WEBVTT
1
00:00:00.051 --> 00:00:05.874
So let's go ahead and talk about profit mode and the $1 million lie that you've been told in the home service industry.
2
00:00:06.555 --> 00:00:14.779
So this graphic basically is this entire video and this entire summation of the book, honestly, in one picture.
3
00:00:15.540 --> 00:00:27.046
And that is we get off the growth mode addiction that all of us have been trained to be on, where you buy more trucks, you hire more people, you take on more debt, and you just keep growing.
4
00:00:28.160 --> 00:00:44.814
And I have constantly said to people, do not quit when you feel like there's chaos in the business until you have spent a full calendar year from January to December in profit mode where you did not buy a single new truck and you didn't increase the number of employees that you hired.
5
00:00:44.834 --> 00:00:49.197
Now you're going to have churn of employees, but if you had five last year, you have five this year.
6
00:00:49.758 --> 00:00:50.018
Okay.
7
00:00:51.399 --> 00:00:53.140
This is what we call profit mode.
8
00:00:53.761 --> 00:00:55.863
When you, instead of buying more trucks,
9
00:00:56.852 --> 00:00:58.513
Hire more people, getting more debt.
10
00:00:59.254 --> 00:01:04.558
You enter profit mode where we raise prices, we increase our profits, and we reduce our close ratio.
11
00:01:05.367 --> 00:01:15.716
Now, one key facet that's so important, this is why most people will not enter profit mode, is they are afraid that if they raise prices, they know that inherently their close rate will go down to some degree.
12
00:01:16.217 --> 00:01:18.399
They'll lose some customers, their close rate will go down.
13
00:01:18.919 --> 00:01:30.829
As long as you have a great website, as long as you have a great brand that's driving enough leads to replace churn inside of your business, you should be able to at least maintain the number of customers you're serving.
14
00:01:31.630 --> 00:01:35.814
So the objective in profit mode is I don't spend money on ads as little as possible.
15
00:01:36.234 --> 00:01:40.017
Maybe during the slow season, you pay some just to be able to keep the crew busy.
16
00:01:40.118 --> 00:01:40.698
I'm okay with that.
17
00:01:41.178 --> 00:01:48.165
I don't want to be dipping way down in revenue in my off season and dropping below 50% of revenue in my worst month compared to my best month.
18
00:01:48.225 --> 00:01:48.885
I don't want that.
19
00:01:49.446 --> 00:01:51.928
So I might spend some on ads, but the whole objective here is.
20
00:01:53.184 --> 00:02:04.515
is I don't spend a bunch of money on ads and that my organic traffic to my site, the referrals, and most importantly, the upsells that I'm able to sell my existing customers, keep my crew busy, and I don't have to spend money on ads.
21
00:02:05.533 --> 00:02:14.700
But those upsells and all of those organic traffic and all those referrals is enough to replace the churn from my business that has a lot of recurring revenue.
22
00:02:15.020 --> 00:02:24.528
So if I have 120 customers and I'm at capacity, capacity is when I must hire more people or get more trucks or I can't serve anyone else.
23
00:02:24.748 --> 00:02:25.528
That's capacity.
24
00:02:26.089 --> 00:02:26.969
And that would be growth mode.
25
00:02:26.990 --> 00:02:32.173
If I went and bought more trucks, hire more people and expanded my capacity to 200 customers, that would be growth mode.
26
00:02:32.975 --> 00:02:36.537
Profit mode is when I say, hey, look, I'm only going to serve 120 customers.
27
00:02:37.137 --> 00:02:38.078
I'm not going to buy more trucks.
28
00:02:38.098 --> 00:02:39.039
I'm not going to hire more people.
29
00:02:39.059 --> 00:02:40.019
I'm not going to get more equipment.
30
00:02:40.299 --> 00:02:42.460
I'm not going to keep advertising and growing to get more customers.
31
00:02:42.521 --> 00:02:46.923
I'm just going to raise my prices every single time I get above 120 customers.
32
00:02:48.704 --> 00:02:58.710
And your level of confidence to raise prices and go into profit mode every single time you hit capacity increases when you know you have enough leads to replace churn.
33
00:02:59.840 --> 00:03:12.504
And for anyone that's ever said they entered profit mode, which I actually don't know of anyone, but assume for a moment you have heard someone, I raised my prices, I lost a bunch of my customers, and more important, my close rate dropped way down and I couldn't close any more jobs.
34
00:03:13.845 --> 00:03:24.288
What they have done is they have not been able to replace their churn with the number of new leads coming in to be able to replace that churn.
35
00:03:25.392 --> 00:03:43.107
And so if I'm losing 10 customers a month to turn, people move, people pass away, whatever it might be, or bad service and they leave, I need to make sure I get at least 10 new customers, which might mean I need 20 more leads every single month passively from people seeing my trucks, seeing my crew, referrals, upsells.
36
00:03:43.187 --> 00:03:48.552
I might need those 20 leads, 10 new jobs every single month in order to replace that churn.
37
00:03:49.352 --> 00:03:57.780
So you can mathematically look at, okay, if I turn off all my ads, would I actually have enough leads to just replace the churn that I'm experiencing every month?
38
00:03:59.262 --> 00:03:59.902
You got to run the math.
39
00:04:00.823 --> 00:04:01.804
Now, don't overthink this.
40
00:04:02.105 --> 00:04:07.210
If you're growing quickly, growth is a byproduct of having higher value than price.
41
00:04:08.468 --> 00:04:15.092
You're getting more customers because they're leaving your competitors or they're joining your service because they see more value than the price you're charging.
42
00:04:15.412 --> 00:04:17.293
That's why you have an increasing number of customers.
43
00:04:17.774 --> 00:04:24.698
So what you do is you raise the price, thereby cutting out the people who value your service the least, and then you make more profits.
44
00:04:27.202 --> 00:04:35.810
So you hit capacity, you're tempted, as you have in the past, to buy more trucks, hire more people, get more equipment, potentially go into more debt.
45
00:04:36.131 --> 00:04:37.212
But we're not going to do that.
46
00:04:37.312 --> 00:04:40.795
That treadmill has been well-worn in the home service industry.
47
00:04:41.596 --> 00:04:45.460
And people grow a $2, $3, $4 million business and hardly see profit.
48
00:04:45.660 --> 00:04:48.943
Work 60, 70, 80 hours a week in their business every single day.
49
00:04:49.084 --> 00:04:50.185
I see this all the time.
50
00:04:50.665 --> 00:04:57.467
And we somehow always think that on the other side of growing the top line revenue, getting more employees and getting more trucks, somehow the business is going to get better.
51
00:05:00.548 --> 00:05:06.749
And so profit mode is a fundamental foundation cornerstone of the copy and paste millionaire.
52
00:05:09.390 --> 00:05:16.552
So warning, I believe that most people should build a business that does $800,000 to $1 million in annual revenue.
53
00:05:18.502 --> 00:05:32.807
crossing 500, 600,000 in revenue, putting it into profit mode, and then slowly growing it over the course of time as they raise prices to 800,000 to a million dollars, having six to eight employees being managed by one person, either the owner or general manager that they hire.
54
00:05:34.528 --> 00:05:39.970
I think that the vast majority of people watching this should stop at one location at this size.
55
00:05:42.003 --> 00:05:52.407
And so as much as I talk about building a GM plus model and growing to 1.5 to 3 million, as much as I talk about copy and paste, I think that the vast majority of people should not do that.
56
00:05:54.787 --> 00:06:05.491
Instead, they should probably stick with one location that has 800,000 to a million dollars in revenue, has a whole bunch of systems that we talk about, incentives for their team, and optimized for their non-business goals.
57
00:06:06.492 --> 00:06:07.212
I actually believe this.
58
00:06:07.990 --> 00:06:16.902
So as much as I write this book, I write this book for the successful businesses because these other three that I wrote, the off-season, P4P, and total business turnaround is for struggling businesses.
59
00:06:17.262 --> 00:06:23.010
This one is for the people, the 10% of my audience that is going to do multiple locations or grow beyond $1.5 million.
60
00:06:25.507 --> 00:06:40.483
But the vast majority of people, in my opinion, should just optimize at this size business, be able to take $200,000 in distributions after growing the business for five, seven, eight years, getting it to optimize profitability, optimize pricing, optimize simplified services, recurring revenue.
61
00:06:40.823 --> 00:06:45.348
And I do believe that the vast majority should not grow beyond that.
62
00:06:47.393 --> 00:06:50.434
So let's go ahead and do the math on profit mode versus growth mode.
63
00:06:50.674 --> 00:06:51.915
Now, there's a bunch of variables.
64
00:06:51.975 --> 00:06:53.395
I try to keep this as simple as possible.
65
00:06:53.415 --> 00:06:54.355
So if you're like, well, what about this?
66
00:06:54.415 --> 00:06:55.796
The variable, you're probably right.
67
00:06:56.376 --> 00:06:57.577
I'm just making a point here.
68
00:06:58.497 --> 00:07:05.779
If last year your revenue was $800,000 and your profit was $100,000, that would be a 12.5% profit margin.
69
00:07:06.500 --> 00:07:07.700
All right, so 12% profit.
70
00:07:08.440 --> 00:07:10.201
Let's assume your hourly rate is 80 bucks.
71
00:07:11.181 --> 00:07:13.082
We decide we're going to keep growing this bad boy.
72
00:07:13.102 --> 00:07:14.363
Same prices.
73
00:07:14.383 --> 00:07:14.983
Same prices.
74
00:07:16.586 --> 00:07:20.469
$80 an hour, but you're going to have to buy two more trucks and trailer setups.
75
00:07:21.130 --> 00:07:22.891
So that's going to cost you a hundred grand.
76
00:07:22.911 --> 00:07:28.195
You're going to put 50 grand in cash and then get some debt, 50 grand of debt to be able to expand the business.
77
00:07:29.176 --> 00:07:32.418
So you grow to $1.2 million in revenue next year.
78
00:07:32.658 --> 00:07:33.118
Let's go.
79
00:07:33.138 --> 00:07:35.620
50% growth.
80
00:07:35.740 --> 00:07:36.121
Let's go.
81
00:07:37.001 --> 00:07:39.663
You're going to profit 12.5%, same exact amount, $150,000 in profit.
82
00:07:43.124 --> 00:07:49.531
However, you have to minus out the $50,000 cash outlet that you're going to have on that equipment.
83
00:07:49.751 --> 00:07:52.795
We're not even going to take into account the debt, just the cash outlay.
84
00:07:54.116 --> 00:07:55.297
Now you have $100,000 in cash instead of $150,000.
85
00:07:55.337 --> 00:07:56.859
On $1.2 million, $100,000 in cash ain't so much.
86
00:07:56.879 --> 00:07:58.941
We're not talking about 7%, 8% profit margins.
87
00:08:05.393 --> 00:08:06.895
Now let's talk about if we go into growth mode.
88
00:08:07.335 --> 00:08:09.438
Same exact business, $800,000 in revenue.
89
00:08:09.878 --> 00:08:11.420
Profit last year was 100K.
90
00:08:11.560 --> 00:08:14.263
We had 12.5% profit margin.
91
00:08:14.704 --> 00:08:16.085
There's a lot of businesses at this size.
92
00:08:16.306 --> 00:08:17.587
Honestly, you're scraping by.
93
00:08:17.627 --> 00:08:20.871
Last couple months of the year are good with cleanups and you wrap it up the season.
94
00:08:20.891 --> 00:08:23.534
You get to like $800,000 in profit.
95
00:08:23.634 --> 00:08:23.875
Awesome.
96
00:08:24.756 --> 00:08:25.697
Let's go into profit mode.
97
00:08:26.973 --> 00:08:28.054
$90 per hour.
98
00:08:28.114 --> 00:08:29.295
We're going to go from $80 to $90.
99
00:08:29.535 --> 00:08:31.176
This is not a big jump, folks.
100
00:08:32.017 --> 00:08:35.199
I would recommend going to $100, and then this math gets really wacky.
101
00:08:35.820 --> 00:08:37.381
But let's just assume $90 per hour.
102
00:08:37.421 --> 00:08:41.805
We raise prices to all our existing customers and all new jobs that come in, $90 an hour.
103
00:08:43.106 --> 00:08:48.550
So because of that, we raised our prices by, what is it, like 12%, something like that.
104
00:08:49.487 --> 00:08:50.247
which I don't recommend.
105
00:08:50.388 --> 00:08:52.629
In the book, I talk about raising prices by at least 15%.
106
00:08:53.009 --> 00:08:54.190
I like more like 20% plus.
107
00:08:54.230 --> 00:08:56.511
But let's assume we're just raising it by 15.
108
00:08:56.771 --> 00:08:57.592
Wait, what is it?
109
00:08:57.612 --> 00:08:58.072
12, 13%, whatever.
110
00:08:58.592 --> 00:09:01.294
We're going to grow our revenue to $850,000 in revenue.
111
00:09:02.154 --> 00:09:05.997
If we go from $80 per hour to $90 per hour, we make $850 next year.
112
00:09:07.117 --> 00:09:09.659
But we're going to make $150,000 in profit.
113
00:09:10.199 --> 00:09:11.960
And so our profit margins are now 17.6%.
114
00:09:15.708 --> 00:09:16.910
Because we just raised prices.
115
00:09:17.090 --> 00:09:17.911
We didn't buy more trucks.
116
00:09:18.111 --> 00:09:19.213
We didn't hire any more people.
117
00:09:19.574 --> 00:09:23.800
We just drew $50,000 in extra revenue and put it right to the bottom line.
118
00:09:23.820 --> 00:09:27.725
Because all we did was send an email and tell people that their prices are higher.
119
00:09:27.885 --> 00:09:30.830
Last year at Augusta Lawn Care, the average location...
120
00:09:31.150 --> 00:09:33.412
grew revenue by more than 27%.
121
00:09:33.793 --> 00:09:35.975
And we're on track to beat that this year.
122
00:09:36.255 --> 00:09:47.586
If you want to see why, go to AugustaLawnCareServices.com slash franchise and watch over 50 videos and case studies of different owners that took their independent lawn care business and turned it into Augusta Lawn Care.
123
00:09:48.527 --> 00:09:49.288
So let's compare these two.
124
00:09:50.490 --> 00:09:52.530
Profit mode versus growth mode for next year.
125
00:09:52.770 --> 00:09:57.371
If we go into growth mode, right side, 1.2 million in revenue, cash profit, 100,000, 8.3%.
126
00:09:57.391 --> 00:09:59.752
You're like, well, no, no, no.
127
00:09:59.932 --> 00:10:01.492
We made more profit, but we had to cash out.
128
00:10:01.612 --> 00:10:01.852
Great.
129
00:10:02.132 --> 00:10:06.393
But this is the pain that you're feeling in growth mode and why growth sucks cash.
130
00:10:06.473 --> 00:10:09.473
It also keeps you very cash poor.
131
00:10:09.833 --> 00:10:14.394
And the reason I talk about this is because people will quit when they have four, five, six, 7% profit margins.
132
00:10:14.414 --> 00:10:18.715
And it happens all the time because it's so stressful from a cashflow perspective.
133
00:10:19.937 --> 00:10:21.778
So 8.3% profit margin.
134
00:10:21.998 --> 00:10:24.239
Over on the left side, we only changed one thing.
135
00:10:24.259 --> 00:10:26.200
We raised our hourly rate to 90 bucks.
136
00:10:26.820 --> 00:10:31.343
In doing so, instead of 1.2 million, we only made $850,000 in annual revenue.
137
00:10:31.483 --> 00:10:33.524
But we profited $150,000.
138
00:10:33.624 --> 00:10:36.665
17.6% profit.
139
00:10:37.025 --> 00:10:37.706
Not bad.
140
00:10:38.286 --> 00:10:38.786
And guess what?
141
00:10:38.866 --> 00:10:46.690
Next year, I'm going to do the exact same thing and probably get to 20% plus profit margins, which is the goal of the copy and paste millionaire.
142
00:10:49.117 --> 00:10:49.758
Pretty cool.
143
00:10:50.740 --> 00:10:51.541
Make more money.
144
00:10:52.903 --> 00:10:54.225
Have to serve less customers.
145
00:10:54.986 --> 00:10:55.868
Have less employees.
146
00:10:55.928 --> 00:10:57.170
Have less trucks to maintain.
147
00:10:58.472 --> 00:11:00.575
That's a business that I think most of us could run.
148
00:11:01.557 --> 00:11:01.997
Here's the thing.
149
00:11:02.921 --> 00:11:04.301
This actually hides the real problem.
150
00:11:05.182 --> 00:11:14.384
Because next year, the person in growth mode that went to 1.2 million, got two more trucks, hired more people, they're going to have to increase their insurance, probably have to upgrade their shop space by growing by 50%.
151
00:11:14.444 --> 00:11:16.805
You're going to have to upgrade, probably double your rent.
152
00:11:17.265 --> 00:11:22.167
Hire a full-time salesperson, because 1.2 million now, and we're going to keep growing, like we've got to hire a salesperson.
153
00:11:22.467 --> 00:11:23.987
And we're going to get an office manager full-time.
154
00:11:24.868 --> 00:11:29.749
It's actually then that the crash crunch begins and margins drop.
155
00:11:30.829 --> 00:11:32.170
It's not actually right here.
156
00:11:33.070 --> 00:11:34.231
Because we can survive this.
157
00:11:35.332 --> 00:11:38.093
We can survive this and we can continue to stay in growth mode.
158
00:11:38.834 --> 00:11:45.038
But what crushes you is when you have to then make huge investments in overhead expenses like an estimator.
159
00:11:45.278 --> 00:11:47.640
And all of a sudden, oh man, I have so many trucks, they're breaking down.
160
00:11:47.880 --> 00:11:48.881
I need a shop maintenance.
161
00:11:48.901 --> 00:11:50.121
Like I need someone, a mechanic.
162
00:11:50.862 --> 00:11:51.582
Straight overhead.
163
00:11:52.023 --> 00:11:53.264
Office manager, straight overhead.
164
00:11:53.504 --> 00:11:56.806
And all of a sudden you're stuck at 1.2 and you're making no more money.
165
00:11:56.906 --> 00:11:58.627
You're making less money than you were at $800,000.
166
00:11:59.968 --> 00:12:00.569
In annual revenue.
167
00:12:01.310 --> 00:12:03.112
And yes, eventually you'll pay off the loans.
168
00:12:03.433 --> 00:12:05.055
Eventually you'll be able to raise prices.
169
00:12:05.716 --> 00:12:07.678
And that's what I hear all the time.
170
00:12:08.499 --> 00:12:09.781
Eventually we'll raise the prices.
171
00:12:09.821 --> 00:12:10.802
Eventually we'll make money.
172
00:12:10.843 --> 00:12:12.304
Eventually we'll be in profit mode.
173
00:12:12.425 --> 00:12:13.206
But we keep growing.
174
00:12:13.246 --> 00:12:16.049
And if we actually boil it down to the brass tacks.
175
00:12:16.250 --> 00:12:17.672
Is we're doing it because of ego.
176
00:12:19.267 --> 00:12:24.030
I know what it's like to have the trucks lined up along the road and everyone feels good.
177
00:12:24.050 --> 00:12:24.950
You do shop tours.
178
00:12:24.990 --> 00:12:26.231
You have your trailers all lined up.
179
00:12:26.431 --> 00:12:33.795
I understand that need to feel like you've made it accomplished, especially when maybe when you were younger, you were kind of like the dumb kid in school.
180
00:12:34.055 --> 00:12:35.075
Maybe you dropped out.
181
00:12:35.255 --> 00:12:38.277
Maybe you didn't finish and you were considered the kind of the black sheep of the family.
182
00:12:38.497 --> 00:12:44.079
I understand the need to then prove yourself with more tangible evidence that you're successful, like trucks and equipment.
183
00:12:44.299 --> 00:12:46.000
But it's not going to make you more profitable.
184
00:12:46.360 --> 00:12:51.202
And it's not going to build you into a business that the copy and paste millionaire method actually applies.
185
00:12:51.442 --> 00:12:53.883
We have systems and procedures and healthy profit margins.
186
00:12:54.143 --> 00:12:56.864
It's just going to inflate the amount of equipment that you have.
187
00:12:57.384 --> 00:12:58.985
And that makes you look good in front of other people.
188
00:13:00.017 --> 00:13:08.700
And if you look at the posts on social media that do well in home services, it is the ones where they post equipment is the ones that they post trucks and everyone likes it.
189
00:13:08.720 --> 00:13:10.100
I have nothing against that.
190
00:13:10.520 --> 00:13:13.201
I don't have nothing against the influencers that do that.
191
00:13:13.621 --> 00:13:14.822
That is fantastic for them.
192
00:13:15.162 --> 00:13:19.463
I am glad that they get new equipment, but 99.99% of us don't make money on social media.
193
00:13:22.324 --> 00:13:23.865
We don't make any money from likes.
194
00:13:24.305 --> 00:13:26.545
We don't make any money from people seeing our new equipment.
195
00:13:26.906 --> 00:13:29.086
The equipment is a tool to build the business.
196
00:13:29.346 --> 00:13:32.467
And the business is built with contracts, contacts, and customers.
197
00:13:32.667 --> 00:13:34.168
And those things come from marketing.
198
00:13:34.428 --> 00:13:36.128
Those things come from raising our prices.
199
00:13:36.389 --> 00:13:38.349
Those things from systems.
200
00:13:38.569 --> 00:13:41.450
But if I take the same photo, I did this last week.
201
00:13:41.770 --> 00:13:43.051
I did a photo of equipment.
202
00:13:43.671 --> 00:13:46.812
And then two days later, I posted a photo of an org chart.
203
00:13:48.678 --> 00:13:53.703
100X more views was on the piece of equipment compared to an org chart.
204
00:13:53.983 --> 00:14:02.011
The org chart is the thing that will make you money, that makes the business profitable and allows you to sell this business one day to someone else who wants to be on that org chart.
205
00:14:02.531 --> 00:14:09.418
It is the thing that allows you to attract talent, allows you to be able to move people up inside of their career, inside of your organization and retain great people.
206
00:14:10.159 --> 00:14:11.320
Not the trucks and equipment.
207
00:14:12.782 --> 00:14:18.672
The trucks and equipment are a tool for you to be able to get the job done and get paid by a customer.
208
00:14:20.187 --> 00:14:22.288
Profit mode versus growth mode.
209
00:14:23.068 --> 00:14:29.791
Also, not to mention, the owner in profit mode will have a longer tenured crew because you're not hiring new people.
210
00:14:29.811 --> 00:14:46.137
So if you look at the average tenor of your team members and technicians out in the field, just the average, if you're in growth mode, you're hiring new people, which reduces, because they're a one-month, two-month, three-month tenor, it reduces the average tenor of your team, which increases mistakes, which increases mistakes,
211
00:14:46.217 --> 00:14:49.919
which increases the drag on your high performers because they're training now.
212
00:14:50.279 --> 00:14:51.400
So it reduces their efficiency.
213
00:14:51.960 --> 00:14:54.822
So I'm assuming in these examples that you stay at the same efficiency.
214
00:14:55.122 --> 00:14:55.802
Not true.
215
00:14:56.583 --> 00:14:57.083
Nay, nay.
216
00:14:57.623 --> 00:15:02.826
When you start going in growth mode and adding employees and adding new customers, you have chaos.
217
00:15:03.187 --> 00:15:05.448
More callbacks, more mistakes, more damage cases.
218
00:15:06.068 --> 00:15:08.209
Less efficiency from your highest performing crew members.
219
00:15:09.190 --> 00:15:12.392
Also not to mention the owner in profit mode will have better customers.
220
00:15:13.576 --> 00:15:13.816
Why?
221
00:15:14.016 --> 00:15:23.759
Because they're not promoting and doing advertising where the lead quality is gonna be lower than the people that saw your truck, that got a referral from their friends and family, that saw your Google reviews, that looked you up online.
222
00:15:23.959 --> 00:15:25.120
Those are better customers.
223
00:15:26.820 --> 00:15:31.842
Not to mention the owner in profit mode will also be able to afford better compensation and benefits.
224
00:15:32.322 --> 00:15:37.043
Because now when you have doubling of your profit margin from 8% to 17% effectively,
225
00:15:39.755 --> 00:15:44.498
And everyone just sells themselves on the fact that, oh, no, no, like I'll pay off the debt eventually and then I'll have better profit margins.
226
00:15:44.878 --> 00:15:46.159
But no one does.
227
00:15:46.499 --> 00:15:48.120
People quit before they ever get there.
228
00:15:48.980 --> 00:15:50.241
And so we're on this treadmill.
229
00:15:50.261 --> 00:15:53.283
If we actually boil it down, it's because of pride.
230
00:15:54.704 --> 00:16:04.890
Instead of just running a profitable business that has a few less trucks, has less employees, that doesn't do a bunch of marketing and ads because I don't need my ego to be inflated by people screenshotting it and sending it to me and saying, your ads look great.
231
00:16:06.185 --> 00:16:18.038
I would rather just send out text messages and emails from HomeWorks and be able to get upsells of my customers where, like my general manager had last week, $8,000 of extra revenue within 24 hours from sending a text message.
232
00:16:18.378 --> 00:16:28.589
That same number of estimates accepted, I think it was like 18 estimates accepted, would have cost me hundreds of dollars, thousands of dollars if I would have spent money on ads.
233
00:16:30.307 --> 00:16:31.828
But yet we go spend the money on the ads.
234
00:16:31.848 --> 00:16:32.988
We spend the money on the trucks.
235
00:16:33.188 --> 00:16:38.371
We spend money on hiring more people, getting more shop sites and expanding revenue and never actually making profit.
236
00:16:38.571 --> 00:16:41.653
The whole objective of running a business is to make profit.
237
00:16:42.533 --> 00:16:44.195
It is not to buy more trucks and hire more people.
238
00:16:44.895 --> 00:16:46.337
It's to make profit.
239
00:16:46.877 --> 00:16:52.342
And then that profit allows and affords you to be able to do all the things as to why you started a business.
240
00:16:52.782 --> 00:17:07.236
Like taking your family on vacation, being able to afford when people get in a jam, be able to pay for their medical bills, being able to help your team, be able to offer benefits, be able to get them to the next stage of their career, be able to create an actual career path where for eight or 10 years that they work for you, you can actually get them above minimum wage.
241
00:17:09.493 --> 00:17:11.436
That's what that shark actually hides.
242
00:17:12.237 --> 00:17:15.661
The $1 million lie is that success starts at a million dollars.
243
00:17:16.903 --> 00:17:21.089
Because of that, we stay in this growth treadmill, grow at all costs, and we take on massive debt.
244
00:17:22.449 --> 00:17:24.730
Inside this book, I do not believe that.
245
00:17:25.311 --> 00:17:28.952
I do not believe that seven figures is where success starts.
246
00:17:29.313 --> 00:17:39.818
I have seen too many times where business owners that run a $700,000, $800,000 annual revenue business, four, five, six employees, absolutely crushing on profit margins with a whole bunch of recurring revenue.
247
00:17:40.118 --> 00:17:41.519
Their sales are automated.
248
00:17:41.559 --> 00:17:43.200
Their admin and backend is virtual.
249
00:17:43.500 --> 00:17:45.341
Their operations are clean, tight.
250
00:17:45.421 --> 00:17:49.463
Team members are well paid because everyone knows exactly what to do and systems are in place.
251
00:17:51.073 --> 00:17:58.920
Alternatively, you can stop growing, make profit, and the business serves you, your family, and your goals.
252
00:18:00.561 --> 00:18:01.903
That is the million-dollar lie.
253
00:18:04.205 --> 00:18:06.647
And in the book, we talk about growing past $500,000 and entering profit mode.
254
00:18:09.202 --> 00:18:30.026
Because if you get to $500,000 in annual revenue, and then over the course of a few years, keep raising your prices every time you hit capacity, assuming that you have a great brand, you have good trucks, you have a website to drive leads to your business and replace churn, you'll be able to build a business that over the course of a few years gets to $800,000, $900,000 in annual revenue, you have four, five, six, seven, eight employees max,
255
00:18:30.980 --> 00:18:32.161
And it's very, very profitable.
256
00:18:33.062 --> 00:18:35.666
I believe the vast majority of people should do that one thing.
257
00:18:36.547 --> 00:18:42.193
And if you're that crazy and ambitious and entrepreneurial and you want to keep going, copy and paste that model.
258
00:18:43.014 --> 00:18:46.719
Instead of trying to figure out how do I then do a sales management position?
259
00:18:46.759 --> 00:18:49.282
How do I then figure out how to do an operations manager?
260
00:18:49.302 --> 00:18:52.826
How do I figure out how to build all of these other, just keep doing the same thing.
261
00:18:53.086 --> 00:18:54.067
Copy and paste it.
262
00:18:55.930 --> 00:18:57.471
That's the entire essence of the book.
1
00:00:00.051 --> 00:00:05.874
So let's go ahead and talk about profit mode and the $1 million lie that you've been told in the home service industry.
2
00:00:06.555 --> 00:00:14.779
So this graphic basically is this entire video and this entire summation of the book, honestly, in one picture.
3
00:00:15.540 --> 00:00:27.046
And that is we get off the growth mode addiction that all of us have been trained to be on, where you buy more trucks, you hire more people, you take on more debt, and you just keep growing.
4
00:00:28.160 --> 00:00:44.814
And I have constantly said to people, do not quit when you feel like there's chaos in the business until you have spent a full calendar year from January to December in profit mode where you did not buy a single new truck and you didn't increase the number of employees that you hired.
5
00:00:44.834 --> 00:00:49.197
Now you're going to have churn of employees, but if you had five last year, you have five this year.
6
00:00:49.758 --> 00:00:50.018
Okay.
7
00:00:51.399 --> 00:00:53.140
This is what we call profit mode.
8
00:00:53.761 --> 00:00:55.863
When you, instead of buying more trucks,
9
00:00:56.852 --> 00:00:58.513
Hire more people, getting more debt.
10
00:00:59.254 --> 00:01:04.558
You enter profit mode where we raise prices, we increase our profits, and we reduce our close ratio.
11
00:01:05.367 --> 00:01:15.716
Now, one key facet that's so important, this is why most people will not enter profit mode, is they are afraid that if they raise prices, they know that inherently their close rate will go down to some degree.
12
00:01:16.217 --> 00:01:18.399
They'll lose some customers, their close rate will go down.
13
00:01:18.919 --> 00:01:30.829
As long as you have a great website, as long as you have a great brand that's driving enough leads to replace churn inside of your business, you should be able to at least maintain the number of customers you're serving.
14
00:01:31.630 --> 00:01:35.814
So the objective in profit mode is I don't spend money on ads as little as possible.
15
00:01:36.234 --> 00:01:40.017
Maybe during the slow season, you pay some just to be able to keep the crew busy.
16
00:01:40.118 --> 00:01:40.698
I'm okay with that.
17
00:01:41.178 --> 00:01:48.165
I don't want to be dipping way down in revenue in my off season and dropping below 50% of revenue in my worst month compared to my best month.
18
00:01:48.225 --> 00:01:48.885
I don't want that.
19
00:01:49.446 --> 00:01:51.928
So I might spend some on ads, but the whole objective here is.
20
00:01:53.184 --> 00:02:04.515
is I don't spend a bunch of money on ads and that my organic traffic to my site, the referrals, and most importantly, the upsells that I'm able to sell my existing customers, keep my crew busy, and I don't have to spend money on ads.
21
00:02:05.533 --> 00:02:14.700
But those upsells and all of those organic traffic and all those referrals is enough to replace the churn from my business that has a lot of recurring revenue.
22
00:02:15.020 --> 00:02:24.528
So if I have 120 customers and I'm at capacity, capacity is when I must hire more people or get more trucks or I can't serve anyone else.
23
00:02:24.748 --> 00:02:25.528
That's capacity.
24
00:02:26.089 --> 00:02:26.969
And that would be growth mode.
25
00:02:26.990 --> 00:02:32.173
If I went and bought more trucks, hire more people and expanded my capacity to 200 customers, that would be growth mode.
26
00:02:32.975 --> 00:02:36.537
Profit mode is when I say, hey, look, I'm only going to serve 120 customers.
27
00:02:37.137 --> 00:02:38.078
I'm not going to buy more trucks.
28
00:02:38.098 --> 00:02:39.039
I'm not going to hire more people.
29
00:02:39.059 --> 00:02:40.019
I'm not going to get more equipment.
30
00:02:40.299 --> 00:02:42.460
I'm not going to keep advertising and growing to get more customers.
31
00:02:42.521 --> 00:02:46.923
I'm just going to raise my prices every single time I get above 120 customers.
32
00:02:48.704 --> 00:02:58.710
And your level of confidence to raise prices and go into profit mode every single time you hit capacity increases when you know you have enough leads to replace churn.
33
00:02:59.840 --> 00:03:12.504
And for anyone that's ever said they entered profit mode, which I actually don't know of anyone, but assume for a moment you have heard someone, I raised my prices, I lost a bunch of my customers, and more important, my close rate dropped way down and I couldn't close any more jobs.
34
00:03:13.845 --> 00:03:24.288
What they have done is they have not been able to replace their churn with the number of new leads coming in to be able to replace that churn.
35
00:03:25.392 --> 00:03:43.107
And so if I'm losing 10 customers a month to turn, people move, people pass away, whatever it might be, or bad service and they leave, I need to make sure I get at least 10 new customers, which might mean I need 20 more leads every single month passively from people seeing my trucks, seeing my crew, referrals, upsells.
36
00:03:43.187 --> 00:03:48.552
I might need those 20 leads, 10 new jobs every single month in order to replace that churn.
37
00:03:49.352 --> 00:03:57.780
So you can mathematically look at, okay, if I turn off all my ads, would I actually have enough leads to just replace the churn that I'm experiencing every month?
38
00:03:59.262 --> 00:03:59.902
You got to run the math.
39
00:04:00.823 --> 00:04:01.804
Now, don't overthink this.
40
00:04:02.105 --> 00:04:07.210
If you're growing quickly, growth is a byproduct of having higher value than price.
41
00:04:08.468 --> 00:04:15.092
You're getting more customers because they're leaving your competitors or they're joining your service because they see more value than the price you're charging.
42
00:04:15.412 --> 00:04:17.293
That's why you have an increasing number of customers.
43
00:04:17.774 --> 00:04:24.698
So what you do is you raise the price, thereby cutting out the people who value your service the least, and then you make more profits.
44
00:04:27.202 --> 00:04:35.810
So you hit capacity, you're tempted, as you have in the past, to buy more trucks, hire more people, get more equipment, potentially go into more debt.
45
00:04:36.131 --> 00:04:37.212
But we're not going to do that.
46
00:04:37.312 --> 00:04:40.795
That treadmill has been well-worn in the home service industry.
47
00:04:41.596 --> 00:04:45.460
And people grow a $2, $3, $4 million business and hardly see profit.
48
00:04:45.660 --> 00:04:48.943
Work 60, 70, 80 hours a week in their business every single day.
49
00:04:49.084 --> 00:04:50.185
I see this all the time.
50
00:04:50.665 --> 00:04:57.467
And we somehow always think that on the other side of growing the top line revenue, getting more employees and getting more trucks, somehow the business is going to get better.
51
00:05:00.548 --> 00:05:06.749
And so profit mode is a fundamental foundation cornerstone of the copy and paste millionaire.
52
00:05:09.390 --> 00:05:16.552
So warning, I believe that most people should build a business that does $800,000 to $1 million in annual revenue.
53
00:05:18.502 --> 00:05:32.807
crossing 500, 600,000 in revenue, putting it into profit mode, and then slowly growing it over the course of time as they raise prices to 800,000 to a million dollars, having six to eight employees being managed by one person, either the owner or general manager that they hire.
54
00:05:34.528 --> 00:05:39.970
I think that the vast majority of people watching this should stop at one location at this size.
55
00:05:42.003 --> 00:05:52.407
And so as much as I talk about building a GM plus model and growing to 1.5 to 3 million, as much as I talk about copy and paste, I think that the vast majority of people should not do that.
56
00:05:54.787 --> 00:06:05.491
Instead, they should probably stick with one location that has 800,000 to a million dollars in revenue, has a whole bunch of systems that we talk about, incentives for their team, and optimized for their non-business goals.
57
00:06:06.492 --> 00:06:07.212
I actually believe this.
58
00:06:07.990 --> 00:06:16.902
So as much as I write this book, I write this book for the successful businesses because these other three that I wrote, the off-season, P4P, and total business turnaround is for struggling businesses.
59
00:06:17.262 --> 00:06:23.010
This one is for the people, the 10% of my audience that is going to do multiple locations or grow beyond $1.5 million.
60
00:06:25.507 --> 00:06:40.483
But the vast majority of people, in my opinion, should just optimize at this size business, be able to take $200,000 in distributions after growing the business for five, seven, eight years, getting it to optimize profitability, optimize pricing, optimize simplified services, recurring revenue.
61
00:06:40.823 --> 00:06:45.348
And I do believe that the vast majority should not grow beyond that.
62
00:06:47.393 --> 00:06:50.434
So let's go ahead and do the math on profit mode versus growth mode.
63
00:06:50.674 --> 00:06:51.915
Now, there's a bunch of variables.
64
00:06:51.975 --> 00:06:53.395
I try to keep this as simple as possible.
65
00:06:53.415 --> 00:06:54.355
So if you're like, well, what about this?
66
00:06:54.415 --> 00:06:55.796
The variable, you're probably right.
67
00:06:56.376 --> 00:06:57.577
I'm just making a point here.
68
00:06:58.497 --> 00:07:05.779
If last year your revenue was $800,000 and your profit was $100,000, that would be a 12.5% profit margin.
69
00:07:06.500 --> 00:07:07.700
All right, so 12% profit.
70
00:07:08.440 --> 00:07:10.201
Let's assume your hourly rate is 80 bucks.
71
00:07:11.181 --> 00:07:13.082
We decide we're going to keep growing this bad boy.
72
00:07:13.102 --> 00:07:14.363
Same prices.
73
00:07:14.383 --> 00:07:14.983
Same prices.
74
00:07:16.586 --> 00:07:20.469
$80 an hour, but you're going to have to buy two more trucks and trailer setups.
75
00:07:21.130 --> 00:07:22.891
So that's going to cost you a hundred grand.
76
00:07:22.911 --> 00:07:28.195
You're going to put 50 grand in cash and then get some debt, 50 grand of debt to be able to expand the business.
77
00:07:29.176 --> 00:07:32.418
So you grow to $1.2 million in revenue next year.
78
00:07:32.658 --> 00:07:33.118
Let's go.
79
00:07:33.138 --> 00:07:35.620
50% growth.
80
00:07:35.740 --> 00:07:36.121
Let's go.
81
00:07:37.001 --> 00:07:39.663
You're going to profit 12.5%, same exact amount, $150,000 in profit.
82
00:07:43.124 --> 00:07:49.531
However, you have to minus out the $50,000 cash outlet that you're going to have on that equipment.
83
00:07:49.751 --> 00:07:52.795
We're not even going to take into account the debt, just the cash outlay.
84
00:07:54.116 --> 00:07:55.297
Now you have $100,000 in cash instead of $150,000.
85
00:07:55.337 --> 00:07:56.859
On $1.2 million, $100,000 in cash ain't so much.
86
00:07:56.879 --> 00:07:58.941
We're not talking about 7%, 8% profit margins.
87
00:08:05.393 --> 00:08:06.895
Now let's talk about if we go into growth mode.
88
00:08:07.335 --> 00:08:09.438
Same exact business, $800,000 in revenue.
89
00:08:09.878 --> 00:08:11.420
Profit last year was 100K.
90
00:08:11.560 --> 00:08:14.263
We had 12.5% profit margin.
91
00:08:14.704 --> 00:08:16.085
There's a lot of businesses at this size.
92
00:08:16.306 --> 00:08:17.587
Honestly, you're scraping by.
93
00:08:17.627 --> 00:08:20.871
Last couple months of the year are good with cleanups and you wrap it up the season.
94
00:08:20.891 --> 00:08:23.534
You get to like $800,000 in profit.
95
00:08:23.634 --> 00:08:23.875
Awesome.
96
00:08:24.756 --> 00:08:25.697
Let's go into profit mode.
97
00:08:26.973 --> 00:08:28.054
$90 per hour.
98
00:08:28.114 --> 00:08:29.295
We're going to go from $80 to $90.
99
00:08:29.535 --> 00:08:31.176
This is not a big jump, folks.
100
00:08:32.017 --> 00:08:35.199
I would recommend going to $100, and then this math gets really wacky.
101
00:08:35.820 --> 00:08:37.381
But let's just assume $90 per hour.
102
00:08:37.421 --> 00:08:41.805
We raise prices to all our existing customers and all new jobs that come in, $90 an hour.
103
00:08:43.106 --> 00:08:48.550
So because of that, we raised our prices by, what is it, like 12%, something like that.
104
00:08:49.487 --> 00:08:50.247
which I don't recommend.
105
00:08:50.388 --> 00:08:52.629
In the book, I talk about raising prices by at least 15%.
106
00:08:53.009 --> 00:08:54.190
I like more like 20% plus.
107
00:08:54.230 --> 00:08:56.511
But let's assume we're just raising it by 15.
108
00:08:56.771 --> 00:08:57.592
Wait, what is it?
109
00:08:57.612 --> 00:08:58.072
12, 13%, whatever.
110
00:08:58.592 --> 00:09:01.294
We're going to grow our revenue to $850,000 in revenue.
111
00:09:02.154 --> 00:09:05.997
If we go from $80 per hour to $90 per hour, we make $850 next year.
112
00:09:07.117 --> 00:09:09.659
But we're going to make $150,000 in profit.
113
00:09:10.199 --> 00:09:11.960
And so our profit margins are now 17.6%.
114
00:09:15.708 --> 00:09:16.910
Because we just raised prices.
115
00:09:17.090 --> 00:09:17.911
We didn't buy more trucks.
116
00:09:18.111 --> 00:09:19.213
We didn't hire any more people.
117
00:09:19.574 --> 00:09:23.800
We just drew $50,000 in extra revenue and put it right to the bottom line.
118
00:09:23.820 --> 00:09:27.725
Because all we did was send an email and tell people that their prices are higher.
119
00:09:27.885 --> 00:09:30.830
Last year at Augusta Lawn Care, the average location...
120
00:09:31.150 --> 00:09:33.412
grew revenue by more than 27%.
121
00:09:33.793 --> 00:09:35.975
And we're on track to beat that this year.
122
00:09:36.255 --> 00:09:47.586
If you want to see why, go to AugustaLawnCareServices.com slash franchise and watch over 50 videos and case studies of different owners that took their independent lawn care business and turned it into Augusta Lawn Care.
123
00:09:48.527 --> 00:09:49.288
So let's compare these two.
124
00:09:50.490 --> 00:09:52.530
Profit mode versus growth mode for next year.
125
00:09:52.770 --> 00:09:57.371
If we go into growth mode, right side, 1.2 million in revenue, cash profit, 100,000, 8.3%.
126
00:09:57.391 --> 00:09:59.752
You're like, well, no, no, no.
127
00:09:59.932 --> 00:10:01.492
We made more profit, but we had to cash out.
128
00:10:01.612 --> 00:10:01.852
Great.
129
00:10:02.132 --> 00:10:06.393
But this is the pain that you're feeling in growth mode and why growth sucks cash.
130
00:10:06.473 --> 00:10:09.473
It also keeps you very cash poor.
131
00:10:09.833 --> 00:10:14.394
And the reason I talk about this is because people will quit when they have four, five, six, 7% profit margins.
132
00:10:14.414 --> 00:10:18.715
And it happens all the time because it's so stressful from a cashflow perspective.
133
00:10:19.937 --> 00:10:21.778
So 8.3% profit margin.
134
00:10:21.998 --> 00:10:24.239
Over on the left side, we only changed one thing.
135
00:10:24.259 --> 00:10:26.200
We raised our hourly rate to 90 bucks.
136
00:10:26.820 --> 00:10:31.343
In doing so, instead of 1.2 million, we only made $850,000 in annual revenue.
137
00:10:31.483 --> 00:10:33.524
But we profited $150,000.
138
00:10:33.624 --> 00:10:36.665
17.6% profit.
139
00:10:37.025 --> 00:10:37.706
Not bad.
140
00:10:38.286 --> 00:10:38.786
And guess what?
141
00:10:38.866 --> 00:10:46.690
Next year, I'm going to do the exact same thing and probably get to 20% plus profit margins, which is the goal of the copy and paste millionaire.
142
00:10:49.117 --> 00:10:49.758
Pretty cool.
143
00:10:50.740 --> 00:10:51.541
Make more money.
144
00:10:52.903 --> 00:10:54.225
Have to serve less customers.
145
00:10:54.986 --> 00:10:55.868
Have less employees.
146
00:10:55.928 --> 00:10:57.170
Have less trucks to maintain.
147
00:10:58.472 --> 00:11:00.575
That's a business that I think most of us could run.
148
00:11:01.557 --> 00:11:01.997
Here's the thing.
149
00:11:02.921 --> 00:11:04.301
This actually hides the real problem.
150
00:11:05.182 --> 00:11:14.384
Because next year, the person in growth mode that went to 1.2 million, got two more trucks, hired more people, they're going to have to increase their insurance, probably have to upgrade their shop space by growing by 50%.
151
00:11:14.444 --> 00:11:16.805
You're going to have to upgrade, probably double your rent.
152
00:11:17.265 --> 00:11:22.167
Hire a full-time salesperson, because 1.2 million now, and we're going to keep growing, like we've got to hire a salesperson.
153
00:11:22.467 --> 00:11:23.987
And we're going to get an office manager full-time.
154
00:11:24.868 --> 00:11:29.749
It's actually then that the crash crunch begins and margins drop.
155
00:11:30.829 --> 00:11:32.170
It's not actually right here.
156
00:11:33.070 --> 00:11:34.231
Because we can survive this.
157
00:11:35.332 --> 00:11:38.093
We can survive this and we can continue to stay in growth mode.
158
00:11:38.834 --> 00:11:45.038
But what crushes you is when you have to then make huge investments in overhead expenses like an estimator.
159
00:11:45.278 --> 00:11:47.640
And all of a sudden, oh man, I have so many trucks, they're breaking down.
160
00:11:47.880 --> 00:11:48.881
I need a shop maintenance.
161
00:11:48.901 --> 00:11:50.121
Like I need someone, a mechanic.
162
00:11:50.862 --> 00:11:51.582
Straight overhead.
163
00:11:52.023 --> 00:11:53.264
Office manager, straight overhead.
164
00:11:53.504 --> 00:11:56.806
And all of a sudden you're stuck at 1.2 and you're making no more money.
165
00:11:56.906 --> 00:11:58.627
You're making less money than you were at $800,000.
166
00:11:59.968 --> 00:12:00.569
In annual revenue.
167
00:12:01.310 --> 00:12:03.112
And yes, eventually you'll pay off the loans.
168
00:12:03.433 --> 00:12:05.055
Eventually you'll be able to raise prices.
169
00:12:05.716 --> 00:12:07.678
And that's what I hear all the time.
170
00:12:08.499 --> 00:12:09.781
Eventually we'll raise the prices.
171
00:12:09.821 --> 00:12:10.802
Eventually we'll make money.
172
00:12:10.843 --> 00:12:12.304
Eventually we'll be in profit mode.
173
00:12:12.425 --> 00:12:13.206
But we keep growing.
174
00:12:13.246 --> 00:12:16.049
And if we actually boil it down to the brass tacks.
175
00:12:16.250 --> 00:12:17.672
Is we're doing it because of ego.
176
00:12:19.267 --> 00:12:24.030
I know what it's like to have the trucks lined up along the road and everyone feels good.
177
00:12:24.050 --> 00:12:24.950
You do shop tours.
178
00:12:24.990 --> 00:12:26.231
You have your trailers all lined up.
179
00:12:26.431 --> 00:12:33.795
I understand that need to feel like you've made it accomplished, especially when maybe when you were younger, you were kind of like the dumb kid in school.
180
00:12:34.055 --> 00:12:35.075
Maybe you dropped out.
181
00:12:35.255 --> 00:12:38.277
Maybe you didn't finish and you were considered the kind of the black sheep of the family.
182
00:12:38.497 --> 00:12:44.079
I understand the need to then prove yourself with more tangible evidence that you're successful, like trucks and equipment.
183
00:12:44.299 --> 00:12:46.000
But it's not going to make you more profitable.
184
00:12:46.360 --> 00:12:51.202
And it's not going to build you into a business that the copy and paste millionaire method actually applies.
185
00:12:51.442 --> 00:12:53.883
We have systems and procedures and healthy profit margins.
186
00:12:54.143 --> 00:12:56.864
It's just going to inflate the amount of equipment that you have.
187
00:12:57.384 --> 00:12:58.985
And that makes you look good in front of other people.
188
00:13:00.017 --> 00:13:08.700
And if you look at the posts on social media that do well in home services, it is the ones where they post equipment is the ones that they post trucks and everyone likes it.
189
00:13:08.720 --> 00:13:10.100
I have nothing against that.
190
00:13:10.520 --> 00:13:13.201
I don't have nothing against the influencers that do that.
191
00:13:13.621 --> 00:13:14.822
That is fantastic for them.
192
00:13:15.162 --> 00:13:19.463
I am glad that they get new equipment, but 99.99% of us don't make money on social media.
193
00:13:22.324 --> 00:13:23.865
We don't make any money from likes.
194
00:13:24.305 --> 00:13:26.545
We don't make any money from people seeing our new equipment.
195
00:13:26.906 --> 00:13:29.086
The equipment is a tool to build the business.
196
00:13:29.346 --> 00:13:32.467
And the business is built with contracts, contacts, and customers.
197
00:13:32.667 --> 00:13:34.168
And those things come from marketing.
198
00:13:34.428 --> 00:13:36.128
Those things come from raising our prices.
199
00:13:36.389 --> 00:13:38.349
Those things from systems.
200
00:13:38.569 --> 00:13:41.450
But if I take the same photo, I did this last week.
201
00:13:41.770 --> 00:13:43.051
I did a photo of equipment.
202
00:13:43.671 --> 00:13:46.812
And then two days later, I posted a photo of an org chart.
203
00:13:48.678 --> 00:13:53.703
100X more views was on the piece of equipment compared to an org chart.
204
00:13:53.983 --> 00:14:02.011
The org chart is the thing that will make you money, that makes the business profitable and allows you to sell this business one day to someone else who wants to be on that org chart.
205
00:14:02.531 --> 00:14:09.418
It is the thing that allows you to attract talent, allows you to be able to move people up inside of their career, inside of your organization and retain great people.
206
00:14:10.159 --> 00:14:11.320
Not the trucks and equipment.
207
00:14:12.782 --> 00:14:18.672
The trucks and equipment are a tool for you to be able to get the job done and get paid by a customer.
208
00:14:20.187 --> 00:14:22.288
Profit mode versus growth mode.
209
00:14:23.068 --> 00:14:29.791
Also, not to mention, the owner in profit mode will have a longer tenured crew because you're not hiring new people.
210
00:14:29.811 --> 00:14:46.137
So if you look at the average tenor of your team members and technicians out in the field, just the average, if you're in growth mode, you're hiring new people, which reduces, because they're a one-month, two-month, three-month tenor, it reduces the average tenor of your team, which increases mistakes, which increases mistakes,
211
00:14:46.217 --> 00:14:49.919
which increases the drag on your high performers because they're training now.
212
00:14:50.279 --> 00:14:51.400
So it reduces their efficiency.
213
00:14:51.960 --> 00:14:54.822
So I'm assuming in these examples that you stay at the same efficiency.
214
00:14:55.122 --> 00:14:55.802
Not true.
215
00:14:56.583 --> 00:14:57.083
Nay, nay.
216
00:14:57.623 --> 00:15:02.826
When you start going in growth mode and adding employees and adding new customers, you have chaos.
217
00:15:03.187 --> 00:15:05.448
More callbacks, more mistakes, more damage cases.
218
00:15:06.068 --> 00:15:08.209
Less efficiency from your highest performing crew members.
219
00:15:09.190 --> 00:15:12.392
Also not to mention the owner in profit mode will have better customers.
220
00:15:13.576 --> 00:15:13.816
Why?
221
00:15:14.016 --> 00:15:23.759
Because they're not promoting and doing advertising where the lead quality is gonna be lower than the people that saw your truck, that got a referral from their friends and family, that saw your Google reviews, that looked you up online.
222
00:15:23.959 --> 00:15:25.120
Those are better customers.
223
00:15:26.820 --> 00:15:31.842
Not to mention the owner in profit mode will also be able to afford better compensation and benefits.
224
00:15:32.322 --> 00:15:37.043
Because now when you have doubling of your profit margin from 8% to 17% effectively,
225
00:15:39.755 --> 00:15:44.498
And everyone just sells themselves on the fact that, oh, no, no, like I'll pay off the debt eventually and then I'll have better profit margins.
226
00:15:44.878 --> 00:15:46.159
But no one does.
227
00:15:46.499 --> 00:15:48.120
People quit before they ever get there.
228
00:15:48.980 --> 00:15:50.241
And so we're on this treadmill.
229
00:15:50.261 --> 00:15:53.283
If we actually boil it down, it's because of pride.
230
00:15:54.704 --> 00:16:04.890
Instead of just running a profitable business that has a few less trucks, has less employees, that doesn't do a bunch of marketing and ads because I don't need my ego to be inflated by people screenshotting it and sending it to me and saying, your ads look great.
231
00:16:06.185 --> 00:16:18.038
I would rather just send out text messages and emails from HomeWorks and be able to get upsells of my customers where, like my general manager had last week, $8,000 of extra revenue within 24 hours from sending a text message.
232
00:16:18.378 --> 00:16:28.589
That same number of estimates accepted, I think it was like 18 estimates accepted, would have cost me hundreds of dollars, thousands of dollars if I would have spent money on ads.
233
00:16:30.307 --> 00:16:31.828
But yet we go spend the money on the ads.
234
00:16:31.848 --> 00:16:32.988
We spend the money on the trucks.
235
00:16:33.188 --> 00:16:38.371
We spend money on hiring more people, getting more shop sites and expanding revenue and never actually making profit.
236
00:16:38.571 --> 00:16:41.653
The whole objective of running a business is to make profit.
237
00:16:42.533 --> 00:16:44.195
It is not to buy more trucks and hire more people.
238
00:16:44.895 --> 00:16:46.337
It's to make profit.
239
00:16:46.877 --> 00:16:52.342
And then that profit allows and affords you to be able to do all the things as to why you started a business.
240
00:16:52.782 --> 00:17:07.236
Like taking your family on vacation, being able to afford when people get in a jam, be able to pay for their medical bills, being able to help your team, be able to offer benefits, be able to get them to the next stage of their career, be able to create an actual career path where for eight or 10 years that they work for you, you can actually get them above minimum wage.
241
00:17:09.493 --> 00:17:11.436
That's what that shark actually hides.
242
00:17:12.237 --> 00:17:15.661
The $1 million lie is that success starts at a million dollars.
243
00:17:16.903 --> 00:17:21.089
Because of that, we stay in this growth treadmill, grow at all costs, and we take on massive debt.
244
00:17:22.449 --> 00:17:24.730
Inside this book, I do not believe that.
245
00:17:25.311 --> 00:17:28.952
I do not believe that seven figures is where success starts.
246
00:17:29.313 --> 00:17:39.818
I have seen too many times where business owners that run a $700,000, $800,000 annual revenue business, four, five, six employees, absolutely crushing on profit margins with a whole bunch of recurring revenue.
247
00:17:40.118 --> 00:17:41.519
Their sales are automated.
248
00:17:41.559 --> 00:17:43.200
Their admin and backend is virtual.
249
00:17:43.500 --> 00:17:45.341
Their operations are clean, tight.
250
00:17:45.421 --> 00:17:49.463
Team members are well paid because everyone knows exactly what to do and systems are in place.
251
00:17:51.073 --> 00:17:58.920
Alternatively, you can stop growing, make profit, and the business serves you, your family, and your goals.
252
00:18:00.561 --> 00:18:01.903
That is the million-dollar lie.
253
00:18:04.205 --> 00:18:06.647
And in the book, we talk about growing past $500,000 and entering profit mode.
254
00:18:09.202 --> 00:18:30.026
Because if you get to $500,000 in annual revenue, and then over the course of a few years, keep raising your prices every time you hit capacity, assuming that you have a great brand, you have good trucks, you have a website to drive leads to your business and replace churn, you'll be able to build a business that over the course of a few years gets to $800,000, $900,000 in annual revenue, you have four, five, six, seven, eight employees max,
255
00:18:30.980 --> 00:18:32.161
And it's very, very profitable.
256
00:18:33.062 --> 00:18:35.666
I believe the vast majority of people should do that one thing.
257
00:18:36.547 --> 00:18:42.193
And if you're that crazy and ambitious and entrepreneurial and you want to keep going, copy and paste that model.
258
00:18:43.014 --> 00:18:46.719
Instead of trying to figure out how do I then do a sales management position?
259
00:18:46.759 --> 00:18:49.282
How do I then figure out how to do an operations manager?
260
00:18:49.302 --> 00:18:52.826
How do I figure out how to build all of these other, just keep doing the same thing.
261
00:18:53.086 --> 00:18:54.067
Copy and paste it.
262
00:18:55.930 --> 00:18:57.471
That's the entire essence of the book.
