Your Leadership Style Is the REAL Reason Your Business Won’t Scale

Hey everyone, it's Mike Andes, founder of Augusta Lawn Care, on the Home Service Millionaire podcast today and we're talking about how your leadership style is the ceiling in your business. So if you're trying to build up to seven figure business so up to a million dollars in annual revenue, you really just got to sell really good and usually lead by example for your team out in the field, that will get you six, seven, eight, nine employees and you're off to the races. Now, when you start needing mid level managers, operations managers, office managers, salespeople, and start building an organization past a million to 3 million, 4 million $5 million in annual revenue, your leadership skills are really the determining factor as to how big the business can get. So today we're going to discuss your leadership style and how it can be the ceiling in your business. Now the producer has produced five different topics for us to discuss today. If you'd like a question submitted though, you can submit a video question here to the podcast, I will answer that. Just go to mikeandys.com? and submit your 90 second video clip. Up to 90 seconds. Any question about your business, I will respond here on the podcast. First question on the docket today, when your business stalls for 18 months straight, is it really the market or just your leadership that hasn't evolved? So first off, I wouldn't take a business stalling in terms of revenue and as an indicator of the business not doing well. If you're going into profit mode, for example, your revenue might stall out, but I'm looking at bottom line profit in that case, which could potentially be doubling or tripling the same year. Now if we're holding all things constant, like profits are staying the same, revenues are staying the same, we're not growing the number of employees, we're not growing the number of customers, like nothing is growing, including our profits. A lot of times I see leadership as the problem if you have mid level managers and this is happening because ultimately, if your time is being spent on being the architect in the business, you should be leading to small improvements in the business because your time is now allocated towards improvements. When you're growing the business from zero to a million, a lot of your time is spent doing the work or managing people directly that do the work. You have less time to be the architect, step away from the building and assess the systems and the training manuals and the standard operating procedures and create better metrics and dashboards. You don't have the time for that. If you have mid level managers, they should be taking management off Your rear plate laborer should be on the field doing the labor and you should be able to spend more time in architect time and actually developing the systems of the business. Now a lot of times what I see is business owners doing 2,3 million in revenue and they start plateauing is they aren't actually delegating to their mid level managers, they're still kind of doing their job and that prevents them from being the architect, stepping away from the business. And it's very counterintuitive because your entire career you've been rewarded for jumping into fires, fixing problems and rolling up your sleeves when work needs to get done. And the exact opposite is rewarded for a larger business at mid level managers where you doing those things actually slows the business down. You doing those things and you're like, I'm going to lead by example. Like no, you're slowing everyone in the organization down. And yes, you might do the task faster or, but if you make the other 30 people in the organization even 5% slower because now they're questioning whether or not they should make decisions in the business, you have now actually had a net negative to the business. And so even though yes, you can do things faster in the micro and get the task done, if you don't step back as an architect and solve the actual constraint to as to why the system required you to step in, that will stall out the business. It's kind of like churning when it comes to customers. Eventually if you have churn your plateau the number of customers you have and if, if in this case, if you as the owner stepping in doing things in the business, whether it be hopping in a route to help them finish up, whether that be knocking out estimates because they're running behind, whether it be answering the phone because they're running behind, any time you insert yourself into the equation in the short term you're going to have a level of ease and a level of like ah, better breathe up, we solve the problem. Yes, I am good, pound on my chest, you know, I get a mark. I am a great leader. Um, and in the long term, you being that spare tire that's constantly getting used, there's a blow up and the spare tire is not meant to go at full speed. It is meant to get you to a workshop, it is meant to get you to a mechanic shop. And so if you are the spare tire in the organization, you can, that bin occasionally can help. Trust me. Like, you'll have to do that occasionally. But just realize the objective of using a spare tire is to get it to the mechanic and fix the root cause of the problem, which is that there's another tire that's not being used and you have to step in. And so a lot of times plateau happens when you start using the spare tire that is the founder all the time and their time gets sucked into manager time instead of architect time. And that's a lot of times where people will stall between 1 and 3 million. It's also the reason why I like having distributed leadership with general managers, because I don't have to worry about those general managers learning that skill of delegation and management of sub of mid level managers. I just know that they can manage six to eight employees out in the field and I can copy and paste that and then I'll find one regional manager that can actually manage managers because it's a very difficult skill to have. All right, number two, what if your leadership strengths, urgency, perfection, hustle are the exact traits keeping your team weak and dependent? Yes. So this is absolutely the case in terms of the ceiling for your business being created. And that is in the past you've used urgency in marketing and it's helped. It's like, hey, here's the deadline, you gotta get in. Urgency inside of the business comes in the form of hey, we go figure this out, but if we can't, we go to the boss and he will figure this out and she will figure this out. And so if you're always the backstop for every single problem, you, you eventually just get so many problems on your plate that you can't take any more on. And that's where the business was cap out. And so we've talked about over and over. I feel like this is like the theme of the Home Service Millionaire podcast when it comes to leadership is you gotta have people that are able to identify a problem, create a solution and execute without you getting inserted in that equation. And the faster you can get people to that. And yes, that might mean hiring people that are more expensive or have more experience or paying people more aggressively as they stay with the company and learn those skills so you don't have churn at a very key, key role inside the organization. And so your strengths from zero to a million will absolutely become the dependencies of the organization. If you just like if you are the greatest salesperson, sales will be the thing that becomes a constraint of the business because you have built all the systems to basically rely on an all star. And so usually your weakest points are the things you delegate first and end up becoming the best performing parts of the business in terms of systems, procedures, et cetera, because someone else develops the systems. So the way around this is when you hire someone, you make it part of their job description to create systems for their department. And so you're like, well, these are my strengths. Great, create a system for it. And then every other area that you're not strong and you hire someone and their job description is to make the systems better. And when they leave, you give their systems to someone else and you tell them the exact same thing. All right, here are the systems and procedures. Your job, part of your job description is to make these better. And then that way even if you have turn in a role after three or four times, people coming in, your system's actually gotten so laser like focused you could actually get a lower level team member to be able to step in and just do the systems because you've had. Part of their job is to refine the systems. The reason I say make it part of their job description is because you never want someone to feel like, oh man, by me making these systems and procedures, I'm basically making sure the I can be replaced. And in my opinion that is first off a really limiting belief and mindset because if you're an all star employee, you want to be replaced so that you can move up in the organization. If you're just like, I'm just trying to maintain this position as much as possible. I'm very afraid to create systems for my role because they're going to replace me. That should be a good thing in a growing organization. It means you'll go up if you're a lousy performer. Yes, you should see that as a threat. And I would say if your managers think that way, I would fire them because it means they're sub performer. They're not going to be the type of person that creates systems delegates drops down and then is able to drops down what they're doing to someone below them and then moves up in the org. And that's the type of people I want to be around. And so I just make a part of everyone's job description, especially in roles that are new. And that is part of your job is to create the systems, the operating manual, the, the kind of like playbook for this create screen recordings and systems and procedures. And for the person that is very growth mindset and has a great mindset that I want to elevate in the organization, they'll look at as great because they know if they can systematize their role enough, it means it can be handed off to someone lower level and they can move up. So your strengths need to start becoming playbooks. So if you're so good at these things, like marketing, perfectionism, your hustle, like, all of these things need to be documented of how do I actually make sure that someone else can do them and then I'm able to hand them off. And it doesn't become a constraint to the business because it only becomes your strengths, only become a constraint if you don't create a system around that strength that is able to be replicated and duplicated across the organization. Because then everything just has to keep coming to you. And again, from zero to a million. You have been rewarded for this in the past is one of the first things I talked about with my coach, Dr. Kashi, and that is like, I talked about how much I was working and like the amount of pain that I was putting myself through a couple years ago. And he said, look, you have been rewarded for doing this action in the past over and over and over again. So why would you not just keep doing it? So you almost have to create, like, there is pain. And one of the best ways to create pain around this is grow the organization so big you cannot handle it. Like, if you're so good at sales and you're like, I'm going to be the salesperson, okay, triple the business and then see if you can really handle all the sales. And you'll force yourself to have to create systems, create playbooks, and allow someone else to take over or the business will stall and it will become the ceiling for your growth. Number three, third question on the docket. How do you know when your GM has outgrown you and are you secure enough to let that happen? Okay, yeah. Like, look, if my, if a manager, general manager, operations manager, any manager outgrows me, I am thrilled out of my mind. In fact, I expect that of someone as the business grows to the point where I might spend 3 or 5% of my, my time thinking about their department. If they're 100% on that department, they better be past me. Like, I actually, like, you have to get past, first off, the insecurity of someone being better at something than you. And then get to the point where you expect them to be better because they're spending 10, 20, 30 times more of their day focused on that one thing. And, and if you start getting more and more pride out of other people, coming up with ideas, other people implementing other people, executing other people, solving problems in the business, like, it'll untap huge amounts of potential. And if you just get comfortable with giving praise to everyone else, even if it is your idea, like people will want to work for you more if you simply give praise to everyone in the organization besides yourself. I don't care if you came up with the idea. I don't care if they came up with the idea. Everyone in the team needs to be praised and, and elevated. And you are the last person to get that praise. Now publicly you'll get the praise and the hate from everyone, but internally you want all the praise to go to the team and then you deflect and absorb all criticisms as much as possible. And so if someone's outgrown you in a certain skill, I would be thrilled out of my mind. I would then make sure again that they have operationalized and put into systems and written down and recorded with a camera exactly what they're doing so that it doesn't become a dependency in the business. I don't want them to become the bottom leg cause they're so good. I want to make sure that when I hire my next general manager, my first general manager has documented how great they are at everything and why everything is working, their checklist for their day and everything that they're doing. So the second person comes along, they can be successful and they can at least get to 90% of what my all star is at. Again, if that person sees that as a threat to their role, I see them as they topping them, topping out the same way we're talking about entrepreneurs here and business owners. If the manager thinks that them creating systems and documenting their procedures and recording is somehow a threat to their job, they will also cap out in their role. And it's very difficult to.

To elevate that person. It's very difficult to promote them. Very difficult to hand more off to them if they're constantly trying to conserve their like, intellectual property to the company. And so this is one of the things that I've decided I don't try to change in someone. It's either like, look, you either have this growth mindset which is you create systems and document everything that you do so that when the business gets to the point we need someone above you, you could actually move in that role. Or if you're like hesitant, you safeguard everything you keep. You know, I am the only one that knows how to do billing, I'm the only one who know how to do payroll. And they see that as a safety net for their job. If they think that way, great, I will let them do their job. Forever. But they're never moving up, ever, because it's impossible. Like, they have secured themselves in that role so much by having so much intellectual property. I can't move them out of it. So if someone has outgrown you, I would take it as a huge, huge win. And I think as the company grows to closer to 5 million and beyond, you actually get to the point where you expect people to be better at customer service than you when they spend their whole day on it. You expect them to be better at sales when that's all they do. And you're worried about, like, the lease and hiring and attracting great talent and looking at expansion and new marketing markets as the architect. But the manager should get better at managing. All right, number four on the docket, the owner who still answers every question is the bottleneck. Pretend. No, let's review the question number four. The owner who still answers every question is the bottleneck, pretending to be the backbone. How do you know if that is you? Ooh, very good question. Okay, so if you have to answer every question in the organization, you will become the bottleneck. I. It will not feel that way to you, though, because you will feel like you're being useful and you will feel like, this is part of being a business owner and like, this is where I'm supposed to work hard. This is like the part of the rocky cut scene where I'm supposed to work and hustle. Like, it's like, I agree. Well, if you're past a million in revenue, and that's still the thought process, especially if you're past 3 million in revenue, but even a million, if that's still your idea of, like, I've got to work and I've got to hustle, it's like, yes, you do, but. But if you just made your team 10% more efficient, you'd replace yourself. Because if you have 10 employees and just think about the fact, like, if I just made them all 10% more efficient, that would be a hundred percent. So 10% times 10 is 100% of you? Like, oh, no, I'm like, twice as efficient. Great. Let's make them all 20% more efficient. How do I do that? Pay for performance, Open book management, profit sharing. I organize the tools, I organize the trucks. I make sure I cut out inefficiencies. I cut out trucks, or customers are way too far out of our service. I really laser, like, focus on route density. Doing a few of those things could easily, easily, like, very easily. One of Those things, just P4P could increase the efficiency of your team by 20%. 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 six weeks, go check out homeservice Web design. Com. And so people wonder why they start at 500, 600, 700,000 annual revenue. They can never duplicate locations. It's like you're not doing the basic things that allow your team to unlock 20, 30, 40, 50% more efficiency. And therefore you become the bottleneck. Because you are the great, you are the best. You are two to three times more efficient than everyone else because you've never actually given them the systems to be as efficient as you. The reason that you're so efficient is because you are paid on commission. As an owner, you get commission. If the business doesn't make money, you make nothing. And if it makes a bunch of money, you make a bunch of money. So give them P4P, pay them like an owner and you have all the information, like how much you got paid last week and how many budget hours on the schedule and who's the most efficient on their routes. Why not give that information the P and L and just opening up the book, open book management to the team? That information is what allows them to think like an owner. And so if you become the bottleneck in the organization, you have to ask yourself, if I just made everyone who works for me x amount more percent efficient, what would I have to do to replace myself? Because that's the constraint to the business, not you. Like everyone is so tempting to get into time management. As a founder, when you start getting busy, like, oh man, I can optimize this and do this on my phone and my computer and notifications and yes, you'll get 10%, 20%, 30, more efficient. I would ask myself, if you have 20 or 30 or 40 employees, if they all just become 1 or 2% more efficient all combined, you would outlast and outperform the massive gains you're trying to make in time productivity and time management. This is why ultimately, as you get huge amounts of scale, it all just comes down to making good decisions. Because you actually doing anything has so low incremental value compared to the hundreds of and eventually thousands of people that you employ. So that's why Amazon people hear Jeff Bezos talk about, hey, he just makes three good decisions a day and like, we're off to the races. That was a good day. That was a good day's worth of work. Doesn't matter if it Takes an hour or two. And he's right. Because the decisions is the leverage as you grow and you become the architect of the business, the decisions is where leverage is made. But that only comes as a result of building the team underneath you to where there is significant amounts of people. So if you're hearing this like, I gotta be the architect of my business. I gotta work on my business. In my business, no, you have five people reporting to you. You should be working and hustling just like them to produce revenue for the business and create value. But if you start having 10, 20, 30 people reporting to you or underneath you in the organization, your goal should be, how do I elevate them and make them 3%, 5%, 6% more efficient? Because their combined efficiency is so much greater than you'll ever be able to squeeze out of your own work ethic. And so if you're answering all the questions, if everything's coming back to you, you have become the bottleneck. And the question that I would ask is, in terms of how do you know if it's you? Is can. Like, the quintessential test is leaving the business for two weeks and seeing what happens. I would say, more importantly is if people are asking you questions that you know they have the answer to or they would figure out, then you probably are the bottleneck. And so don't get me wrong, my managers still ask me questions, but they better be questions that they do not know the answer to, or they want my context, or they might just need my approval on. Something like that can happen. But ideally, I love, like, I love to see them identify a problem, identify a solution, and go execute without me getting involved. Then there's upside, and then I get to, like, heap all the praise on them. And if you do that enough times, they start to realize, like, that's the better route to go, and they will consistently do it. So how do you know if you're the bottleneck? If people are asking you questions that you know they know the answer to, there's a good chance that you have reinforced and rewarded making the right decision instead of making a decision. And so if in the past they have been rebuked for making the wrong decision, and then they've been praised, when they came to you, you said, yes, change, X, Y, and Z. And then they made the change, and then you praised them, guess what they're gonna do? They're gonna always come to you and run every single thing through you. They're not gonna hire people without you. They're not going to make any sort of risks decisions in the business without your approval because you've rewarded that behavior in the past. And so if we just look at ourselves like very basic animals, like in the past, they've been rewarded for coming to you for every single question they have. And they have been rebuked and chastened and maybe not physically beaten up, but like they have been punished in the past for taking action, it failing and then you blaming them, which means there might be times they take action, it fails, you do not blame them. It's a function of like, hey, let's figure this out together. Let's make the problem. The problem is the enemy and we'll attack it together. Don't attack them because you will then simply punish them for taking action. And guess what? You will become the bottleneck for every decision going forward. All right, fifth and final on the docket. Have you built leaders who can replace you or followers who depend on how on you to feel useful? All right, have you built leaders who can replace you or followers who depend on you to feel useful? Interesting. The feel useful part might be a little bit more of their problem. If you need someone else to feel useful in life.

I would say if you have become the tool they constantly pick up in order to get things done, that is a problem. Because eventually the tool can only be used by one person. And so if one manager is like, hey I need you for a second and they pick up the pliers, they're using you for a second and getting their questions answered. Eventually though, the pliers should only be used by one person. So eventually you'll cap the growth. And this whole podcast about the ceiling. If you think of yourself as a tool for the business, as a spare tire for the business, that tool can only be used by one person. Which means eventually you will just get split up a bazillion different ways. And eventually you will hit a cap in terms of how big the business can get, how many decisions the business can make. Because everything does have to go through you. And you are the tool that every manager picks up to make decisions in their department. And that is very limiting and it will usually limit a company from passing 3 million. A great, a great entrepreneur that has decent mid level managers that all just execute really well. They might not come up with problems or solutions themselves, but they can just execute. Will can easily get to 2,3 million can easily get to 2 or 3 locations, no problem. Because they're just so good at making decisions, they're so good at execution. But because they have not empowered their leaders to identify problems, create solutions, and execute without them involved. They'll usually get capped before 3 million. I've just seen it over and over. 1.7, 1.82 million. They'll get kind of locked in. That range doesn't really even matter like what services they offer. If they start doing more upsells, like, it's like they start capping out because it's simply a function of the tool of that A plus entrepreneur. And like, no disrespect to the entrepreneur, the entrepreneur is probably the best. They're amazing. They're probably off the charts incredible. They're A plus. But because they've built the business away where they are needed for every decision, that tool can only be shared so many times. And so, you know, we as business owners, if we're going to pass that $3 million marker, we usually have to come come to grips with the fact that you're gonna have to humble yourself and realize that we kind of have a savior's complex when it comes to problems in the business and us jumping and solving them and what makes us feel good. Like if a problem came in the day in your business, flat tire, equipment goes down, someone walks off the job, customer gets mad if you go solve the problem. And then right after the customer's happy, the truck gets back on route and crushes it for the rest of the day. You hire someone tomorrow. Like if you are able to jump in and it is such a dopamine rush and we get addicted to that, and that will serve you so well. Like up into 10, 15, 20 employees, 1 million, 2 million, even up to 3 million in revenue. But if you're gonna pass that $3 million marker, you've gotta really start letting go of that ego. And I say that.

Humility. Cause I had to do the same thing. And I still have this trouble of like wanting to solve problems, wanting to be aware of problems so that I can help. And sometimes you're doing it out of like, I don't want to overwork other people, so I will take more on. And you're just getting in their way. And then long term, you're hurting the organization and you are creating a ceiling by which the company can't grow any bigger. Because only so many decisions can be made when they're all going through you. Hopefully that was helpful. If you have a question, go to mikeandys.com? submit your video today. It'll take you like a minute. And I'll be able to promote it here on the podcast. I thank you all for watching. Comment below what you enjoyed and what you'd like to hear more about on the Home Service Millionaire podcast.