like if you look at, ultimately what you're trying to do is you're looking at your return on your investment. That comes into marketing. So if I can get a 10x return on door hangers, but then a 15x return on bandit signs or 20x return on Facebook ads, that's all I care about. And so when I talk about return, I'm talking about if I spend a dollar on bandit signs and I get $10 in revenue, I have a 10x return on that money. And I'm looking over the next 12 months. The beautiful thing about lawn care or any sort of recurring service in any home improvement industry is the fact that you might get a 10x return this year, but if you keep that customer now, you get them next year and the year after that and the year after that, assuming you don't have bad attrition. So, yeah, bandit signs, yard signs.

Postcards, door hangers, knocking on doors, it's all just simply a matter of how many leads do you get, what's your conversion ratio and what's the lifetime value of that customer once they convert? If you know those three numbers, you, you can determine exactly what's the best marketing method. Have $18,000 in a truck, need to leave my job due to an abusive employer and see lawn care as a wise path. My estimate is 30,000 first year and 75,000 second year. Thanks for all the tips and content. Keep in mind that if you, even if you're by yourself, $30,000 that first year is probably going to lead to zero profit. Okay? Because you got to buy the truck market, invest in the business. 75 that second year, you're probably going to make $40,000 on that. If you're solo and keeping it really, really lean just because you got fuel, equipment, dumping fees, material costs, et cetera. So just keep that in mind if you're going to be switching jobs that you're like if you're, let's say you're making 30 or 40 grand right now, you're not going to make that on Your, in your first year. If your total revenue is going to be $30,000, just keep that in mind. Please tell me, what's your end goal? I just, I just enjoy doing that every single day and growing businesses and helping small business owners. I think the ultimate goal is to alleviate entrepreneurial poverty and people messing up and constantly making mistakes and the anguish that creates in families. Would buying a truck for a business be a smart as a tax write off or do you know any other assets that can be wrote off that would bring a higher return? Real estate or stocks? Every single person's individual case is so different on this. I have tried to avoid giving tax advice. I'm not accountant.

But I truly believe there's better ways to spend money than buying a new truck for the sake of a tax write off. I think it's just dumb, honestly. It makes really good TikTok videos to say this sort of thing. It makes really good YouTube videos to say that you buy trucks in order to save money on taxes. And there's absolute stupidity. You're buying a depreciating asset that is simply a tool to make revenue in the business. Why would I? You are not investing in your business when you buy a truck. By the way, personal opinion. You can disagree with me all you want. You're not investing in the business. You are buying a tool that has the capacity to build the business, but the business comes from customers. You buying a bunch of trucks doesn't build a business. You getting more customers and figuring out systems and procedures and back end operational efficiencies is what creates a business. So when you're gonna invest in your business, don't think buying a truck, just personal opinion. Personal opinion. I could be, I probably am wrong. But you know, you could buy all the trucks in the world and guess what, you wouldn't have a business. You get a whole bunch of customers, you'll figure out how to buy trucks. I do not look at trucks or equipment as investments or even assets really. When I look at my, when I look at my balance sheet, I look at, you know, assets and liabilities obviously, but I strike out like trucks and equipment. Those are simply the tools required to get the job done so I can create the arbitrage of labor from 20 to $30 an hour to 80 to 100. This is Tools that are required. And you're looking from a tax perspective. My question is, are you investing in your business or you just buy a truck? Like not say buying a truck is wrong. You have to buy a truck. You have to have the tools in order to create that arbitrage. But ultimately we are not selling trucks, we are not selling equipment, we are selling the arbitrage of labor and the trucks and equipment are simply the tools required in order for that arbitrage to happen.

If we only take the minimum out of our business each year and it gets to 1 million, would it be a better idea to take 100k, 200k or more and start 10 locations without having to be at each location? It just simply depends on your goals. Right. So, Ken, obviously you're at Augusta. You just got started.

Starting multiple locations. If that is a different game, right. Some people would rather build one location, make it really, really profitable, take 150, $200,000 a year in distributions, passively have a general manager run it and go do real estate. Or. Or do something in stock and do something more passive. Or you could start more businesses, start more locations. It is what you want to build. Right. And that's a conversation that again, you know, at Augusta, we don't even start talking about that until like literally six, seven, six and seven stage of wealth, which is usually five to seven years before you even start thinking about that. Right. So that's why, like, I think real estate and stocks is an absolute distraction for most people because they start getting into it way too soon when they should be focusing on that time, energy and money, an investment on their business, which has far greater potential to grow.

I think let's go public. I want to get in this training if I can. I know this much by now. Hook your way into it. Right. Thank you. I appreciate it. I think. What is it? Sometime next week, the vlog? I actually draw out kind of what I'm doing with Augusta in terms of the goal, how we're going to take it public in 20 years and how it's going to be broken up and all the rest of it. So that's coming up.

This is just a shot in the dark. Can silver bullion be considered a business experience, business expense? I would doubt it because it's completely like how is a business expense, although you could put it as an asset on your balance sheet. You have to talk to your accountant. I don't think that would be super legit unless you're buying underneath the business's name and then taking. Taking it as an expense and as an asset.

But you'd have to talk to an accountant because it's not really security. So I don't know. Can I, can I, can I any invest do with money I want to use in the next 24? If you want to use money in the 20 next 24 to 48 months, you're going to keep the money Liquid, right? You're not going to want to go into something like real estate necessarily because 24 months. Whoa, someone just gave me $15, dude.

I just got money. They didn't even ask a question. Solo boss. Hi, Mike SEO on website. Hey, hey, hey. Ask a question, you gave me 15. I'll answer whatever you want for 15 bucks. Okay, let's see here. I gotta go back. I'm way behind.

Can I Invest? Okay, so 24 to 40 months you got to keep. If you want me money within 24 to eight months, you got to do something that's liquid. That's the thing about stocks, it's very liquid. You can buy and sell it very quickly. Real estate is much more of a long term game. Your business is a very long much long term game. Don't expect to invest 20,000 your business and in two years you'd be like, oh, you see this massive company pumping out cash flow like it's a long term game. That's why most people go into stocks and why so many people like just invest in the stock market is because it's so easy to get into and it's liquid. You can buy and sell it very quickly and just tap a few buttons and you have the money. That is very risky in my opinion. If you're thinking about long term wealth building and that's why most people in Robinhood the last couple years have been wiped out because they got caught up into quick gains and quick wins. And it's so liquid you can buy and sell, buy and sell. When you can move in and out of stuff so quickly, you're just riding a wave of emotion. And so real estate harder to do that. It's much more slower moving your business. I talk in terms of five and ten year windows when it comes to your business with real estate, yeah, you can flip, do it in six months. You can start like tapping a button. So okay, stocks super fast tap button. Very much emotion based because of that. Flipping a house six months rental investment, real estate, property investment, like getting rental income. If you're going to do that, you're literally looking at at least a couple of years. So you can around get around short term capital gains at least a couple years. Now we're talking about business. I truly believe you should not get into business if you're not thinking outside of five to 10 years minimum, minimum, like oh, I'm going to do this for a couple of years, I'm going to sell it. Like I'm sorry, I just don't see that working very Often. And the reason people do that is because they see like these tech startups that get started and they are like billionaires within a couple years. That is not reality. And watch all those companies in the past six to 12 months go bust because that's the mentality that they're so short term thinking not related to the video. How are you going? How are you going to church tomorrow? See, it's already Sunday. It's already Sunday today. It is already 10 o' clock where I'm at. I just kind of gave away where I'm at. That's not good.

What about multi unit recreational cabin rentals? Big demand for campgrounds right now. Yeah, I think that you're investing in a bubble, but you're investing the peak if you're doing things like recreational cabin rentals because they saw such a massive increase during COVID like RV rentals, tiny houses, Airbnb just crushed in 2020, 2021 and even in 2022. I think you're investing. If you're investing those things, just realize you're on. You're definitely on the upswing of those like on the top of the demand curve.

Want to grow your business, attract the best talent and outperform your competition. One of the first things people see when they're looking for your business is your website. The most people to make a judgment call only based upon how your website looks. If you own a service based business that needs to expand their online presence, you'll need web experts that can combine great design and search engine optimization into the perfect website for you. And that's why we founded Home Service Web Design. We handle every aspect of your website for a fraction of the cost of other web design services and outperform the SEO of your competitors constantly. You can find out more@homeservicewebdesign.com should I.

Hire a person I personally know they are good work but I'm afraid knowing them already will make them demand a friendly raise occasionally. And I'm going to be firm on the 35 rule. I have not had super great experience with hiring people that I know. I would not recommend it. But your first employee, second employee, a lot of times you'll do it just because you need someone you can trust and I'm okay with that. Just realize you're probably they're not going to stick around if you're trying to grow really quickly. I just. Yeah, I just don't see it work out very often. Bought my ticket and book my room at Landscape Summit. Let's go mikeandys.comsummit Everyone should be booking their ticket. The, the, the rooms are going to get booked out. We're gonna, I, I think we're gonna get every single room in the entire hotel and it's, we're gonna book the whole thing out. So this is a great event. I highly recommend everyone come there. It's gonna be fantastic. You guys gotta see we got some crazy good speakers this year. It's not just me yapping. I'm not just having one speaker come in. I'm gonna, it's be great. Tommy Mellow from the Home Home Service Expert podcast is coming. He's like $150 million garage door business. Let's go. We got like Mike Callahan coming. He's a simple growth from simple growth. He does like all sorts of automations for your business service. Autopilot he works on. He uses a whole bunch of different softwares. He's like great at tech at the automation side of your business. Looking forward to having him. We got Marcus, the guy who spoke last year. He's coming back again and going to bring him from Fire. Some fire, especially on the design, build and construction and project management side of things. We're going to have multiple speakers. It's going to be fantastic. We have a couple of our actual members being one of the franchisees speaking. I'm going to be having, we're having a separate breakout session for spouses and employees to be able to go on Friday and Saturday and actually speak, hear speakers from their kind of that demographic. It's going to be a great event. You should bring your team. It's going to be the best one we've ever had. I'm really looking forward to it. So, yeah, definitely book your tickets. Mikey.com summit $500,000 grand in revenue, 30% profit including owner salary. That about average? Yep. That's really good. That's going to be a mature $500,000 business.

Because you're taking about what, $130,000, $125,000 in distributions, including your own salary. That's pretty good. That's really good at that stage. That's not going to be a business that is growing really fast. I'm assuming you've been at 500 approximately. You haven't been growing like 50, 80% a year into 200,000 last year. You've been around that 500,000 level. This is a good, this is good business. Good business, you know.

So glad younger people are getting it. Thanks, Mike. Now spread the word about it, especially in the liberal West. Coast and I'm in Washington, Oregon and California. Just embarrassing. They're just embarrassing. What is the best to spend on marketing signs, Facebook ads, vehicle app? Listen to what I talked about earlier. It's simply a matter of tracking your cost for the ad placement or door knocking or whatever you're doing. You got to track the conversion ratio or the close ratio of the estimates that you get. The leads that are converted into one customers and then three. What's the lifetime value of those customers? The best to loan against your business in order to avoid paying taxes and use that loan instead of dividend. I would recommend that. Keep in mind though, you got to build a pretty sizable business. For a institution to want to loan against your business, I. E. Give you a line of credit or give you an actual business loan against your equity, you're going to have to build a sizable business. You cannot build like a 300,000 or $200,000 annual revenue business. Go to the bank and like hey, can you give me a loan against my equity? Like that's not going to happen. But like this happens all the time on the stock market because they've come to an agreed upon valuation mechanism, I. E. A stock price that it's very easy to go to a bank and say hey, I have X amount of stock. Can you give me a loan for Y. It's very easy for them to do that. If someone has extra cash, they put it on existing debt or invest. I would put in existing debt personally if your interest rate was variable or if it was currently above like 6%. Like so if you're paying 7, 8, 9% interest, I'd probably put towards that over investing right now because I think you're going to get some good deals, especially on real estate over the next six months.

But and even businesses this winter is gonna be a bloodbath for businesses going out of business. I'm a one man company and have about 60 properties plus a subdivision with about 20 townhomes. When's a good time to get an employee?

As soon as you can fill their schedule and you can start handing things off to them so you can focus on sales and growing the business. I already talked about that. Agrees 100% about buying trucks. It's better to buy a reliable used vehicle. And there's a lot of reasons why buying a truck, you know, or even leasing makes sense too, right? Like I'm not, I'm not discounting those things. Just remember they are tools that allow the business to operate. They are not the means to an end. They are not a business. Is it a bad idea to build my shop or office on my land in the in the country or should I lease a building so I can catch the public eye? I would personally not buy real estate or a shop space just for the sake of public eye, like getting exposure. You're typically going to pay a lot more because it's going to be commercially zoned. It's going to be also higher theft areas because higher traffic, so you're going to have to build like a fence, more security, etc. I would look at it as if you're going to buy land, you're going to build on it, or you're going to lease land. If it's next to a busy street and you can put up a sign, great. If not, I would not think that's a big deal because if you took that same increase in lease or an increase in mortgage of say a couple thousand dollars a month and put into marketing online, you get way more return than just people driving by.

What are your top three ways to start marketing your business? Watch some of my other videos. Do you recommend radio ads? I do not. I have not seen them work really well to be perfect. Honestly.

SEO, it's starting to make more leads for me. Should I stop spending 22.2.52 500 on Google Ads and put 4k in SEO?

4K is a lot in the SEO to be honest with you. What are they going to do for you? You already have a site I get at lawn careweb, design.com and homeservice web design.com we charge 400amonth, includes all your design, all your SEO and.

We do really well. I just don't think that there's a lot of value someone can offer if you already have an existing design and you're spending two and a half thousand dollars a month on Google Ads plus you're in $4,000. Like they better know what they're doing in terms of SEO, because I don't think like I know SEO enough to know it's not going to take me an entire week to fix SEO on a site. It's not. There are five to eight different things that are the most important that we can knock out, usually in a day or two. So someone turning $4,000 for that, whew, that's a lot, right? We do entire design and SEO on an ongoing basis and constant changes to design for 400 bucks a month. And you can cancel anytime just what you're paying in one month with this SEO and the Google, that's $6,500. I would literally pay for a year and a half of long care, web design or home. But you do pressure washing, so I do homeservice web design dot com. You're in Australia, let's go.

I'm from Madison, about Alabama and saw the Augusta over here for the first time and all I thought of was the first time I saw your channel. Let's go.

I'm starting my own business. You inspired me. Keep it going. Don't give up, buddy. I plan to send all ads money on door hangers. Do you think that's a good idea? I'm targeting specific customers. I wouldn't spend all of it.

Because. Wait, I'm not ignoring you. I'm starting my own business. Saying I'm ignoring you. I'm not ignoring you. I'm starting my own business. You're inspiring to keep doing. Okay. I wouldn't recommend spending all my money on any one marketing platform, right? So I always recommend doing a few and then tracking which ones do the best and seeing which one. Get your best return. If you have a small amount of money, typically spending that money in your website is going to be the best return because it's like in perpetuity. It's not like where if I do a print design or I do door hangers, it's like this week I'll get leads. If you spend money on a website, it's like owning real estate. It's like you put money in and you get in forever. As long as that website is up, you're going to get leads from it. Okay? Whereas short term stuff like Facebook ads you love, as soon as soon as you turn off the faucets, you stop turning, you know, renting that space, then you are going to not have any more leads. Do you like strike for credit card on file? What's strike? Oh, I think you mean stripe. Yes, I do like stripe.

Am I in Australia? Why do you think I'm in Australia? Oh, because I told you the hours thing. My average month is 30k plus. Yes. If you're doing $330,000 a month and let's just say that average $350,000 a year, you're spending $2.5K a month on ad spend. So you're paying about 20, you're paying 30 grand a year to 10% of revenue approximately on Google Ads. And then you're gonna pay 4,000 on SEO. I just truly believe that like at 30,000amonth in revenue, I wouldn't spend $4,000 in SEO. I just personally would not.

Especially if they're not doing design and constant improvements and updates for you.

We try to be as open and transparent about our pricing as much as possible because this industry SEO thing is so murky and gray and blurry and people try to pull money like it's just stupid how much people get charged. And we see people coming to us that are getting paid, charged 1500 plus what we, for what we're giving. And we just know, we know the margins, we know how much it costs. Like I've been honestly, it cost me around, it's a little bit more now. I've always said 250. It cost is more like 270 now.

And so we make about $100 per month in profit. So if I jack that price up to $1,200 and there's plenty of people paying that, there's massive margins.

So yeah, kind of a look behind the curtain. Is there an associate's degree you recommend to someone who plans to be in a lawn care as a permanent career? I think if you're doing associates, I like associate degree, especially community colleges. You can get them for really cheap, good, good value in my opinion. You can get tuition for like, you know, most community college, like five, six grand a year, seven grand a year. So you might pay 15 or 20 grand for the associate's degree. I think a business degree would be good. You know, good marketing basics, accounting, things like that is super helpful I think. And so you know, MBA for. I shouldn't be plugging my own stuff. MBA for entrepreneurs.

Is where I took all those skills and I tried to distill them into a much cheaper version online. And I basically took all my textbooks and tried to consolidate them. I'm still like, I still have a lot of lectures. I still have like about a hundred lectures I still want to put in there. And so I'm just going to keep chipping away at them over time. But it's really literally. I took all my books, all my textbooks, you see them like as a stack like crazy high and just went through all of them, got all the stuff that I learned most throughout my MBA and try to consolidate into that. So I think that'd be a good place to start if you don't want to spend your two years and probably I'd imagine 15 to 20 grand on an associate's degree.

Can you all, can you tell us what you all are going to do with Command center yet? I'm sure you knew that might happen. What do you mean. Oh, I talked about yesterday in the vlog. I know that. Did I talk about the vlog yesterday or that vlog for tomorrow? I'm sorry, I get all confused. Yeah, I talked about Command center in terms of whether or not we are going to do a waiting list for it. We have not just figured out exactly what's going to happen yet, but we have some really cool stuff we're working at Command Center. Pretty excited actually going into this winter. New stuff, we're working on software, just making stuff super efficient and just siloing things now that we have more than. We'll have more than 50 people next spring. So we'll be able to really create departments for every single part of the business. The time difference on 36 lawnmower over 30 inch on quarter acre lots, no fence.

The 30. The see the thing is the 36, it's not a matter of deck size. The fact that that 36 is probably going to be a stand on or a walk on, a walk behind with a sulky which can go way faster. It's not so much the size of the deck, but you're also going to spend probably three to four times as much for that type of upgrade of zero turn versus a push behind, a walk behind or like a push more. Do you offer a one time upgrade only for websites instead of monthly? No, we don't. We do not do that. Mostly because what happens in this industry is people sell a 5, 10, $15,000 package and then they don't ever touch the site, they don't ever improve it. I don't believe that's the right thing for the website. We have touched every single one of our websites and made every single. Every single. Websites have changed in the past three to four months. I know every single one at least. And so we go in there, we're constantly looking at SEO. Every quarter we're looking at every single site trying to make changes. SEO banners, you can change your pictures, your video, et cetera. So I do not like a one time upgrade. Not a fan. I don't think it's the best thing for the customer. And it keeps like, keeps us accountable to make sure we offer good value to be able to have it more of a monthly. And then that way people can get started. Right? Like if you pay 10 to $15,000, you are hoping and praying that that site looks good at the end of it for ours you're going to be out maybe two months before you see a website and six months before you see you ranking well on Google, right. So you're going to be out, you know, way less and way less upfront so you can get started for way less. Biggest month, 45k, one year. Business is 270k a date. Can one truck pull in 50k a month solo? No, it can't be 50k a month solo unless you're doing design, build, and very, very custom work. But one truck can't do 50k a month solo by yourself, dear. Franchise in California. Get a C27 license. How is opening franchise? They're different from other states. California's a pain in the butt to open up a franchise. Absolute pain in the butt. Worst ever experience my whole life. But we did it. We pulled the plug, went ahead and got registered and everything. They take a long time. Take months and months, actually for us as a franchise order to get registered. And then, yeah, there's a special license that they have to do. They have a whole bunch of rules in California that I don't know. I guess I'm not surprised at this point. They're giving away money to help inflation. Like, blows my mind. All right, everyone, have a fantastic day. Have a fantastic weekend. Next week, you're gonna see exactly where I'm out in the vlog. It's gonna be great. It's again, I record videos, and a week later, seven to 10 days later, they're on the vlog. You're not gonna see it till like end of next week. Okay?

It's gonna be a lot of fun out of town right now. But hey, make sure you go check out mikeandys.com let's check this out, actually. Let's do this together. Mikeandys.com I got the new speakers up there. Or I didn't. Zach did bus his heart. Let me show you this. Let me. Let me. Let me show you this real quick. This is going to be an event you do not want to miss for you, your spouse.

Where is it? There it is. For any of your employees. You got to bring them to Landscape Summit 2023. It's going to be awesome. Okay, so check out the website. Watch the videos. Watch this one here at the top. It talks about where we're doing it, kind of what we're. The goal is here, but now you can actually book the hotel. We're going to take the whole hotel over, take the whole conference. It's a restaurant on site. It's going to be awesome. You could literally, if you don't want to rent a car, you can fly into Seattle and catch this bus directly to the.

Hotel like an hour and a half, two hour drive or whatever. Don't have to get a rental car. Okay. So I figured that's going to save you. And they're giving us a great deal on the lodging. I think you can still see this. It's like 100 and can you guys see this one second. No, you can't. Sick. But if you click on that, you're going to see Here it's only 100 and share screen.

Which even a few years ago would have seemed like is crazy expensive. But now it's 120 bucks a night. Okay, but this is like a four points. It's really nice. It's right at the hotel, right at the conference center and I'm really looking forward to it. But again, you can literally get your flight into Seattle, get on a bus, not even need to get a rental car. But check this out. Let me show you this. I think they put this up the other day. Let me scroll down a little bit more here. So this is the support track. Click here and you can watch a video about what that support track is going to be. Liz Lee the team is going to put that on. They're going to have other speakers, spouses of owners. So if your spouse is like, man, I don't really understand this business thing. Why you always work. Why can't you just, you know, come home and spend some time with me? This is the type of thing that I think brings people together, maybe families, relationships, employees and their, the owners. Tommy Mello is coming. Just confirmed the other day. Really looking forward. He's gonna be opening keynote. That's the plan right now. We'll finalize the schedule a little bit later. Marcus Vander Vliet, he's coming in. He's ran and turned around massive companies, a lot of design, build really good project management. Highly recommend. Obviously he was here last year, great speaker. Mike Callahan's coming. He's new too simple growth. He's gonna come in. He does a bunch of automation technology, multiple different software packages. He's involved with John Garrettson, one of our own. One of our own OG members from Landscape Summit and from landscape businesscourse.com and then also Ryan Payne, he's one of our franchisees. He has two locations but he also has a nursery and he has a dealership with Skag and all the rest of it. So he's gonna have a really unique perspective, I feel on what's happening in our industry right now. And kind of from all different angles of supplier, manufacturers, labor, etcetera so, really looking forward to this event. Highly recommend you guys go check it out, get a couple extra tickets, bring your manager, bring your wife, bring your husband, bring your spouse, get people on the same page. The very beginning of the year, first weekend of January. It's going to be fantastic, and I really look forward to it. So make sure you book your tickets and we'll see you there.

This has been the Mike and podcast, and we hope you enjoyed this episode. So where's the best part, place to put your money in the future? You should have plenty of options to consider now. And if you liked what you heard, we have tons of lectures, interviews, and more over on the Mike Andy's YouTube channel. That'll be right up your alley. That's all we got for you today. We'll see you next time.