Mike Andes walks through the cycle every business hits: raise prices, your close ratio drops, so you need more leads, which means hiring, which creates overhead. You never fix everything at once. You just move from one bottleneck to the next.
Because now as soon as you raise prices, you increase liquidity. Great. We figured out that bottleneck. Well, now we can't book as many jobs because our close ratio went down. So now it's like, okay, well what are we doing for leads? What can we do for SEO? What are we doing for Google and Facebook? Like are we spending anything on right now in terms of marketing or not? No, nothing. Actually I just started running Google Ads at like $30 a day. Now we start optimizing for that. I'm willing to spend 500 or $600 a month if I can make $5,000 extra in terms of profit because I raised my prices appropriately. Okay, so then the leads will become the problem. And then that's what happen. Leads. You're like, okay, now we're still getting 5 a day even with my higher prices. And now 180 or 190. We got to get another crew. Now the next part of the 400 framework is labor. That's your next bottleneck. You're going to have this great manager. You're probably growing the business to 800,000 to a million. Things are going really good. And guess what? Then the next last one, leadership. Now you're going to hire someone that can actually lead. A team meeting can do one on one meetings, can read an efficiency score. Look at close ratio, understand the numbers. Different skill set, different bottleneck. So it'll never be like where the business like works perfectly. You'll just keep going in that CY thing. Yeah, because now you hire that leader and guess what? They cost a lot of money. Straight overhead. You know that causes a liquidity problem.
