You’re Losing Money Every Time an Employee Quits

Hey everyone, it's Mike Andes and today we're going to be talking about hiring culture, growing your organization inside of your home service business. Whether you're growing your crew out in.

The field or you're growing your general managers.

This is going to be a long video. It's a marathon video. Just use the chapters below the video and you'll be able to scoot forward to the next question but without any further delay. The marathon video and everything you want to know about hiring.

Nobody likes to play a game without knowing the rules. And the failures I've had in my first hires is there was no clear KPIs, you know, key performance indicators. There were no rules to the game. It was hopefully they're going to follow that 30 page document that I had Chat write up for me just so I didn't get sued in California.

That's right.

And as I hired more and refined my team, there's a very clear 1/2 page set of rules and KPIs for the position that I've hired for. And they get rewarded for playing by the rules and winning at the game. Having a clear set of this is what I expect of you and this is what you can expect of me. Before you to it, I had a hand back there.

Have a question.

I think part of the beginning when you hire somebody, the introduction to the.

Entire team is important.

So if I'm bringing somebody in, I would like to come in and say.

Okay, this is Kate.

This is what she does in that first day. I think they're going to feel very valued and then they're going to know when they see you, hey, I know, I'm here. That's this. I know Kate. That's this.

Well, I think that's really important to do that.

Right, right.

And so for those of you maybe online that haven't heard that it's he was saying it's really important on the first day through the onboarding process to introduce that person to every single member of the team by name. And I like what you said too. Like maybe preparing everybody to like greet them by name to make them feel very, very welcomed and accepted into the team. Do you want to tackle the question?

Yeah. Like, it kind of depends on the role you're looking for. In my opinion, if you're looking for someone to.

Compliance will attract B players. And so if I am going to create rigid lines for every little thing they're supposed to do and what they're not supposed to do, you will attract employees and there will be lower paid Employees. If you're looking for an all star absolute Crush killer, the 1 in 1% unicorn that we all want most of the time compliance drives them away. They could take your job. They have the ability to do that. They are a unicorn and given the right resources or circumstances, they would probably be a business owner. And if you want to track that type of person, which again sometimes you.

Don'T want this person by the way.

So sometimes compliance is actually what you're looking for. And being really clear in terms of like am I trying to hire someone that is going to comply by the rules or am I trying to find the person that's going to run this business for me and take it to the next level? Because the person that the latter, the 1 percenter that's going to sell on every job upsell going to basically operate like this is their own business. They want less rules. They want to be able to know the goal and just run towards it. And so if you're going after that person, what I would say, which again the vast majority of us do need just compliance, let me be clear on that. And so it's a different demographic of person. But the winners in the organizations I built is any rule I give them just slows them down. And I want to say here's the goal, here's the goal post, here's the ball which is all resources go. As soon as I start putting definitions on that, it slows them down and makes them frustrated and then you leave the organization. So if you have a lot of churn of your best people because a lot of times if you have a high compliance environment and culture, you will simply attract every B player that wants to be told what to do. A players do not want to be told what to do. And if like, well how do you know that? Do you want to be told what to do? Are you an A player? Likely entrepreneurs answer that question. And so if you want and so the only way to keep that type of person in your organization is to make it friendly to entrepreneurial people and make entrepreneurs inside the organization. And so I'd just be careful especially as you begin to go above a labor once you go to manager or any sort of level above that or you want a general manager to run the business essentially and you're giving them profit sharing. I give them less and less definition as what good looks like. And I simply say I want this result. And when you're abction it's like I want to make a lot of money, let's be honest. And so here's the goal post.

Go.

Yep.

I was going to ask you, what positions do you start moving? And you just mentioned a question. You said something very interesting because churn, there's a churn rate. Can you explain what churn means?

Yeah. So when it comes to customers, when we're looking at recurring customers, we're looking at how many customers are leaving every month, usually due to bad quality, bad service, they're frustrated by something, et cetera. The same thing is true when it comes to our employees, because every single day we have to sell them on showing up to work. And so if we lose that customer, quote, unquote, which is now, in this case, a member of the team, that churn cost you a lot of money, and it's something that you can't. It's very difficult to measure. So the cost of churn, but it is absolutely. It is eating away at your profit margins.

How do you create an environment and a culture that really motivates your team to stay with you?

Yeah.

Like, so for me, I always ask the question again, like, really try to make this simple. Why do you stay in the business? Well, I make more money. Okay, great. What are their goals? And then how do we align the goals of the business with theirs? Because if they're getting ahead in their life, whether it be financially or achieving their goals, they'll want to stay as long as that aligns the goals of the business. And so, in my opinion, the vast majority of us will hire people. We will be frustrated by them because they don't work as fast as us. They don't think about the customer as much as us. They don't make sure the customer's satisfied. They don't upsell the customer. They don't treat our tools and equipment correctly. And the reason they don't act like an owner is because they do not have the information of an owner or the compensation of an owner. And so if you can fix those two things, you can get employees to act very closely to how you act. And so the vast majority, when it comes to labor, the owner is usually 40 to 50% faster and more efficient than the laborer that they hire. And then they get very frustrated. They don't make enough profit on the employee, and they go back to being solo because, like, no one else is going to work as hard as me. No, duh. You own 100% of the business. So the only way to do that is either a, do I split the equity?

Yeah, you operate as an entrepreneur. 100% commission. And so how can I make sure that my employees are compensated like I am. And they have the information I have. Because the reason that you work till 8pm to finish the job is because you have the information that tomorrow you have to be on another job site by 6am and so how do I do? This is a matter of pay for performance. So the harder they work, the more money they make, whether that be a percentage of revenue or a bonus structure that incentivizes them to work hard. And I pay them like an owner. And then the second thing is information of an owner, which is open book management. They know my pricing, they know how much things cost. They see my P and L. They see everything in the business. Like, everything. No hiding. Why would you open up your books? Okay, let's play this out. If you were working for somebody again, I just try to go back to, like, how would you feel? Who are you going to work harder for? Someone that you like or someone you don't like?

Somebody you like?

If it's someone I don't like, I'm probably going to actively look for ways to discourage them. I'm going to look for, actively look for ways to tear down their business, make them look bad, etc. So we have agreed that I'm going to work harder for someone that I like. Now, what's the number one way to make sure someone does not like me? I hide things from them. And so then we wonder why our employees don't work hard for us. Because they don't like you. And the reason I like you is because you're hiding things from them. Because every single day you're trying to hide estimates, you're trying to hide your pricing, you're trying to hide invoices from them. And so if you're going to hide things for your employees, realize that you are, you're bringing down the level of trust inside the organization. They do not like you. They will not work hard for you. And it is a function of. We are not giving the information of an owner and then we're not paying them. Like owners. Yeah, Yeah. I love that.

I love that. Yes.

Got a question from the audience.

That's not a question. Okay, so what we did.

And we have, we have, we brought on Wyatt.

But what we did up front was.

This is where we want to take the company. These are the goals of the company. These are our values. And also it's going to be hard work. And you know, we can't promise 40 hours a week.

Right.

But I feel like that really helped us as a team. Like we are all in this together to share that with him up front and bring him on board fully open like you said. And I share my KPIs with you and with him.

Amazing.

I like that. Yeah.

Anybody else?

I think one thing that one of the main reasons why I decided to start my own business was room to grow opportunity. So I think it's important to make that that person. Like Mike was saying, you're investing in this company. You grow as we grow. You know, you probably don't want to be installing forever. As we grow, you can start doing sales and we'll get somebody else to get installed. And I feel like that kind of makes that person feel invested in the business to where one they want to do well because they know the better they do it, you know, a higher chance of growing plus retention wise isn't true investing. I'm going to stick around because, you know, someday I'm not going to be selling forever. Someday I want to be.

Question I wanted to ask is how do you maintain motivation and focus during periods of slower growth setbacks or the seasonality challenges that we have? So we kind of went into that and I would like to kind of get back there because we're all in the service industry and there's a lot of states in here where we have rough winters. Right. And it's really, really hard to do anything, pool fence and even some other stuff. So how do you maintain motivation and leadership do those slower or hard setbacks? I would like to hear from the rest of you.

So as far as seasonality.

At least for our area, we're in Dallas. So usually by Thanksgiving it gets colder and people worry about, you know, Christmas and New Year's, they're not going outside as much. So forever things slow it down. It doesn't stop, but it slows it down. And then typically by, you know, February, March, whenever spring comes, starts warming up, starts getting busy again. We this is how it's always been. You know, after Covid we had a third and getting slow. Now we've been going, you know, 247 since then. But this, the first year is starting to go back to normal. It's how it's always been. We kind of expect it. It's kind of nice slowing it down a little bit, you know, recharging because we know come March it's gonna get pretty busy again. And so I think, and I think all the guys too, they also do a lot of practicing. A lot of the. It's just improving during the downtime. So that's when I think it's use that little downtime to improve things within the business. So, yeah, part of it, it's how. It's how it's been. You know, certain things you can't change.

Have you repeat the question? Yeah.

So how do you maintain motivation for your team, even for yourself sometimes, you know, during these setbacks. Seasonalities. Yeah, I mean, I'm so obviously I'm here in, you know, South Florida. I don't have much of a season actually, if I was to say what is my season? It's actually kind of inverse from literally everywhere else in the country. I kind of slow down in, you know, in the summertime.

And. Which isn't bad because it's brutal. It's hot.

So.

But you know.

You know, I'm doing, I'm just doing the math. I mean, I'm probably doing 60, 75,000ft a year.

Right.

Roughly.

And, you know, so Christian, you know, my lead guy would always kind of freak out a little bit when it would get slow, but I would have to, you know, remind him and myself that.

Making 200,000 runs a year, you know, give or take. So it's, it's okay if we're, you know, we slow down a little bit, but I guess to. How do you keep the motivation? It is tough because when it slows down, as you know from some of our conversations.

Yeah.

It's anxiety, like, what is Eric doing? Like, we're not getting any leads. It's always Eric's fault by the end. We all agree with.

But you know, to keep the motivation is hard, tricky, you know, and so I don't know the answer to that question, but I always just, you know, you kind of got to step back and look at the bigger Yearly, monthly.

Yeah.

You know, Picture Weekly, even like, hey, we just, you know, we had two jobs on the day and this one canceled. This one, I went through three bits. There goes that. So we totally lost money today. But you can't freak out about that because it's not about the day, it's about the week. It's not about the week, it's about the month. It's not about the month, it's about the year.

I don't know. That's how I. What if the motivation isn't on the owner? Like just like the gentleman from Alabama saying, like, I'm losing money.

You know what I mean?

I'm trying to keep that part full time guy.

You know what I mean?

What are some things that maybe you can do to take extreme ownership right. During those Moments of negative revenue or negative profit. Are there things that you can do throughout the year to kind of prepare for that? If so, what do you do? What are some of maybe your tips and tricks to doing that?

Yeah.

So I mean, in San Diego, it doesn't get super cold, but it is seasonal. We don't completely shut down or anything in the, in the wintertime. But I, we have pool service and we have the, the fence. And pretty much between like October, November through March, April, it's much slower to the point that you start to get worried again when the phone's not ringing and the leads, you know, we're used to X amount of leads per month and it slows down. You're like, you start to get a little nervous.

Without getting into too much.

We shift.

We shift.

So I prepare by shifting for what our winner, what we do for the winter times. So we have other services, other add ons that we promote and we shift our marketing to do that so that we can keep the guys busy. We cross train each other so that if one side of the business gets a little heavier, then the defense technician can go over there or the pool technician can go over to the fence. And so we do have to stay busy for motivation for us and the team. I actually plan all of our events and our trips. This, this last winter I took them, took him fishing, we went bowling, we went to a baseball game. I try to find like, I go ahead and spend the money to, to have fun with these guys because next summer I remind them we're gonna, we're gonna get super busy. We're gonna work 10, 12 hours a day. And that's actually more of a harder motivator for me than when it gets up because they're still getting paid anyway.

You know, in the summer it's 100.

Degrees outside, you can't touch the bed.

A bunch of jobs.

And it's humid in Texas too, so it's 100 degrees plus, can't stop sweating.

And so that kind of in the back of your mind, okay, we got a few more months and then we're gonna have a little off season if anything. That's a little, I know from a business standpoint, making less money is not ideal, but at the same time, you can't burn out by, you know, doing 75,000 people every year.

I'm ballpark.

It's kind of nice having, you know, a month or two without time. So you can, I don't know, better yourself and just recharge the better.

Interesting to hear from you, sir?

Yeah, in terms of motivation, I don't think about motivation very much so. But in terms of like the off season, my goal is to win and to win any game. A good strategy is to be on the offense when everyone else is playing defense. And because we take it for granted that there is an off season and that we're supposed to slow down for three, four, five, six months out of the year, all the competition is as well. And so if you can figure out a way to be able to advertise when no one else is, to hire people when no one else is, to get customers when no one else can, you will win this game. And that's how you become very big and you dominate a market. And so I know I keep referring to it, but like today, like they end today from 4:36. The presentation I made. It took me six months to make the presentation. It's 500 slides and it's going to walk through five ways to do this. So I don't want to go into it too much. But like that is what the presentation is about and it will solve this problem. And that is off season. Like an off season is a curse word. It is what keeps this industry poor.

We recently took on two clients that are slightly out of our service area. They are larger contracts and we decided to charge extra for drive time. Do you recommend that we give extra budget hours for the crew that may have to make that longer drive or would that be confusing for them as it gives them an inaccurate amount of time the job should be completed. This also applies to multi jobs as well. Normally we add drive time to pick up the mulch since it's often so busy at the time and makes takes up to an hour sometimes. Mercy. It may be as misleading to the crew because they think they have more time than they actually do. If we don't add budget hours and the cruise efficiency core for that day is always lower and they don't get a bonus. Okay. So yeah, so if you're doing pay for performance, your budget hours need to be accurate. Now if you're not doing budget, if you're not doing pay for performance, this really does not matter. You're charging a customer an amount, you're paying the crew by the hour. No one cares. Now you'd have a whole different argument as to whether or not it's efficient for them to be driving this far or going an hour away from mulch, etc. But when it comes to pay for performance, we do need to take into account the drive time now, do I pay them for drive time? No. But if I'm going to make them drive an hour away but only do budget hours for the three hour job they're going to be at, they will never be able to make P4P and above base pay. So you'll have to bake it in. This is why small service areas, you don't have to think about this stuff. Like if I'm, if I'm not, if I'm driving more than just a few minutes from house to house, we have a big problem. And so if you're going to randomly take two customers way away. Yes, I'm going to. I'm going to inflate the budget hours if I'm on paid for performance to make sure my crew could get above base pay. Because the last thing you want is they know there's no way in the world they're gonna be able make base pay. Not because the budget hours are accurate, but because the drive time's so long they're just burning time and they'll get mad at you. So what's nice about pay for performance? It keeps you honest. It prevents you from doing bad business behaviors like getting a random couple customers way outside your service area because your crew will be mad at you. Because they'll know. They'll start figuring out they don't make any money if you're doing services that far away. So if you're going to. I would beef up the budget hours for is. I've been running my pressure washing business by myself for three plus years now and made some huge decisions recently. I'm very close to my family and recently added my brother on as a part owner with me barely holding the majority share. I've also added my sister on as almost equal parts owner. Okay, interesting. The question is not if this is a good idea. I know it sounds like a disaster waiting to happen. I'm extremely close to them and have a ton of trust as well. I didn't do this because it was a smart business move, but instead that is something I want to do as a family. My siblings are definitely type A and we would like to grow as quickly as possible. We are all willing and able to take very little if not no money out of the business. My question is, do you have any advice for me when navigating this complicated situation to not only maximize our growth but also keep all parties on the same page and avoid complications? Okay.

This.

In about probably five or six weeks there is a turnaround video that's coming out that'll talk a lot about this because there was a three person partnership. One person in kind of an ugly way had to leave and it was really bad. It really put them through the ring and the business was doing I think 4, 3, $400,000 last year. They're trying on page like 600,000 this year. But it really put them in a bad spot where it's where like they couldn't do any marketing last year because they're so far behind once this part time, part owner bailed mid season. And so as much as right now, you all trust each other. There can be kamikazes that come in through life. For example, one of them could have a tough breakup, for example. And if they're married to that person and all of a sudden they're going through a divorce court, they're going to try to get 50% of the equity that that person holds in your business. And that could potentially lead to liquidity event where you're like, we have to sell this business to be able to give this person, get them out of the business or you have to take a massive loan to buy them out. So as much as you might have really good relationship with in the siblings, there are other impacts, health for example, that could cause this to change. Now do I think this is a bad idea? I'm not going to give my opinion on that. What I would say is prepare for it not to be this way forever. Unlike marriage, it is not till death do us part. Most business relationships, and I don't mean like 50% like marriages, but rather more like 99% of people that start in business together will eventually not be in business together. That's just the facts. Like there are very few Charlie Mungers and Warren Buffetts that literally until the day they die are in business together and just keep going together. It is very, very rare. Most of the time you're in business for someone's are 5, 10, 15 years. These are partnerships, these are not marriages. And so what I would recommend is like some people spend literally 10 seconds getting a business relationship and they think that's crazy. If you went and got married. If you're giving someone equity in a business, you are giving them a huge chunk of your like a huge amount of investment together. You're spending more time with this person than probably your spouse. And yet we just do it so flippantly. And so I would recommend creating quote unquote, and I say this mostly for the effect a prenup for your partnership because it's not a matter of if you will separate is a matter of when. And so just. It's not a bad thing. It's a matter of saying like, eventually life is going to happen. One of us is going to want to move on, one of us is not going to want to be here eight, ten hours a day. When that happens, what's going to happen? Are we going to. Are we have to buy someone out? Are we going to take it? So for example, I like the idea of having value, having three independent valuations, taking the average of it and then being like, hey, if you, if you are wanting out and you're wanting to be bought out, there's a discount rate applied. So for example, just say a business is doing 500,000 in revenue. Say, hey, when we dissolve this relationship, we're going to have three independent valuators or we're going to come with a valuation mechanism now based upon profitability or revenue, for example, we're going to determine that now either three independent valuations or evaluation mechanism based on profit or revenue. Now great, I went out. Okay, I'm out. Like I want to move. I'm done with this business. Great. Valuations coming at $150,000. Now I personally like that if I'm trying to get out, there's a discount rate applied that might be 40, 50%. So the valuation business is no longer 150,000 I'm wanting out, which means it puts pressure on the business tax to buy me out and the other partner. I'm going to agree prior to getting in this partnership that there's going to be a discount rate applied of 40%. So now the business is only worth 80 or $85,000. And then if I own 50%, great to buy yields going to cost 40 grand. Doing all of that now makes it to where everyone knows what's happening. There's never bad hard feelings. The business is not put in jeopardy. You're never wondering as to why someone should or should not be doing more in the business. So just think about every possible thing that could go wrong for the business. What happens if someone has a life event? What if someone wants to move? What if someone wants to get out of the business? What if someone only can work three or four hours a day because they have a physical issue or they have a family problem? What happens if someone needs an extended period away because of pregnancy or because they get injured? These are the type of things that need to be thought out. Now how do you come up with all these questions? Go to ChatGPT, be like, hey, this Is the business. Here's what we're kind of doing. Revenue. Ask me every single question that could possibly go wrong so we can figure out exactly what, how every single case would be hand and it'll give you like 20 to 50 questions that you all need to figure out, like what happens if someone gets divorced? What happens if someone wants to buy more equity? What happens if one person's working 16 hours a day and someone else is working three hours a day? How does that impact profit sharing? How does that impact equity? These are so there's so many variables and if you just go to it blindly, it's not a problem until you're making money. Like no one really cares about holding equity or profit sharing. In a business that doesn't make money, as soon as it starts making money, it means a lot of money. And that's when confrontation happens. So right now there's no confrontation because like everyone's like, I don't want money for the business, that will change. For everyone that says that eventually that will change. And so instead of just blindly going into this, let's think about, okay, well when that changes, how are we going to handle it? So that way when it happens, we don't have to ruin our personal relationship. Congratulations, happy couple. May your marriage be filled with love, joy and God's blessings as you embark on this new chapter together. May your love for each other, like the love of Christ Church, be everlasting. Thank you very much. Okay, what should an operations manager position look like for 400 to 500,000? A business that has never filled that role other than the owner, what are the most effective ways to get someone up for success in that position and set clear expectations spelled out and which of those expectations be. Okay, so I would need a little bit more information this Jeremy, because I don't know if you are what your pricing looks like because usually at 400 to $500,000, I would say you can't afford an operations manager. However, if you grew the business to 300,000 was like 150 customers and then you raised prices aggressively and you're like top of the market, you can actually make money. So usually you don't need a full time operations manager. Now what I would say in terms of this role at 4 to 500,000 is this does not require a full time overhead position. The reason I say that is because to get a really, really good operation manager, especially if you want this person to run the business without you, then you have incentive to be able to make good money and they just call it $80,000 on a $400,000 business, that's 20%. And so it's very difficult to have a 20% overhead if that person doesn't generate any revenue. So personally, the number one thing I'm looking at is budget hours of work every single week. So if they have zero estimates and zero in person training and interviews, then I expect 30 budget hours of work in the week and I go down one hour for every in person estimate and for every in person training or interview they have to do for hiring the team. So sales and the other aspects of. Now, the reason I do that is because I know that on the other side of the coin, I am trying to do what, Reduce the amount of in person estimates with instant pricing over the phone estimates so I can drive that number down, make them more efficient. Like the number one reason I do instant pricing is my general manager from being out doing, driving around, making no money and actually burning money instead generating revenue in the business. But the only way to make sure this happens is keep them accountable to budget hours of how much work is expected of them. So we expect 30 budget hours of work in this size of business. And then if you, hey, you got five in person estimates this week. Great. 25 budget hours expected. Oh, you have to do two interviews and you did half a day of training. Great. We're going to bring that down to 20 budget hours for this week is what now is expected. Instead of just being like, yeah, like I filled my day with follow ups and I did some estimates, I did some training and you actually boil it down. They actually did like 10 estimates the whole week. They hired one person and they did a little bit of training. It's like, well, how do I measure this? Use budgeted hours and then have a metric every single week we're going to sit down and say, hey, how many budget hours you complete? We start at 30 budget hours, which is like a 40 hour work week if they were just working out in the field. But then, hey, yes, you are expected to still do sales, in person assets, you're expected to lead the team and hire them, et cetera. It's all part of the job. I bake in 25% for things like team meetings and getting the shop set up in the morning, et cetera. That's why it's 30 budget hours, not 40. Yeah, that's our expectations. I need, at that size of business, they have to be producing revenue. That's a, that is the difference between what we say in our training for Augusta is Like the difference between a profitable location at 500,000 and a very unprofitable location at 500,000 is what percentage of the time of the quote unquote GM or operations manager is spent in the field. Because you can get a location that's 500,000 in revenue. And the general manager works their tail off 30 budget hours out in the field every single week. They do an estimate one or two a day at the end of the day and they interview people a couple times throughout the spring rush. But operations are smooth and you can take that location and the general manager produce a hundred thousand dollars in revenue for the business in addition to doing everything in terms of task wise, easily. If you're charging, if you're charging $100 per hour, that is literally a thousand budget hours per year. Rewind the clock that. That's 20 budget hours per week. If you charge $100 per hour and you have a 20 budget hours of work on the schedule for your general manager, they will produce $100,000 in revenue. They will pay for their wages. The difference between that and then someone else that runs a very unprofitable business at the same exact size is simply the delta between the person that makes 100,000 out in the field, that's your profit margin essentially and the person who makes nothing because they're straight overhead and they dink around in their truck all day long. Or maybe they don't. Maybe they hustle and work hard. But you have really bad route density. You have projects that go way over budget hours all the time. You're doing services that are not simplified or standardized. You have no software. This is the difference between a very profitable 15 to 25% profit margin net business from a $500,000 level and the business that loses 10% loses $50,000 a year at the same exact size.

What would you have for suggestions of trying to set yourself apart besides pricing?

Or just get into connection with, you.

Know, the person that actually makes the decision rather than, you know, the, the.

Property manager who usually just collects the bid.

Great question. So do the job with the property man. Like the property. Think about like, instead of thinking yourself as like the maintenance guy, think of yourself like do their job. Because property managers want to do as little work as possible because they're going to cut up top line revenue of rents. And so if you can do site inspections for them, if you can do like say, hey, we don't just come mow your grass, we're going to also take pictures of any damage we're going to take pictures of the, the, the garbage bins for example. We're going to take pictures of any broken glass. Like things like that separate you because usually they do site inspections and that's really the main cost of them. Once again, one thing at a tenant in probably managers not stupid but what they're supposed to be doing is property inspection. So I've seen this work pretty good. And it's like you say hey, we do free weekly property inspections for you and you even do videos. Some people do this inside copilot to make a video. Put in YouTube as unlisted thing and then they put it in a client portal. You do before and after pictures as well and it's helpful. So it's a differentiator for some property managers, especially the ones that are managing 2030 properties. If you can do that for them, you're essentially doing their job. So I've seen that work. Sometimes it's sometimes difficult to sell the value of the upfront because you don't have any trust. But once you get your foot in the door like one property, if you just start doing that they'll be shocked. Like no, no one else is going to do that for it's more of a long term like build that rapport with them knowing like you're the only company that every week they get a video of the property with before and after pictures and they don't have to do their job. So I would look at kind of.

An angle more like upfront value with a long term.

Exactly. It always B2B is always sort of a longer term game. Like you're going to have to build that relationship but. But once they have one property with you and they realize oh I go that property half as much because the same way we track efficiency, they're tracking how much time they spend these properties because they have thousands of properties. A property manager depending on residential, commercial. But like they have a lot of properties. And so they're saying oh my word. Like this one I'm spending half of the time.

Oh why?

Because I just watch the video every week. And based upon that I say if the trash guy needs to come more often. Based on that I say whether or not the gutters need to be cleaned out. And by the way when you're doing your, your, your inspection, you're also upselling them on all the improvements where the margin of the business is. And so, but when that property manager talks to other people because they all are very networked in property management and they say hey, if you Want someone that you're gonna be a little more expensive. But you're getting a site inspector and you're know everything that's wrong on the property. Even if it's not to do with lawn care and landscaping. Like the trash overflowing. The waste bins are not. Don't have the bags in the public restroom was dirty. These are the type of things that literally you're there on the property anyways. You're walking, you're blowing these things off like it doesn't take you much longer. If they have to create a system around that. If you can do that huge value to them. What was the service? I missed that.

Sorry.

Exterior.

Yeah.

So in my opinion any sort of labor based job should. Otherwise I cannot effectively calculate the efficiency of my. I need to know how long should this job take. Now even if you're using production rates like one story house, two story house or square footage, it still needs to be linked back to budget hours because my crew does not care how many square footage. They care how long should this job take. And if you're going to pay them based upon how long it takes, you need to be accurate in that estimate. So the only way that I've ever seen grippy break down is when accurately estimate how long the job will take. And that usually is a matter of simpleness standardization to be able to to come up with and get within 10 a budget hours accurate.

Yeah.

In general an employee across the board. Okay, so is it. Is it a lack of them memory memorizing and under and knowing them or is it adherence to the. Are they not doing what? Why, why is that important? Why is it important that they memorize it if they're doing it? Are they doing this and the protocols. This is what I'm struggling with. Are they not being implemented well or are they being implemented well? And quality is fine. So what's not being imminent? Because I'm not. I'm not in a debate here. I'm just trying to understand. So right now you're saying they don't memorize them. That's fine. I don't care about that. I'm thinking about what's the output. So the output here is that they're doing a quality job. Are they doing the things that you want them to?

Got it.

We're going to.

Yeah, they really don't. Okay.

I'm tracking. So what I would say is you need to simplify if you're actually expecting memorization processes standardization of your system itself and your SOP having a whole bunch of stuff. First off, I'd like nail it down to three, right? So for example, at command center, they're doing this whole ring around phones. I said, we need to know what a 10 out of 10 call is. And no less than, no more than three. So when someone gets off a phone call, I just simply say, was that a 10 out of 10 call? And they know the exact three things right off the rip of what should have happened. So I would first take whatever that list of things is and say, can I chunk this down into two, three or four things tops? Because they won't remember anything like that. Even a checklist. If the checklist now requires them to remember to use the. I want three things. For example, a walkthrough like what Logan.

Was talking about the other day this.

Morning was exactly right for a star employee. He had chunked it down to four things. There's probably 30 things that go into a good cleaning service, but if I can chunk it down to four and they, they do understand and memorize it, the likelihood of adherence is high. And then if they're not adhering to it despite the knowledge of it, you fire to reinforce.

Hey, Mike, Sam with troops mowing.

If you want to be an absentee owner, you're going to give this general manager autonomy.

I'm making. Do you have a decision making framework? Obviously they want to be proper. Do you take the.

Yeah. So on Saturday I'm going to go over system. A framework for creating a system. I would say if you're gonna take ownership of making sure you set up the gem manager for success, you're gonna have the business systematized already. If it's not systematized, you're handing them over a ticking time bomb and they will fail. And so I'll give you a framework for how to make the system. And you can literally take every single aspect of the business, estimates, project management, et cetera, and just put it on this graph and like, where am I on this continuum of from bad to good? And I'll have that continuum for you. My question is, I currently looking to open a second location. This my general manager. I discussed switching him from hourly to a salary with profit sharing. My question is, do you. Do you switch your office admin or.

At what point do you switch your office admin to more.

This is Michael. Yes, Michael. From hourly to salary and stagger up his back. So when do you turn into salary? Say that again. Sorry, you're asking when do you turn your admin person into salary? Exactly. Yeah. When you know that Year round they are worth their wage. If they're not, I'm going to be laying them off or they're going to go into the field. So at two locations it is likely that an admin person and if you're doing say 1.5 million at that size, an admin person is going to be full time even during the off season and even just getting things ready for the spring rush. So then I would say yes. So if I was in a rock and a hard place, if this is like a topic, I would give him a revenue goal around. When the business crosses the threshold, then we're gonna put you on salary. He'll be motivated on follow up calls. And as an admin person he can actually change that. He can affect that. So he'll impact the growth. And then to use your operationally sound gm, I kind of know the situation here. Use him to make sure things are efficient in the field. But then use the fact that you've incentivized this growth to a certain point, knowing that at least 1.5 you hit a more profitable size of the business. Make sense? Assuming your sales GM like kills it. What do you do with him? Like once you send a technician to replace him as an operational one, what.

Can you do with that guy?

Some creative things. Couple things you can either a one part didn't talk about today was the starter role. That's basically what I kind of would do with Connor where he started locations for me. So if you're trying to do the chain model, I would get them onto the next location and I have an operational jam behind them. I would incentivize them on that operational manager getting trained up so they don't just leave them in a lurch. So sometimes what we've done is we give them a perpetual distribution of cash based upon that location in perpetuity. So hey, you're gonna start this other location, but I'm still gonna need 5% of this location. And then what happens is they kind of start to make sure that managers train better and check in on them occasionally cause it is affecting their paycheck. So what do you recommend for people who are getting their first non owner.

GMs and prepping their expectation?

Obviously we're sharing with them like have scorecards, meetings, all that.

We're expecting 30 budget hours a week.

But due to our lack of experience.

With managing GMs and spring rush hits.

And now they're at like 50 hours a week and they feel like we're.

Dishonest with them in the Beginning.

How are you handling those expectations?

Managing manager?

The first thing, as I would say, is, first off, be very conservative. So profit sharing. When I'm pitching a general manager, go lower. So even like my target plateau situation, I went lower. I don't want people think, oh, my goodness, I should be making, like, 30% margin. It's possible, yes. But, like, most people don't. So I'm going to go lower in terms of what I incent. I'm also going to tell them how hard it is. Most really hungry general managers, if you say these lines, they actually salivate. And that's like, hey, it's going to be really hard.

It's difficult.

It's hard managing people. I know you haven't done it. You've been in the field before. It's tough. And when the buck stops, it now stops with you. And if we go over in Spring Rush, you're the one picking up the slack.

And it's difficult.

I don't know if you're made up, like, if you. If you can do it, but it's. It's tough, like. And you tell them the stories, the pain you went through, but I think you got it inside you, and you're gonna. You're gonna tug on their emotions here, and you're gonna get them to commit to those, because they will happen. Even if you do everything right. Spring Rush is, you know, it kills everyone. So I would just prepare them for the worst. And then secondly, I would communicate with them on that weekly cadence of how they're doing and going into what you just told me, I would tell them, I have never managed a manager. I'm new to this. I need your feedback. If there's something I can do to support you more or if there's something that's not tracking with what we've talked about today, I need to know about it. And that includes you working more hours. That includes you not feeling respected. That includes you not feeling compensated. I need to know about those things because I can't fix them otherwise, and I don't know what I'm doing. If you say that they'll be on your team, they'll give you all the feedback faster instead of having a quarter go by and all of a sudden they want to leave because they could have just told you in the first two weeks that they don't want to work 80 hours a week. So got a question about pay for. Say you've got a field employee earning P4P and you're one, transition them into an operational GM and they're just crushing on P for P making too much money.

I'm curious, like, how would you go about that transition?

When would you transition out of P4P into something profit sharing, what factors would.

Go into making that transition decision and everything?

Yeah, so if you're, if you have a really high producing P4Pmembers, sometimes this is difficult because during peak season, they could literally be making more per hour on P4P than a general manager salary. So this is when having a conversation like, what is your objective of working here? Do you want to have what is valuable to them? Do they want longevity? Do they not want to be working the field because they're getting a little older? Do they think about 10 years from now and their knees might not be able to take it? And maybe like, okay, I'm okay with sometimes making a little bit less. But for the upside potential of profit sharing as well as the fact that I'm not going to be as hard on my body, I just need to know what they value and then I'm going to build back in the incentives against that. Sort of like, no, I love P4P. I just like working hard. I would leave them alone, let them keep doing their thing and don't push them. But if you're like, you know, I'd love to learn about estimates, just slowly guide them into it. If they start feeding on it and they'll gravitate the Little Orchard videos, they'll start getting better at it and then they become a general manager and they're willing to take a pay cut of a few bucks an hour because they want the salary, they want the stability, they want the position, and they want the option to not work in the business, in the field all the time. What is their goal? And then you simply make the benchmarks to get them to their goal. Don't think about you don't think about the business. What's your goal? I need to know that because if it's not aligned with being a great general manager and what that entails, I'm not even going to incentivize you to get there.

I'm a little over 600,000. I want to open a new location next year. I made a, I hired an admin for this year and a general manager. And I'm wondering what are like the things I should focus on for them and like KPIs to track?

Yep. So are they both full time, year round? Yes.

Yep.

Are you working the business full time?

Yeah, I'm going to focus on sales, marketing, and it's my goal anyways, if that makes sense.

Yep.

I'm going to guess that pro, like cash is a little bit tight because you have three different overhead people working in a $600,000 business. Like, is that. Is it a problem or not really. Am I barking up the wrong tree?

It hasn't really been.

Okay.

Yeah. Actually hasn't been too tight.

Okay.

Next year I'm raising what I'm paying now. So I'm. I'm nervous about.

Yeah.

Because like, as soon as you get out of the business, you're going to.

See all the flaws. Right. And so if you're going to do. Are you going to start the second location next year?

No. So this year my goal is kind of just to. To simplify and like get ready to copy and paste, like, find what's most profitable.

Yeah.

Yep. And 100.

I would be recommending that.

Okay. Because this year I'm like, if I can just focus on sales and marketing. Like last, like beginning of last year, I was like creating all these sops and it wasn't working. But I realized I wasn't letting them take accountability. I was still jumping in, like doing the tasks. So I'm trying to like, give the responsibility, but I also want to know, like, what to track, like, so I know that they're doing a good.

Yep.

So when asking for an admin person, like, what are the things they actually move the needle for? And then how do I incentivize against? It's like, what do you want a good general manager to do? Well, I probably want them to take care of the team. Like if I'm not there, I need someone to take care of the team. Well, what does that look like? What's a measurement of success when it comes taking care of the team? Usually it's efficiencies. Right. It's the amount of budgeted hours in their clocked hours. So like efficiency score, you can track it inside copa, you can track inside pay for performance. That is a huge determining factor for me of whether or not a general manager is doing their job. I'm also going to be tracking, if.

At your size, that general manager is.

Likely going to be working the field a little bit. Now I'm going to have a measurement around that I'm going to have, say.

Look, out of a 40 hour workweek.

I expect 30 budget hours worth of work to get done. Now that number goes down one hour for every estimate you do that's in person goes down another hour for every interview you do in terms of hiring. But Ultimately, I expect you as a General Manager, complete 30 budget hours of work a week and then be able to tally and show me the estimates and interviews, interviews that were done to subtract from that. So if you have 10 estimates and three interviews, that's 30 -13. You're. I still expect you to complete 17 budget hours worth of work on the dispatch board. And so this is going to be efficiency of the crew and efficiency of the general manager.

That'd be measuring for them. Okay.

So I was planning on focusing on sales and marketing myself. So I would do the estimates. But we do landscaping and lawn care. But I was kind of hesitant. I wanted to set like a minimum for landscaping because I want to eliminate a lot of like the bs, like going and doing jobs that I don't know if it makes sense to go. Like I said about setting like 800 as a minimum because I feel like to go and bid a 300 job, the amount of time it takes me to go bid it where I can sit on my computer and bid 50, you know, lawn mowing or weed control jobs. So I'm like, does it make sense to just set a minimum price, eliminate it completely? I just want to. I feel like simplifying makes sense.

But yeah, I think, I think what.

You'Re trying to do is like simplify the sales position I before I start saying arbitrary dollar amounts. Because there are 600 cleanups that you can do in two or three hours with your crew and make good money and simple services. It's also a great way to upsell existing mowing customers into something and double their lifetime their annual customer value by selling them a 6 or 700 cleanup when you'd otherwise only make 6 or 700 for the whole year of Boeing, depending on your market.

So the false cleanups I'm all right with, but anything I can't bid for my computer and I can't like systematize. Like there's certain just random cleanups where someone wants like a couple branches cut and a pile picked up. And it's like, I have to go look at that. But it's only like a 2, 300 job.

And yeah, but you can, you can.

Create systems around this, right? So for example, you can just have it where it's like, hey, if you, we don't do in person estimates, you can submit a video, you can make a form where on, on the estimate request form, it's like, hey, if you want mowing, click here. And then as soon as they go to another thing, it's like Great. Submit your video for your project.

Right.

So when our. When our owners get busy, they have the option, they have a banner that basically says, hey, we're accepting mowing customers. If you would like a project, you got to submit your video here.

Okay.

You're basically just throttling.

You're just throttling. Like, you'd only do this if you have so many leads coming in. Right. And so I would just have different forms for different times of the year based upon what you're trying to prioritize. The same way that I would do the same thing with scheduling. Like a lot of these bigger projects, I would probably actually try to get them bid, even if it's remotely. And I'd be trying to schedule them in your off season. Right. And you can be more price competitive during the winter too.

Yeah. Okay.

I'm worried too, about if I can't, because, like, all the random landscaping jobs are hard to systematize. It's like, how do I ensure quality? Like mowing, weed control. It's very systematized. I can give a guys a training and they're good to go. But I guess all my callbacks are from these random jobs that they miss something. And there's so many little details. And that's why I was thinking about setting the minimum, because it's like, for a 300 job, I've had so many callbacks and I'm like, it's not paying that much. And I don't know, but I guess videos. Videos do work. Those do work for me. If I send a video to the crew, that. That helps. So, yeah.

Yeah.

What you want to be careful of too is like, are we. Are we fixing the problem, like the root problem, or we are we just simply dealing with the symptoms? Right. So callbacks, in my opinion, are symptom of something else.

Either a.

A too complex service mix, a not enough standardization in the service mix, and. Or a lack of systems around pay for performance because if they're incentivized to not have callbacks, they will have less callbacks.

And so I would actually look at something like that.

If you're doing simple service, like a $300 cleanup, there should never be a callback because it's extremely simple. Usually, like, it's cut a few branches, for crying out loud. So usually that's actually a system failure, not actually a system that you need to make a system around it. It's like, there's no pay for performance. They're incentivized to come back to the job site because they'd rather be in the truck driving back to do a callback than they would be doing more jobs. It's like the incentive structure is now messed up.

So I actually think the system failure.

Happens because they're not like the downstream. It's a downstream effect of not having paper.

Okay, yeah, that makes sense. I. I've been trying to do the pay performance. I'm signing up for the software next year. I was doing it all my all myself. I made like through app sheet and all this crazy stuff. But I was going to get the software and focus on growing the business then stuff.

Dude, good work.

I find it difficult to do computer work, deep work, maker time in an open office setting, even manager time. I find things take longer than they should when I stay in the same area. I'm far less productive when there are people around, objects on my desk, or even if there are objects in the room near me. I am most productive for the longest durations when in silence with dim lighting, no windows, and with nothing around besides my computer. How do you know? How do you work at the command center office without getting interrupted or distracted? Are there key. Are there benefits to you being easily accessible to the team? Does this become a crutch for team members being able to quickly get answers? Do you think the team. Okay, we have a lot of questions here.

I'll keep reading.

Do you think the team seeing you work near them has any effect? Of course, if you weren't nearby, your work would need to be better. Your work would need simply to show the results and avoid doubts of the leader slacking Overall pros and cons Office or remotely. Okay, first off, I will say I agree I'm probably similar in terms of like, the general notion here. However, I came in, I said, look, there are people that have learned this. Like, if you think of this as like preference versus skill. I think a lot of times people think about work the way that they work as like, this is my preference instead of thinking, oh, this is a skill I have not learned. And when I approach it that way, it kind of changed my mindset on this. So yes, I try to stay focused. Yes, the, you know, an open office, there is downsides to that. There are also pauses from a cultural perspective for you to be around. People do not walk up to me and talk to me. You guys have never seen someone interrupt me on a call. So there's certain parameters. Like, everyone knows my calendar. They can see it. Instead of playing position, I just put my calendar link. No one can book time on my Calendar in terms of the team. So the question is, why are you here then? When there is a need or emergency, I do like to be close to the team so that I can react with speed. Um, also I do believe that if I'm going to talk about as much as I do around working hard, putting in the effort and hours and time, I do want to show that to the team. Now, I still work a four hour, usually in the evening and no one's around, obviously. So, you know, is it a crutch maybe? But team members don't come up to me for questions like, there's levels, like, in terms of not, you know, who they go to. Like, no one has my. So like, as you grow the business, you create levels of management to prevent this from happening. But then it is easier to have a cultural standard in an office where everyone sees the owner doing exactly what they're doing. You know, the way you dress that you start to see people dress the same way. You know, if I'm putting in hours, I can expect other people to put in hours. And yeah, I don't know, I used to think this way and then I just realized that if other people can figure this out, it is a skill. Like, instead of thinking, this is my preference, which maybe I do have preferences to work in this sort of environment. In terms of quieter, I do like headphones, I have white noise, the accessory mode on your iPhone. You can quickly add white noise to block everything out. I do have shields so I can't see anything around me. But if I'm going to expect people to work here at the office, and I think there's a huge upside for them to be able to work here. I have tried to learn the skill of being able to stay focused in this environment. And so I do believe this is a skill. I do believe we all have preferences, but we can learn skills. And so, yes, I have to learn the skill of like, how do I stay focused? I do not get distracted with other stuff around and just lock in. And yes, it takes a while. This doesn't come natural. Some people are much more. They like to talk and stuff. It's not me. Um, I just got off on an hour and a half call and then right before that was an hour long call on Zoom where I was talking the whole time. Like, I don't enjoy that. I wanted to disc fragment and like chill for a second. But like, we can't. Yeah, hop on the next call. So it's just a matter of like, this is a skill and that is Something that can be worked just like a muscle can be worked. And so I would personally say, like, if this is. It's something that's difficult and you're, you're struggling to balance having an open work environment so your team is supported more, but then also you getting more work done is a matter of, okay, how. How can I make sure these both things can happen simultaneously? Well, first off, they don't have, like, you just set up the expectation, like, if I'm here, you don't bother me. Like, and it's not a bother in terms of, like, you are bringing up less than problems. It's a matter of, like, I need to work on these topics. I need to work on these things and make it clear to them what those objectives are for you. And so their objectives in the business might be more clear, like, oh, you got to pick up the phone, oh, you got to do an email, et cetera. If you' not telling them what you're doing, yes, they will assume whatever. And so making it very good for myself, it's like, look, if, if I'm not doing calls and, you know, in operator mode, I am working on this, this workshop thing and. Or I'm working the book, or I'm working on, you know, what we're trying to roll out at conference. And so being very clear what those objectives are, and then them realizing that every time they take moments away from you is taking away from the objective. And then ideally having middle management to be able to take out 99% of the, hey, I have a question type situations, and then them having a filter in terms of if that's happening enough, you have to let people go.

So it's Brandon over at simply Longcrowd, Massachusetts, your favorite turnaround. Quick question for you, quick synopsis. So, as you know, we did 700 last year. We're doing 800 this year. We took your advice. We focused on profit. We had three overhead people. Now it is just me in the office, Admiral and Scott in the sales and opera where we're at right now. The issue we're having, it's summer teams, all trained, everyone's making P for P. And we're at about 75 to 80% equipment utilization. The reason I'm not pushing a 9200 is everyone takes vacations right now, including myself and Scott. So we're more at like 90 if you include all the vacations coming up. The issue we're having is our workloads have been cut in half. So Scott is Now picking up 15 budget hours a week of field work because he has time and we want more money and I don't. I mean, I'm getting all my office work done, but I have nothing to do but like wait for calls most days. So our question is CAC obviously goes up in the summer since there's not as much demand. So really want to know like what do you recommend for the summer? Either one, just prep and save money for the fall demand bump and next year's spring rush. Or two, do we try to actually up the marketing spend and test out some new marketing methods or is there a third option?

I would say the third option is focusing on the customers that you got.

During the spring and upselling them into other services.

Because now we're switching from focus on.

The recurring side to now one off projects.

So all the customers you got for mowing, fertilization, so mowing in the spring, you know, now it's time to go double down on one click estimate emails, text messages, even in person estimates for projects. And so it's all the things that we didn't want to do in spring.

Because we were super busy.

Now it's time to swap over to those other services as demand for recurring services has basically fell off a cliff.

Roger. So focus on marketing things that don't cost much extra money.

And if you look at your blended.

Cost per lead with this sort of.

Activity of focusing on upsells, then you actually have a decent cost per lead.

During even the summer because now that.

Cost per lead is zero on an upsell. And so, you know, inside of copa, because I'm going to use it, I would, I would incentivize your guys to.

The moon for upsells and I would.

Really dial that in. I'd get your top four or five.

One off services that you can offer.

And I would give them a 20.

30, $40 if someone gets an upsell from their recommendation.

And whether or not you make it where you have to approve it, so you can make it where you have to approve it from the dispatch board before it gets sent to the customer.

I would recommend that if you have.

More entry level guys out in the field or if it's, if you and your partner, you guys want to have the ability you can do it directly from one click, it immediately goes out.

Without any sort of approval.

I would incentivize that I'd make a, I would make a thermometer on in the office of like or a leaderboard of who's getting the most upsells and either give them per upsell a significant amount, like 30 to 50 bucks. Or I would.

Make a leaderboard with a massive cash prize and then do a leaderboard, like, each month, because ultimately, and this is how you pitch it to your crew, hey, I'd rather give.

You guys the money than Google and Facebook.

So everyone knows work is kind of drying up.

We have two options.

One, we can go spend a lot more money on Google and Facebook and give Marky Zuckerberg.