Latest / The Life-First Solopreneur / 152. Franchising for Solopreneurs: Is It Your Next Big Move with Mike Andes

Transcript

152. Franchising for Solopreneurs: Is It Your Next Big Move with Mike Andes · The Life-First Solopreneur

• 0:00
  Carly Ries: Today, we're diving into a topic that could completely reshape how you think about scaling your business, and that is the topic of franchising. Whether you're looking to grow beyond your one person operation or dreaming of building a business that operates like clockwork without you in the driver's seat 247, franchising might just be the game changer you need. And who better to guide us through the ins and outs of this strategy than Mike Andes? Mike is a franchising expert and the founder of Augusta Lawn Care, a company that's taken the franchise model and turned it into a platform for empowering entrepreneurs. He's here to share his secrets on how solopreneurs can harness the power of franchising to scale their businesses without losing that personal touch.
• 0:39
  So grab a notepad because this episode is packed with insights that could spark your next big move. You're listening to The Aspiring Solopreneur, the podcast for those just taking the bold step or even just thinking about taking that step into the world of solo entrepreneurship. My name is Carly Ries, and my co host Joe Rando and I are your guides to navigating this crazy, but awesome journey as a company of 1. We take pride in being part of LifeStarr, a digital hub dedicated to all aspects of solopreneurship that has empowered and educated countless solopreneurs looking to build a business that resonates with their life's ambitions. We help people work to live, not live to work.
• 1:20
  And if you're looking for a get rich quick scheme, this is not the show for you. So if you're eager to gain valuable insights from solopreneurs who've paved the way before you, then stick around. We've got your back because flying solo in business doesn't mean you're alone. Mike, we are so excited that you are on the show today. This has been a little bit in the making, and we finally made it work.
• 1:49
  That was on our end. I just think this is gonna be such a great episode. We have not covered the topic of franchises yet on the show. I think a lot of people, when they think franchise, they think fast food chain, that you need to have a gazillion employees or whatever, and that simply isn't the case. So I'm excited of how we're to discuss it in the realm of solopreneurship.
• 2:09
  But before we get to any of that, I wanna know what inspired you to start Augusta Lawn Care and kind of the lessons from your journey that can apply to solopreneurs who have niche businesses.
• 2:20
  Mike Andes: Yeah. So I actually started mowing grass when I was 11 years old, and I did that because I knew I was gonna go to college early. I wanted to become a doctor. So I ended up going to college at 13. I paid my way all through college, basically, mowing grass, my brother and I, kind of on the side.
• 2:35
  And then I thought I was gonna go to medical school. Ended up after a couple months over in Africa doing medicine and then coming back to the US. Didn't really like what I saw over here in terms of a lot of paperwork. I didn't wanna do the same 3 or 4 procedures for the next 40 years of my career. So I'm like, you know what? I don't know anything else.
• 2:52
  I'm just gonna go back to lawn care. And so jumped into it full time when I was 18 years old, dropped out of medical school, and started Augusta Lawn Care. And then fast forward 5 years, we franchise. And so the past 5 years, we've been franchising the business, and we now have a 155 locations around the world.
• 3:10
  Joe Rando: It's a typical typical typical story. You know? I mean, yeah, college at 13, med school, drop out, and go mow lawns.
• 3:18
  Carly Ries: How often do you get compared to Doogie Hauser? Because that is incredible.
• 3:23
  Mike Andes: When I would shadow a lot. So I shadowed when I was 14 through 17 in a lot of different physicians, different types of surgeries. So that's what they always would say to me. So I ended up having to look it up because I wasn't, like, into movies or anything like that. Obviously, it was a little bit of a dated, reference as well.
• 3:39
  Carly Ries: Well, I feel like somebody at some point will be making a movie about you. So, please let us know when that happens. I feel like your life story is a whole other topic we can get into in another episode. But for today, let's talk about, the specific side of your life story. How did you navigate the transition, from being a solopreneur to scaling your business into a franchise?
• 4:03
  And what are the first steps solopreneur should even take if they want to scale like that?
• 4:09
  Mike Andes: Yeah. I think the first step is really determining whether or not it's actually what you want. I think there is this proclivity to think that we need to always scale. We should always keep growing. We should always keep hiring more people.
• 4:21
  But, ultimately, a lot of people are chasing on this treadmill of success, quote, unquote, or bigger business. is this actually serving you? Is this actually serving your business, or are you serving the business? And so this question as to whether or not it is serving you or you are serving it can only be determined by what are the goals for the business. Like, how big do you need it to be to be able to actually hit those goals That's an important conversation to have.
• 4:47
  Joe Rando: you know, Carly, I love that. This is what we keep saying. It's not always about scaling at all costs. And especially for a solopreneur, if you're doing that deliberately, then you can't scale the way you could with employees.
• 5:00
  So there's gotta be something else driving you. And I love that you just referenced back the goals because that's what it all comes down to. What are you doing this for?
• 5:08
  Mike Andes: Yeah. And specifically too, like, especially in home services, I see all the time when someone's working by themselves, they can usually do a 100 to $200,000 in annual revenue, maybe not take home, but revenue. And then what happens is they start growing the business. So they get 1 employee, 2 employees, 3 employees, 4 employees. All of a sudden now they're maybe doing $500,000 in annual revenue, but they have 4 employees.
• 5:28
  But no longer is their day filled with actually producing labor revenue, you know, revenue producing work. Instead, it's focused on doing sales. It's focused on doing admin. It's answering phone, emails. All of a sudden, they're making just as much money in terms of profit and take home at 500,000 revenue as they were at a 150 to $200,000 in annual revenue when they were much smaller.
• 5:49
  And this is what leads to a lot of wandering in the wilderness, a lot of very unprofitable businesses, and a lot of people completely wore out on their business at that size of 3, 4, 5 employees is because you make just as much, if not less profit, as you grow simply because you no longer are a revenue producing team member. You're actually overhead cost to the business. And so knowing what the goals are is either, going to be like, yes. My goals align with a bigger business. I am willing to get to this financial pain that is required to scale.
• 6:17
  Or it is, oh, I actually really value getting home at 3 PM every day, and therefore, I'm not going to scale. I'm gonna keep it a $150,000 in revenue. I'm just gonna keep raising my prices if I have a lot of leads coming in and not scale up.
• 6:31
  Joe Rando: Really interesting got, like, I'm assuming it's like the trucking industry. Right? Where you've got a point where you can have 1 truck or I can't remember the number? You can have 10 trucks, but you can't really be as profitable with 5 trucks or 2 trucks because of the overhead factor. So is it the same thing in this business where you you're here and then you come down and then you go back up and eventually you can start scaling, but now you've got a whole bunch of employees?
• 6:58
  Is that fair?
• 6:59
  Mike Andes: Correct. It's fair. And I think the big thing is when you stop producing revenue, I. E. The most efficient person in your crew stops producing revenue and you start becoming a manager, your profit margins are much, much lower.
• 7:14
  As a solopreneur in home services at least, you can have 60 to 80% profit margins, which means out of every dollar you make, 60 to 80¢ is literally going in your pocket. Because you just have cost of goods sold is, like, some material cost, maybe, fuel, some insurance, maybe other overhead expenses, but there's not direct labor. But as soon as you now have an employee working, that might be up 30 or 40% of the revenue just in wages. And so now all of a sudden, your margin is compressed in a 10, 15, 20% instead of 60 to 80%.
• 7:42
  Joe Rando: Got it. And so this really is a compelling argument for a solopreneur kind of business. I love it.
• 7:48
  Carly Ries: So, when should people start considering the franchise model? At what point is it, this will make sense for you, but you can still be a solopreneur, which is a common misconception?
• 7:57
  Mike Andes: For franchising, there's a lot of them. There are ones that literally take 17 to 20 $1,000,000 to start, something like a Hampton Inn. There are massive franchises in terms of, hotels, especially take a lot of capital. But there are also franchise that you can get started for, like, 5, 10, $15,000. These are usually gonna be revolving on home services, like cleaning services, hotel, travel agencies, etcetera, that don't require a lot of capital, don't require a lot of overhead, don't require employees.
• 8:26
  And so it's a matter of, again, what's the goal of you starting this business? If it's to scale and grow massively, great. You're probably gonna want a vehicle that you can grow a $1,000,000 business. But if that's not what's required to reach your goals and ensure you're satisfied with what you're achieving, then, like, there's lots of options for franchising. And the reason I would say someone should franchise is simply this.
• 8:50
  Let's assume a franchise has, 200 locations. Would you be better off if you were a betting person, betting on someone who had never started a business before, starting a cleaning company, for example, or starting a cleaning company with a model that has been done 200 times successfully? Like, if you just had to bet on who's gonna be successful, which one would you put your money on? And that's when I think franchising is a very valuable tool when it comes to the predictive nature of, like, are you gonna be successful? Are you able to pay your bills?
• 9:21
  Are you gonna be able to replace your 9 to 5? The likelihood of that is greater, in my opinion, with a franchise that's been that's been tested, proven, and other people you can go talk to when you encounter inevitable obstacles along the road.
• 9:36
  Joe Rando: Can I dig in with a question before we because before we move on because I just don't wanna miss this? So the franchise companies do certain things for the franchise or does certain things for the franchisees, the people that are running the business and paying franchise fees to the franchisor. because I poked around on this a little bit over the years. it's not always the same. It's not like there's a standard model of what they do for the money.
• 10:03
  And I remember I was looking at 1 one time to possibly go into, and it was and they weren't really doing anything. You know? I just didn't see where there was they had a name. It wasn't even that big. You know?
• 10:15
  So, I mean, what should people be looking for as they look at these things? What kinds of things should the franchisor be doing for them, and what kinds of things should they expect to do for themselves?
• 10:23
  Mike Andes: Yeah. Absolutely. So, if someone's thinking of joining a franchise, I think the number one thing is I wanna be able to contact any franchisee. If the franchisor is giving you a targeted list of 5 people you can contact, those have been cherry picked. They're probably getting incentive on the back end.
• 10:37
  So I wanna be able to contact anyone. So red flags would be going up if I yes. Here's the 3 people you can contact out of our 50. No.
• 10:44
  No. I want the list of 50, or I'm gonna go just call them randomly, and I'm gonna get feedback. That's the number one thing I'd be looking for, because there are a lot of bad actors in the franchising world. For under a $100,000, you can become a franchisor, set up legal documents, and be ready to roll. For that reason, in 2023 last year, over 400 franchisors were started.
• 11:07
  Now from a statistical standpoint, more than 90% of those will not be around in 10 years, and all the franchisees they sell will be completely screwed because there's people that will join at 1 location, 2 location, 5 location, 6 location, and then the franchise never gets to profitability because many times you need over a 100 locations to actually hit that. And out of those 400, statistically speaking, less than 8 of those franchisors will hit above a 100 locations. And so when you are a franchisee getting into a franchisor system, you wanna have full confidence. They are in this for the long term. They're well capitalized.
• 11:41
  They are sticking around. They're not just trying to flip this off to some other private equity firm, and they have your best interest at heart. And so, do they have training? Do they have support? Do they have coaching?
• 11:52
  Do they have a community? Do they have events? Do they have brand awareness in terms of getting better pricing for you? Because you can save more than your franchise fee just in the savings of what you would otherwise spend on equipment, tools, machinery, supplies, ingredients, depending on your franchise, as well as, does the brand actually bring you in leads when you are going into a new market? Do you get ranked well on on social media or on Google much faster because you're part of a domain online that immediately gets you the top of the rankings?
• 12:23
  These are all the things that you wanna be looking at. Because if you're joining a franchise that has 10, 5, 10 20 locations, you're not getting brand awareness. No one knows about you. If you join, you're not going to the front page of Google within a matter of a couple weeks. It's gonna take you 6 to 12 months like everyone else.
• 12:39
  And so as a franchise grows, the problem is when you join a franchise like Subway or McDonald's, they have so much brand awareness, and they bring so much value in terms of just their name. The issue with that is they can start to strip away all the other aspects of a good franchise, which is training, support, and other elements because the brand itself brings in so many customers. And so a lot of times, the legacy franchisors actually give a really bad name to franchising because they no longer need to provide support or training or any sort of development for their franchisees simply because their name is so well recognized. And so, unfortunately, in my opinion, you have the upper echelons of thousands of locations that sometimes treat their franchisees incorrectly because they have brand awareness, and they do just rely on that alone to sell franchises. And then you have the ones that have very, very few locations that give the industry a very bad name because they make up 95% of franchisors that do not support.
• 13:37
  They don't have the capitalization. They end up going out of business. Everyone gets messed up. And so, really, that's the struggle, I think, with franchising, and that's why it's got a bad name.
• 13:46
  Joe Rando: No. That's great. Great.
• 13:48
  Carly Ries: And, gosh, I mean, like, just the franchise aside, you just seem like a great business owner. You know what you're doing. You seem very knowledgeable about running businesses. So for these solopreneurs who feel stuck because they're juggling so much, what advice do you have for them?
• 14:05
  Mike Andes: Yeah. I think it's important to stay focused on what actually is gonna move the needle for your business. What I mean by that is, especially if you're listening to content, it's very easy to start getting into, entrepreneurial CEOs in terms of other things that you think you should be doing the business. For example, I think at home services, from 0 to $200,000 in revenue, really, the main role of an owner is that of a labor. Like, go do hard work, do more of it, be efficient, focus on your tools, etcetera.
• 14:33
  From 200,000 to $800,000, you start hiring people. Now your focus is that of a manager. That's your role. your job is to be a great manager. And then at 800,000 plus in annual revenue is when I start seeing the role of the owner being that of an architect.
• 14:47
  That is when you're gonna hire a manager to then manage the labors. You're also gonna step away from the business and start to think about strategy, acquisitions. How am I gonna think about a second location? What am I gonna do in terms of financing? That's what an architect is.
• 15:00
  They step away from the business. They step away from daily operations. What I see a lot of solo operators doing is they are doing a $100,000, doing $50,000. They're weekend warrior doing the their side hustle, and that's great. And at the same time, they're trying to act like a $1,000,000 business.
• 15:18
  They're going to conferences thinking about acquisitions and how they're gonna scale multiple locations and who they're gonna be hiring. No. No. No. Let's focus on where you're currently at, and by doing that, you'll be most profitable because you focus on doing the work that is required at your stage of business.
• 15:32
  And I think that's the part that many times we begin to drop, especially when we're inspirational, especially when we're inspired. We wanna do more. We wanna grow the business. But, like, today, how do I make more money if I focus on being a great labor?
• 15:44
  Carly Ries: Mhmm. Absolutely. Well, on the note of juggling all these things, you rely, I believe, on automation and delegation for a lot of what you do. Where do you think solopreneurs should start with that?
• 15:56
  Mike Andes: Yeah. I think sometimes, especially if you're an OCD type, that can be very, detrimental to think too much about automation and software. And all of a sudden, you have 20 different softwares, for managing your day, your calendar, your to do list, email, etcetera. It's like, look, let's strip this down to 1 or 2. Let's keep this really, really basic because right now, you have no leverage.
• 16:16
  And so what I mean by that is if I can save 10 minutes in a day, but I have a 1000 employees, all of a sudden, that 10 minutes a day adds up very, very substantially in terms of the value of my time. When you're a solopreneur, and let's say you're charging 50, 60, a $100 an hour, you saving 10 minutes a day is is is is okay. But if it takes you a month figure out that process and you're reading books and you're trying to figure out how to save the 10 minutes a day, it you have no leverage. If you had 10 employees that were also making a $100 an hour and you save all of them 10 minutes a day by getting that special tool or that automation or that new software, then it starts to make sense. And so what makes sense for a large business that you might be listening to myself or anyone else that has a bigger business, like, oh, they said it was great.
• 16:59
  Therefore, I must do it. Be careful because they have leverage in the form of employees and other people working for them, and them saving tenants for every one of their employees could make sense. For you, it might not.
• 17:09
  Joe Rando: Mhmm. Great point. Great point.
• 17:11
  Carly Ries: So smart. Just, again, the difference between small businesses and larger ones.
• 17:16
  Joe Rando: What about outsourcing certain functions? Like, you know, you outsource your booking, keeping and accounting, or are outsourcing, you know, content creation or something. How do you feel about those kinds of things for solopreneurs?
• 17:31
  Mike Andes: Yeah. Like, thing that is interesting with solopreneurs, if you don't outsource, you are going to be doing everything in the business. And so the question is, there's 2 ways or reasons I outsource. Number 1 is I stink at doing the work. Like, if I'm just not good at it, I'm probably take way longer at it.
• 17:48
  So I just don't enjoy it. not good at it, etcetera. The second reason would be because I can make more money doing my primary task per hour than if I just outsource that task to someone else. And this is ultimately when you start hiring employees down the road. But even if you're gonna stay solo, it's a matter of, okay.
• 18:05
  Well, if I can charge my customers a $100 an hour, if I'm able to get someone at $40 an hour to do my bookkeeping, it makes more sense that I do the $100 per hour task and delegate the 40 per hour task. And furthermore, that person that does bookkeeping 8 hours a day is probably gonna do it in half the amount of time as you. And so all of a sudden, realistically, the effective hourly rate is $20 an hour. And so, I think as long as you are okay with delegation, you're okay with letting go of some of the rains, then absolutely try to outsource for anything that is either, a, you stink at it, or, b, simply, your hourly rate doesn't justify doing it yourself.
• 18:43
  Carly Ries: Yeah. And, Mike, the other question I wanted to ask you just based off your experience. So you started just mowing lawns on your own, and then over the past, you said 5 years or so have turned it into the franchise business. What mindset shift did you have to make that happen? I feel like a lot of people are like, okay.
• 18:59
  I can just as a solopreneur, I could just continue mowing lawns, make a living. At what point was did the light bulb go off and you're like, no. I can scale this, and here's how.
• 19:10
  Mike Andes: Yeah. So it's a little bit morbid, but I almost died. So, I was on a job site and, got my hoodie caught in the PTO of a dump truck. So the PTO is the power takeoff. It's a thing underneath that spins in a circle and basically powers the dump truck.
• 19:25
  Oh my gosh. And so my hoodie got caught in that, and, by the grace of god, I fell out. It bought all of my like, my sweater, my t shirt, and my undershirt got caught around my neck, and then just blew up, and I fell out. But I was in the hospital for a while, was recovering for a few weeks, and I realized my business had no systems. It was all based upon me working 80 to a 100 hours a week.
• 19:44
  I was literally on in the hospital, on the bed, video calling my crew out in the field to get the next project done. And so coming out of that, I started to share, here's what I'm doing to change the business. I'm instituting how I pay my employees differently. This is how I do my estimate videos differently. I'm trying to create systems instead of it being all based upon me.
• 20:02
  And then from that, it kinda led into the franchise so I could do that with the owners and have skin in the game.
• 20:07
  Carly Ries: Wow. Yeah. That is quite the story. Yeah. I wish you didn't have to go through that to get that lesson, but it seems like the lesson you took away from it has served you well in your business.
• 20:19
  But, that is unbelievable. And so just thinking back to your younger selves, if you could give solopreneurs one piece of advice to help them prepare for scaling their business while staying true we were talking at the beginning about just staying true to the why and your goals. By staying true to their values, what would that piece of advice be?
• 20:40
  Mike Andes: Yeah. I would say build it to scale. If you're gonna grow with the business, it's easy to do 2 things. Like, when it comes to home services, there are 2 ways to grow your revenue. 1, add more services, b, expand your service area.
• 20:53
  Those are the easiest ways to grow. Just serve more people. Like, I'm willing to travel as far as possible to get customers. Or just add more services. Like, I will do that.
• 21:00
  Yes. I will do that, and I will do that. It's the fastest and easiest way to grow revenue. Now when it comes to a solopreneur, is that how I should grow the business? I don't think so.
• 21:09
  I think we should build it to scale because eventually, you don't wanna be keep growing so far out in terms of service area, you're unprofitable. Eventually, you're doing so many services, you can't train your employees. They're making a lot of mistakes. It's hard to find labors that can do that work. So I always think about how can I create a systems centric business from the get go even as a solopreneur?
• 21:28
  And that is, how do I build a system? Well, I build a system by doing 2 things. 1, I can simplify, and I can standardize. Well, what's the opposite of simplify and standardize? It's complexity, and it's custom.
• 21:40
  And so whenever I am thinking about how do I scale my business as a solopreneur before I go get employees, I'm gonna think about how can I simplify the system? How can I make it really, really basic? Or how do I take even something that might seem complex, but standardize it? I do the same way every single time. If you're able to to create systems of the business by simplifying and standardizing, if there's a much greater likelihood you'll be able to scale the business profitably and find other people to plug into that system, that it'll still have the same output.
• 22:08
  Because ultimately, that's what the system is, is certain inputs with a specific output. And if you can do that over and over and over again, that's what allows you to scale a business.
• 22:16
  Joe Rando: So when you say employees, you're really saying contractors for a solopreneur. Right?
• 22:20
  Mike Andes: Exactly. Like, whether that be contractors, whether that be employees, whether that be your outsourcing. It's just a matter if you're gonna grow revenue and you're gonna get more people involved, even if you're gonna get more customers. Like, even if you're you're gonna stay solo, and let's say you're you're in a contracting model yourself or you're selling your time, it's, like, yes. You can offer more services to your customers, and you will get more revenue, but will you specialize in that?
• 22:42
  Will you actually be able to charge more if you just focus on 1 or 2 services? If you standardized the way that you did pricing, if you standardize the way that you do delivery of your product or service, if you do that, you'll be able to actually get more, you know, clients in a day, even more efficient, and ultimately scale the business.
• 22:59
  Carly Ries: I could listen to you talk all day long. I just think you are fascinating. You're a great storyteller. You're a great business owner. I'm so happy we had you on today.
• 23:10
  And we ask all of our guests this question. What is your favorite quote about success?
• 23:15
  Mike Andes: Oh, so I'll just say what's top of mind right now. So I think that, you know, Alex Romosi is a big inspiration to myself, his friend and kinda coach and editor. Doctor Kashi is my coach, and so, we share some similar beliefs. And one of the things that he said recently that I think is super valuable, and I think, especially for solopreneurs that might have a lot of ideas and aspirations, is I would rather have one bridge completely across the river than starting 10 different half bridges over and over and over again. And because of the shiny object syndrome, we consider jumping from one object to the next one business, the next one service.
• 23:52
  Oh, I'm gonna start this. Oh, oh, this. And especially as solopreneurs, it's got so easy to pivot. We keep starting bridges instead of just being like, hey. For the next 10 years, 10 years, I'm gonna do this thing.
• 24:02
  I'm gonna stick with that. I'm gonna stay focused on it. So really, you know, if I had to boil it down, it's just focus. I think of the greatest entrepreneurs that we can all think of have done their craft for at least 10 years. And so why not just dedicate the next 10 years to the thing you're doing?
• 24:17
  And he's like, well, what if it doesn't work out? Well, if you're 20, if you're 30, you have 5, you have 6 more swings. Right? Well, I'm 50. You still have 2 or 3 swings left.
• 24:25
  And I have a great propensity to believe that if you did something for 10 years, you'd actually get through the hardest years, and then you have the skills to be actually successful in that industry, and you'd be in the top 1 or 2% in that industry. And you'd be paid the top dollar. And no one wants to do the work required to get to the year 10, but they all want to have that. And starting not the part where you actually see the results. It's a part where everyone cheers.
• 24:47
  Everyone cheers at the start. Everyone cheers at the end, but it's the middle game of the marathon that everyone quits.
• 24:53
  Carly Ries: Mike, I wanna be best friends with you. Where can people find out more information about you if they wanna learn more?
• 24:59
  Mike Andes: You just go on YouTube. I do a bunch of free videos in there. We go do turnarounds. We fly out to companies and just try to help them, go from, you know, on the verge of bankruptcy to hopefully turning them around. So we video all that and share it with other business owners.
• 25:12
  Joe Rando: Cool.
• 25:12
  Carly Ries: Awesome. Awesome. Well, come back anytime. We so appreciate you stopping by today. And listeners, thank you so much for tuning in.
• 25:19
  As always, please leave that 5 star review. Subscribe on YouTube. Anywhere you listen to podcast, we would so appreciate it, and we will see you next time on The Aspiring Solopreneur. You may be going solo in business, but that doesn't mean you're alone. In fact, millions of people are in your shoes, running a one person business and figuring it out as they go.
• 25:40
  So why not connect with them and learn from each other's successes and failures? At LifeStarr, we're creating a one person business community where you can go to meet and get advice from other solopreneurs. Be sure to join in on the conversations at community.lifestarr.com.