Why Meet Kevin's employees LEFT HIM!

More than six figure salary, paid vacations, paid trips, paid entertainment, only to get rug pulled before launching a new company. That's pretty disgusting.

Unforgivable, as we like to say.

Maybe I demand people work hard, but I pay well for that. And so if somebody can't work a hard 20 hours because instead they want to work a lazy 20, then you don't belong here anymore.

It's been great because like the less employees you can have, the better. Wow, wait a minute. I just actually saved, saved a lot of payroll expenses and travel expenses and healthcare. I could do this myself for that pay. Wait a minute, how much were they really doing in the first place? You know, employees are a variable cost. They're variable cost for a reason. Because if we don't need you, you get laid off.

Man, Kevin is a bad mood this morning.

So I checked out your channel and some of your notes. What's up man? It looks like you're killing it.

So what I'll do is I'll just have a few questions. I know obviously you've been through a lot recently with employees and things like that. And I've been through your courses, they've helped me a lot. And Now I have 20 units and you know, seven figure, you know, stock portfolio, a lot of it really in the past few years watching your content. And I was able to exit before all this garbage happened the past few months in the stock market.

So.

But all of that being said, I wanted to kind of talk to you about small business because I know you talk about stocks, real estate, you're kind of the leader in that online. But I wanted to talk about small business and I want to talk about employees specifically because when I watch your courses, I watch your content. You used to actually own a construction company. Some people don't necessarily remember that or realize that you actually used to do that and you had employees. And I remember you talking about just how much of a headache it was. And you said, hey, no employees. I'm staying solo. What changed over the past couple years? Obviously you ran for governor, you started hiring people, but what's changed now that you actually do have employees? And has your mindset changed on having them?

Oh, yeah. Look, I mean, I think there's always a benefit to having employees because ultimately that's the only way that you can really scale a business and grow. But yeah, I mean, I think it's, it's a very individualistic question for everyone because for for example, my father in law, he ran a painting business and he realized, wow, we're growing so well, we're getting so many referrals. He hired five employees and then all of a sudden he realized, wow, now I'm not making any money anymore and I'm working weekends to go do the callbacks right. And the fixes. So he as soon as then. So he went from making a lot of money to having five employees to making no money. And then as soon as he got rid of them, he was making money again. My father actually had a very similar experience where he was doing.

He was building custom kitchens and when he worked with himself and one helper making great money, soon as he bought a warehouse, had 10 employees, made no money, right? And then he ended up moving into going back alone and he just did installations and he premiumized his product and he went to really premium installs and he did whatever he could do with himself or just like, you know, the occasional helper when he needed to lift larger heavy things. And it was very, very profitable. I've noticed myself that I can make a lot of Money just making YouTube videos. I could literally do it myself because I've just turned everything I do into a system to where I could sit here, I can press record and I can upload a video, start to finish within 15 minutes. I mean research the notes, my talking it filming for eight minutes or whatever, posting. I can do all of it in 15 minutes. And I could do that alone. And so like the level of income that I can make alone is ridiculous. As soon as you start hiring people, you've really got, in my opinion to have a high margin product like you're selling Apple computers or you've got a fund or something like that. So I don't know that my opinion has so much changed, but I have started to spend money on things just to make my life easier. So, you know, having assistance or like an in house cpa because I don't want to do bills, I don't want to do, I don't even want to look at my mail, I don't want to do my email. So things like that.

Cool. And I think it comes down to, like you said, the margin side of things for small businesses, especially home improvement business, like I focus on landscaping and lawn care, it's basically most of my content. But for people in the home improvement industry, really what we're doing is we're selling labor. And right now we're seeing labor go up dramatically in terms of cost, squeezing our margins. To think that has something to do with it. Or do you think that having three, four, five Employees. There's a certain level of, like, economies of scale when you get 10, 15, 20 employees and you kind of either need to go big or stay at that solo level or kind of is there like a wilderness, do you think, in terms of small businesses?

Yeah, totally. I absolutely think so. I would say that probably the. The. The easiest business for somebody to run is just themselves and, like, their spouse or, like, one employee or whatever. Like, that's the easiest business to run because it's just. It's you. The money you make, you keep. Right. The next easiest business to run to some degree is. Is a business that just operates to the point where it's already got 50 to 100 employees. You've already got management in place, You've got systems in place. I think that that dead zone in the middle is terrible because that dead zone in the middle is where people like, oh, my Gosh, I have 10 employees now, but I didn't teach my, you know, top employee who used to just be my assistant how to be a manager. But now you're expecting to be a manager. Maybe you don't have the systems for it or whatever. Total disaster. Like that. Yeah, that. That zone.

The worst. And so talk to me a little about when you did have that business in the contracting side of things, because so many of my audience is contractors, Home improvement. What was that looking like? Did you mostly focus on contracting, or do you actually have W2 employees during that business?

Yeah, I'm a big fan of almost always having W2 employees, at least when. When I'm running business like that. I do think that is the riskiest, though, because every Friday you got this payroll, and it's just like, you're looking at, like, oh, my go. There's a huge desire in the contracting field to just focus on premium clients and become a briefcase contractor, where you literally have no employees. You know, we're like a bookkeeper, and that's it. And I get that. But it's. It's very difficult to scale that now in contracting. That's probably. It's probably one of the best ways to go. Unless you have some really sick systems, because you'll go bankrupt under payroll costs. Now, one of the scary things, though, about contracting is it's. You don't really see, other than, like, a serve pro. You don't really see a national contractor. But you can learn a lesson from serve pro. High margin. You look at servpro, they're like, oh, yeah, we'll charge you two grand to clean your ducks. And they come, they Send a guy for an hour with a blowing machine and, and you know, in an hour, they're. They're invoicing two. 2,000 bucks or whatever. You know, that's how you know they've been able to go national is because they can charge those rates. Now. No homeowner pays that. It's the insurance companies who pay it because they need that guarantee. The person who's got the mold license and the equipment and all that crap, you. I mean, to me, it's like you have to choose which. Where do you want to go? Like either high profit or stay small.

Well, folks, I'll be damned. Today is not one of the best days. In fact, we've already had a little.

Bit of a double. Double of this. Yeah.

Like a. This morning. Like, I'm pissed. Right. It's kind of like the steps of feelings.

Right. I want to go back to now you have employees and some of the recent things that happened in your business. But before I do that, do you ever feel a little bit strange because you kind of came from the world of contracting small business ownership, and now you're putting this, like, stocks and real estate category that people would lump you into. Do you ever feel like you have more and you like that change, or is it more a matter of, like, people judge you as this, like, online guru? When, like, when I watch your videos, I see you go through a real estate house. I. Okay, he knows exactly what he's talking. He's a contractor at heart.

What's your feelings on that? And that kind of, you know, that change that you've had over the past.

Few years, I mean, it's been great because, like, the less employees you can have, the better. So, you know, I've really enjoyed that. Again, unless that. That's the career that you have where you could scale that now, for example, like, if I was like an active pest control, I'd be like, please, I want like hundreds of more employees. Because the more salespeople you have, the more money you're making. Right? I mean, like in, in sales. And this is what's so different in sales. More employees is. Is not a cost. It's. It's like an investment. You're making more money when you're selling. But. But yeah, I mean, when, when you get those W2s, that's. That's where things get. Can get. Can get quite scary now. So right now, you know, talking about covering news and that, like I said, I could do so much of it myself. I really don't have that. That Burden. I mean our profit margins like 90, 95. Right. Because it's like we, we don't have much overhead. We've like, we've, our fixed costs are, are nominal. We've already invested in our studio. Right. Like there's, there's little that we actually have to spend money on. Extra. Whereas we do have W2 employees still that are sort of our in house contracting team. And they're great, they're like, I love them, but these are people that I've worked with my core too, that I've worked with for five years now. But what's so awesome is actually more than five years is I could send them to a remodel and they could do the whole thing, start to finish, exactly the way I want it. Because we've gotten to that system of like, here's the formula, but just apply the formula over and over again. And I'll tell you, that's probably one of the most satisfying parts of having employees is like when they know the formula, they know what they gotta do and they do a great job at it. And then you overpay those people on purpose. So like, I don't even wanna call it overpaying because I don't, I would never want them to like, think like I resent them. No, no, I'm, I'm like happy that if I could just make them feel like, wow, I make so much money here, I do a good job here and I get well taken care of, that's what I want. Like, then it's not even overpaying anymore. Then it's just like, well worth it, right? They're so great so you could get to that balance. But it's like, what do you want to do now?

I have seen like when you've, you've put out, you're hiring developers, et cetera, and obviously you're trying to focus more on those high margin things like code, et cetera. And do you think sometimes employees, like, the original reason for getting them is really just to duplicate time, but then also down the road, try to have things like code or capital being the things you're leveraging instead of just time? Because like, I think that's the bane of most solo operators, the fact that, hey, if I stop working, like in your case, if you stop making videos, if someone mowing lawns, stop mowing lawns, there is no more revenue. And that's a very scary thought. And so they venture into getting employees. What would you say though, in terms of making that work? Like, is it something that Someone should test and then decide if they should get employees or just stay solo. With those high margins, you stay in control, you don't have the headache and potentially lower margins by getting all the, that overhead.

Yeah, I mean, I think if you have a profitable business and there is more demand than you can satisfy. And when I say profitable, I don't mean like scraping by like you're making, you're bringing 50k to the bottom line. Like, I mean, like, you're really cranking, right? You're, you're, you yourself are already in this place where you're able to bring home, you know, 2,300k or whatever. That's like, okay, now maybe let's try to expand, right? And let's, let's get someone on payroll. Hey, 60, 75K, can they make it so that you can. That bottom line number for you from like 200 or 300 to, to 500, right. Like now that makes sense. If, you know, you're, you're a small business and you're making 75k at the end of the year, you hire somebody and, and all of a sudden your, your net at the end of the year goes down, you're at like 50k. Yeah, sure, you did some more top line, but your bottom line didn't really move. Then that's no good. So for me, the decision to hire employees should always be driven by what, what your actual business profits are, because it tells you how good your business is and how much in demand you are. Like, if you're selling homes for, you know, or, or here's a good example, somebody came to me once, they're like, hey, you know, I'm a leasing agent for real estate. And we're like, all right, great. How much are you making? Well, you know, 100K. And he's working seven days a week. You know, sometimes he tries to take a day off, but he's probably working 70 hours. And I'm like, well, you know, what would the dynamics look like if you hired somebody? And in his example, if he hired somebody, he'd have to pay somebody 70k and maybe he'd be able to show 20% more home. So it didn't make, that's not a business that makes sense. So for him, he's got to get out of the leasing business where he's making 4k of commission, and he's got to get into commissions that are 30k or 40k, you know, 10x those commissions. I think the same is true of, of whatever business that we were thinking about getting. Into or somebody who follow of yours might be in. For example, we wanted to get into the brokerage business for stockbrokering. That was about the summer of last year. And that's why we're looking for program. No. Well, yeah, good thing we didn't. Because one of the reasons we didn't is first of all, the business is high margin when it's doing well, but it's terribly low margin when the stock market's falling and it's been falling the last five or six months. It's very expensive to acquire customers. So you know, we, we saw the writing on the wall in around November, December. We're like, no, we're not going into that business. Glad we didn't. But that could have been a high margin business in a good market. But that's the other thing you have to balance out too is some things work. Almost everything works in a good market. It's can your business work profitably with employees in a bad market?

Let me push back a little bit because I know there's someone listening saying I'm not making 200 or $300,000 take home, but I also am 50 years old and cannot actually go out and hit nails, put paint on the wall, mow long. Like how do I get employees if I don't have those margins? Is it a matter of just raising prices? Is it a matter of creating value high enough to be able to charge those prices? Like what do I do if I physically am starting to actually have challenges, but I need to hire employees, but I don't have those kind of margins?

Yeah. So I mean it's, it's both of what you said. I mean, what, what can you do to provide more value or a higher quality product where obviously you can have more margins? I think that's, that should be the key of almost every business that somebody's in is how, how can I. Let's say if you're, you're doing contracting and you're doing, you know, the $15,000 bathroom remodel, how can you get to that level of working for that client that's wanting to do that 30 or 40 or $50,000 bathroom remodel? Because then all of a sudden, you know, the 30% that you're throwing on to a light fixture isn't noticed where it totally is at the 15k level. Right. And they're pinching pennies on everything you're doing. And it's the line Adamscope, that's, that's a tough place to be. And so for some People, it's what can you do to go into those higher margins for other people? It's are you in the right line of work? You know, if you haven't, if let's say you're 50 and you've been in contracting for 30 years and it's like, crap, like I can't get into that higher margin biz. Well, can you now leverage your book of business and say, hey, well, I'm going to be a real estate agent, right. And move into, into what's an extremely high margin business. You've already got the book of business. You've got the sales skills and the customer service skills. You know, real estate. Right. So a lot of contractors I think could be really good real estate agents. And now you're going to spending, you know, I don't know, 20 hours a week. If you're working three clients or whatever, you're not gonna be working more than 20 hours a week. Three clients, that's on average a commission check a month. That's ten grand a month on average. That's, that's a pretty good year working 20 hour weeks. Right? So sometimes that's a question.

So yeah, I mean, some businesses just shouldn't get employees unless they can figure out how to get that premium, that premium pricing.

Very cool. And now we got kind of the clickbait part of the video. And that is recently you've had issues with employees. And I remember the day it happened and waking up and like, man, Kevin is a bad mood this morning. And what I remember is watching the video, obviously there was a lot of disappointment. But then by the end of the day, literally you had kind of already worked things out in your head and you're almost looking at it like a positive. We're going in a better direction.

Well, folks, I'll be damned. Today is not one of the best days. In fact, we've already had a little.

Bit of a double double of this.

Two core individuals who were helping me with my Series A launch that's coming.

Up decided to go get a different.

Job right before our, our launch. Probably one of the most disrespectful times you could possibly leave a company, but. Oh, well, I'll handle it myself.

This morning some people in the comments.

Got mad at me because I talked about how a couple employees left before really big project. Core folks who were working with me on this were not just employees. These are folks that have been probably the closest friends I've had for years. Yeah, like a, this morning, like, I'm pissed, right? It's kind of like the steps of feelings, right? If you have a better opportunity, that's great. I hope the world that people get better opportunities. In fact, I talk about better opportunities.

In front of people that work with me.

The big lesson, though, is if you hit such a low that it now gives you a spark, you have to just look at it and say thank you. So I'll say that thank you for rug pulling me. It's been incredibly inspiring, and I'm very motivated now, so thank you.

I know you can't share everything. I don't. I'm not asking for that. I know that you are preparing a new business, and I don't need to know about that. But what can you share about that day or your thought process? Not really what happened, but your thought process. Once employees left when you needed the most, that you had put a lot of confidence, paid them very well. I see how much you pay people, but what was that thought process, the beginning of the day to the end of the day when they left you?

Well, you know, I think the beautiful thing now is that I have the benefit of hindsight, which I'll talk about, because I kind of know, like, what happened after. But, yeah, that day, I mean, it just. It feels terrible, right? It feels like you get rug pulled. You know, it was. At the time, it was very devastating. But it ended up, you know, over the next few days, I realized, okay, well, I just have to pick up that. That slack that they were providing value for. And a few things sort of came out of that in the short term. I realized, wow, wait a minute. I just actually saved a lot of payroll expenses and travel expenses and healthcare. Like, it was amazing. When I added up the amount of money I was saving, I'm like, oh, my gosh. Then I compared that to me actually doing their work, and I'm like, wait a minute. I could do this myself for that pay, right? And so it was actually, like, kind of damaging to the employee mindset or like having employee mindset, because I'm like, wait a minute, how much were they really doing in the first place? Right? So that was quite interesting. And so we became a lot more efficient with the people that we do have, and we get a lot more done now per person, which is great. And I think every business kind of needs to go through those cycles where if. If you just stay fat and you just keep adding people and you never really put yourself in their shoes, like, work, work someone's job for a day and see how much actually, you know, that need is for that person. Boy, that was so eye opening. It was. It was really incredible. So a lot of good things came out of that because again, we became more efficient. We realized like, okay, here's a. Maybe some. Here are differences we're going to do in terms of, like, management and communication or whatever. But the sad part that came out of all of it is I was really kind of happy because I thought they were going on to a better opportunity, which turned out to not be a better opportunity. They ended up leaving to an opportunity that they thought was one thing. And then they felt relatively misled and almost completely misled or clickbaited their words on, on, on, you know, some of the things that happened. And so it's unfortunate. I would, I would never want somebody to have that experience because that also builds resentment, I feel like, for the original job that they had, because it's like, dang it, I'm not with my original job anymore, My other opportunity to work out. So I don't know if it's like an age thing or if it's just like, hey, sometimes that happens and people, you know, need to go figure it out themselves. And hey, eventually I'm sure it'll work out better for them. And that's what I hope for. But, boy, it was an eye opener for me. All right.

How did, how did you just psychologically, though, like, even small business owners, they have guys walk off the job, for example, quite often, especially in this labor market. And like you said, they're going after other opportunities. There's 20 other signs they're driving by. It says, now hiring, promising more money in this labor market. How do you deal with that psychologically? Is it a matter of, like, I'm going to go find someone else? Is it, this is happening for a reason? Or how do you deal with that in the moment? Because I saw the flip within about 24 hours.

Yeah.

There's something always, in my opinion, happens for a reason. And my goal is always to try to make the best of it. I see if somebody leaves me because somebody else is like waving a carrot and I'm. And I hear about that carrot and I'm like, I would not take that risk. But if they take that risk, well, clearly that's a sign that either they're unhappy with you or they think that opportunity is so much better than what they have with you. The kind of employees that, that I want are people who see these other carrots and they're like, not taking the chance. I like my job way too much like that's the kind of loyalty that ultimately you want to, or if there is a carrot where there's a better opportunity. Like I would be a cheerleader for that. You know, if somebody came to me and they're like, hey, I'm making good money here. I'm making 150k or whatever here. I got all these benefits and stuff, but I just got offered a job for 400k. I'm like, well, I can't pay that. Like, hey, what kind of letter can I write you to make sure you.

Actually get that job?

Because that's a great opportunity for you. So that's, that's always what I would wish for somebody who left real quick.

Before I let you go. Last question for small business owners right now as we are heading into a pretty cloudy macroeconomic place. Recession, inflation, all these things happening for a small business owner. Talking three, 10 employees, what do you see as recommendation for them? Obviously, tough labor market, etc. From your point of view, what's going to be their keys to success the next 12 to 24 months?

Yeah. So number one is, is to the degree that you can, you want to provide certainty. Right. So your employees will start to see, in my opinion, in recessionary times like the book of business start to dwind. And then there will always be this concern that like, oh my gosh, well, then I'm going to get laid off or whatever. And so the, I mean, and that might have to happen for some companies that's, you know, employees are a variable cost or variable cost for a reason. Because if we don't need you, you get laid off. And that's terrible. So to the degree that you can, I think it's really, really important, especially a small business, to make sure that either your key folks or everyone, if possible, knows that, hey, we've got the funding to, to stay alive for a couple years with a slow book of business. We value you so much, we want you to be here and stay here. But we've got to work together to make sure that we are preserving as many costs as possible. Like the fat days are over where we could throw away a half box of screws because it's too inconvenient to keep it around. Like, we gotta, we gotta pick up every, every nail that we didn't use on the floor, we put it back in a bucket, we're reusing that sucker. You know, like that's the kind of conversation I would have right now, is really emphasizing this is the time to get like tight with margins and really try to motivate staff to respect that as well and even suggest their own systems or recommendations for being able to save costs.

Awesome. Well, thank you so much for coming on, Kevin. I really appreciate it. I'll cut the recording off here. I know I want to respect your time, and I'm over a bit.

Sure. Well, thank you for that. Appreciate it. And, hey, man, good luck out there.

I appreciate it, Kevin. Take care. Have a good one.

You got it.

Bye. Bye.