Why a Second Business Is the WORST Way to Fix Your Off-Season

In this video, I'm talking to a $3 million home service business owner that is considering nationally expanding his business. But at the same time, he gets all of his revenue in the last 3 months of the year. We've got to figure a way to be able to spread out all that demand throughout the rest of the year where he's otherwise losing money. We've got to change the marketing, the packaging, the pricing, the way he answers the phone, and really restructure the business so we get to $5 or $10 million in annual revenue without having to change the business model and add more lines of business. This is a coaching call. It's one-on-one with myself. If you need this type of coaching, you can go book a call at mikeandys.com/coaching. It's very expensive. However, I have a limited amount of time, so if you do need a call, go ahead and check it out.

How's it going, Mike?

Good, man. How you doing?

Oh, can't complain. I've been running out permanent outdoor lighting for the last 6 years. This is Haley. She runs the company. I am actually really, really good at selling. I hold records in this industry for selling. We've been burned. First person we worked for We had a million-dollar commission owed and they skipped out on it. So we obviously quit. And then the second company was a— we bought a franchise, was a complete scam. So we obviously quit and we decided we keep coming back to this and keep making money here. So let's just do it ourselves. We own our own manufacturing facility. We either assemble or build everything right here in Houston. Really just focus a lot on efficiencies. Is anything that ultimately gets built out there gets built to the customer? That's one of the things that we've worked pretty hard on is going upper on the quality, E, and then being able to get it fast, being able to get it, um, the, the right customization, and then be able to do it here locally has been pretty big to us.

And is it all Christmas lights, or is there other just like more external lighting, landscape lighting, permanent lighting?

Yeah, it's just permanent, all permanent lights.

Oh, all permanent. Okay.

We don't do traditional Christmas lights. We've thought about, um, like maybe this coming busy season like adding on something like that because our installers are already there. Like, not like obviously to the home, but like, oh, we'll wrap your tree, we'll put Like, what is it, Garland? Or like, we're trying to figure out how to increase LTV.

We're about $3 million top line this year. There's a big few things, like I posted my video that you saw. Hey, by the way, really excited to see you fly out here.

Oh, did you apply for a turnaround?

I did. And y'all accepted. We met with your wife.

Okay, cool.

Yeah, we were trying to figure out how to increase LTV. Like I posted in the video, some personal stuff have really come up and pulled me out of the business for the last 6 months. I'm back in and ready to grind, but there's— we took some heavy losses this last year. We grew, but it wasn't what we should have had. Um, and so, yeah, what questions do you have? Let me, let me let you guide this thing.

If you were to not manufacture them yourself, what would the cost of goods be on that? I have $3 million. Like, what would you be spending in cost of goods?

$694,000 was our total cost of goods. That was cost of goods sold. So that's getting the, the lights, the, the labor to, to assemble it all, the, the manufacturing, the— that's, that's everything.

Yeah.

So if, if, if you did not, like, manufacture them, I know it'd be— it's more expensive per unit. Got it. But when you charge, when you charge the customer, like, for example, what's the average job size cost? On average, about $4,700. Okay. And on that, if you were to go out and get someone else to manufacture the tracks, what would the cost of goods be on that approximately? Like $1,000?

Call it $1,400, $1,500 before shipping. That cost me $341.

Okay.

A little labor, but yeah, you have $500.

Yeah, it's labor.

Yeah.

Maybe.

Yeah.

All right.

And does that include things like the— do you have a warehouse, things like that?

It's not including the rental of the warehouse. We also house our office out of there. We do trainings for sales. And so that's all takes place there. So I've not allocated what portion of that would be for the manufacturing facility. Our rent is $2,700 a month. Yeah. Not over—

Because like my, my thing is a $3 million business and you're really good at sales. I want as little of your time being spent on operations or on manufacturing as possible because your skill set is in sales of the final product.

Yeah, I do nothing with manufacturing.

Yeah, it really runs itself. Honestly, we're, we're looking at kind of having it like creating it its own company away from our lives for liability reasons. And then even making track for our competitors.

We've thought about that way under capacity, like we can produce so much more. Yeah, our guys there run it all. They run the whole, whole deal. I've been out of the business for the last 6 months. We haven't been doing anything.

We have an operations manager and she, she manages kind of like the warehouse there. She's also like over the office and install as well. Um, she doesn't have to do much with it. Like, even our manufacturing lead, he's the one that orders the materials for like—

he orders it, makes it, does our installs and our manufacturing, you know. He stages the jobs, so that's all done there.

How many technicians do you have like out in the field versus like manufacturing versus office admin?

2 office if you include the operations manager. Uh, we have 2 in the the manufacturing facility, we need to let one of them go. Like, they're— we've calculated it out and they have probably about 1 day's worth of work, but we're doing 10 days' worth of billing.

Yeah, because we're seasonal and we don't have as much work.

Seasonality kills us. But yeah, and then we're 4—

we have a marketing manager, so we have 5 employees, and then we have— and the rest are just contractors. So our sales reps are installers. They're 1099s.

They're 1099s.

And so we have 4 installers, and then we have 5 sales reps.

4 installers, 2 in the manufacturing, 2 in the office if you include the operations manager.

Okay, cool, awesome. That's all the questions I had, so you keep going, whatever I can help with.

Great. Yeah, I got— I have a list of questions, so really happy to be here, but I'm gonna stick on 3, and if we can get those, I think this is money well spent. Uh, okay, first one. Do you want to read all of them? You want to go one at a time?

Let's go one at a time. Let's go one at a time.

Great. My number one hairy problem is how to maximize busy season. So our constraint, our biggest constraint of the whole year is because when it comes busy season, demand's infinite, cost per lead, CAC is super low. We're incredibly profitable. That's where we make our entire profits of the whole year is the last 3 to 4 months of the year.

We've been in business for 3 busy seasons and every year have had to turn people away. We just, we just can't. Yeah.

And what is that? Is it people doing it for Christmas, or is it people just end the year with money? What— why is that season created?

Yeah, the pain point is going to be permanent holiday lights. Like, hey, I want Halloween, I want Christmas, let's get up there. The other two propositions that people are really buying for are going to be security. I would love these for all year round. I'm already gonna do accent lights, can lights. These double as that, especially with our newer bulbs that are, are 4 times brighter than anything else on the market. So that's just something that we, we, we gear towards. Hey, you also get security. And then the last one is going to be your security architectural and then like one-off events, sporting events, things like that. So use it for security, architectural, make the house look nice, and then for holiday lights. That's, that's the main driver. And busy season, busy season, it's like the holidays are what's driving that.

Yeah. And they're already looking for, you know, people to hang up their traditional lights so they see ours. And although we're like a heavier price point, like the break-even, if you hire someone every single year to do traditional lights, it's like 3 to 4 years depending on the home.

3.5 to 4.

Yeah. So it's like, it's an— it's a— if you have the money to do it, it's like it's a no-brainer, right?

Yeah.

And so marketing for that last quarter, easy peasy. We don't even think about it. Everything else, we're way below capacity. And struggling to stay up with the leads.

We just hired Paul, the marketing director that was with Alex Hormozi. So we hired him, but we hired him during busy season because that's when he was available. He quit there and like, we'll take you, definitely.

He actually recommended you.

Yes, he's been texting you, or he said he was. But the— when we hired him on, even though he's an A-lister, A-list, you know, marketing talent, we told him, look, just sit back and do nothing for busy season. Like, it's going to run itself. It's going to be fine. We need you now. Um, so our biggest constraint is getting recruiting, training enough installers and the SOPs and structures around that to capitalize on the busy season. Last year, another thing that— lots of things hurt us, but we lost our training capacity, our trainers last year, and that just, that hit us hard.

We didn't expect that. We didn't expect that. Yeah.

I mean, I suspect we would have been 500, half a million $100,000+ in profits if we would have not.

I mean, we learned our lesson. We were banking on 1 or 2 of these guys and then they kind of— one of them in June fell off the ladder. He's drinking on a job and then he's just— yeah, so it's like we can't—

sure you've never had that before.

So yeah, right? Yeah, yeah.

Like, like the question becomes like, do, do we actually try to increase the size of the dam and allow more people to come in during the last quarter? Or do we figure out how to increase the lead flow for the other 9 months of the I, because of how low CAC is, I'd say increase the capacity during busy season. My CAC— do you know the difference between the two? Like CAC versus Q4 versus not?

During busy season, if you can nail it right, you're getting customers acquired for under $80, generally under $50. I mean, I've seen as low as $10. Yeah, like it can get pretty ridiculous in there. Just give me current. Scroll down the bottom and see what he's looking at. But yeah, during the busy season, we're going up to $1,300 or off-season, we're going up to $1,300. $900 for CAC. $960 is what we're at right now for outside of offseason or during—

outside of the Q4, it's $900 per lead.

That was last week. The week before that was $1,200. The week before that was $1,400. So I guess we're $1,000. Yeah, we're at $1,300, $1,500 on the peak. And we still have other opportunities that aren't being factored in there, like home shows and referrals. That's just our marketing efforts online.

And it's all paid through Meta and Google, right? Got it. And does he think he can like half that just through better optimization, etc.?

Paul's not working out, so I don't know. We're going to have to re-scrub all this.

Are you tired of paying Google and Facebook a whole bunch of money and not really seeing any leads? If you want a custom website built for you in the next 6 weeks, go check out homeservicewebdesign.com. If you're spending that much, you can't make money if 25% of revenue is going out the door to CAC. Yes, during the fourth quarter there's way more demand. But I also think we can create seasonal specific offers based on other times of the year and then highlight those. It might only be for 2 weeks. So we go hard after July 4th and it might only be a week or 2 or go after Easter. It might only be a few. But I do believe that there's ways to be able to bake in and get lower CAC.

Talking to Paul when we first hired him on, his originally— his original game plan coming towards this, because that's what we we asked a lot of questions around was how do we handle that beast? And he's like, look, right now you're offering full price during busy season because you can do it, and you're offering discounts during off-season, uh, in order to get people in. And he's like, that's not a sustainable model. Really, you need to have some kind of lead magnet. And so the question, how to, how to increase LTV, was starting— his suggestion was to start a pressure washing company. Offer free pressure washing on every job, you know, really, you know, add value as much as possible and differentiate ourselves from the market during, for, you know, with a product that's really in demand for those, those time periods and see if we can't drop CAC that way. You would increase them, you would add cost, but he thinks it would pay for itself.

Yeah. Like, like when it comes to solving the off-season, which for all of you guys is like actually Q1, Q2, Q3, you can always add another brand. You will always add more revenue. And I think the reason why that advice has some credence is the fact that you could— any home service is usually busiest in Q2 and Q3, and then Q4 it slows down. So almost you could almost throw a dart at what service you provided. But if it was busiest during the spring, it would at least offset your demand. I still believe, though, like we can do more and better before we get to like the stage, like we need to start a new brand, which is a huge amount of operational complexity. Can we just figure out how to get CAC under $400 or $500? And I'd be, I'd be looking there first before I go add a whole nother level of complexity around a new brand.

Yeah, we've, we've been working through this and this is a, this is a serious issue everyone in this market faces. It's, it's a multimillion-dollar question if you can answer it.

Even, even the people that you offer quotes to, because like what percentage of your this rough number is fine. What percentage of customers that get a quote from you all accept?

Right now we're at 30% close rate.

That's pretty good. That's pretty good for permanent lighting. So like when you send an estimate, 3 out of 10 people accept.

I think there's a lot of room to grow on that. So when I did it personally, I was at 70.

Yeah, he, he sort of assumed 30 for a minute. Assume 30 for a minute. I'd be going after the other 70% during the offseason. Because they demonstrated the need for the service. They decided not to, but they still want it. And now I would rather give them a $500 discount, 10-15%, than go and spend it on Facebook and Google ads.

But right now we are giving 15-20% discounts, like we—

But that's to new customers. Are you going back to the people you sent a quote to?

Follow-ups are happening, but we're not offering an additional 20% on top of that.

Well, because you, like, if they come in during like November and they're like, hey, I want— and you're like, hey, it's going to be $5,000. I would love it to be when you're in the slow times, like, hey, it's $4,500 now or never kind of thing.

We offer 30% if you, if you book in our busy season and get installed during Q1, we offer 30% off because marketing's like next to nothing. And we feel the— we didn't do as good a job this time, but we generally book at least January and February solid. Full of installs doing that.

Can we, can we advertise more during, during Q4 then and just fill the rest of the year?

I don't know if we can fill the rest. I've never tried to push that, that aggressively.

I'm just thinking about the fact that if you were literally getting leads for $20, $30, $40, $50 and that jumps to $1,000 and you're able to offer a discount to book outside of this time of the year, my goodness, I would be dumping money on those. And even if the, even if your close rate went down to 10%, you triple your, your cost per lead. Let's say it goes from $50 to $150 now because your, your, your close rate's only 10%, but you're literally trying to book into next year. Yeah, because with permanent lighting, yes, they might miss. Here's, here's how literally you can make sense of it, Landon. You can say, hey, look, you're going to save $1,000. Go get someone else for $500 to put lights up for this year. Cool. We'll come install this next June and you're going to still save $500. Yeah.

We have run into an issue where, like, okay, if you're not getting it done now, there's no value. But I think there's credence to push harder, like more and better before now.

Well, if I'm thinking about permanent lighting, right, and someone's like, hey, it's gonna cost $5,000, if you're willing to wait until next June, it's gonna be $4,000, you'll have the exact same thing just for next year, and you're gonna wait a little longer, I might take it, take it, take them up on it.

You could also sweeten the deal. We have a standard bulb and a premium bulb. Roughly 87% of all our jobs go with premium bulbs, which means we probably should increase the pricing of it, the Okay, we'll give you this and we'll upgrade you for free. The cost between the two products to us is pretty negligible. Like it's very similar cost to us.

I would, I would, I would increase the price of the premium bulb dramatically and then it makes that deal sweeter without costing you a single penny. If you say, hey, you're going to— I'm just making up a number— a dollar for low premium, or low quality, and for premium we're charging $2. Now all of a sudden the difference that you can, you can give in discount is huge. Yeah.

So our premium bulb, we currently are charging 15% extra.

Yeah, I would go way more. 87% of people are doing it. It's probably like a very marginal cost difference for you. I would probably do 30%. And then you just know that now it just sweetens the deal of that, that premium upgrade. If you wait, it's okay. If you wait, you not only get a discount, you also get the premium bulbs, which now you could very well be showing them a 25-30% discount. You knowing that a lot of that's just the markup.

They will also upgrade them. That— yeah, it makes sense because I was—

I just want to figure out how you can get as many leads as possible for $50.

Yeah, I mean, no, the leads are— the leads are under $50. I'm talking about the CAC is like up to 80.

Wow. Are you serious?

We print money. We lose money all year just to print money there.

Oh, yeah. Okay.

Yeah.

Then this is a matter of just packaging in the offer, which is make the premium very expensive, substantially, not 15%. I'm talking a minimum of 30%. Knowing that that increases the value of the upgrade. Some people will just take you up on it because they're so price insensitive during Q4. Straight margin to your bottom line. And then the upgrade for free if you book outside of that time, along with a discount, sweetens that pot where hopefully we can book into March, April, May.

Yeah, I was, I was suspecting you knew quite a bit about this industry just because the margins are what they are. If you, if you stack it right with what you do, I was like, man, this I was honestly a little nervous about this call just because like, man, I can't compete with Mike. He's going to—

the offer. The offer is, I think, right. Like, yeah, you're close. Like, whenever you have so much demand, you can't put up with it. The question always is, how do we get outside, get— push it outside of that, that fourth quarter? And I think to sweeten the deal, there's a discount. But you also have this fact that 87% of people are taking your current upsell and there's no cost difference to you. I would juice that thing. Yeah, increase 30%, make more money from people who are time sensitive. The people who aren't, it'll make it more sense to go out into next year and book further out. You don't have to hire any more people. You don't have to lay off any manufacturing. You don't have to do a new brand. Pressure washing is a whole different business. You keep your guys busy year round, so your retention goes up.

Like, my thought process was, how do we quadruple our labor force? You know, whatever it takes, 10 times our labor force seasonally for a little bit. And I'm thinking, how do we lower the barrier of What's the lowest cost skill to recruit for? That's the direction I was going with this. And then offer a new brand pressure washing and see if that cuts the CAC. And so we have like maybe like a 7 on the ROAS all year round during the offseason, and then that would allow us to just take off.

Yeah, but if you can spend all of your budget in fourth quarter and get leads for nothing essentially, and then just make an offer so good for them to like, like, you know, like, I want your average ticket to be more like $6,000 if they go with the premium. But then now it's dropping them down to $4,000 if they're willing to move out in the next year. The $2,000 of savings that mess with people's brain, it's like, do you want it now for an extra 50% or do you want to have it in a few months? And this is a permanent thing. This isn't like, oh, I missed this Christmas sick. Like, they will have this forever on their house because all the things that you talked about, like, like, for example, like Anytime you're trying to match labor with a seasonal increase, max operational chaos. We have— we have it with Command Center. Like, we have to hire 50 people for answering the phone. It's insane. But we can't control the fact that they— I can't push their calls out outside of my demand curve. For you, you're trying to create an offer that you can actually move it outside of that time instead of trying to staff for the peak. Bring the peak down.

What's Command Center again?

Where we answer all the phone calls for all owners at Augusta.

Okay. Thoughts on increasing LTV? That was one of the questions I have. We're at $3 million. Hermosi's roadmap says second product line.

I think you already have a second product line because you're doing the manufacturing. I see it as a separate thing. That's why I was asking about the metrics early on, is because I see it as a separate thing, even though like now, right now it runs by itself. As you begin to grow and scale, like that will become like, I need to create more, more better manufacturing, like logistics, shipping. That becomes a whole different part of the business that if you were just an installer like we do, we don't even think about that side of the business. So in my opinion, you actually already have two businesses. It's just that this one has tons of supply. Like you could, you could scale it up significantly more and not be a problem. And so that's why you're feeling the pain on this side, which is like sales, installation, the recruitment side. When I think we could scale this dramatically, like keep making them in-house, etc., just make sure that our demand curve gets spread out more throughout the year. You could very well not have to hire and still double the business. Real quick, in case you missed it, Copilot CRM is a thing of the past. We've now officially moved to HomeWorks and you can go check out the new website and it's super cool. Go to home.works and see how we guarantee home service businesses to grow their revenue or profit by a minimum of 10% or we give them their money back.

What's the, the second product line you're talking about is manufacturing. How's that a second product line?

I think it's a separate business. Manufacturing is totally different than the other side.

Yeah, it's way different, but it's just a vertical stack allows us to cut costs in the long run once you scale it.

Right. Right now it's a distraction for the thing you're really good at, which is selling. Now it can scale though and save you huge amounts of money. Like it's going to save you like 70, 80% of cost of goods sold. So I didn't— that's why I didn't like go cut it. If you're doing it, if you're doing $800,000 and I'd be like, hey, forget the manufacturing, move on, right? To scale to make sense of it. I just think that it is already— you already have a second business.

And so would that second business go sell to other people?

People, or you could, you could, like, you have— it sounds like you're not so— you're not, uh, supply constrained there. Like, you could do more tracks.

Manufacturing, I love, love it. I, I really— I'm very genuine, I really don't do any time in it. But yeah, we could— it wouldn't take me much time to quadruple our capacity there, and our capacity is already way— dwarfs what we make right now.

I would do that before starting a pressure washing business. It's a whole different ball game.

I just don't want to sell to our competitors. Like, I might—

what sets us apart is that we do it in-house, like the track system and everything. Like, that really does set us apart. Um, and so if we start—

why not get all the leads yourself, and then for the ones that you can't get to, you also get money for, right? Because like right now, if we're wasting leads, they're going to someone else anyways. Why not get paid for that too, right? I would just rather you do that than go do pressure washing. Pressure washing is a whole different business, and yes, it will it'll solve the seasonal issue. I think we can solve the seasonal issue with an offer by raising prices of the premium bulb, showing a bigger discount, and then pushing demand. When we get— if you can get leads for $10, $15 during the fourth quarter and they're otherwise going to be hundreds, I would guess that and just do everything possible to make sure people are booking later the next year.

Yeah. We're also running into an issue right now with, with our CAC is that our office set rate It's like 15-20%. Like, we are firing and we're— there's a fire in the kitchen with that.

Okay. So when I asked for— okay, so all right, that makes sense. So when I said close rate, you're saying 3 out of 10 estimates we send are getting accepted. But when leads come in, only about 1 out of 10, 1 out of 8 are getting actually booked an appointment.

Yeah.

Why is that?

We believe that— I mean, we had some issues with our calling software, so our numbers are a little off. We had moved to a different calling software. We had some issues. Anyway, I moved us to another one and we're doing better, but we also believe it's just the office staff member that we have. With this new software, we can listen in on her calls and different things like that. And so we just believe that we should probably do more training there or definitely do more training there. But like to put things in her perspective, like, so I did the office, he did the sales the first year.

You were, yeah, you were hovering in the 60s, 60% set rate.

And then our operations manager, she can maintain a 50 to 60%.

60.

So it's, it's the lowest that we've been. And I do, I do believe it's because of the call software issue that we had.

But so we're not 100% sure, but our gut and all the data we have so far saying it's a skill people issue, wrong person and need more skill. And so we are developing training programs currently to try to help solve that.

Yeah, like certainly if you can increase one lever of going from 15% to 45% would triple the number of leads you're getting. And so certainly high leverage there. And what are you doing on that side? Are you just doing better call recordings? Are you training them differently? Like, what's the steps to like—

All calls are recorded and game tape is reviewed at 7:30. We start calls at 8 AM. So 7:30 to 8 AM, we're doing call review, role play. And then we have at least 2 breaks throughout the day where we're like, hey, let's pause, let's go back and listen. And do it again. We're trying to tighten the loop on the listen, make improvements, role play it as much as we can because we don't have tons of leads right now and we have the time, we can afford to do that. So that is our game plan to move forward. And then it might look like cutting this, this, this one person just because there's personal issues there.

Also, I did calls after 5, you know, and Kristen, our operations manager, she did that too. Um, and so new lead comes in, we're calling it, you know, that's what we used to do. Uh, now that we have this other office person, they don't work after 5. And so we're trying to work on this like on-call thing, trying to work that out. But I'm trying to build an AI software where they'll, like a new lead comes in, they'll call and book the appointment and put it on the calendar. So I'm trying to do that so that we don't necessarily have to have people work after 5. But you know, So that conversion, it's much better when you can call it immediately once the lead comes in.

Why do you think it's a software issue? Like, is it something wrong with the call tracking?

Yeah, there was calls were getting dropped. They weren't coming through. There was a— if you were an AT&T or Verizon or something like that, there's two carriers that our calls would not go through at all. Like we were blocked by those.

Reported our numbers from— we were using Google Voice and then we ported it from Google Voice to Call Tracking Metrics. And then Call Tracking Metrics just wasn't— yeah, honestly, we stayed there too long. It was a month of issues constantly.

Yeah, it kept saying they'd fix it. We were like, okay, number of things, we're gone.

So I just went over to Aircall and we're doing much better there. It's like, we love it.

But yeah, we're just trying to figure out how to do this whole business thing.

If it's 15%, I think that's a huge lever too. Right. I see it's really just two levers. One is can I increase the booking rate by 3x? That's an easy lever. And second is can I keep spending money during the off— during the fourth quarter when leads are nothing and improve the offer so they book later on? Okay.

Our last big hairy question is we want to go nationwide. We would like to have over 200 locations. We were really hoping we could find someone who's done that before.

Yeah, that's what he was like, let's do the pressure washing. And then I was, I was getting things together to start that company up. And then I'm like, wait, like we opened up and we didn't open up an area last year. We opened one up the year before. I'm like, I think maybe we should focus on that.

The other area is somewhat of a shell too.

It's still struggling. Yeah, it's— and so we're like, why open another area when we, we can't copy and paste into— we're in Houston, you know, into Dallas.

So our Our goal is to scale, open new locations. You know, what foundations need to be built in order to allow us to have that?

Well, the question becomes like, what's your moat? And I think the moat that you've identified is actually the manufacturing side.

We're local manufacturers, so Texas-owned, family-run, you know, local manufacturing. Those are, those are our moats.

Right. But what I'm saying is like, to scale this internationally or nationally, it'd be very difficult to go one location at a time. If you're going to like, hey, let's start a second location, start a third location, why not just train people how to install your product and make it where they go make the— do the installing, they take the leads and they install your product and it's more of a business opportunity slash licensing. Yeah.

So thought there is our manufacturing. It doesn't cost a lot to start up a new location. It takes people that, you know, home service, no duh. Uh, we're a people business, so I didn't want to do franchising because I don't need someone else's money. Like, that's not, that's not my constraint at all. Like, I can— I have the systems to train, train people how to sell. We're trying to get the systems to really just hone in training people how to install, make sure it's like world class. And then from there, we just take these, which is our IP essentially, and then just go there and say, hey, we'll give everything. Our marketing guys will take care of it all. Um, almost like a gym launch. You kind of like that. I mean, we're like, hey, we'll build everything. We'll come in and we'll do all that. We already have all the tools in the background and we'll get this thing running. I don't know. I feel like we can strap a big engine if it's all one brand. There was a company who did that, who went and I worked for them in the past. They distributed to everyone else, but they're really getting pushed out of the market right now because they don't have branding. The company that has the worst product has better branding because it's all one. It's all under one, one name. And they're, they're the largest in the space now. That branding element was just so powerful. They're not even the best. Like, they have worse reviews than most everyone else. Yeah, Jellyfish.

Do the dealer program.

They do the dealer program, but they, they franchise and everything's under their name.

Yes, true.

Whereas Jim Stone only did dealer, right? They also have DIY, but I don't know if that's really much of a market.

But yeah, yeah, I think the most important thing is to nail your current model, right? Because until, until you have your current one, whether it be like most people do not have the capacity to run a $3 million business. They don't have the capacity to run a $5 million business. Only 8% of people that start a business get over $1 million. So that being said, when you start thinking of multiple locations, it's either A, you find incredible general managers that can run $3 million locations for you, or 2, you create a product that is profitable, that you train people how to install it, and you give really great advice and training on that so that that becomes the brand. The moat is Hey, they get Aurora Lights, gives us this like level of service that no one else can. And then to your point, like at Gym Launch, they stopped flying out to people. Like what's much more scalable is here's how we did it, here's the roadmap, here's the ads, go do it. And so I think the thing that you're developing now, like even when it comes to like the booking rate, solving that problem is the IP. Like what are the scripts used when it comes to the offer that gets most people? Everyone in this industry has a problem with Q4. Great. Let's move. How do we get an offer that actually gets them into Q1, Q2, and Q3? These, these are the things that solve, allow you to scale it.

Then why would we trade equity off and, you know, let someone else— why, why, why not do a corporate structure?

Oh, I'm not saying which structure to move. Like, honestly, I think you nailing this one location, taking it to $5 million and $1 million in EBITDA, that, that gives you opportunities for all sorts of stuff. You go the manufacturing route, you can go the licensing route, you go franchising, you go corporate expansion. But like, this one location, if it's not being run right and like booking rates are low, we have a huge seasonal issue, like we have huge excess capacity. If we have these problems now at the first location, when we do a second, it'll just get worse.

Okay. So you're saying don't scale? Yeah.

Oh no. Figure this out. Like, because all the current problems that you're talking about, if you solve them, allows all sorts of opportunities. Focus for now just on like fixing them. And then the world will be your oyster. You'll get people calling you, hey, can I, Buy the lights. Okay, well, should we figure out how to do retail and sell it to them? Should we do the do-it-yourself? What do people really want to buy this online? Okay, do I want to do licensing where I get people into a group? They charge— I pay them a thousand— they pay me $1,000 a month, straight 100% profit, and they buy my product. And by doing that, like, there's a lot of routes you can go. But the thing that you do first is you build one of them that just cranks out cash, and that will come from a result of solving all the problems in your industry.

But yeah, I hear what you're saying. Yeah, I was thinking just because we knew we hit big problems and I didn't work for a huge chunk of that last year and we still got $3 million. There's all this meat on the bone. I felt like we were at the point, that's just why I think scaling made sense. But I hear what you're saying that yeah, we're here at 15% sat rate right now.

Like, come on. Yeah, if you like, you could go start a second location and let's say it does just as good as this one. Right, you would double revenue. Awesome. You would also, you would also triple revenue if you just went from 15% booking rate to 45%. And so what's the, what's the easier battle to, to figure out is the second one. What's going to increase the enterprise value the most, make it the most scalable? Figure out the second one. The easiest one is the first one.

Okay.

Could you go get another, another shop space, another location, another website, and like new LLC, and let's go.

Let me run everything past you today and just kind of do a little recap here. So what I'm hearing is, um, no, nothing fancy. Don't do a, uh, new service. Um, just increase the cost of our premium bulb, try to use that to help lift the offer during the busy season to book throughout the year, push that like crazy, be that— have that be the focal point, and then work on some, some internal things. So there's just training, obviously, always improve the training for the installers, but particularly the office staff. That's the easiest lever right there. That's what I'm hearing from today's call.

Yeah, something that I've been wanting to move forward because, you know, we don't have recurring revenue. Like the fact that we can make what we make with just a one sale. And I mean, we try to push add-ons, but whatever. Like, I mean, we could do that better, but we've thought about recurring revenue. And so when we started all this, we were thinking, let's do a subscription base. Um, and because even when we hit busy season, we have all these installers and then we also have customers who have issues with their lights and we do service calls. And so we were thinking about like we could do this monthly subscription that we could sell and it could be like, what do we think about like, um, you have to pull up your notes, find out what we wrote on it.

But yeah, we do like priority service during busy season, 24-hour service call. We'll come do that during— we'll do a check before busy season. Um, you'll get all the add-ons to our app. Which we're looking to try to develop an app. I was going to ask you about that.

Yeah, one emergency visit a year. You need your lights, you need, you need to fix your lights, whatever will come out. Custom scenes, we can download them, put them on like a group Facebook page, whatever.

One of the things that our app has, it has a few pictures of what your house looks like. We can, we can with our own app, we can improve that dramatically. And so you'd get an actual picture of your house instead of a picture of a prebuilt house. And it would make customizing everything a lot easier. We'd also do remote changing and creating patterns for you so we could build all that into it on the monthly. That's what we're, we're trying to do.

Again, I'm a huge fan of recurring revenue. You know that. I think there's still bigger levers like we've talked about that I'd focus on first. But yeah, like certainly these would all— I would also use this as a way to sweeten the pot of getting them out of the Q4. Like I think your 7 to 1 ROAS can very easily become 20 to 1 if you can figure out how to do that.

I think that's just the highest leverage thing in the business during the busy season. Yeah, we're hitting up to 18 on the ROAS. It's— that's where I'm at.

That's where I just— I want to focus all our time and energy on that because all of this recurring— yes, awesome. When you get— when you get your database large enough, when you have thousands of people in there, you could launch that and immediately have recurring revenue. So like, I'm a big fan. I think that the app is a distraction. It's just, it's another thing. You have this thing that's working and I just want you to keep doing more of it. And I want you to just simply make it less seasonal because by doing that, you will dramatically increase the profitability of the business. And even like, again, the 70% of people who said no to an estimate, let's assume you also have a whole bunch of other contacts that didn't even get the estimate because the booking rate is so low. I would be going after them like crazy. For the first 3 quarters of the year. Crazy. Like, they— we know they want lights. I'd be texting them, I'd be emailing them, I'd be making sure I have monthly emails based on every single, like, holiday or, you know, event that's local, even like in Texas. Like, if there's a college game, like, whatever, like, I'd be hitting that like crazy because that whole database is all ripe to sell outside of the Christmas season.

Yeah, I— that drip campaign, that sounds really interesting. I'd like to hear more about that. Uh, another distraction I have that I'll let you try to squish, or maybe— I'm trying to lower the barrier to entry for installers. And so we have a set of lights that we have. We figured out if we swap them out to a new set, we could lower the, uh, the time it takes to install. And so each installer, we can maximize their time by doing that. It might cost the company a little bit more, but we think it's a wash. Um, and so we were like, okay, let's do the switch out. Now we still have to hold inventory for all the past clients because none of the old system would work with the new one., but if we did that switch out, then we could get installation done faster.

Training installers would be easier, which is a huge bottleneck, come right before busy season. Like, training these guys up, it takes time.

So yeah, I mean, it would take a while to set up, but yeah.

Yeah, like, I, again, these are all like great ideas, 5-10% wins. I genuinely believe even this problem gets solved when you move your constric— when you even out your demand curve because right now you're thinking, how do we hire and train all these guys? Well, that's no longer a problem if I can keep them busy year round. And so I would again, like, I genuinely believe keeping the same number of crew, you could triple the business by just greasing the offer and changing your pricing packaging to get it where you can fill the first 9 months, having emails, text to all of your database, your existing customers, you're upselling into the recurring package. People who said no or you only got their contact, I'm trying to get them on a discounted version of what they asked for.

3 months ago. What is your— what's your thoughts on this, this industry, the opportunity that we have here? And then if you were to come in and just kick us out and just run this company, you're the CEO now, what would your next 12 months look like? So thoughts on the industry?

We like the industry a lot because the margins, right? And it's like, we do it because Q4 is our weakest— our one of our weaker quarters.

You're already in permanent lighting then?

Uh, well, we do a little bit of permanent, mostly just the, the— where we— they lease it from us. And we take it down for Christmas lights. And so we mostly focus on that. But like, I know that even on permanent lighting, like, they love it. The guys who do it, that's great margins. I love it. It's also the Achilles heel as to why you're thinking about starting a whole new thing. And that is I got to fill the other 8, 9 months of the year. And so I just genuinely believe if you figured out your secret sauce is getting leads for as cheap as you have, whether it be your website, your brand, or the quality, I don't really care. I just know that's where— that's your secret sauce. And I want to take that and spread it throughout the year because it'll solve almost all the complaints that I've heard otherwise, like around capacity issues, training new people. You don't have to train new people if you can keep them year round, right? A lot of these problems will just disappear if you can solve having seasonality. If you struggle with having an off-season in your business and your revenue dropping a lot for 3 or 4 months out of the year, like a lot of home service businesses, I created a special workshop. It's completely free. You can scan the QR code here or just go to MikeAndys.com. And it's 3 to 4 hours of content where you'll be able to figure out the 5 solutions to make sure that the winter or your off-season doesn't tank your business. I— everything we talked about, I'd be 100% thinking about increasing premium. Like, obviously you have this— the problem is we got 5, 6 months until we can execute on some of this stuff, right? We are going into an off-season. I think during this time I'm looking at the things that are the intangibles that have nothing to do with the customer. For example, the booking rate. What are the scripts? You know, my goodness, the software better be dialed in. Using something like RingSense, which is from RingCentral, but like, I'm sure your current provider has something like this where you don't do listening to calls like game day stuff. You are— it's the AI is looking at their transcript and giving them coaching based upon the prompts that you've given it. So it's live. So they get off a call, they exactly know what they should have changed, where they should have said something different, what the improvements are made. So I don't know what the version of that is for your current call system, but like, I'd be dialing that in because that 15% could become 45% as we go into the busy season. Extremely high leverage. I'd be focused on everything I possibly can. You're going to have to train new people going into this upcoming busy season. But my objective is really to fix the pricing and the packaging and the offer so that when this, this season comes, we don't stop spending money on ads. We just keep pumping it and we keep putting more and more people into the next 9 months. And it just makes it like the premium pricing on the bulb is just making that delta for them bigger and bigger.

That was called RingCentral, you said?

RingCentral is what we use for our phone system at Command Center. And then RingSense is an add-on. It's only like $60 a user. So for you, just $60. And it's just going to look at every single word they say and then give them coaching on how to get better. You give the prompt for the AI to coach them. So like you could say, hey, we want you to ask these questions in this order. You tell it all of that and then it will give coaching to the person once they do the call live.

Oh, I love that. That's, that's awesome.

Okay. So like those sort of systems, that's what I'd be focused on now. And then as I go into the busy season, I've had the packaging, the pricing, the offer ready to go. I'd have my text and my emails for January, February, all the way through the slow season. I would already have that set up in my software for texting and email. I'd have it then tagged based upon existing customer, like I've installed for them, and then people that I just have in my database because like I'm going to treat them very differently. When I text and email them. So those are some of the things that you can still do now. And then once you hit the busy season, the objective is to be able to keep the throttle full force and then just be booking people out like crazy in the next year.

Pretty straightforward.

Yeah, good stuff. Well, hopefully I'll see you in a few weeks. I'll, I'll put a good word for you. Say hey, you know. Yeah, absolutely.

We actually closed on a new house today.

Like, hey, yo, let's go.

We're, uh, Yeah, I'll get you steak or something. Haley is an amazing—

oh man, good stuff. Well, hey, we'll stay in touch. I wish you all, all the best. And, um, if we don't see you, best of luck. But hopefully we get to see you here in a few weeks and enjoy some of the Texas weather there. 84 degrees, let's go! Good stuff. We'll have a great weekend. Appreciate y'all. Take care.