Latest / Home Service Millionaire with Mike Andes / His Commercial Clients REFUSE to Pay

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His Commercial Clients REFUSE to Pay · Home Service Millionaire with Mike Andes

• 0:00
  business will make $1 million in revenue this year.
• 0:03
  I need help with collecting on $57,000 in past due invoice.
• 0:09
  They're just trying to push off payment as long as possible because it's cheaper to get the money from you and you charge a tiny little bit of fees compared to going out and getting a line of credit.
• 0:17
  They promised a few times through the winter
• 0:20
  that they would make sure to get it paid, asked us to keep servicing them.
• 0:25
  They were going to make sure it was paid.
• 0:26
  I agreed to it mistakenly.
• 0:28
  The biggest mistake is someone having dumb money.
• 0:31
  So they have plenty of cash, but they don't have the leadership chops to actually turn the culture into what they want it to be.
• 0:36
  If you build a business around one person, you actually create more risk in the business because there's more key man risk when there's only one person running the whole operation.
• 0:43
  If you have a million dollar home service business and you're trying to get to $10 million in annual revenue, this video is for you.
• 0:50
  I'm talking to several entrepreneurs that are inside of Home Service Boardroom.
• 0:54
  They have a seven figure business and they're running up against the challenges of leadership, advertising and trying to get to the next level using pay for performance.
• 1:03
  We're going to be discussing what they can do to make sure they get past this constraint and continue to grow the business.
• 1:09
  Now, this is a recorded call and one of the coaching calls that we do inside of Home Service Boardroom.
• 1:13
  It's a private school community where we have 30-day challenges and we keep each other accountable to becoming the leaders that is required to grow to a $10 million organization.
• 1:22
  Let's go ahead and roll the coaching tape.
• 1:26
  Our long-term snowplown business will make $1 million in revenue this year.
• 1:32
  I need help with collecting on $57,000 in past due invoices.
• 1:39
  pay and 57k is that commercial or residential invoices mostly commercial some residential 20 000 of it is from one commercial account last year for snow two customers owe for ten thousand dollars one for snow last year one from the year before and then the rest is from you know smaller businesses or residential
• 2:07
  And do you have any sort of like, so we can talk about how to try to get this money now.
• 2:12
  Like to set, to prevent this in the future, do you have any sort of like overdue fees that accumulate on invoices?
• 2:21
  We do.
• 2:22
  Cool.
• 2:22
  And so on like the 20 grand one, for example, is there a bunch of fees also on top of that?
• 2:27
  There is.
• 2:28
  That 20,000 does include the fees.
• 2:31
  Got it.
• 2:31
  And...
• 2:33
  Commercials in general, they're slow and bad at paying, but like, have they been communicative with you?
• 2:38
  They have, they, they promised a few times through the winter that they would make sure to get it paid, asked us to keep, keep servicing them.
• 2:48
  They, they were gonna make sure it was paid and I agreed to it mistakenly.
• 2:55
  And, and have you threatened with like any sort of a lien on their property or anything like that?
• 3:00
  I have not yet.
• 3:02
  what, like, I would look at your state laws, like, just, this is a great use for AI, like, I'd put in all your email communication, the invoices, and say, hey, in this state, like, what should I be taking in terms of legal action?
• 3:13
  What can I do before actually trying to do, like, a lawsuit?
• 3:16
  I think it's probably going to fall into the category of some sort of a lien on the property.
• 3:23
  And are they, like, let's talk about the $20,000 one, for example, are they a tenant or do they own the land?
• 3:29
  They own the land.
• 3:30
  It's a,
• 3:31
  I suppose there's a whole bunch of apartments in there, and it's just a big area of
• 3:38
  plowing parking lots and drives and yeah yeah so sometimes like putting a lien on a property will immediately cause them to get their attention because if they go to try to pay like taxes if they try to sell the property there can be downstream effects for them but i would i would personally take all your communication correspondence with them i take their invoices i would dump into ai and be like hey i'm in this state in this city what could i be doing and when you make the emails
• 4:05
  I would start off with a much more friendly tone of like, Hey, we got to get paid.
• 4:09
  Like we're a small business in this area.
• 4:10
  In order to pay our employees, we have to get paid.
• 4:13
  If we don't, we'll have to go to these measures.
• 4:16
  And then you try to reference a specific RCW or code that is going to give you the permission to be able to put a lien on the property or some other way of taking legal action without taking legal action.
• 4:30
  Got it.
• 4:31
  And
• 4:32
  Is a lien a lot different than suing someone for individual invoices?
• 4:37
  I suppose to keep it from under like a $5,000 threshold or what have you.
• 4:42
  Yeah.
• 4:42
  Like if you're doing a lawsuit that, that, that is a much more aggressive approach compared to a lien.
• 4:47
  I think that if you position yourself much more like, Hey, we're a small business, we got to pay our employees.
• 4:51
  This has really been hurting our business.
• 4:53
  If we don't get paid by this date, we've got to put a lien on the property.
• 4:57
  That feels different than a lawsuit.
• 4:59
  Like a contractor's lien in most states, you can put this on.
• 5:02
  It just depends on your state specifically and what services were done.
• 5:05
  And did you have a signed agreement?
• 5:07
  All the rest of it.
• 5:08
  But I think it sounds like they're communicative.
• 5:09
  If they dropped off the map and just like did not talk to you, that's when you usually have to go a little more nuclear and start saying, hey, we're pressing legal action and sometimes just getting paying $500 to an attorney and say, hey, can you draft up this document and send it to them on my behalf?
• 5:24
  Then it shows you're really serious.
• 5:26
  And that will usually also get them to move faster.
• 5:29
  Okay.
• 5:31
  So like I would say in the short term, I would be dumping AI.
• 5:35
  I'd be trying to come up with an email that is, Hey, I'm a small business owner.
• 5:38
  I need your help here to try to make this work.
• 5:40
  Otherwise I've got to take this and then you cite the violation code or like the actual code in your state that gives you license to be able to do a contractor's lien or whatever remediation.
• 5:50
  And then the more nuclear option is pay a small retainer to a lawyer to just basically be the person that sends a much more legally, you know,
• 5:59
  legalese type of document to them that's going to be a little more threatening.
• 6:03
  And that would be more of like, hey, if this doesn't happen, we're going to we're going to suit the property and sue you.
• 6:08
  I don't think you'll have to go nuclear because they have been responsive with you.
• 6:12
  Usually people are responsive as long as you communicate well and you cite what's the law.
• 6:17
  They're just trying to push off payment as long as possible because it's cheaper to get the money from you.
• 6:21
  And you got you charge a tiny little bit of fees compared to going out and getting a line of credit.
• 6:26
  Got it.
• 6:27
  And with one of these customers, it wasn't from last winter snow.
• 6:32
  It was from the winters before.
• 6:35
  They were an EV charge in place.
• 6:40
  They opened up a second business.
• 6:43
  Then we started plowing both businesses.
• 6:45
  Their second business, we got paid for everything.
• 6:49
  From the EV one we had gotten paid the year before because we were formed the year before.
• 6:54
  And then since then, they've just ghosted us on that account.
• 6:59
  Yeah, that's the one where I'd probably be looking for an attorney and just be like, hey, this has happened.
• 7:05
  They have not been responsive.
• 7:07
  Can you please draft up a document that basically threatens them?
• 7:10
  90% of the time, when they get that document from a lawyer, all of a sudden they get responsive because they don't want a lawyer in their business.
• 7:17
  They've got to defend against that, and that'll cost them a whole lot more than just paying the invoice, especially at 10 or 20 grand.
• 7:23
  It's going to cost them more to get a lawyer under a retainer and defend themselves for
• 7:27
  And so I would I would do your due diligence and work with AI so that when you go to an attorney, they're not going to bloat this thing into a huge expense.
• 7:36
  But rather, like, hey, I just need this document.
• 7:38
  Here's approximately what I want said.
• 7:39
  And I want you to send it and I'm willing to pay your fee.
• 7:43
  And a lot of times a lawyer that is, you know, just a smaller claims type of situation, you might be looking at between five hundred to a thousand dollars for them to like just draft that document up, send it to the client and take a few customer emails back and forth.
• 7:57
  That cost is bearable.
• 7:59
  Got it.
• 8:00
  Now, we've been owed money plenty of times before.
• 8:05
  We have never sued anybody.
• 8:06
  Generally speaking, how long do you have to collect on something until it's just tough
• 8:13
  It depends on your state.
• 8:15
  I typically if I don't collect within a year, I just consider it bad debt.
• 8:18
  But if it's if I'm going to allow it to go to bad debt, it means that I have warranted it not enough of funds for me to go take this new more nuclear option, which is go get a lawyer involved.
• 8:29
  Once you do get a volume, a lawyer engaged with your business, it's usually assuming they are smaller and they're OK with working with you on an individual one off case basis.
• 8:39
  It can be like, hey, it's $500 per time I need to reach out to a client because they know just their letterhead and their email alone will usually get 90% compliance.
• 8:48
  I believe though, like to be clear, I have never had to sue somebody.
• 8:52
  I have always been able to deal with it without having to go all the way to a lawsuit, either A-
• 8:58
  if I'm going to settle B, if I am going to.
• 9:01
  So, for example, settle would look like, hey, we both disagree on the fact that maybe we did some we messed up a couple of things on the property.
• 9:07
  Now we're going to go back and forth.
• 9:08
  Okay.
• 9:09
  What about 17,000 instead of 20,000?
• 9:11
  Because that $3,000 covers the damages, for example.
• 9:15
  But if you're like completely in the right, usually
• 9:18
  you can either A, just cite the infractions or the codes that allow you to be able to get the money or put a lien on the property.
• 9:26
  Almost always, they'll respond to that.
• 9:28
  If not, then I usually get a lawyer involved.
• 9:30
  And I just have a lawyer on tap that basically is like,
• 9:34
  I could just use to threaten people.
• 9:36
  And it sounds horrible, but if they're not gonna communicate and be reasonable, then I'm gonna use that more nuclear option.
• 9:41
  And I have never had to go beyond that point, but I am willing to.
• 9:45
  I'm not willing to do it for over like 10 grand because it's gonna cost me more
• 9:49
  to just have the lawyer do the suit, go to court the whole nine yards.
• 9:53
  And so the 20 grand one starts to be coming where if you actually had to go all the way through with it, you know, the attorney would take you to court and try to sue them.
• 10:02
  But I have rarely ever had to do that.
• 10:04
  I've never had to do that, to be honest with you.
• 10:07
  I've got a pool service business that does about 1.3 million in sales a year, and I've
• 10:12
  I asked all the standard questions and gotten all the standard answers.
• 10:15
  So I'm looking for some girl math.
• 10:17
  Okay.
• 10:17
  If that applies here.
• 10:19
  Let's do it.
• 10:20
  So I was reading the copy and paste millionaire and maintaining good admin talent is good.
• 10:28
  Costs more to rehire, retrain, have turnover in that position.
• 10:33
  Okay.
• 10:34
  So I'm trying to not let my best people go over the winter, but I'm trying to justify the cost because they do contribute to sales.
• 10:40
  They do all the follow up on sales.
• 10:42
  I do all the sales myself, but they do all the follow up.
• 10:44
  They do all the regular admin stuff and do some of their own smaller sales for standardized things.
• 10:50
  So I'm just trying to see what is the quantifiable cost of.
• 10:57
  letting somebody go and offering them a return to work bonus that they don't take and they just go get another job and having to retrain that position every summer versus switching to a, you know, a VA service or something that's a little bit less.
• 11:10
  reliable than what we have with an in-person worker yeah totally so you know it saves money to have good admin costs money to retrain admin so then where is the threshold of like well just paying i know that you're not supposed to just pay them through the winter yeah but i'm looking for how do i just pay them through the winter yeah i got you all right well the way that you can convince yourself of your return to work bonus to like increase like what is the return to work bonus now that you've proposed
• 11:37
  I've never done it because I've never had enough admins and need to lay anybody off in the winter.
• 11:41
  This is the first winter where I'm like, I have to let somebody go.
• 11:44
  It's too expensive.
• 11:45
  I have two admins.
• 11:46
  Okay.
• 11:47
  Or I have to find another solution.
• 11:48
  Cool.
• 11:49
  So before we endeavor on this, which we will, I want to say I hate fighting ghosts, which means we don't know if this is a problem because we haven't gone through an off season where we lost admin.
• 11:59
  So I was just like, as a little disclaimer there, mostly because I thought this for so long and it cost me hundreds of thousands of dollars before I had to tear the bandaid off because I was forced to and everyone came back.
• 12:11
  So I would just put that as an asterisk next to this.
• 12:15
  so first off how many admin are there one or two two okay and are they both full-time right now yes okay um additional caveat yeah because it's pool service and we're in the south we only have about two and a half months off oh that's not bad like long care five months perfect perfect okay so full service um
• 12:41
  Okay, you can quickly usually calculate how long, how much it actually costs you to replace them by looking.
• 12:48
  Most will determine like their wages, but the biggest cost is going to be your time.
• 12:53
  And that's the part that I'm always most cautious of is the owner spending four or six weeks of their time vested fully in getting them up to speed.
• 13:02
  And let's hope and pray they actually work out.
• 13:04
  So I don't want to lose these people either.
• 13:06
  But if you actually do the math on replacing the admin person, usually for what I have seen,
• 13:11
  especially when there's only two of them in the office and they're generalists, meaning they have to do a bunch of different stuff.
• 13:17
  I'm going to go on a limb and say it takes them four to eight weeks to get really good at their job.
• 13:21
  I think that just shows the trash quality of our training because it's like six months before they're like, okay, that's fine.
• 13:28
  I think that's actually relative.
• 13:29
  I was being conservative.
• 13:31
  Um, but it's probably because they do a lot for you.
• 13:34
  I'm assuming they do, do they do like your QuickBooks and like payroll and everything?
• 13:38
  Pretty much everything, yeah.
• 13:40
  Okay.
• 13:41
  So there's two ways to fix this problem.
• 13:43
  One is you start piecing off some of the most complicated admin tasks and getting outside help.
• 13:48
  So, for example, like a bookkeeper would reduce their need for them to even know how to do bookkeeping or expense tracking, et cetera.
• 13:55
  Maybe that's not something we tackle, though.
• 13:57
  If it's six months to get them up to speed, let's just say it's four before they're decent and you don't have to micromanage them.
• 14:03
  I would go out and say it's costing between $8,000 and $10,000 to replace them by the time you factor in your time, their wages, and mistakes they will make in their first six months.
• 14:14
  And so I would keep that in your mind when it comes to how much do I pay them to come back to work.
• 14:21
  And so I see a lot of people do like, I'll get $500 return to work bonus.
• 14:24
  And it's like, well, compared to four to eight grand, maybe we should reconsider.
• 14:30
  Um, have you talked to them that you about this or is, or, or have they talked about, like asked you about what you're doing during the off season?
• 14:38
  Yeah.
• 14:38
  They, this came up a couple of weeks ago because they said, here, we cutting hours like we did last year.
• 14:42
  Cause the way I solved this last year was that it's cut one of them, the less tenured person down to three days a week and the other one down to four days a week.
• 14:49
  And that was like, maybe you were saving enough collectively that it, we don't have to let anybody go.
• 14:55
  And they were okay with that.
• 14:56
  They were annoyed, but.
• 14:58
  It was an okay solution.
• 15:00
  Yeah.
• 15:02
  The perfect situation is this.
• 15:03
  This is what we do with our admin.
• 15:05
  And that is we determine what months of the year we need certain amounts of hours of admin tasks.
• 15:12
  So, for example, for you, it might be like December, January, February, you basically need them for like 20 hours a week.
• 15:17
  But then during the peak season, you need them 40 plus hours a week.
• 15:21
  And there might even be a spot in between there where it's like you need them 30 to 35 hours a week.
• 15:27
  And just setting the expectation might be all that's required to take away this fear for them of what is to come.
• 15:34
  And just by knowing that, okay, starting this date, I'm going to be down to 20 hours or I'm going to be down to 30 hours.
• 15:40
  And then they've got to make the decision.
• 15:41
  Do they stick it out with a lower pay throughout the off season?
• 15:44
  Or do they go find another part job or something else to supplement the income?
• 15:47
  Or do they leave, come back to work two and a half months later after they go out and get a job someplace else?
• 15:53
  And then you have a big fat bonus attracting them to do so.
• 15:57
  And so I would just give them a couple options.
• 15:59
  Like, hey guys, one, we can do what we did last year.
• 16:02
  We've all got to trim our hours a bit.
• 16:04
  Two is one of you, if you want to leave, go get another job full time.
• 16:09
  When you come back, you'll get this big bonus.
• 16:13
  I think it's having the open conversation with them.
• 16:14
  You'll probably save them.
• 16:16
  I would then lock in though what your what your system is for this.
• 16:21
  So that way everyone just knows this is how the offseason rolls.
• 16:24
  Otherwise you have to have this awkward conversation every single fall with all your admin.
• 16:31
  so i think what i would probably do if i was used this year is say hey guys i don't like cutting your hours but in order to get by we have to so we can do one of two things either a we all cut our hours back to 25 to 30 hours a week or 20 to 30 or b if one of you want to leave go get another job and come back i will pay you a bonus and i'll maintain any of your benefits throughout the off season but when you come back you'll get a big fat check uh
• 16:57
  to make up for any loss of wages compared to a different job that you might have for just a short period of time the positive thing is that period of time is during the retail peak season and they can usually get a job really easily anywhere due with retail because christmas yep i guess that's where where i'm trying to do the girl math i'm like okay by letting one go and then giving them a three thousand dollar return bonus i'm saving
• 17:23
  20 000 but then giving back three versus just cutting both their hours in half is like 18 000 in savings and then it's just a hassle and they're annoyed it's better like one of them called out sick now all the admin is back on me for a month or a week or something it's just like
• 17:41
  I think we have one of them takes vacation every January.
• 17:44
  So that's like a whole week of like paid vacation that I'm paying that they're gone for that somebody has to cover.
• 17:49
  And then if I'm covering it, I'm like, great, now I'm back in the trenches again.
• 17:53
  So it just feels bad.
• 17:54
  Yeah.
• 17:54
  And I think when you're at two employees, no matter what you do, you're going to be at their mercy somewhat.
• 17:59
  And so this is where I lean heavily into having the conversation with them and giving they make the decision.
• 18:05
  Hey guys, these are the two options.
• 18:07
  It's up to you because you're fine with either option, either a one of them opting for the bonus.
• 18:12
  And you know that next spring rush, you're gonna have your two odd person be happy to keep scaling up and not worry about this.
• 18:17
  Or you're also happy if they both just decide to cut their hours.
• 18:21
  And they're like, Okay, that's fine.
• 18:22
  We'll both get part time jobs.
• 18:23
  We'll accommodate each other's schedules, make sure there's coverage, but then we'll have we'll both find something else on the side.
• 18:30
  But they make the decision so that you don't have this awkwardness and feeling like you're not a good boss and then they might leave.
• 18:35
  You don't want to feel that way.
• 18:36
  You want them to make the decision.
• 18:38
  Makes sense.
• 18:39
  Cool.
• 18:40
  You got this, brother.
• 18:41
  Good work.
• 18:42
  Thanks.
• 18:43
  You got it.
• 18:43
  Take care.
• 18:45
  Hi.
• 18:47
  This is my first time on the other side of this.
• 18:50
  Let's go.
• 18:50
  Let's go.
• 18:50
  I've listened to a lot of these.
• 18:52
  Yeah, this is really cool.
• 18:53
  Very interesting.
• 18:55
  How can I help, brother?
• 18:56
  Awesome.
• 18:57
  Great.
• 18:58
  No, I'm sure in a lot of ways, man.
• 18:59
  I think the biggest challenge is to focus in on, it's like don't know what you don't know.
• 19:05
  So focusing in on the question that's going to move the needle forward the most.
• 19:11
  And my wife and I, we have a landscaping business and we are,
• 19:15
  I've always been fascinated with pay for performance, especially in the lawn mowing world.
• 19:21
  We don't do any of that.
• 19:22
  We have a specialized type of maintenance that people do pay for a certain amount of time.
• 19:26
  So this isn't about the maintenance side.
• 19:28
  This is more about the landscape installation side of things.
• 19:31
  And I actually did a little test of it today, and we've done it before, where we're calling it efficiency pay, where essentially we have, we do four 10s.
• 19:41
  And if the crew has a job that we have budgeted, for example, today,
• 19:45
  We're in Florida, it's super hot, so it also incentivizes them to get out of the heat because it's just brutal right now.
• 19:50
  But we have them scheduled for the full day.
• 19:55
  I had two guys for a full day of cleanup, planting, mulching, you know, basic stuff.
• 20:00
  And I told them, you know, this morning after talking it over with my business partner, my wife, and saying, hey, you guys finish adequately all the things I talked about and all the little extra things the customer asked for.
• 20:14
  and the cleanup and get everything, you know, look in stick and stand when we leave and you get back to the shop, clean out the truck and clock out, we'll fill you in the hours for the rest of the day.
• 20:27
  So we're kind of starting with that because I think that's just the easiest way to move forward.
• 20:33
  And just from that, the reaction I had from the two guys was they were super grateful.
• 20:39
  And it's something I know you're always talking about.
• 20:41
  but it's taken me a while to actually implement it, but it really changes the whole incentive structure.
• 20:46
  So my question is what kind of problems that I'm thinking of that could possibly come about with that is that if maybe the customer thinks that they're getting a certain amount of time and they just want them to stay more and they find more stuff to do to them.
• 21:02
  If the crew thinks they got everything finished and they actually didn't, they don't do a good job and they have to come back out again.
• 21:10
  I know you guys do the yellow slips, so.
• 21:12
  It's not a straight, exact question on something specific, but more or less from that system, from what you understand, working in landscape installations, what problems do you foresee with that?
• 21:25
  Yeah, so the challenging part with day rate, that's essentially what you're doing, is it all is great.
• 21:31
  Like, it's the easiest way to do it until there's a callback or a mistake or damage case.
• 21:37
  And specifically, when it's like someone has a callback, then they leave for vacation, and someone else has to go back to the property and fix their mistake.
• 21:47
  So that's when it starts to get really murky.
• 21:48
  Yeah.
• 21:50
  And that's why the ultimate version is P4P, where everything's down to the budget hour.
• 21:55
  But we can absolutely make this work and at least get some positive results.
• 21:59
  The thing that you want to be careful of is a couple things.
• 22:02
  Number one, never giving the customer the estimated amount of time for the job.
• 22:08
  So if it's a 15 budget hour job, the customer cannot know that because if they do, that's when they'll start pulling the crew back in like, hey, it said 15 budget hours.
• 22:18
  You did it in 12.
• 22:19
  That means I got three more hours.
• 22:20
  Right.
• 22:21
  And then they put it puts the crew in a really awkward position.
• 22:25
  So that's the first thing.
• 22:27
  And the second thing is having clear parameters of what done means.
• 22:30
  And so.
• 22:32
  Like whether that be a walk for us, it's like a walkthrough with the client is considered done.
• 22:38
  You could also have like where they have to take a video of the property to prove that everything was completed.
• 22:43
  In addition to the customer doing a walkthrough with them.
• 22:47
  So the reason for that is because that's going to massively diminish the amount of callbacks you do have.
• 22:53
  And so even though the callbacks is going to be your kryptonite when it comes to day rate, you can massively reduce it if you just say, hey, in order to get day rate, you have to have the customer either sign off or do a walkthrough.
• 23:04
  And I need a video attached to the job showing everything was done on the estimate notes.
• 23:09
  Then you can get day rate.
• 23:10
  So doing those couple things will help a little bit.
• 23:13
  Yeah, that sounds great.
• 23:15
  And I really like the video idea.
• 23:17
  Just for example, today, I mean, it wasn't that big of a deal, but it was about a 15 minute drive there, and 15 minutes with the crew, 15 minutes back.
• 23:25
  You know, that takes up 45 minutes or even an hour of my time.
• 23:28
  And we have, we use Housecall Pro.
• 23:30
  You know, we've just gotten used to using that and they have a video attachment feature.
• 23:34
  I could have very easily asked
• 23:37
  The two guys that were out there to just send me a video of everything before they leave.
• 23:41
  You know, those are some small little finishing touches I wanted them to do.
• 23:45
  But I think I'm still going to put myself or possibly our operations manager out there to be the final say along with the customer because they're really the final say.
• 23:53
  If they say something is good, then it actually is good.
• 23:56
  But those pieces of advice really helped, Mike.
• 23:59
  Thanks, man.
• 23:59
  Absolutely.
• 24:00
  You got it.
• 24:02
  The thing to be careful of is like having an operations manager or someone else going at a straight overhead.
• 24:08
  You sometimes will wipe out 50 to 50% plus of your efficiencies gained from your crew by having an overhead person going out and trying to make sure they walk through the customer in order to get P for P. So like, if you're not already doing that, if you're just doing that in order to make sure that the job is completed correctly, that's where I'd be like, okay, you're going to start off saying a huge amount of your efficiency gains.
• 24:30
  by having that extra overhead person go out and visit the project.
• 24:34
  But it's still going to have some gains.
• 24:36
  And I think that would be the worst case scenario is you do have an overhead person or you yourself are going and checking the job, making sure it's completed.
• 24:44
  I became an arborist and some networking found out about a contract and we plant trees for the county where we're at.
• 24:53
  And the markup is
• 24:56
  The way we make money on it is we have to take the wholesale price of the tree and market up a certain percentage.
• 25:01
  And within that percentage has to contain a full year of warranty and tree watering, planting, lodge poles, mulch, everything.
• 25:09
  So usually we do 20, 30, 40 trees.
• 25:12
  So it's a big payout, but I have to I have pretty much almost a full time guy who just waters trees.
• 25:19
  He also does planting when we need him.
• 25:23
  I'm trying to train him to do herbicide, trying to add some more things to what he's doing because the watering definitely lowers in the wintertime.
• 25:31
  But with some sort of efficiency system like that, and this is a conclusion I came to is that we need to really track how long it takes us to plant these trees.
• 25:41
  We've now done it for a few years, so I know the average number of waterings is about 18.
• 25:48
  So at least 18 watering events that were going out, but it sometimes can be upwards of 30 or 40, you know, if it's in a very dry sandy spot.
• 25:57
  So that one's hard, but we came to the conclusion that a good number for two crew to plant in the day is about 12.
• 26:05
  But so I want to incentivize them.
• 26:09
  But if one of those trees dies, not even because of lack of watering, just because it happens, if, you know, whatever, something comes up,
• 26:18
  I still want to incentivize them.
• 26:19
  It's really hard work.
• 26:20
  Again, I want to keep doing it.
• 26:21
  We love the tree planting, but I don't know how to incentivize that.
• 26:26
  So that's a little more complicated.
• 26:28
  Yeah, we've always found any sort of warranties or guarantees that claw back from months before make it really, really difficult to actually get that money back from the technicians once it's given.
• 26:39
  And so personally, I would just be looking at, OK, what what what percentage of the initial amount do I need to set aside for repairs or damages that are inevitably going to come?
• 26:49
  And I'll have to pay my guys for them.
• 26:51
  So, for example, like I.
• 26:53
  on some of our work, we would do 30% of revenue, labor revenue goes to the employees.
• 26:57
  But when we started saying, OK, well, if we're going to guarantee this, for example, planting specifically, let's do 25% knowing that
• 27:06
  In six or eight months, there's going to be some percentage of these plants die or projects that go awry, and we're going to have to replace it for the cost.
• 27:15
  And we're going to have to cover that cost because there's no way you go back and take someone's pay from six months ago.
• 27:19
  Like they will leave.
• 27:21
  So that's the challenging part.
• 27:22
  Yeah.
• 27:24
  Yeah, it is.
• 27:25
  And I mean, because we got that one county contract, and this is something I'm learning from all these municipal contracts, the cities can do something called piggybacking.
• 27:32
  Yep.
• 27:33
  Where, you know, the county already went through all the work of putting this, you know, long, and this is pre-ChatGBT world, so I actually read through the whole contract.
• 27:42
  I didn't just throw it in and be like, chatGBT, tell me what I need to know, which is what I do with contracts now.
• 27:47
  But they were able to, we got two additional cities.
• 27:51
  The nice thing about the two additional cities is that their billing and invoicing process is a little bit easier and they pay faster.
• 27:59
  The county, for whatever reason, takes about like one and a half times the amount to pay.
• 28:03
  It's net 45, which is just forever.
• 28:06
  But what we do, we just had some hitter bank account.
• 28:09
  It's like, oh, that's nice.
• 28:11
  Like, okay, good.
• 28:12
  and pay off some of the wholesalers.
• 28:15
  But because we've gotten it with them, so maybe I can...
• 28:19
  I was thinking, going back to what I was saying before, that if we say, ideally, you guys, we want the two of you to plant, we came to the conclusion of about 12 to 15 30-gallon trees that's loaded up in the truck, planted, mulched, lodge-pulled, and staked, and inspected, so everything's looking good.
• 28:39
  And we already want them to do that in the full day if they finish it like today.
• 28:42
  They finished around 2.30.
• 28:46
  By the time they get back and unload, they'll probably have an extra hour and a half in their regular allotted day.
• 28:53
  So I kind of think I could still go through that.
• 28:55
  That's why I think that efficiency pay for just for what we do seems to work better.
• 29:00
  Does that same crew have to do all the watering and maintenance or just the installs?
• 29:05
  They're just doing the installs.
• 29:07
  They're sometimes they're not even loading up.
• 29:09
  That's something as a business owner, I it's taken me a while to claw myself away from popping up like I'll do it.
• 29:14
  I'll do it.
• 29:16
  Um, but I used to, uh, get there early and I would not agree for the back, but I would take like 30 gallon trees and muscle them up onto the back of the trailer and load them up for the crew and everything.
• 29:26
  But I'm like, wait a second.
• 29:27
  If I'm already trying to incentivize them to do this, the trees are already there, it's gotta be part of their day, you know, because I can't.
• 29:35
  Like I'm trying to take myself out of the equation.
• 29:37
  That's the, that's the big part.
• 29:38
  You know, I got three young kids at home.
• 29:40
  I, I'm trying not to inject myself into all these things because that just skews the whole system.
• 29:46
  Like you wouldn't be able to do what you're doing if you're like, I'll be there.
• 29:49
  I'll be at every job.
• 29:50
  I'll go check one.
• 29:51
  I'll check each one.
• 29:52
  Let me just hop in the plane real quick.
• 29:53
  Like it just doesn't work.
• 29:55
  So I'm really trying to pull myself away from that stuff.
• 29:57
  And there's that like.
• 29:58
  And now I'm going all over the place.
• 29:59
  But yeah, that's that owner mentality because we built it ourselves.
• 30:03
  You know, we have that quality control with that.
• 30:07
  I've gotten better with it.
• 30:08
  But yeah, that still is sometimes hard where I'm like, I want to do it.
• 30:11
  But hurting my back, that helps.
• 30:13
  I'm like, I can't.
• 30:13
  I physically cannot do it.
• 30:15
  Sorry.
• 30:15
  Yeah, I think there's always a identity shift of leading from the front and being a leader that is, you know, out with the front on the front lines, taking the bullets with the team and realizing that that actually does not serve the team at the highest level because it puts you in danger.
• 30:34
  And so a lot of times we will fantasize or lift up the generals that would be like on the front lines with their team.
• 30:41
  And there's certainly a time for that.
• 30:43
  But also that is potentially the worst thing for the team, because if that general goes down, the entire army is gonna be affected.
• 30:52
  And so you spending time out with the guys in the past has probably been the thing that allows you to generate and foster great culture.
• 31:00
  They like you, they want to work harder for you.
• 31:02
  That's all very good, but taking it to the extreme, you can't grow the business or be a strategist if you're in the front lines.
• 31:09
  you have to step back and be able to see where everything's happening and make good strategic calls that affects the entire team, not just the crew that you're working with.
• 31:16
  And so when you zero out to a large size business, almost no large business can the founder or the owner or the CEO
• 31:26
  know, hire or have a connection with every single team member.
• 31:29
  So if you look at like the large companies have hundreds of thousands of employees, there's no way the founders will stay in touch with all of them outside of like an all hands meeting or a video, but he does not know them individually.
• 31:38
  He or she cannot step in and actually do their job.
• 31:41
  And yet they still could be a great leader.
• 31:43
  They can still have great vision, have great camaraderie, great culture.
• 31:46
  And so it is certainly identity a shift.
• 31:48
  And I think the thing that you are in the middle of
• 31:51
  is creating the systems that still manage the labor when you're not there.
• 31:55
  So that when you are the strategist, that there's people out performing on the strategy, the way that you intend them to do.
• 32:02
  So you don't have to be there in person.
• 32:04
  And so things like efficiency pay, ironing out, okay, how many can they install per day?
• 32:09
  If they have to go back and install another one, do I hold that against them?
• 32:12
  Or do I just bundle that in with the number of plants per day?
• 32:15
  As like, okay, if you got to, you got to go with,
• 32:17
  you know, install three ones that died six months ago, but I will still pay for the three.
• 32:22
  What is their incentives like figuring out this is the hard part that no one does, and that's what keeps them out in the field.
• 32:28
  Having to be the leader by example instead of the leader by stepping away and the actually be a thing about strategy.
• 32:34
  And so I just encourage you like all these little like the nuances of the planting, the maintenance, how many do I take away from their pay?
• 32:40
  What percentage can I afford?
• 32:42
  All of those things are the unlock that allows you to not have to be the leader by example all the time.
• 32:48
  That is yeah, that really hits the nail on the head.
• 32:51
  And I think that is exactly my challenge because when there is a fire to be put out, a plant to be planted, a customer to assuage.
• 32:59
  I can run out and do it.
• 33:00
  No problem.
• 33:01
  Yeah.
• 33:01
  Flat tires.
• 33:02
  Boom.
• 33:03
  Oh, one.
• 33:03
  It's like, I knew you've mentioned it.
• 33:05
  Like I've listened to all your stuff.
• 33:06
  It's like a, it's almost like a little, uh, uh, jolt of, uh, adrenaline and energy, like, Oh, awesome.
• 33:11
  I did something.
• 33:11
  I fixed something.
• 33:12
  I'm helping.
• 33:12
  But, um, I, I, the reason I was avoiding sitting down on my computer, opening up our spreadsheets, looking at the efficiency and looking at the budgeted hours with our trees and developing these systems, obviously again, AI and tragedy, do you have made things much more.
• 33:28
  I'm efficient in that.
• 33:29
  You've still got to review things.
• 33:31
  So that's still my challenge.
• 33:33
  My wife is way better at it than me, so I'm really grateful that I have her to kind of nudge me and remind me, like, no, no, no, don't.
• 33:39
  You can't go and play with trees right now.
• 33:41
  You don't want to.
• 33:41
  Like, that's not how it's going to move the needle forward.
• 33:44
  So, yeah, that hit the nail on the head for me to really spend the time.
• 33:48
  Continue to spend the time with that.
• 33:49
  It's like I need to hear it a hundred times sometimes And the challenging part is the dopamine hits still come but they just way more time in between and so when you go out and fix a tree you immediately get this Joel like I fixed this problem The customers happy awesome and you can get ten of those in a day being out in the field with your crew Because okay you you got the gas can that they forgot you fix the problem like this fix it mentality is the thing that gives you the dopamine hit and
• 34:15
  when you start working on the systems or the strategy of the business, you still get dopamine hits.
• 34:19
  It just might be three to six months between dopamine hits.
• 34:22
  And so the one way to stay focused, that's a big one.
• 34:25
  Yeah.
• 34:25
  So so so the way to to hopefully help this is like you can do one of two things.
• 34:31
  One,
• 34:32
  Have these big chunked up goals that you're focused on.
• 34:35
  That's the first part is like six weeks sprints or like what am I focused on this quarter?
• 34:39
  What do I need to achieve?
• 34:40
  What do I need to achieve?
• 34:41
  That's a big domino in the business that if I achieve it, it kind of fixes all these other problems.
• 34:46
  And the second part of that is specifically if you like the if you know, the dopamine hits are what you're looking for is break that larger goal into smaller pieces.
• 34:53
  So you have something to celebrate all along the way.
• 34:56
  So if you're like, well, I've got to do efficiency pay for my whole crew.
• 34:59
  Okay, great.
• 35:00
  Can we figure out what it is for just the planting?
• 35:03
  Well, can we do it for just the maintenance person?
• 35:05
  Can we somehow figure out a way that we're, the person that's doing the watering wants to minimize how many waterings, but they also don't want to
• 35:12
  have trees die.
• 35:14
  Like, these are all the hard problems that we usually will skirt around.
• 35:17
  And we will go after the more urgent problems that are happening on the field, because we can immediately see progress versus the things that do take weeks or months to really wrap our head around test, iterate, try again, revise.
• 35:30
  And that's the part that me and all of us included as leaders have to forge into if we're ever going to scale.
• 35:36
  That's, that's a great example.
• 35:38
  I really well, yeah, I'll look at some of these bigger goals in the systems and
• 35:43
  you know, doing our employee reviews and everything and systemize it and look at something that I can do, chunk it up in a little bit smaller pieces instead of saying, wow, there's these like 20 things I want to do for our business.
• 35:55
  But actually breaking it down into a little bit more digestible pieces, I think it's a,
• 35:59
  great idea because right now i'm using i know i'm sure you've heard of the eisenhower square that helped me a lot at first but now i just have a daily goals list and a not urgent and the not urgent ones i don't even look at and then the daily goals like small little things but i need a bigger one um so that's that's really good advice i appreciate that man excellent anything else to help with oh awesome well i mean pretty much what i was going to say as well is uh and if anyone else is also dealing with this uh i
• 36:26
  Can I say that I'm also in that in the boardroom?
• 36:29
  Yeah, yeah, that's fine.
• 36:31
  Yeah.
• 36:31
  Um, so, so the one of the things that we're, we're working, working through and it's something that I kind of put to the side because, you know, I know a lot of guys out there have kids, they got family members, they got all these different, um, responsibilities and you kind of put aside.
• 36:48
  One of the first things you start putting aside is your sleep, you start sleeping less and then the health goes and then you start,
• 36:54
  Chugging coffee, which is kind of where I was at.
• 36:57
  And I have now trying to lean myself off of a probably, you know, four to six cups a day caffeine habit for many years.
• 37:08
  And it's not easy.
• 37:12
  But it's a big change in the way that I'm approaching problems.
• 37:18
  I think the coffee was great for the,
• 37:21
  broken tire, plant something real quick, go over there and help that employee, hop in the truck and run and grab some supplies, run around.
• 37:27
  It was great for that kind of more jittery, scattered type work.
• 37:32
  But now that I'm leaning off of it and I'm still tired and trying to figure out how my body's going to function without it, but I think it's opening up my mind to some of those more long problems.
• 37:47
  I need more like long thinking into them.
• 37:49
  So...
• 37:50
  That's a part of it and that's been a big help and a big amount.
• 37:53
  But I didn't really put the emphasis on it before.
• 37:55
  I was like, yeah, whatever, yeah, health is fine.
• 37:57
  You know, you got to sleep, sure.
• 37:58
  We always hear about that, but it is, it is such a big part of, of being a successful business owner is to be a successful body owner, I guess you could say that way.
• 38:07
  And a lot of times, whatever you do with your body, it's kind of, it almost reflects itself in the way you leadership, because if, if the leader is constantly trying to get the dopamine hit or like solve all the small problems instead of the big hairy problems, usually to your point, it's just the same thing in health.
• 38:22
  It's like, okay, I'll cram the caffeine or I'll, I'll take this high, you know, a bunch of sugar just to get me through the day.
• 38:28
  Instead of doing the much harder, longer task of like, okay, what do I need to work out?
• 38:32
  Do I change my schedule so I can sleep, change my diet, change the way I'm buying at the grocery store?
• 38:37
  And so I think it's very reflective.
• 38:39
  So what the caller is actually talking about is the first 30 day challenge inside of home service boardroom.
• 38:44
  And usually when people join a mastermind or a group of some sort, they're like, I want tactics.
• 38:49
  The thing that gets you from $1 million to $10 million is usually not tactics.
• 38:53
  It's not a marketing hack or this little website or use this URL.
• 38:57
  It's most of the time becoming the leader that other great talent wants to follow and great management wants to join your team.
• 39:05
  and to become that we have 30-day challenges inside of home service boardroom the first one like he's mentioning is all about health and it's all about your diet and your exercise and we do that and the second one is all about your marriage and we do those first as the foundation for everything else we talk about in the future in home service boardroom
• 39:22
  whether it be public speaking, communication styles, compensation models, that stuff has to come after getting the foundation right.
• 39:29
  And that starts with your health.
• 39:30
  If you'd like to join home service boardroom and you have a seven figure business, click the link down in the description and apply it today.
• 39:38
  This year we'll do about like 1.2.
• 39:41
  I started another location.
• 39:42
  I talked about you with that, um, this upcoming season, I guess a separate, um, point off of that is.
• 39:48
  Is this the right decision to do or should I not?
• 39:50
  And that is starting, it would be kind of a separate, I guess, business in a sense, but obviously like have some overlap.
• 39:56
  It would be stump grinding and it would be, because right now we're just subbing out all our stump grinding.
• 40:01
  And I mean, we don't have a general sum out, but we're obviously not trying to get stump grinding either.
• 40:05
  It's just kind of like, if it's part of the job, then we'll sub it out.
• 40:09
  This would be probably my dad just to do it.
• 40:12
  He's a teacher during the...
• 40:14
  school year, so he's off in the summers, and he just kind of be him like doing it like by himself on a one man job.
• 40:19
  So, I mean, besides buying equipment, I think I would kind of be like, not really in it at all.
• 40:25
  But I guess just from your point of view, starting in another location, obviously next year,
• 40:29
  I'm going to take a lot of my time.
• 40:31
  So is it a smart thing to do?
• 40:32
  Because in my head, it's just like I need to buy the equipment and, like, we're good and that's kind of it.
• 40:36
  But what are your thoughts on, like, should I do that or should you stay clear where you're kind of at with that?
• 40:43
  What's your primary or core service right now?
• 40:46
  Mainly maintenance, so mulling, cleanups, and then, I mean, small landscapes.
• 40:50
  So nothing, like, no hardscapes, but, I mean, grading.
• 40:52
  Yeah.
• 40:54
  plantings mulch stuff like that so i mean we don't do any tree work okay um but sometimes stumps are just like obviously kind of part of it like oh we'll move this stump plant the tree or whatever else um so again we're not trying like to get stumps but it just kind of happens with the job obviously if i did this i mean i'd probably just set up like another website and and just looking at the people in our area too i mean there's some companies but they're like you
• 41:17
  I don't know.
• 41:17
  I feel like I could crush it, like just getting a good website and Google reviews and whatever else.
• 41:23
  And like I said, just have...
• 41:24
  I'm just looking at it more for like, even if my dad's like in retirement, just like have him like do something.
• 41:29
  Obviously, if I'm physically demanding, just grinding stumps.
• 41:31
  So I'm kind of looking at it that way too, like get him doing something.
• 41:34
  And like it is just kind of a one-man show.
• 41:37
  So it's not like setting up a whole other thing that I need to be like managing every single day.
• 41:41
  Yeah.
• 41:43
  But yeah.
• 41:43
  Well, what percentage of revenue right now is constituted from sump grinding?
• 41:48
  I know you said you sub it out.
• 41:50
  Super low.
• 41:51
  Okay.
• 41:51
  Yeah.
• 41:54
  Yeah, I don't know.
• 41:55
  Like, I don't know.
• 41:56
  As far as jobs go, I mean, we probably give this guy like per year...
• 42:00
  30, 40, some kind of jobs.
• 42:02
  So over the course of a year, I mean, that's not obviously a lot.
• 42:05
  But that's another thing.
• 42:06
  If in the beginning, like, my dad was working one day a week, like, he wouldn't care.
• 42:10
  If I would have to, like, fill a schedule or anything, obviously, like, over time, like, I would want to, like, obviously get that working more.
• 42:17
  But it's not really like a rush where I need to, like, book someone out, otherwise they can't pay their bills.
• 42:20
  Like, it's just kind of like whenever he has time, like, he doesn't really care.
• 42:24
  Like right now, like right now you're giving him probably three to 4% of your revenue, the subcontractor.
• 42:30
  And so even if you spent time on this, did the website, put reviews, got your dad set up, get the business lentils, whatever bank accounts.
• 42:40
  If you tripled the amount of, of stump grinding, which would mean you'd have to go out and get reviews, you'd have to generate leads.
• 42:47
  You'd have to triple the amount that you're currently getting.
• 42:49
  Yeah.
• 42:50
  That would still be 10% of your revenue.
• 42:52
  And so I generally look at things like, okay, I got a crazy website.
• 42:56
  I'm gonna get new reviews, new accounts, or like setting up a bank account, whatever it might be.
• 43:01
  If you just put that towards your current business, I happen to think you take 1.2 and add a whole lot more than 10% of revenue.
• 43:08
  Hmm.
• 43:10
  No, I'm kind of thinking the same way.
• 43:11
  I don't know.
• 43:12
  That's why I just wanted to talk to you.
• 43:13
  You're good.
• 43:15
  If you look at it more from like the realistic version.
• 43:17
  But no, I see what you're saying for sure.
• 43:19
  The other part of it is if it goes great, right?
• 43:22
  And it 5Xs and now you're adding like 15% of revenue, for example, even if it goes great.
• 43:27
  if you build a business around one person and then they leave for whatever reason life happens now all of a sudden you've built a business around someone who leaves you have no systems you were out of day to day like it was kind of quote unquote running by itself and now all of a sudden you either have to cut it anyways or b you have to go out and find someone who has all the skills he has and can run the whole business himself
• 43:48
  And so you kind of pigeonhole yourself.
• 43:50
  If it goes really well, you actually create more risk in the business because there's more key man risk when there's only one person running the whole operation.
• 43:58
  Versus you have $1.2 million business.
• 43:59
  Can we just 50% increase that where you already have systems in place, labors, technicians, systems that are already firing, and just do more of that versus going out and doing this other thing, building around one person and creating, at best, a dependency in the business, and at worst, a huge distraction from the thing that's already working.
• 44:18
  Yeah, like even if you guys get like hurt or something too, like then like who's going to grind stumps?
• 44:22
  Like we need stumps to be grown.
• 44:23
  Yeah.
• 44:24
  No, but obviously you think like even if it wasn't my dad, like just a new employee, like same thing.
• 44:29
  I mean, obviously it's going to be one, like it doesn't need to, I'm not going to have a crew of stump grinders, so it's still going to be kind of one person unless, I do take it to a huge thing with like a couple of crews of stump grinding, but obviously that's a general, like that's a whole nother obviously business that I don't want to do.
• 44:43
  I kind of just wanted to have like a little add-on thing, but yeah.
• 44:46
  So you're thinking probably no, just stick to that.
• 44:48
  I would with great prejudice.
• 44:50
  I haven't done anything yet.
• 44:50
  I don't really care.
• 44:52
  But I just, yeah.
• 44:53
  I would encourage you heavily to just focus on what you're currently doing.
• 44:56
  It's working.
• 44:57
  You're at 1.2.
• 44:58
  All that discretionary effort that would go towards setting up the website, getting reviews, setting the business license, doing the stump grinder thing, figuring out the employee or your dad situation, all that attention just focused on this business will get you to 2 million.
• 45:09
  And a business at 1.2 million is in this weird spot where like, you can't really get managers and all the rest of it.
• 45:14
  If you can get us a 2, 3 million,
• 45:16
  this starts to look very interesting and be much more profitable.
• 45:19
  And more importantly, it'll have a business that doesn't depend on one person.
• 45:23
  And in a $1.2 million business, you have five other services.
• 45:26
  It just so happens that your dad does the sump grinding thing, but there's probably five other services that you also sell about, whether it be gutter cleaning, pressure washing, a bunch of other stuff.
• 45:34
  And those are all two, three, four, 5% of your revenue.
• 45:37
  But that doesn't mean I need to change the business or add a new business line.
• 45:41
  Otherwise, you will wake up with a $3 million business, but have 10 different entities, all with a huge amount of key man risk, and each and every one of them constantly having fires that you're just...
• 45:51
  hopping around to I'd just take the current thing deploy all your energy towards it and scale this to 3 million okay I mean right now the plan is actually do multi-locations but keep it actually smaller um which I know it's kind of like this I mean that's still better just to do keep everything like the current one is not playing the girl like at all like next year no more employees more crews um and then just kind of have like one GM kind of run like that one so kind of more separate locations rather than one big one
• 46:16
  Yeah.
• 46:18
  And that's different.
• 46:20
  That's more of like a copy and paste versus build new.
• 46:23
  Right.
• 46:23
  So I would rather have your dad if you're trying to make a role for him, just have him go replicate what you've already done in your market.
• 46:29
  Do it again.
• 46:31
  That way, if something happens to him, whatever, like you can just say, hey, we already know what good looks like.
• 46:36
  Here's location one.
• 46:37
  It's crushing it.
• 46:38
  do this and instead of being like oh we don't really have a recipe or a system for stump grinding and how to get customers we don't know what that demand curve looks like what our cost per lead is you already have figured out so many things you're already ahead of like 95 of people in landscaping let's just keep doing that and if you're going to go copy it again the likelihood of that second location succeeding is much higher because you've already done it one time right what do you think about off season just trying to like supplement that if
• 47:04
  I know sometimes you can sometimes on the ground, like we're in Wisconsin, so sometimes the ground's completely frozen, you can grind stones.
• 47:09
  But what do you think about like, if you're looking at it from that point of view?
• 47:12
  I mean, I'm probably not going to do it.
• 47:14
  I'm just kind of saying like, if you come at it from that way, they're kind of because we do snow, but obviously if it doesn't snow, like we're kind of
• 47:21
  doing much um so just looking at from off season point of view what do you see that as yeah would that be more of a smart way to go if you look at it from that way or no well ideally if i'm adding a service for off season it has an inverse demand curve from my core service meaning when i look at all the pnls i've ever seen from tree companies that do stump grinding they match very similarly to what you do with landscaping which is very busy spring to you know very consistent throughout
• 47:47
  the summer and fall slowly petering off and then an off season.
• 47:50
  And so if you're like, well, I'm going to add the service to do it during the winter.
• 47:53
  If it freezes, you can't work at either of these services like either either one.
• 48:00
  And so the demand curve on both of them is kind of the same.
• 48:02
  Exactly.
• 48:03
  Yeah.
• 48:03
  So I would I would prefer not to do it because all you do if that business grows, all you do is compound the stress during spring rush and make the off season drop even harsher.
• 48:13
  Yeah.
• 48:14
  Okay.
• 48:15
  That makes sense.
• 48:16
  All right.
• 48:16
  That's all.
• 48:17
  That's all I got.
• 48:17
  Thank you.
• 48:18
  Sorry.
• 48:18
  I hope I didn't dash any hopes or dreams.
• 48:20
  But I just wanted...
• 48:21
  Sorry, I didn't do anything yet.
• 48:22
  It really doesn't matter.
• 48:24
  I just wanted to see where you were at.
• 48:25
  Yeah.
• 48:26
  Which I kind of thought you were going this way, but no, I appreciate it.
• 48:29
  You got it, brother.
• 48:29
  You have a good one.
• 48:32
  Two landscape maintenance and design were around a million dollars in revenue.
• 48:36
  And I was curious when you set your vision, deciding that you were going to franchise and have, you know, 100 plus locations or 200, whatever it is,
• 48:45
  and how many years it took you to get to there.
• 48:48
  And I know I often might ask the same question on some of the steps to get there, but I think in repeatedly asking that question, I get a slightly different answer each time, so I'd like to ask some of the steps you took to get there.
• 49:02
  Specifically on the franchising level, or can you frame that into question?
• 49:08
  Yeah, for sure.
• 49:09
  So when you decided to have the vision of, okay, I'm going to franchise, and this is how many locations I want to get to, when you set that vision, how many years it took you to hit that vision?
• 49:21
  Let's say you might be at 200 right now.
• 49:23
  Maybe when you set the vision, it was only 100.
• 49:26
  So when did you know your vision?
• 49:27
  How many years did it take to get you there?
• 49:29
  And what were some of the steps you took to get to the 100?
• 49:32
  Yeah, for me, like I work backwards from what is the vision and then I put numbers towards it.
• 49:37
  So like when I said, hey, I knew our goal is to change level professionalism in the landscape industry.
• 49:41
  That's the vision.
• 49:42
  I then have to ask myself, OK, well, what does that actually mean?
• 49:45
  Because that is a infinite game.
• 49:47
  So I need to put some numbers like some hash hash marks to towards the end zone specifically for the team, because I'm not necessarily the type of person that needs a victory lap, but for a lot of times your team,
• 49:59
  They want to know if they're if they're doing a good job and if they're making progress towards the goal.
• 50:04
  So the goal, the touchdown might be, you know, a very big ethereal goal or infinite game, but most people get very discouraged if there's not hash marks all along the way.
• 50:13
  And so that I reverse engineered, okay, to change level professionalism, I need a thousand locations.
• 50:19
  And the reason we needed 1,000 locations was to compete with enough people to where they would listen to paid for performance, profit sharing, stages of success, and answering the phone, having a great website, having uniforms, treating the team members a certain way.
• 50:33
  And so I reverse engineer from the goal back to numbers.
• 50:36
  A lot of times people will start with numbers, and then five or 10 years later, they'll try to figure out what their vision is.
• 50:41
  And that's why it feels contrived.
• 50:43
  If you're trying to figure out your vivid vision,
• 50:45
  and you're like struggling or it feels like you're just kind of making things up or it doesn't feel authentic.
• 50:50
  A lot of times because you start with a number and then you move to the vision.
• 50:53
  I like to work the other way.
• 50:55
  And as like, here's the vision, here's what the goal is.
• 50:57
  And in order to be able to make that true, what number of locations, what amount of revenue, what number of team members, what number of trucks do I need to have in order to make that vision a possible possibility?
• 51:06
  I didn't hear the majority, but I did hear the tail end when you're talking about starting backwards.
• 51:11
  Hey, here's where we're going to be.
• 51:13
  How many trucks do we need to get there?
• 51:14
  All that.
• 51:15
  Yeah, that's what I would start with.
• 51:16
  That's why that's why for most people when they say they want to franchise and things, it's I usually push back because when they actually identify what their goal is, they don't need to franchise to make that happen.
• 51:27
  And then when times inevitably get tough, they say, oh, man, I shouldn't do this.
• 51:31
  And they probably are right, given the fact that they do not need to franchise in order to hit their goal.
• 51:38
  And so do you specifically want to franchise or what's your what's your sort of vision?
• 51:44
  Yeah, for sure.
• 51:45
  I'd say the goal or the vision is to be a top 100 company.
• 51:49
  Um, in order to do that is kind of scaling, maybe acquiring other businesses.
• 51:53
  Um, franchising is an option.
• 51:55
  Um, when, when sharing the vision from the guys on the team, he just made a comment about, oh, if we acquire other businesses, or just some of the concerns about, you know, the shared culture and, um, being on, you know, the same mission.
• 52:06
  And it seems though franchising might be a better option to
• 52:10
  to execute that game plan rather than, you know, getting to top 100 by just buying a bunch of other, you know, $3 million company, $4 million company, and just kind of scaling it in that way.
• 52:18
  So that's kind of what brought us the idea of, oh, you know, franchising could be a good idea to hit that top 100.
• 52:24
  And, you know, you might ask why hit the top 100.
• 52:26
  It's really, you know, obviously money's cool, but, you know, it's really the greater vision of just having a, you know, like many entrepreneurs, you know, trying to,
• 52:34
  have our full potential.
• 52:36
  If we have different skills, trying to make the most of our abilities, thinking big, trying to impact more lives, different things like that, that sharing the faith with more people, something that's really, that we're passionate about in our company.
• 52:47
  But there's many different things like that, which I'm sure you guys can understand.
• 52:51
  Yeah, I think reverse engineering, that's okay.
• 52:52
  Well, if I need to get the top 100, it means you probably need to do about $30 million in annual revenue.
• 52:57
  And so it becomes, do I, you know, do I do go out and I do three to four large locations in large metropolitan areas, or do I do 20 to 30 smaller locations in smaller, smaller suburban areas?
• 53:10
  And then the question becomes, okay, does either of those require a franchise?
• 53:14
  And I don't think so, because I don't think so.
• 53:18
  I will also say both of those, both directions are hard, either A, M and A, mergers and acquisitions to be able to get to 30 million.
• 53:25
  Yes, it is hard to acquire or bring in new talent from a company that has a different culture and assimilate them to your culture.
• 53:32
  That is hard.
• 53:33
  It is also hard to convince someone that has paid you money to uphold the brand standards that you want them to.
• 53:40
  And that would be franchising.
• 53:41
  So either way is hard.
• 53:43
  And so there is no easy way when you start getting a larger organization.
• 53:46
  It all comes down to leadership in terms of whether or not people actually get on the bus and go in the direction of the vision and uphold brand standards and the culture that you're trying to build.
• 53:55
  Either way is hard, whether you're doing mergers and acquisitions or franchising.
• 54:00
  And I think
• 54:01
  Either of those strategies would work.
• 54:04
  If your goal is top $130 million, you can probably do it within 20 years, 20 to 30 years, if you are trying to grow yourself, each individual location.
• 54:16
  You could probably do it in 10 years if you are trying to do mergers and acquisitions, mostly because it's getting the capital and you're going to make a couple errors likely on your first couple of months.
• 54:27
  Acquisitions and then franchising you could probably do it a lot faster but whether or not you want to get into the game of
• 54:35
  managing a franchise.
• 54:35
  It's a whole different business.
• 54:37
  The same way that mergers and acquisitions is a completely different business than landscaping.
• 54:42
  So it's determining what industry you wanna be in for the long run, but regardless, it's just a matter of how fast you need to go.
• 54:49
  And yes, franchising will do it faster.
• 54:51
  Also, you gotta go convince someone to buy your business versus it's a whole lot easier to convince people to take money from you when you do mergers and acquisitions.
• 55:00
  That makes sense.
• 55:01
  That was a great one.
• 55:02
  I really appreciate that.
• 55:03
  What are some of the things that some of the main points you touch on when, you know, shifting to different locations or, you know, it's not usually franchising, but if you were to buy a location, what are some main things you look at buying a business or changing a different location?
• 55:16
  You know, leadership is always, you know, a big thing.
• 55:18
  Who's the owner?
• 55:19
  But what are some of the things you look at on that spectrum?
• 55:22
  Yeah, if you're buying a larger size business that has an established brand, established teams, and established leadership already in place, so you're buying companies that are already doing multiple millions in revenue, you have to be extremely strong in terms of leadership.
• 55:34
  Otherwise, you will get beat up on the acquisition.
• 55:38
  And so most people, when they go out and try to buy a really established brand that's already doing a few million dollars in revenue in a local market, usually I see that the biggest mistake is someone having dumb money.
• 55:47
  So they have plenty of cash, but they don't have the leadership chops to actually turn the culture into what they want it to be.
• 55:53
  And so what ends up doing is they buy a business that's doing well because of the great leadership that's already there.
• 55:59
  But then as the leader of the company moving into it, as the acquirer,
• 56:04
  They do not have the skills to be able to keep that leadership team and that leadership team churns within 12 to 24 months.
• 56:09
  And now they do not have the skills to go higher the caliber of individuals required to grow that business.
• 56:15
  And that's usually the mistake I see people doing when they're going out and doing their first couple acquisitions for larger companies.
• 56:20
  The question becomes, well, do you hire, do you go out and acquire small companies?
• 56:24
  They're doing $300,000, $400,000, $500,000.
• 56:26
  And now you don't really need to be a strong leader.
• 56:27
  You just need to have systems to move clients into your database.
• 56:31
  And that is easier in terms of leadership, but also much harder in terms of integration because you're changing the brand.
• 56:38
  You are you have no skill, like you have no talent, but it comes with the business.
• 56:42
  You've got to go out and hire a bunch of people, get the trucks and the assets, and you're buying them usually at a much lower valuation.
• 56:48
  than comparatively if you had a larger brand leadership team installed etc but it comes with the extra task of upgrading their pricing to what needs to be going out and hiring all the talent all the technicians and so it's like which flavor of hard do you want i i find most people though that if they have a whole bunch of cash going out and buying larger businesses and underestimating how difficult it is to uh merge their leadership team into their leadership style
• 57:15
  I see we're near the end, but I'll ask you one more question if you're down for it.
• 57:18
  Go for it.
• 57:20
  Sure.
• 57:21
  So I was curious, when you started your second, third location, what were some of the
• 57:25
  the key factor you looked at was like, hey, there's not any other landscape companies in this area, or perhaps it was, oh, there's a lot of landscapers in this area.
• 57:32
  There's a lot of work that needs to be done.
• 57:34
  And what do you do as you're scaling with different, you have a franchise, you have these different things you got to hit on, but then you have different climates.
• 57:42
  Like near us, we have snow, down south they might not, and how you restructure things from different locations throughout different states.
• 57:50
  Yeah, so the main thing is I'm just looking for how few of services can I offer while still maintaining decent revenue during the offseason.
• 57:58
  So if I could get away with just one service, that's all I'd offer.
• 58:03
  But...
• 58:05
  Usually in home services, I have to offer something else to do one of two things either a add revenue during the offseason and be Increase the annual customer value high enough to where I can spend money on customer acquisition costs advertising at a faster clip And so that's the only reason I would add other services for those two things And then in terms of when I looked like when I started my second location, etc was looking at my customer acquisition cost and and
• 58:31
  as it would go up in my market just ask myself okay if i'm now spending a hundred dollar customer record costs in my existing market and my new market is smaller and i'm already boiling this tiny puddle i'm in i'm spending a lot on customer acting costs can i
• 58:48
  going to this new market and get customers for $50 instead of a hundred.
• 58:52
  Now I'm comparing my customer, I wouldn't cause difference between between moving the location or starting a second one, or the fact that there is, there is also a lot more cost and headache by splitting locations.
• 59:06
  And so sometimes I'm willing to spend a higher customer, I can cost at my primary location to increase route density, have everything centralized.
• 59:13
  But over time, if you're in a small market, like in our market is 80,000 people.
• 59:17
  So like,
• 59:17
  In a small market, if you start boiling that puddle, you're starting to spend a lot of extra money on customer action costs.
• 59:23
  And it makes sense just to move to a different puddle and start there.
• 59:26
  And so you can take off the cream of that new market.
• 59:30
  Does that make sense?
• 59:31
  That makes so much sense.
• 59:33
  That was great.
• 59:33
  Yeah.
• 59:34
  Thank you.
• 59:36
  How about the challenge of like state to state when you have different, you know, like one summer and winter, some don't as people are, you know, buying your franchise and.
• 59:45
  and you're you know you're dealing with the weather changes how have you dealt with that the same thing is true just like what's their core service they can keep you eight to nine months busy at the year because almost all our services are seasonal and then what other one maybe two do i need to supplement that with in order to make sure my off season isn't as harsh
• 1:00:04
  And so I can cross sell other services to my existing customers and make them work so much more.
• 1:00:10
  That's really the only two reasons I'm thinking about adding services.
• 1:00:13
  It doesn't matter if it's in a market up north or it's like, oh, it's snow and mowing.
• 1:00:17
  Very simple.
• 1:00:18
  Great.
• 1:00:18
  I'm not going to do all these other things in some markets.
• 1:00:21
  It might not snow and they would complement their mowing season with landscaping so that way they only do landscaping for four months of the year.
• 1:00:30
  but then they do mowing the rest of the time of the year.
• 1:00:32
  For others, I don't want to do landscaping.
• 1:00:34
  It's a whole other, like trailers and equipment, et cetera.
• 1:00:36
  Great.
• 1:00:37
  I'm going to do Christmas lights, or I'm going to do treatments because I can do fertilization weed control during the offseason.
• 1:00:45
  So the only thing I'm thinking about is what's my core service and what supplementary services must I add to fill in my offseason or increase my lifetime value to where I can keep spending money on ads.
• 1:00:54
  That's really it.
• 1:00:55
  Really appreciate that, Mike.
• 1:00:56
  Thank you so much.
• 1:00:57
  You got it, brother.
• 1:00:58
  You have a good one.