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$300K GONE... The Cost of Being a BAD BOSS · Home Service Millionaire with Mike Andes

0:00
Something's broken that needs to be fixed.
0:02
You have like 500% annual churn.
0:05
Today we're in Indiana visiting John with Club Cleanz.
0:08
Very much focused on the success of the business rather than the success of the people who worked in the business.
0:13
That's just my biggest thing is care about your workers, okay, because life happens and shit happens.
0:17
His commercial janitorial service will make $2.4 million in revenue this year.
0:23
How much lost revenue from customers that were like, hey, we're canceling.
0:27
The average over the last three years has been about 300,000 a year.
0:31
But on average, his new employees only stay two months.
0:35
The reason why I feel like people leave is because we throw them in a building and then an auditor comes behind and fails them in certain sections.
0:41
Oh, this was missed.
0:42
This was missed.
0:43
The floors could be better here.
0:44
Then they blame it back on the training like they didn't feel trained.
0:47
This is the Business Turnaround Show.
0:49
My name is Mike Andes.
0:50
I'm the founder of Augusta Lawn Care and Homework Software.
0:53
I travel the country fixing struggling businesses.
0:56
Our goal is to give John a strategy to turn around the company in the next six weeks.
1:01
So I would just hire comp with the biggest problem in the business, which is retention of the team.
1:05
It's easier for managers because they don't feel like they're beating people over the head or uncompliance.
1:09
You're just trying to help them.
1:12
Hey there, my name is John Torres.
1:14
I own and operate a commercial cleaning business.
1:18
In 2025, we did about 2.4 mil.
1:20
And unless we earn some new business, which I'm hopeful we will, we'll probably be somewhere closer to 2.2.
1:25
It was just me and one other person.
1:27
And today, we have somewhere between, depends on the week, 50 to 60 employees.
1:32
He says he has about 20 to 24% profit margin, but he has a little bit of debt.
1:36
But if you have that profitable business, it isn't really that big of a deal.
1:40
But I'm really interested to see the labor percentage.
1:43
And so what we will be digging in tomorrow is, we have 50 to 60 employees, assuming they're all W2s, and you have only 2.4 million in revenue.
1:52
We're running like, we're skating either part-timers, 1099s, or we are very thin margins.
1:58
I would say that the main struggles have to do with effectively leading a large team.
2:04
And that's part of what led to some of the dip in potential revenue for this year was just a failure to come through for our clients.
2:12
And so we're trying to figure that piece out.
2:14
That's what we'll be digging into tomorrow, is how are we making this work?
2:17
He's obviously running a very tight machine in terms of overhead and not having an office, et cetera.
2:22
What can we do to make sure that he's able to lead the company and take it to the next level?
2:26
Because two and a half million sounds good, but he obviously wants to go past 10 million.
2:30
So what's the unlock?
2:31
What's the constraints holding business back from doing exactly that?
2:34
I love what you guys are doing to just help service businesses.
2:38
I could definitely use some insight on how you're going about what you're going about.
2:43
and what feedback you might have for us.
2:47
Cleaner turnover rate is pretty high, but it varies on county.
2:51
So we're in six different counties right now.
2:53
This, LaPorte County, is our highest county, our county with the highest turnover rate.
3:00
My recent walk-through though with Jordan, this is the best, like, the location has looked.
3:08
What would you attribute it to?
3:09
I think the location supervisor really understands the expectations.
3:17
And he is consistently upholding the board, communicating when something is not right.
3:24
So when's the last time you hit your website?
3:30
Two.
3:32
I mean, if I'm being honest, probably two years.
3:36
Hey, guys.
3:38
Hi.
3:39
Have you graded the closet yet?
3:41
No.
3:41
No.
3:42
From there, you know, I went from cleaning to training people to clean, to training people to train people to clean.
3:47
Sorry, I didn't prep you, Tanya.
3:49
I want to see you in action.
3:50
She looks at Frankie.
3:51
I know.
3:52
She's like, bro, put me on the spot.
3:54
And my position is managing partners, so I'm like over operations and client happiness.
3:58
And I'm more just meeting with the sales team to make sure we're hitting our targets and staying focused and things like that, so.
4:10
quite the journey from a cleaner to a supervisor to a manager and then it just made sense a couple of few years ago to take the next step in that progression and make her a partner so we've been operating that way for maybe two and a half almost almost two and a half years now how's it going all right what's up man good to see you man
4:32
So maybe walk me a little bit through the background of the business.
4:35
I know we started in 2018 and it's been growing quite a bit since then, but maybe just kind of give me a brief summary and what got you into cleaning in general.
4:42
Well, what got me into cleaning in general was, um, I was backed into a corner.
4:46
I had no choice, but to do something.
4:48
Cause I relocated to this area, the Chicago land, Northwest Indiana area.
4:53
With the intention of growing a real estate portfolio and opening up a franchise with my wife in Chicago, I had to file for bankruptcy because I had no way to deal with that.
5:03
It was one of those moments where it was like, if he can do it, I for sure can do it.
5:09
We had a huge account with like Buffalo Wild Wings.
5:11
And so we ended up being the biggest we ever were by the end of the summer of 2020.
5:16
They gave us our notice, essentially, and I was scared.
5:20
Like, I wasn't sure what we were going to do because...
5:22
Okay, so I've asked John one question that is like, tell me about how the business started.
5:25
Usually this is a one to two minute answer.
5:27
This has been 20 to 25 minutes of me listening to about the origin story of the business.
5:31
And I'm okay with that.
5:32
But if he's gonna lead a big business and attract great managers, I've gotta be succinct.
5:36
I've gotta be to the point.
5:37
And I've gotta give information to the people who need it, when they need it.
5:41
And I can't take 25 minutes answering a simple question.
5:43
And so when you look at the business and you say, hey, this year we're going to do 2.5.
5:47
I want to go to 10.
5:49
What do you see as a constraint?
5:50
Like, why is it not that way already?
5:51
Part of it is the losing business.
5:54
And I haven't spent as much time as I would have liked on building out our lead generation in sales.
5:59
Because I know if I do that, it's only going to exacerbate the problem.
6:03
You feel like you want to expand.
6:04
It's like, well, we just lost these three customers.
6:06
Precisely.
6:07
We can't manage the team.
6:08
If we can't do here, how little are we going to do there?
6:11
Yeah, I'd say the most significant one, early 2022, late 2021, about 35%.
6:18
If you looked at 2025, how much lost revenue from customers that were like, hey, we're canceling.
6:23
Do you know that number?
6:24
I do.
6:24
Yeah.
6:25
So the average over the last three years has been about $300,000 a year.
6:29
$300,000 of revenue churn.
6:30
Of revenue churn.
6:32
And those are customers that were signed up and they canceled.
6:34
Yeah, we were under contract, and then they either gave us a notice before it was up, or when it was up, they said, see ya.
6:41
$25,000 was really tough.
6:42
It was a little over $400,000.
6:45
And two accounts, or two locations, consisted of more than half of that.
6:50
So if you lose a big account, it can have a big impact on you.
6:53
And when they're canceling, are they citing quality control issues?
6:57
Okay.
6:57
The main thing that we're supposed to be auditing, which are consumables, floors, glass, and trash.
7:02
So I look to see if they have the OSHA folder, the trade folder, closet standard, and core values.
7:08
So she has like a site check, which is a site audit, in addition to checking the closets.
7:14
It's always a toilet paper wasn't replaced, or the floors weren't cleaned, or the glass is smearing.
7:21
How many locations are you doing this for?
7:28
Do you know how many that is?
7:29
I have no idea.
7:30
Okay, cool.
7:32
So I think there's two components to it.
7:33
It's how do we stop the errors, and then how do we communicate in a process-oriented way so that we can even get ahead of this stuff in case there are errors.
7:43
I mean, we're just humans, so of course we're going to make mistakes.
7:45
We're going above our efficiency, we're doing a lot of rework, and there's still complaints.
7:52
The good news is these are all solvable problems.
7:53
When you have revenue churn and there's just quality control issues and it's an operations problem.
7:58
And I'm gonna go out on a limb and say, you could care less about operations.
8:01
You love sales and you love growth.
8:03
And so I'm gonna spend more time actually with you because I feel like you actually have a lot of the perspectives that as entrepreneurs, we need to hear a lot more so that we can grow.
8:12
But in order for us to grow, we need to have the confidence that when we sell the contract, that it's gonna be delivered on.
8:17
Yes, 100%.
8:18
And sometimes our speed makes your job very, very hard.
8:22
So from your perspective... She's literally said, John, can you not get any more accounts?
8:25
Can you slow down, please?
8:26
Let us catch up.
8:28
Okay, great.
8:28
That's fantastic.
8:29
So from your perspective, what is the kind of North Star for you to solve that problem?
8:33
I think it's our employee turnover rate, correcting training, which I feel like we put some things in place in the beginning of 2026.
8:40
We have one trainer now who does all of the working interviews and all of the training.
8:46
Up is forward, right?
8:47
And then left, okay.
8:49
So up is left and then backward is right.
8:52
and then we release them.
8:54
One thing I wanna clarify because I confused Kamiya is when he's saying up, he's only talking about lifting the hand of our slightly up.
9:01
There still seems to be a gap where they don't feel competent to go into a new facility.
9:08
What you think, wanna give it a try?
9:10
North, right, south, left.
9:14
So, man, we'll figure it out.
9:17
You got it.
9:19
If it gets out of control, you let it go.
9:21
Get out of control and just holler and let it go.
9:24
Scream like a girl.
9:25
No, don't scream.
9:26
Don't scream?
9:27
Press the button.
9:31
Oh, press the button first.
9:32
Then you got it.
9:32
Yep, there you go.
9:37
And then it's like creating growth for the team because they don't normally stay with us because they get a better opportunity.
9:45
And I do get it's an entry level job.
9:46
But from what I hear on the field from the team, it's like there's nowhere to go here or there's like a better opportunity for them.
9:53
The reason why I feel like people leave is because we throw them in a building.
9:57
We use the software for them to review.
10:00
And they'll audit it.
10:00
I think it's like once or twice a week, depending on
10:03
their scheduling and stuff and our scheduling.
10:06
And they'll go in the chat thing and be like, oh, this is from the audit, this is information.
10:10
So it's like, oh, this was missed, this was missed.
10:12
The floors could be better here.
10:13
And then an auditor comes behind and fails them in certain sections.
10:16
And then they'll be like, but this was good too, or this is good, but it's always more like things we need to do versus like, everything's great.
10:23
Then they blame it back on the training.
10:25
Like they didn't feel trained.
10:26
Like I feel like I'm missing everything sometimes from
10:30
the way that they put information in, especially because like the last couple months we've gone through a lot of staff here.
10:37
And then there's been a lot of nights where I've cleaned this whole building by myself, which is so fun.
10:41
Question for you.
10:42
If you had to guess, if someone new joins a team member, how long are they on average staying around?
10:49
Three months.
10:51
Okay.
10:51
Two months.
10:52
I did the math recently.
10:53
Two to three months.
10:54
It depends on the role.
10:55
Supervisors.
10:56
Longer.
10:57
Closer to five.
10:58
Entry level, just cleaners.
11:00
It's closer to two months.
11:01
Yeah, the turnover rate is pretty high.
11:02
I'm not going to lie to you.
11:03
It's hard work.
11:05
Yeah.
11:05
Like, it really is hard work.
11:07
It's not just like, oh, I'm in a vacuum of floors.
11:09
You have to understand.
11:10
Like, hotel cleaning is not like cleaning your house.
11:12
Like, no, you're, like, actually cleaning places, and you're expected to do, like, certain things a certain way, and, like, a lot of people don't want to do that.
11:20
I think a lot of younger people don't understand what it entails.
11:24
The nighttime stuff gets too long, which I don't blame them, because it's hard for me to.
11:27
Like, I have a five-year-old, so, like, I get off work, go home and sleep for, like, two hours, get up, take him to school.
11:36
These are things you've seen for a long time.
11:38
Why, in your opinion, have they not been fixed?
11:40
Because it's been eight years now.
11:43
I feel like we have improved in some areas, but then every time we grow, we're not sustaining it.
11:49
The objective, too, with growth is we always want to grow to the moon, right?
11:53
I've found more it's more of a stair step.
11:55
It's like, hey, we grow.
11:56
We get a big contract.
11:57
Let's stop growth for a second and create infrastructure, right?
12:01
And so in a business like yours where you have 20% plus profit, it's lumpy because of these cancellations slash mistakes that are happening.
12:10
That doesn't give us confidence to go spend on marketing and growth or investing in the infrastructure.
12:15
And so it's a cat and mouse game.
12:16
I need the infrastructure to create good quality.
12:18
I need good quality to have confidence to sell to be able to grow the business.
12:22
If I'm going to pay a trainer to train them for three days, I'm going to pay a recruiter to onboard them, hire them, interview them, etc.
12:30
And then I'm going to spend more money on a supervisor to make sure for the first week they're doing a good job.
12:36
That means it's likely they aren't even profitable for the business until weeks four or five.
12:42
Meaning out of the average two months, it is taking two to three weeks.
12:46
just to get them to being profitable and above zero for the business.
12:50
It is very difficult if 30% of the average tenor is just spent getting them up to speed and training.
12:56
I do see this as a training issue.
12:59
All of it.
12:59
They don't feel like they're joining a team right now.
13:01
They feel like they're being, they're a mercenary coming to do these specific jobs, right?
13:07
And so there's pros and cons to that.
13:09
It's good because it's very efficient, but they are lacking a leader.
13:13
If they were asked who they work for, they would probably mention the trainer's name.
13:17
Right, or I get, I don't know who my supervisor is.
13:20
During that training process, is there any orientation
13:24
Yes.
13:24
To the company?
13:25
Okay, what does that look like?
13:25
They do have orientation and they go back with our staffing guru.
13:30
So she'll conduct a virtual training with all new hires and, I mean, a virtual orientation.
13:36
They review the guidebooks and like who to contact for specific things.
13:40
So she's the one who does the initial interviews.
13:43
If they check the boxes as a core value match and just the typical, like you have a car, you recognize this as a night job, we're cleaning toilets, you okay with that?
13:55
Then she would schedule them for training with our trainer.
13:58
Three consecutive trainings is the goal.
14:02
The ones who make it through that third one, they submit a form, a digital form after every night.
14:07
Then they get sent the hire packet.
14:10
And once they fill that out, then that week they're in orientation with the staffing coordinator to just give them more in-depth training on how to clean well.
14:18
I'm scheduling them at a location that has a supervisor because not all the sites have a supervisor.
14:23
So I'll schedule them at a location that has a supervisor so the supervisor is still giving them hands-on training
14:28
I just don't know that with all of that new information in a short period of time that anybody would be able to fully retain and bookmark all the important things.
14:37
And when people leave after two months, are you doing any exit interviews right now?
14:41
They hadn't had great success with people doing it.
14:44
Yeah.
14:44
But sometimes when we part ways, it is because there's a violation of policy.
14:48
And then I get feedback.
14:50
Got it.
14:51
So what percentage, if you have to look at people leaving, is it violation of policy versus lack of quality versus just, I'm just leaving to something else better?
15:00
I would say 50-50.
15:01
Okay.
15:02
So 50% of it is like we're parting ways because they stink at their job.
15:06
Or two is they want something better.
15:09
Yes.
15:10
Sometimes the team signs things that they don't read.
15:12
So even though the guidelines are in the employee guidebook, there's not somebody on site to constantly.
15:17
And I don't feel like everyone needs it, but like to remind them, hey, two absences equal like we're going to part ways in a month, you know.
15:25
So I feel like we are still lacking communicating what our policies are.
15:30
And then when they violate them,
15:33
They don't even know.
15:34
Yeah, that's the feedback I get.
15:36
So this is their training folder.
15:38
Routine cleaning is in the front, then it's periodic services, like towards the end.
15:42
But yes, it is.
15:46
He's actually missing a whole section.
15:47
He has more folders hanging in here.
15:50
I want to check to see if one of them has an accurate training card.
15:53
Okay.
15:54
So right here, it's like the daily restroom cleaning and we do step by step.
15:58
So if ever the team forgets how to clean a restroom, this is what they use.
16:02
And then our software for where they clock in and out tells us what to clean.
16:06
I want to find a way to be more encouraging to the team because if I'm the one always receiving the negative feedback from the clients, I'm also then reporting it to the team and they don't want to hear more policy reminders on a Tuesday weekly meeting from me if I'm already telling them about the mistakes made.
16:22
I feel like it tears them down more.
16:24
Even though there's 60 employees, find a way to build relationship with people and point out more positives.
16:30
There has to be a better way where the team can take more ownership of their sites and I can give more positive feedback.
16:38
That way when the negatives come, it doesn't feel so heavy.
16:40
And I feel like that area I lack.
16:42
Instead of just all the complaints that are received.
16:46
Because mistakes are constantly being emailed to me and I'm quick to just, Hey team, there's this.
16:51
Because I also conduct their quarterly reviews.
16:53
You do those?
16:54
Yes.
16:55
Okay.
16:55
On a nightly basis, if they're calling out, are they talking to you?
17:00
They are filling out a call-off form and it goes to our scheduling department, which I am then, yes, covering.
17:05
Okay.
17:06
And then the role the supervisor then is really just the people you hold responsible for?
17:11
Their site that they're the supervisor of.
17:14
Got it.
17:14
Not over people as much as it is over their site.
17:16
The challenging part, I guess, on that part is like if you're doing it every two and a half months, there's times where people don't even get to the two and a half month marker, right?
17:22
Because they're lasting two to four weeks.
17:24
The 4L framework shows the four reasons why every home service business stops growing.
17:29
It's either a lack of liquidity, cash in the bank, a lack of leads, a lack of labor, or lack of leadership.
17:36
Liquidity, I'm going to give you just like a pass.
17:37
Like, it's fine.
17:38
You're taking money out of the business, I assume, every month.
17:40
Yeah.
17:41
There's a little bit of debt on the business and cash isn't super high inside the business, but it's over 20% profitable and he's taking distributions.
17:48
Let's just go through this and then we'll come back to what I think is the major constraint, which is the labor side.
17:53
But for leads, are we doing any advertising right now?
17:55
Are you in sales?
17:57
Who's driving that?
17:57
I definitely am the one directing all marketing efforts.
18:02
And right now, the system we have in place is we have a virtual assistant who just lives on LinkedIn.
18:08
and they're making connections, they're setting up calls.
18:10
We have a cold calling service, and they're consistently calling 15 to 20 hours a week, and their whole goal is to set up walkthroughs.
18:21
The sales consultant just submits right there on site a form kind of recapping the conversation, the estimation and scope details, and that gets shot off to our sales administrator, and they put together a proposal, and that takes about 24 hours to
18:36
go from start to finish on all that.
18:38
And then I have an SEO, Google, pay-per-click ad person who just mans that, makes sure all the buttons are working, stimulating and building out pages every month, and just making sure we're ranking and that that's doing what it's supposed to.
18:54
And how many leads per week are you usually getting?
18:56
We're doing about 15 consultations a month right now.
19:01
I just call it one every other day, so 15 per month.
19:05
And then out of that, 40% are closing.
19:07
So we're looking at five, six new contracts a month.
19:12
And then right now, are we seeing that same amount dropping off?
19:15
No, thankfully.
19:16
So like maybe two or three.
19:17
The problem is because they can be bigger.
19:19
You can go months, not lose anything, and then you lose one and then bam, you might as well have lost one every month.
19:24
When we do get one drop off.
19:26
It hurts.
19:27
It hurts.
19:28
Yeah.
19:28
They're generating enough leads.
19:30
The problem is we're losing a lot of customers out the back door.
19:33
And so a lot of the problems that I have to focus on is labor and leadership.
19:37
Anytime we are supply constrained with labor, it almost always is a training issue.
19:41
Every single entry level position, the way to be able to scale it is nail training because it just trickles down in quality control, then churn, and then if you don't get good churn, like eventually just plateau the business.
19:52
Something else that I wanted to mention though, when we are losing those people, I'm back out on the field covering.
19:57
Really?
19:59
shifts.
19:59
Is that usually if a supervisor goes down?
20:01
Even a cleaner if we don't have any supervisor in a specific area.
20:04
Anytime I hear a manager stepping back into operations and doing the work of a technician, especially this size of business, 60, 70 employees, I immediately know that this is a system failure.
20:15
In my opinion, the challenging part when you have a virtual business is very easy to go the way of compliance.
20:21
What I mean by that is because I don't see them, I don't have the human connection as much.
20:25
It's much like fill this form, then you do these three things, and then you show up here and you check these boxes, and then you get this, and then if you do these three things, you will get fired.
20:33
And if you do these, it's all like very rule based because
20:37
The business is built that way around automations.
20:38
And so we treat everyone in the organization like an if-then statement.
20:42
If this happens, do this.
20:43
Then do this.
20:44
If this is true, do this.
20:46
I see this all the time when you have a distributed workforce.
20:48
It just becomes all compliance.
20:50
And it looks great on paper.
20:52
But then how everyone solves quality control is more compliance.
20:56
We just...
20:58
went to what seemed natural for me, which is here's a system, let's follow the system.
21:03
All right, you're not following the system, so we'll create some checks and balances to check that you're following the system the way you want.
21:09
And if not, you know, see ya.
21:10
For example, you gotta read the document.
21:12
Okay, well, you gotta prove it, so you can't sign it for 10 minutes because we gotta make sure you read it.
21:17
These are all the little things we start throwing in there to just work on compliance, when ultimately we are dealing with human beings.
21:23
And that's why they'll leave.
21:24
I've never loved that, but,
21:26
It was what I knew how to do.
21:28
And so I just did that.
21:30
So it got us to where we are now, but I do see the cap on our growth if we don't change something.
21:36
So you don't feel any connection to the team, the people behind the team, or the mission of the business.
21:41
And just telling them those things, like the values, doesn't do anything.
21:45
The number one reason the cleaners are coming here is because they want to make more money.
21:48
If you're having a second job, you're not doing it for fun.
21:51
You're not doing it because you enjoy it.
21:52
You want to make more money.
21:54
This is very good because now we can create a system that makes it very clear to them why staying longer means more money.
22:00
If we can just get people to stay from two months to six months and triple the tenor of the cleaner, huge.
22:08
Quality control, completely different.
22:10
And so if I was you, I would be measuring that number religiously.
22:15
When did they sign up?
22:16
Like when did they initially join?
22:17
When did they leave?
22:18
And then we're measuring that over the course of time.
22:21
That would be my North Star.
22:22
Yeah, and the more I'm interacting with certain supervisors or certain cleaners, the longer they're staying.
22:29
So the more personal you become and treat them like a person.
22:32
I have felt you strain, like you feel the strain of that though.
22:36
Yeah, I mentally, I'm not strong in that area and I'm... What part of it specifically?
22:41
Yeah, listen man, listen, her boyfriend asked her to be his gal.
22:47
Like that doesn't even happen anymore.
22:49
Just the connection.
22:50
Hearing people.
22:51
Yeah.
22:51
Oh, being a counselor.
22:52
Being the counselor and stuff.
22:54
Mine was like, I want nothing serious at all whatsoever.
22:58
I'm going to see other people.
22:59
I'm like, cool.
22:59
As long as you understand, I'm going to do the same.
23:02
And then when I started doing the same, then all of a sudden I was his girl to everybody.
23:08
And what system do you use for your quarterlies right now?
23:10
Like when you're doing a quarterly report, are you looking at kind of their sites, how many complaints they've had?
23:14
We have a cleaner scorecard, so it measures their efficiency, call-offs versus pickups, client complaints versus compliments, and got your back scores, their audit scores.
23:25
Okay.
23:27
I know, it's very... Alright, so this is what I've been hearing, like, a lot.
23:31
Scorecards, audits.
23:33
These are two words that keep coming up over and over and over again.
23:36
You know when I got a scorecard was when I was in school.
23:38
No one enjoyed school.
23:39
You know when you get an audit?
23:40
From the IRS.
23:41
No one enjoys an audit.
23:42
Look, partly I'm saying these words just to get an emotion from them, for them to see how crazy it is to use these type of words like auditor when it comes to your team.
23:51
Like I'm not gonna audit someone that I have a great relationship with.
23:54
I might have a discussion with them.
23:56
I might have a conversation, but I'm not gonna audit you.
23:58
And this sort of terminology is just a downstream effect of having a culture of compliance.
24:04
Even just the terminology around this stuff can be massaged a lot better.
24:08
Like you guys have a cool name, Club Clean.
24:11
All of this gets changed from scorecards into what club are you in?
24:15
Scorecards and audits feels like I am working for a big corporation that has no soul.
24:20
And if my only goal is making money, the minute I don't need that, I'm out.
24:23
We are running this based upon compliance and we're running this like an automation, like a software.
24:28
which is great until you have the constraint that you need human beings to be on board.
24:32
You can tell whether or not there is a missionary or a mercenary leading a company based on how they talk about their team.
24:39
So if they talk in terms of they don't do these things, these checklists, audits, compliance,
24:45
standards.
24:46
Cool.
24:46
All those things are important, but that's a mercenary speaking.
24:49
A missionary is going to speak to the vision of the business and why we're doing this.
24:53
And then they depend more on the heart leading their team towards that mission than them following the checklist of do's and don'ts that they've prescribed.
25:01
For example, we implemented a one-on-one system where it's called high-low buffalo.
25:06
So it's like, hey, I'm gonna share a high, then you share a high, personally.
25:09
Okay, now you share a low, I'll share a low.
25:12
And then buffalo is, tell me something I don't know about you and I'll tell you something you don't know about me.
25:17
And then you as a manager can customize what you say back to them based upon what you know about them.
25:24
So for example, if I'm talking to a single mom that has two kids and I know she's working at night, I'm gonna say something very different for my buffalo, things that she doesn't know about me, compared to a single guy that's at college and just trying to make an extra buck.
25:35
And so now you create this personal connection that then leads into the professional side.
25:39
Okay, what's your personal goal?
25:42
Like I need to know their goals.
25:43
Probably just providing for my son.
25:46
I don't like even being asked this question because I don't plan anything.
25:49
So I can align Club Clean with how do we make those goals happen?
25:53
And it doesn't have to be direct.
25:54
It's like, well, I want to become a trucker.
25:56
Okay, well, being a trucker, cleaning, how do we connect those two?
26:00
I always wanted to be a beautician, always.
26:03
Well, if we have a system in place, a career progression that they're moving up into, and one of those is that they lead one of the team meetings,
26:11
Now all of a sudden, the ability to communicate publicly is a skill they can use towards their personal goal.
26:16
And so I want to try to incentivize or I want to align their personal goal with the business goal.
26:22
Being able to actually provide for my kid by myself when I had to rely on someone else before is like really nice.
26:28
And then like they made me a supervisor worth a year.
26:30
Like I was only here like six months and they made me a supervisor.
26:32
I would create clubs of cleaners.
26:35
Like club clean and club cleaners.
26:37
And you have different clubs that they move up into.
26:40
And then there's incentives and money should be attached to it because that's the main objective here.
26:45
They're coming here for money.
26:46
Let's not beat around the bush.
26:48
It's not just about incentives though.
26:50
You know what I mean?
26:51
That's great.
26:51
Everybody wants money.
26:52
Everybody wants, you know, and especially nowadays.
26:55
Me and my son wouldn't.
26:57
be in the position that we are now.
26:59
And like, I just got us like a car and everything.
27:01
So it's been like a huge, like 360.
27:03
My biggest thing is at the end of the day, I want,
27:07
The company that I work for to be understanding and to care is my biggest thing.
27:12
Tying those two things together is the unlock.
27:14
I would create clubs that they move up and do.
27:16
Would it be around reviews?
27:18
Would it be around taking on more sites?
27:19
So for example, are you a one site person?
27:21
Are you a two site person?
27:22
Are you a three site?
27:22
Like now they have incentive to get more sites instead of you hiring more cleaners.
27:26
So right now, like for a cleaner, what is the entry level wage?
27:30
per hour?
27:31
14.
27:31
14.
27:32
And what's the flexibility there?
27:33
Is it 14 to 15?
27:34
Is there any, is it just like it's 14 all the time?
27:36
It's always 14.
27:37
Okay.
27:38
And what's the progression on that as a cleaner?
27:41
There's none.
27:42
I mean, they could become a location supervisor.
27:44
We have promoted people from within.
27:46
Okay.
27:46
That pays between like $16 and $18.
27:49
Some, I mean, do we have anybody higher than that on that role?
27:53
Yeah.
27:54
I think that might climb up to close to $20.
27:57
And those people that are up against $20, for example, what are they?
28:01
Have they just been around for a long time?
28:02
It's before we restructured.
28:04
So it is, that was based off of how many hours they overseen, not how many locations.
28:09
So if a location equals 35 hours per week and they take on another location, that equals 20 hours.
28:16
So we have like a pay bracket.
28:18
If you oversee in 40 hours, then this is what you get.
28:21
If you oversee 50 hours, it's what you get.
28:22
That was in the past.
28:23
So anyone that's making that higher wage has been here for a long time.
28:25
Yeah.
28:26
That is an unlock.
28:27
They're making more money.
28:28
They have stayed around longer.
28:30
Yeah.
28:30
Right?
28:31
So, like, the people who have been here the longest, I'm assuming, are on that old pay structure, and they're making 19, 20 bucks an hour?
28:36
Some of them.
28:37
Yeah.
28:37
Okay.
28:38
And how long have they been here?
28:39
Two, three, four, five years?
28:40
Longest supervisor is two and a half years.
28:43
Whoa.
28:44
Wow.
28:45
That's a lot of churn.
28:47
Mercy.
28:48
That, that you've like 500% annual churn.
28:52
If you just got a new job and within the first week, five or 10 people leave the chat or the people that you're working with, they get fired.
29:00
The people that you're working with are like moving on to something new.
29:03
You immediately are like, oh, this is not a place I build a career.
29:06
Hardly anyone here has worked here for more than six, eight or 10 months.
29:09
No one's sticking around for a year or two.
29:11
That doesn't lead me to think as a new employee that this is a place I can build my career and move up inside the company.
29:16
I think a really clear career map with incentives that start you at 14 but get you to pay about 18 would be the goal.
29:24
Because my question is, if someone stayed here for three years, are you willing to pay them 18?
29:28
Yeah.
29:29
Because that's 15 times longer than the average.
29:33
Yeah.
29:34
and I didn't have to train 15 other people otherwise.
29:38
That's the cost you're saving.
29:39
Whether it be the person onboarding them, training them, the site supervisor, all the back and forth, setting up and payroll, all of that gets saved 15 times if they just stay here two, three years.
29:48
And so some of this is gamifying it because you're like, well, how do I change the title of a cleaner?
29:53
We can have a junior cleaner.
29:55
We can have a cleaner.
29:56
We can have a senior cleaner.
29:57
We can make a team lead.
30:00
We can create, along with those clubs, is titles, recognition, and compensation.
30:05
Whether it be five steps, 10 steps, 12 steps, you're simply trying to get them to buy into this idea that this is not a dead-end job.
30:13
If you just say, hey, you're making $14 an hour, you're cleaner.
30:15
As soon as any good performer is two or three months in, they realize, oh, there's nowhere for me to go, they're out.
30:20
Because they'll just go to the next job after $15 an hour.
30:22
Yeah.
30:23
or $16 an hour.
30:25
I would really encourage that during the onboarding, most of it is not about the company and compliance and how your employee handbook is looking and two times off.
30:33
Like yeah, that has to get done.
30:34
The first thing we're talking about is you, the employee.
30:38
It's all about them.
30:40
It's almost the orientation could just be a deep dive on here's a path to growth for you in this company.
30:45
Here at Club Clean, we do not believe in dead-end jobs.
30:48
We believe in being able to get you to the next stage of your career.
30:50
And for some of you, that is get through college debt-free.
30:53
For some of you, that's being able to pay off some debt that's been lingering over your student loans.
30:58
For some of you, this is being able to fill in the gaps so you can make ends meet for your kids at home.
31:02
We're not judging you on that.
31:03
We're just gonna give you a path to make more money and move up inside the company.
31:07
And we're gonna make sure that at every single one-on-one, we know what your goals are personally, those other things.
31:11
And then we're gonna try to align the goals of the business with your goals.
31:14
You need to set that two sentences.
31:18
Two minutes.
31:19
At the beginning of an orientation, you have a very different mindset going into a very compliance-driven organization, which needs to be that way.
31:25
Because you don't have as much oversight on eyes with them.
31:28
And yes, I can talk about pay for performance and how do we actually give them incentives based upon quality control.
31:33
Yes, we can talk about that.
31:35
But if you just get them to buy into the logic that if you stick around here, you make more money, you get recognition, and you get a new title.
31:42
That's meaningful.
31:43
The reason I'm trying to build this second type of culture is because it unlocks something called discretionary effort.
31:48
This is the effort where people don't have to give it and they'll keep their job if they don't give it, but it's also the thing, the ideas that come in the shower.
31:55
It's when they're driving, I'm thinking about solutions for the business, the ability to pick up extra shifts.
31:59
All that discretionary effort is not given to a business when I'm thinking only about compliance.
32:05
You know, and if they get to the next stage and then you show up with a certificate at their job site or someone else does, it's a, hey, congrats, picture, selfie with them, giving them a gift basket, put that on the team chat.
32:17
Very different.
32:18
Now people start paying attention to the team chat.
32:20
Yes.
32:21
Right.
32:22
And they're going to come to a one-on-one like, Hey, okay.
32:24
I'm one more review away from unlocking the next stage, which gives me an extra 50 cents an hour, which I'm really needing.
32:29
Okay.
32:30
Now you say, here's how we make sure that happens.
32:32
So go ahead and get a QR code, put the review link in there.
32:35
And then when you, if you see someone where you can slide them a note with a thank you or say it was great servicing your property and leave the QR code in there.
32:41
Now you are helping them get to the next stage of their career, making it helping them get close to their goals.
32:45
Right in front of John is the mission for why this business exists.
32:49
He was in a really bad situation financially.
32:52
He was upside down on a ton of debt.
32:54
And if he could just open his eyes to the fact that his employees are in that exact same place, they're having to work a second job overnight after their nine to fives already done.
33:02
We came up with goals that admittedly were very much focused on the success of the business rather than the success of the people who worked in the business.
33:12
And if he could just put himself back into how he felt and the emotion that he was feeling years ago, he'd be able to have a lot of empathy and care and passion for helping his employees get out of their bad situation.
33:25
I think that's some of the work that Frankie and I need to do in response to this meeting is...
33:30
redefine and discover for ourselves what the mission is.
33:36
I think the next thing I would say is like an onboarding path, which is like 30, 60, and 90 days.
33:40
So if their first one-on-one is a quarter, that's too long because our average employee tenor is not making it to one of those.
33:47
I would figure out what your 30, 60, 90 is, and I would probably align those like stage one, stage two, stage three of your career map.
33:54
So that way in the meeting, you'd be like, hey, are we falling behind a little bit?
33:58
How do we get you next stage?
33:59
If you're going from 14 to $18 an hour of course of three years, for example,
34:04
Their first one could be a 25 cent bump, then it's a 50 cent bump, then it's a 75 cent bump, then it's a dollar bump, and then the next one's like a dollar and a dollar.
34:11
Like you could really make it, ramp it up.
34:14
Because what's not showing up on the P&L right now is the cost of churn.
34:17
And I think we could talk a lot about like quality control and the systems and like,
34:21
what we call yellow slips callbacks, that all kind of gets solved when you just have employees that have been around for a long time.
34:25
They know the site's at the back of their hand.
34:27
They start to pick up on other stuff.
34:28
They go through it quicker.
34:29
They know what doors to look behind.
34:31
Just all the nuances that someone just needs to be around long enough to find out or figure out.
34:35
What you can do is tie your stages for them to move up into to tangible things like reviews,
34:42
like upsells, these are things that are really tangible.
34:44
It's hard to be like, have a good score or like have a good quality.
34:47
Like you gotta make it really specific.
34:49
So we have like number of reviews, number of upsells, like all the little things that, you know, if someone does, they're doing a good job.
34:55
Doing a good job is a side benefit.
34:58
It's a downstream effect of something else happening.
35:01
Because someone's getting a bunch of positive reviews, you're not having quality control problems.
35:05
So I just go after the positive thing, which is the positive review instead of like compliance.
35:10
audits, you know, like your auditor should be something much more along the lines of someone that like, they're supposed to find things that are happening good.
35:17
Like use the carrot instead of the stick.
35:19
An auditor coming behind me, it does not sound great.
35:22
As much as we talked about training, keep in mind that how to wash something, how to vacuum, how to clean is a technical skill.
35:29
And that is important in training.
35:30
But honestly, if they just spent 20, 30 minutes at the beginning of a three day training session and focused on the goals of the employee and
35:38
why we do what we do, if that was answered, I believe there'd be a whole lot better quality output from the training that ensues over the next three days.
35:48
Yeah, because otherwise, if you say, hey, it's $14 an hour, and your incentive is that you don't get fired, because that's how everyone thinks.
35:54
Like, if that's the way we think, then their goal is to do as little as possible without getting fired.
35:59
That's their goal.
36:01
We feel that.
36:02
That's exactly what we feel.
36:03
It feels like horrible.
36:05
And so like.
36:06
How many times you've called me and said this location looks awful.
36:08
That's her word awful.
36:09
Yeah.
36:10
And so we just changed that to how much more can I get done so I can make more money and be able to accomplish my goals and dreams as an employee here.
36:18
It makes it way easier to do reviews, compliance audits, whatever you want to call them.
36:22
You may even look forward to it because you're actually seeing very tangibly how I'm helping them achieve their goals.
36:30
That would give me so much life because I do like when I can make an impact on them personally.
36:34
Now you feel like you're actually making a positive effect.
36:36
This is now the club connection, not the audit.
36:39
So I would just tie your comp with the biggest problem in the business, which is retention of the team.
36:43
I 100% agree with that.
36:44
It's easier for managers, because they don't feel like they're beating people over the head or on compliance.
36:48
It's, you're just trying to help them.
36:50
And if they don't want to help themselves, that's, we can't.
36:52
That's on them, yeah.
36:53
They're out pretty quick.
36:54
But you don't even feel the weight of that now, because they're just rejecting an opportunity to help.
36:58
Yeah, I'm just trying to get them closer to the goal.
37:00
I know that they want to pay off this debt.
37:01
I know they're trying to provide for their family.
37:03
This is why they're doing the job.
37:04
Let's try to get them closer to that.
37:06
Cool.
37:06
I know that's a lot in a very narrow area, but I do think it is the causing all the other downstream things that we've talked about, and it will solve everything.
37:16
This is honestly some of the best advice I've received in business in a long time.
37:22
And even in the last year, I've paid serious money to have consultation, to be part of communities, to get education.
37:31
And I don't feel like it was as impactful as however long it was we sat down here and he came to me, which is like mind boggling.
37:40
So I'm like super grateful for Mike and his team.
37:44
his time and attention to the details of our business.
37:48
And you'd be stupid to at least not apply to see if you'd be a good fit for it.
37:56
I did kind of immediately take some action on that and, and met with some of my support and supervisors and management, um, in the team on the team, which, you know, it's just a handful of us, but I wanted it to be collaborative.
38:11
Um, and then ended up creating a cleaner growth path.
38:13
Um,
38:15
along with certificates for hitting every single one, as well as the benchmarks that they would need to reach to unlock essentially the next certificate of completion or however you would call it.
38:28
Starting out, like the day one, you're onboarded, you get put on the shift for the first time, you're a cleaning recruit.
38:35
And right now we pay everybody 14 bucks an hour if they're just a cleaner coming in.
38:41
And so we kind of keep that the same.
38:43
Bacon, bring home the bacon is one of our core values.
38:46
So I kind of leverage that.
38:48
And it basically is just, you just show up reliably.
38:50
And so the metric there is you don't call off for the first 30 days.
38:54
And if you can just not do that, just show up to your scheduled shifts, you unlock another one.
39:01
And so we kind of just kept going down that line.
39:03
And then the last, you know, kind of the last one here is the Mentor Club.
39:07
By this time you have you've created or or at least hosted a workshop where you're helping other people in these first kind of stages.
39:15
And so now you're paying it forward as you have been able to move along this path yourself.
39:23
And you've had multiple raises over the course of a couple of years.
39:28
The way I kind of envision it is every quarter we're having like an all day workshop that anybody can attend.
39:33
And if you've hosted one of those, then you've unlocked that final mentor club.
39:38
I haven't implemented it yet.
39:40
So we have my, like Frankie, she's going on maternity leave like very soon.
39:45
And we just hired a new like night manager.
39:49
So.
39:50
That's been our focus right now is getting them like onboarded and like in.
39:56
And one of their first kind of initiatives is going to help me in implementing this fully.
40:02
And so I took like the artwork itself and I just...
40:06
opted out of that graphic.
40:09
And my goal was to like create buttons for these that they can put on there or like pins they can put on their smocks.
40:16
And so you don't even need to know who the person is, but if you see them with their smock on, you're gonna be able to know what club they're in.
40:23
So that was the idea for that.
40:24
And then I created like certificates of completion to basically show up, hey, you've graduated.
40:33
And we take a picture and leverage it kind of like Mike was mentioning.
40:38
So we just we did all those kind of consistent with the theme itself.
40:41
So the goal is in the next two weeks, we will officially have announced this and started integrating it
40:50
into the interviews, into the training, and just into the vernacular of the whole team.
40:55
I want to have a competitive but fun environment.
41:01
You know, one where we feel like we're collaborating and working together towards something.
41:06
And so, without even realizing it, I kind of created a company that didn't match that desire.
41:14
And so,
41:16
It was sort of a wake-up call, like hearing that.
41:19
So that was the one thing that's been ringing true the most.
41:23
And we've already, even before rolling it out, but just I think the mere fact that we're working towards this has already kind of opened the door, and we're seeing the turnover rate start to get better.
41:33
So that's a positive as well.