Is Your Business Actually Ready for a Recession?

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talking to some, we'll call them consultants in the trades that work with lots of owners.
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They're seeing a lot of companies in the industry missing their numbers.
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Companies that dropped 90, 95, 98%, they were growing really fast and were like stock market darlings.
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And then all of a sudden it's like, oh, you're losing money?
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Interest rates have gone up?
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we are slashing your valuation.
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And if you've kind of gone on that treadmill, like I use equipment loans, I use truck loans.
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Now all of a sudden that loan might cost 40, 50% more.
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In a bad market, when things get harder, if you're not profitable, the losses just compound the debt compounds, the trouble compounds.
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This is how you miss making the sales tax payment or the payroll payment thing.
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If you look at 2008, 2020, 2001, those were actually the years when a lot of big businesses today were started because they are at the back of a recession when a whole bunch of customers were leaving their competition and they were able to absorb all that extra demand.
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Living in fear just perpetually has us not hiring, not marketing, lifting our foot off the gas, and the pain and the problems continue for longer and longer periods of time.
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And that's why we eventually shut down our businesses or we wear out.
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Hello, everyone.
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Welcome back to another podcast.
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Today we are putting on our tinfoil hats.
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We're getting doomerism.
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We're going to be thinking about all the bad things that could happen in the world.
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We're usually pretty optimistic people, but today we're going to put that on a reverse a little bit.
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And we're going to talk a little bit about the economy and more importantly, what you can do to make sure you win in a bad economy.
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And so we don't want to be the people that say, oh, there's going to be a recession.
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Don't do don't invest.
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Don't grow your business.
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That's not really going to be the theme of the day.
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It's going to be how do we take advantage of this?
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How should we be thinking about an economy that might be softening?
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I think for most of us, we've felt pressure in the economy from customers.
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pressure at the pump in terms of the cost of fuel, interest rates are going up.
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There's a lot of different things.
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And so I wanted to talk about kind of three core elements of the economy, how it's going to affect the home service industry.
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And hopefully, JP and I can give you some ideas of how to prepare for it and make sure you win during this time.
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So the first one I want to kind of kick over to you, Jonathan, is really talking about interest rates and
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For the last year and a half, two years, interest have been slowly kind of coming down.
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They stayed stagnant for a while.
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And now, just most recently, the Fed decided, hey, we're moving interest rates back up because inflation is kind of running hot.
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And so when it comes to home services and interest rates going higher for longer, what are some of the implications that that might bring
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And more importantly, how should we be thinking of it at home service level?
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Because a lot of times interest rates mean if they go up, people are spending less money.
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They're less likely to get loans or debt to go do a home improvement project or buy a new house.
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So what would be something you would tell a home service business owner?
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And what really happens to home services with interest rates being higher?
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Yeah.
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Do you think people understand what higher interest rates means in the first place before we even talk about... Go ahead.
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Check that off.
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Go ahead.
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Okay.
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I was...
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thinking about this a little bit in advance.
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And there's a common term that people hear in the economy, or if you read financial stuff, or if you just listen to the news in the background, you'll hear this concept of a K-shaped economy.
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And this will sort of lead into interest rates.
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And I just want to define this because I do think it helps understand why interest rates matter.
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So if you've ever heard the term K-shaped economy, it's this basic argument.
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There are two economies.
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If you think about it, it makes sense.
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You could think about all the
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Very, very, very wealthy people.
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They live in their own little world, their own little economy.
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They have lots of income.
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They own lots of assets.
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And then there's another economy you can kind of, if you want to look at the furthest, the opposites in the market, there's another economy.
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And that economy would be the people at the bottom of the financial economy.
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Ladder, they have very little income.
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They live in maybe an apartment.
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They own no assets.
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They may not even own a car.
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And that's the two dramatic.
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You got Elon Musk on one side and you got the homeless person on the other.
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As I'm it's not really that dramatic, but it's that kind of a scenario where that's the two K's.
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And those are two completely different economies.
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You could argue there are multiple economies.
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More than two, because you can also think about other people that might live in your area that are way upper middle class.
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You could almost call that a third economy.
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But the K economy, you've often heard this.
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Now, the reason why this matters to the interest rate conversation is both are impacted by interest rates.
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And so.
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Another thing to say about the K economy, just to be clear, one group is doing better.
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Maybe life's getting better for them and one is doing worse.
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That's the argument.
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Now, there's also an argument right now that this is stabilizing.
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There's also something really important to understand because I like this topic.
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I can't give you the facts.
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I just know this to be the case.
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This K economy that we're having, this has happened in the 80s.
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It's happened in the 90s.
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It's like not the first time.
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This is not like some brand new development, but it's become worse more recently.
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And why has it become worse?
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Back to interest rates.
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Because a lot of times when they talk about the K economy, they are talking about the income difference, but they're really talking about the wealth difference in assets.
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So think about what's happened as the prices of homes have gone up, as the price of stocks have gone up, as the price of all these other investments and asset classes have gone up.
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The people at the top of the economy tend to be the ones that own that stuff.
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And so their net worth, their wealth has gone way up.
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While people at the bottom of the economy don't have as many stocks, they may have a smaller home or no home.
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They're renters.
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They haven't benefited as all these asset prices have gone up.
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So that's the when you hear about this wealth gap or you hear about this K economy, it's about income, but it's largely about assets, about wealth.
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OK, OK.
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Yeah, and one thing to speak to that, one of the notes I put is you almost have to, the economies, we can talk about a K-shaped economy for high wealth, low wealth, etc.
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It's almost, if you look at your service area, there's probably going to be pockets where there are people that have a lot of assets.
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They have experienced the biggest wealth shift in the past five years since COVID, and then the opposite in literally a neighborhood over.
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Yeah.
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And really the segmentation of no longer do I look at like my retention or my churn, of course, my whole service area, I've actually got to look at my zip code or by neighborhood, because it could be completely different based upon where are they at on that K shaped recovery.
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A hundred percent.
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And that's one of the reasons why I wanted to define this exact concept, because it's going to inform our conversation about interest rates.
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It's going to inform exactly what you talked about, Michael.
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What you're basically saying is, who do we serve?
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Where do we serve?
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It's going to inform that.
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There's also a general argument that this whole case shape economy thing stabilizing a little bit.
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Who knows?
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I don't know.
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What do you mean by that?
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When you say stabilize, you mean it's like coming back to me.
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Yeah, yeah, yeah.
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Yeah.
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So if you think about the way that the, and again, I'm pretty informed on this topic, but I'll tell you that
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I don't have the answer.
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Like when we talk about this broad theme of, is there going to be a recession?
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I have no idea.
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And nobody has any idea, no matter what they say.
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Just remember, everybody's selling clicks.
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Everybody's selling newspapers.
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Everybody's selling commercials on TV.
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That's what they're really selling.
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And they have to say it's all going to end.
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Is it going to end?
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I doubt it.
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When's it going to end?
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I don't know.
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Nobody does.
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Okay.
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I think that's like really important to say.
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So, but as we talk through this, I think there are reasons to be concerned.
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And I think we're going to talk about some of those concerns and we're going to talk about what to do.
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But to this K-shaped economy, it's about wealth and assets.
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But so as an example, if asset prices come down, like housing prices, as interest rates go up, it gets more expensive to buy a home.
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Or people just stay in their home, which we're already seeing that now.
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They stay in their home and they're not buying, they're not upgrading their homes.
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Normally, if interest rates were low, they'd buy the next bigger home.
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They'd spend more money.
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But now it's like, ah, interest rates are high.
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If I go into the bigger home, it's going to cost me almost the exact same payment I have now.
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or it's gonna cost me way more to go into the bigger home than what I'm paying now, and so they don't make the move.
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So that's an example where interest rates could impact a decision.
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And so if home values were to come down or asset prices like the stock market come down or any values of companies were to come down, anything that is a wealth-creating asset, if any of that starts to come down, that brings the K-shaped economy more together.
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Another thing that's been happening is on the lower end of the economy,
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incomes have been coming up.
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We know this.
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Like, we're in the business.
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We know that we're paying... You go back to 2020, 2019, we are absolutely paying more money.
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Those incomes are coming up.
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Now, the counterargument would be, well, interest rates are going up, food costs are going up, fuel costs are going up, and some of that's being offset.
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100% agree.
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But there are...
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That's an example where if asset prices come down or as wages come up, and if we continue to run a hot labor market, which we still are running a hot labor market, in my opinion, it depends where you're at in the country, but in my opinion, we are, and I think the data generally supports it, then that means incomes are going to continue to rise.
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And those are the things that aren't going to close the gap, but it may keep it from continuing to grow bigger and bigger.
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That's the gist of the idea.
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Yeah.
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can jump to interest rates but mike anything you want to add around yeah it was funny i saw a uh stat the other day it was something like more than 50 percent of current mortgages in the u.s have a industry under four percent and like those people are just not gonna gonna move like if you have a two and a half three percent mortgage i looked at this other stat it was something along the lines of a five hundred thousand dollar house
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if you got a mortgage at like 3% interest versus now, you'd be paying $1,200 per month more, and just interest today.
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And that's gonna take you from like a $1,900 a month payment to over $3,000 a month.
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That's like 50% more cost of living for that mortgage.
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And so,
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I think in some markets we've seen a kind of depressing, going down, downward pressure on housing prices, but other markets, that's not the case.
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And so I think there's this regional sort of approach to where are your best customers and who are on the top of that part of that K-shaped recovery.
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And then also like, can I make an offer for the person that might be on the bottom end of that K-shaped recovery that might be more price sensitive that can still make it work for me?
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um it's something to think about too and not always like you have to be premium you have to be premium in in a tough economy even sometimes people who have money just because of the news they're like yeah i need to cut back i need to cut some subscriptions i need to think about maybe discounting me i don't need these extra services and so i think having an offer based upon zip code neighborhood part of your service here because i think for all of us in our service areas we look around it's like there's the neighborhood that has million plus dollar homes
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Everyone just accepts everything and wants full service.
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And then in the exact same service area in our city, we have other neighborhoods that are very price sensitive.
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They want the truck in a truck.
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They want to use someone that's cheaper.
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They don't care about your communication or whether or not you're taking a credit card.
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And...
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being able to either A, do I serve both of them?
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Or do I only go after one of these markets?
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Because you kind of have to serve two different, very different ideal customer profiles in the event of trying to go after the high and low part of that K-shaped recovery.
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Yeah, and I call this going up market.
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Like if you want to think strategically, and there's a lot we could talk about here, and we will, but if you want to think strategically about how do you insulate yourself from this, how do you protect yourself from,
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then you want to be thinking just as Mike said about who is it that I'm serving.
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And because as again, Mike said, and as my K shaped economy concept points out,
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There are people in the market that even in a recession, in a downturn, will continue to have enough wealth, enough money, enough disposable income to be able to continue to buy whatever they want to buy.
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And they will largely not be impacted.
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I think we should also take a sidestep and say two other things.
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Like what is going to drive?
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There's two things that are going to drive what people do.
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Okay.
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One is what we're talking about.
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how much money they have.
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So as interest rates go up and housing expenses become more expensive, you know, and all these other things are already more expensive, fuel and food and such that are largely driven by other factors.
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That makes people feel like they... Or as credit card rates go up.
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Wow, we didn't even mention that.
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Credit card rates will go up on people.
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A lot of people have money on the credit card.
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All of this leaves them less money to spend.
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So we've kind of hashed that out.
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That's pretty clear.
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It's intuitive.
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They're going to have less to spend.
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So when they look at where they're going to spend their money, they're less likely to spend it maybe on our services.
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But there's a whole other side here, which is the psychology side.
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And I think that's one of the big areas we're actually in right now.
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I think we do have...
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My brain's going in 90 directions here.
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I could give you something.
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I think there is something going on right now.
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It's my personal assessment.
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I think we should talk about it.
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I think we're already seeing something right now.
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I'm just not like crazy worried about it, but I think we're seeing something.
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Okay, so I think some of what we're seeing right now is psychology.
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That's my theory.
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There's so much change.
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AI, talk of robotics, Iran war, still going with Ukraine.
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Like, just so much negativity.
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It's like, it feels like an almost... Midterms.
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Midterms are coming out.
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Midterms are coming out.
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Thank you.
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Like, yes.
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I would even made my list.
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And that's like almost, that almost says everything you need to know right there.
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So I think this psychology is a big driver in what's happening right now.
223
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So again, as you think about going up market or where do you go, you're not just thinking about who has disposable income.
224
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You're kind of thinking about psychology.
225
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One way that people are overcome, uh,
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psychology is they actually have lots of disposable income and wealth.
227
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Yes, they're hearing all the news.
228
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They're a little negative.
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Maybe they're on the side that they can't stand Trump.
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So they're especially negative right now because he's the current president.
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But they have enough money that they're still spending.
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And so those are the two things you're constantly thinking about.
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And I think within markets and then with neighborhoods and within areas, there's differing psychology.
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This is getting really in the weeds that you probably don't need to go here, but I think it's important to understand this concept because it does inform strategy and it does inform marketing.
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And so, um, boy, I've thrown so much out there.
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I think I'll pause any, I've got, but I've got kind of a list of things to think about around this topic.
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Do you have anything you'd add there, Mike?
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No, I was kind of thinking also to, we talked a little bit a lot about the customer, but even for the business owner, the access to capital, when it's so much more expensive, starts to make asset utilization more important, route density more important.
239
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Maybe you don't buy vehicles or trucks ahead of your growth as much.
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Even things like maybe I put two people in a truck when in the past I only put one.
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because now I'm able to get better asset utilization.
242
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I'm able to get more budget hours per week per vehicle.
243
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So CapEx or capital expenditures starts to cost a lot more, especially if you've been financing things.
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And if you've kind of gone on that treadmill, like I use equipment loans, I use truck loans.
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Now all of a sudden that loan might cost 40, 50% more.
246
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And so really thinking about how do I use what I have now and make it make that dollar stretch further or just that equipment stretch further and then cut out the really is tightening the belt and things like route density.
247
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Can I shave the 10, 15 percent of my customers?
248
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I'm driving so far away that I know I'm not making money on them, but I've just kind of gone along with it because I know I'm growing kind of hides in the P and L and.
249
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I think a lot of times rising interest rates and the lack of access to capital, not being at 0% or 1% interest rates on a truck.
250
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Now you have to really start thinking about our CapEx.
251
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For the first time, really, you know, 2020, 2021 was just like, it's money for free.
252
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You just go get money for nothing.
253
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Well, now it's 6%, 7%, 8%, 9%, 10% for some people, if they don't have great credit on equipment, even completely different calculus.
254
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Yeah, I agree.
255
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I have a whole list of things that we can talk about that you can do.
256
00:16:21.724 --> 00:16:28.831
And that's absolutely, that fits right into that bucket of the things that I think strategically you want to be thinking about.
257
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Maybe going back to the interest rate a bit, something I think I should put out there is what I'm seeing now.
258
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and we might have talked about this a little bit before, but in talking to lots of other business owners and then talking to some, we'll call them consultants in the trades that work with lots of owners, they're seeing a lot of their clients and they're seeing a lot of companies in the industry missing their numbers.
259
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So they might've had goals and they're not hitting the goals this year or they're not necessarily, some companies are a lot of companies are just kind of flat.
260
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That's a great way to put it.
261
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Some companies are getting a little growth, but they're not getting nearly the growth that they've been seeing.
262
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So there's something going on.
263
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I think that's valuable to put out there.
264
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Whether or not that's reality, I'm hearing it so much now.
265
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There's clearly exceptions.
266
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There's clearly other companies are still just going and going fast.
267
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Right.
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But definitely hearing that more than I've heard before.
269
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So I think, or recently.
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So I think that's worth putting out there.
271
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But I also still have this general operating theory when it comes to maintenance and repair companies.
272
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Even in a downturn, if that's what's coming, I think they hold up.
273
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I'm really not overly concerned here.
274
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I think what you might see is the amount of money they spend might contract.
275
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And clearly some people will be impacted.
276
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But on the whole, I think it holds up.
277
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I think where you get a little bit more worried is around any service that you're selling where it requires financing.
278
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That is of concern because interest rates are going up, but it also tends to mean they're spending a lot more money and it's a bigger ticket item.
279
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And so those things are going to require a little more caution on people's parts or they're going to be a little more careful about spending that money.
280
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But on the whole, for most of who I think we probably talk to, I think you probably fall in the maintenance and repair world.
281
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My positive argument here is I think you need to think about everything we're about to talk about as we continue to rattle off solutions.
282
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But I don't think you should live in a state of fear here.
283
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We just don't know.
284
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And I think living in a state of fear is a really bad thing to be doing right now because we could stay on a rocket ship.
285
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financially for several more years.
286
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And I can make arguments on that side as well.
287
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And so that's one.
288
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Another one that, going back to the interest rate thing, we've already said this, but this has a real impact, but we're already feeling this.
289
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There's less new movers.
290
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New movers are one of the single easiest ways for a company that's aggressive to grow their business.
291
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It creates movement in the marketplace.
292
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when you sell your home, you might've been indifferent, liked, but generally been indifferent to the company you had before.
293
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You weren't unhappy, but you're switching homes, so you just switch providers.
294
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It's an easy conversation.
295
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You didn't actually have to fire them.
296
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You just told them, I'm moving.
297
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I'm canceling.
298
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It's an easy conversation.
299
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There's a whole lot of reasons why less movers in the market makes it a little bit harder for many of us to grow.
300
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And then to Mike's point,
301
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what he just said is everything around this financing.
302
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It's just the other thing.
303
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It's just going to continue to cost many operators more and more money to run their businesses.
304
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And even in an indirect way, your vendors have financing costs that get added into their pricing.
305
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They can pass along to you.
306
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So costs are just going to continue to go up in a high.
307
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Even private equity.
308
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I was thinking at the highest level, like multiples have to come down because they, they use debt in order to be able to make these deals happen.
309
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Interest rates impact everything.
310
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What is the government's number one tool with the economy?
311
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It's interest rates.
312
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So when the economy runs hot, as they say, hot simply means there's a lot of inflation.
313
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Asset prices are going up too fast and they want to slow down the growth of the value of homes and stocks and everything.
314
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et cetera, assets, they can raise interest rates, which will slow down the economy.
315
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When the economy goes really, gets to a place where it's like really slow, nobody's investing, they're not buying these assets, they're not buying more homes, they're not upgrading their lifestyle, the government tends to bring down interest rates to stimulate activity in the economy, to get people buying things, to get businesses to make big investments.
316
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And so interest rates are one of the single biggest levers the government has to,
317
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to move the economy which is a positive argument possibly possibly to if we do find ourselves in a recession at some point as interest rates have moved up there's an argument that we can bring interest rates down to create stimulus the counter argument to that i know i'm getting in the weeds but if people are interested in this the counter argument of that is they can only do that if inflation is also coming down if the economy continues to run hot
318
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because of say AI in just a few specific areas or because food prices are up because of the war, things like that, they may not be able to bring interest rates down to re-stimulate the economy.
319
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But normally that's the tool they use.
320
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And so when you're making a bet about what's gonna happen, are interest rates gonna go up or down?
321
00:21:17.401 --> 00:21:19.523
I think you should fall in the camp of, I have no idea.
322
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Like you shouldn't plan for that.
323
00:21:21.904 --> 00:21:23.025
I don't think you should bet on it.
324
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You should just run your business in the safest and best way that you can.
325
00:21:28.132 --> 00:21:46.874
One thing that we were talking about last night in the boardroom that I had never really thought about before, and we started discussing it, and someone had a question about raising prices, et cetera, and he had several things he wanted to do with his billing as well, like changing his billing cycle and his billing terms to improve his cash flow.
326
00:21:47.635 --> 00:22:01.968
And I think one thing that is a really tangible thing, just to get off this topic, when it comes to just the overall fear, the psychology of people hearing all about prices going up and inflation, and it's going to become loud, very loud, over the next several weeks as we go into the midterms.
327
00:22:02.869 --> 00:22:07.011
is the ability to be able to change things outside of pricing with your customers.
328
00:22:07.552 --> 00:22:12.434
So for example, he was on where he accepted checks and did net 30.
329
00:22:12.635 --> 00:22:15.056
So end of month billing gets 30 days to be paid.
330
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And he said, hey, you would be very popular right now is telling your customers, we're not going to charge you higher prices.
331
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We're not raising your price, but our costs are going up and we need to make sure that we help our cash flow.
332
00:22:25.962 --> 00:22:31.245
And to make that possible, we're going to accept credit cards now and we're going to be billing you right after the service is done.
333
00:22:31.685 --> 00:22:33.006
but your prices are not going up.
334
00:22:33.246 --> 00:22:35.447
That's almost a very popular thing to say right now.
335
00:22:35.847 --> 00:22:42.850
Customers have been very receptive from what I have seen at several companies now doing this, where it's like, hey, we aren't changing your price, but our costs are going up.
336
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And everyone knows that.
337
00:22:44.671 --> 00:22:54.475
So they give you the immediate check and they usually get, even on social media, a lot of positive feedback by saying, hey, we're not raising prices, but we need to work with you to make this work and be able to pay our employees.
338
00:22:55.095 --> 00:23:00.638
And to make that happen, we're gonna adjust billing terms, whether that be how long it takes to bill or payment type.
339
00:23:01.442 --> 00:23:05.943
Yeah, we used that strategy back in the days of the cleaning business.
340
00:23:05.963 --> 00:23:07.463
And we were dealing in the commercial world.
341
00:23:07.923 --> 00:23:12.104
And we negotiated weekly payments on movie theaters to not raise their prices.
342
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Because everybody in commercial takes a standard 3% a year, whatever the case might have been.
343
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And it worked back then.
344
00:23:18.166 --> 00:23:21.546
I never thought about it for residential, frankly.
345
00:23:21.566 --> 00:23:24.367
But I guess maybe we've been on credit cards as long as I can remember at this point.
346
00:23:24.387 --> 00:23:26.348
But that's a really savvy idea.
347
00:23:26.628 --> 00:23:28.088
I think that's really smart language.
348
00:23:29.260 --> 00:23:37.347
We touched on briefly kind of about the real estate market, but another sort of trend in the economy, whether it's gonna continue or not, just to be debated.
349
00:23:37.747 --> 00:23:44.013
But with interest rates being so high, in a lot of markets, it's so much more expensive to own a house than just to rent.
350
00:23:44.874 --> 00:23:49.057
And I think back in the day, four or five years ago,
351
00:23:50.178 --> 00:23:54.585
if I don't want to live at my house and I own it, it's like, oh, I'll move and I'll just rent it out and I'll cover the mortgage.
352
00:23:55.026 --> 00:24:01.916
Well, now the mortgage is likely, if you have a 7% mortgage, you'll be substantially higher than what you can rent that place out for.
353
00:24:02.832 --> 00:24:11.078
And so what we're seeing kind of as a general trend right now is home ownership on the decline and more and more Americans becoming renters.
354
00:24:11.758 --> 00:24:14.140
How do you think that's going to affect the home service industry?
355
00:24:14.800 --> 00:24:19.604
And what can we do to pivot in this direction of more renters, less homeowners?
356
00:24:19.804 --> 00:24:23.266
I think the stigma is if they're not a homeowner, they don't care as much about their property.
357
00:24:23.306 --> 00:24:27.189
They don't care about repairs or maintaining things as much as a homeowner would.
358
00:24:27.789 --> 00:24:31.352
But what's sort of your feedback on this overall trend?
359
00:24:31.712 --> 00:24:39.758
Yeah, my philosophy is that statement right there is true, that if you're a renter, you're not going to invest in the home in the same way.
360
00:24:40.499 --> 00:24:42.420
And so I do think that's problematic.
361
00:24:43.101 --> 00:24:46.043
I will say the trend, I believe in the trend without question.
362
00:24:46.063 --> 00:24:49.866
I think the data supports it, but I'm not overly worried about it right now.
363
00:24:50.366 --> 00:24:54.390
But I will also say that's coming from a place of being in a pretty dang good market.
364
00:24:54.710 --> 00:24:54.930
Yeah.
365
00:24:55.170 --> 00:24:56.831
So take that with a grain of salt.
366
00:24:56.871 --> 00:25:00.653
And depending on where you are, maybe it's a different experience.
367
00:25:00.673 --> 00:25:04.195
We have tons of renters here, like in our market, no doubt about it.
368
00:25:04.495 --> 00:25:11.339
And I've been exposed to enough conversations to know, even though I don't run the business, that they're not the same quality of customer.
369
00:25:11.819 --> 00:25:15.221
But I think this is a building trend that could become more troublesome.
370
00:25:15.621 --> 00:25:20.343
And the reason I think it's troublesome, it's not that the work, repairs and maintenance still have to happen.
371
00:25:20.744 --> 00:25:21.424
Now they could happen.
372
00:25:21.664 --> 00:25:22.985
So it's not really like,
373
00:25:24.710 --> 00:25:27.742
It's more that you're going to maybe...
374
00:25:30.144 --> 00:25:31.725
you're going to do less maintenance.
375
00:25:31.745 --> 00:25:34.107
You'll cut back the level that you would do.
376
00:25:34.247 --> 00:25:36.408
If you owned the home, you'd spend more on the bushes.
377
00:25:36.428 --> 00:25:37.930
You'd spend more on the irrigation system.
378
00:25:37.950 --> 00:25:38.890
You'd water more.
379
00:25:39.310 --> 00:25:40.752
You'd fix things faster.
380
00:25:41.232 --> 00:25:46.996
I think we intuitively know how a renter versus an owner might operate psychologically.
381
00:25:47.536 --> 00:25:50.478
And so I think the repairs and the maintenance continues.
382
00:25:50.578 --> 00:25:53.380
It just, the volume is less.
383
00:25:53.440 --> 00:25:54.821
They spend less on it.
384
00:25:55.742 --> 00:25:58.504
And then I also theorize that it becomes more price-driven,
385
00:26:00.085 --> 00:26:09.801
really the worst scenario in my mind the price driven buyer is not a good buyer and the renter or the person renting the property
386
00:26:10.937 --> 00:26:12.918
may remain price driven.
387
00:26:13.358 --> 00:26:22.621
What I mean by that is, if I'm dealing with Ms. Smith and she's a new homeowner, she's highly likely to be somewhat price driven.
388
00:26:23.202 --> 00:26:27.203
Maybe, maybe not, because she has to go through this process that is called price discovery.
389
00:26:27.523 --> 00:26:31.825
She has to learn what she gets for her money and what a fair price is.
390
00:26:32.145 --> 00:26:35.066
So she might look at three companies and say, I'm going with the cheapest one.
391
00:26:35.086 --> 00:26:37.487
They all seem about the same, but then they burn her.
392
00:26:38.207 --> 00:26:40.128
And then she tries another one and she gets burned.
393
00:26:40.228 --> 00:26:45.849
And then over time, she discovers spending more generally, generally delivers more value.
394
00:26:45.869 --> 00:26:46.610
It's a better outcome.
395
00:26:46.910 --> 00:26:57.933
And as she time passes as a homeowner, she tends to make buying decisions less on price and buying decisions more and more on the perceived outcome that she's going to get the value.
396
00:26:58.153 --> 00:27:02.034
OK, I think in a renter's world, it's more of a balance.
397
00:27:02.114 --> 00:27:03.815
It's more of a profit loss statement.
398
00:27:04.515 --> 00:27:04.976
decision.
399
00:27:05.196 --> 00:27:08.681
It's like, I need this property to stop losing me money.
400
00:27:09.061 --> 00:27:10.603
I need this property to break even.
401
00:27:10.704 --> 00:27:12.786
I need this property to actually return some money.
402
00:27:13.107 --> 00:27:16.251
And it's more, there's not an emotional connection to the property.
403
00:27:16.291 --> 00:27:17.292
It's more of just math.
404
00:27:17.753 --> 00:27:20.777
It's like, yes, this vendor is a pain in the butt.
405
00:27:21.478 --> 00:27:24.700
that I'm using, they're not that great, but I need the price to be as low as possible.
406
00:27:24.900 --> 00:27:31.765
And maybe I don't even care because I make the vendor, the vendor problems, my property management company's problem, not my problem as the owner of the property.
407
00:27:32.085 --> 00:27:39.770
And so I don't think there's a solution to the landlord being more price driven than a homeowner.
408
00:27:39.810 --> 00:27:41.651
I just, I think that is what it is.
409
00:27:41.911 --> 00:27:43.532
And I don't think you're gonna market around it.
410
00:27:43.813 --> 00:27:45.394
So it's back to the concept of,
411
00:27:45.974 --> 00:27:49.935
this up market concept, like who are you serving, what areas, what type of client.
412
00:27:50.175 --> 00:27:51.656
That's when that becomes really important.
413
00:27:52.276 --> 00:28:06.760
It's already something as I've gotten back involved in the CityTurf business that is moving us slowly from, and it's been happening for a bit now, but we used to be like really hardcore on one kind of client, generally one kind of client.
414
00:28:07.120 --> 00:28:10.621
And we are now starting to have two kinds of clients in our business.
415
00:28:10.941 --> 00:28:11.841
And that's a difference.
416
00:28:11.901 --> 00:28:13.622
And it presents a number of problems.
417
00:28:14.482 --> 00:28:18.083
But it's very much me thinking about how do you go faster?
418
00:28:18.964 --> 00:28:22.885
How do you solve for, not just me, but other people in the company, but how do you go faster?
419
00:28:23.366 --> 00:28:26.267
And how do you solve some of these problems that could be coming?
420
00:28:26.887 --> 00:28:28.428
And so that's just how you want to think.
421
00:28:28.448 --> 00:28:29.228
And I'll add two more.
422
00:28:30.567 --> 00:28:33.688
The other thing I think that happens in a more of a renter world is more churn.
423
00:28:34.208 --> 00:28:35.248
It just naturally happens.
424
00:28:35.308 --> 00:28:36.649
It's because they're price sensitive.
425
00:28:36.669 --> 00:28:37.369
There's more moving.
426
00:28:37.589 --> 00:28:42.350
It's just churning through the vendors, trying to get a solution or properties are flipping.
427
00:28:42.650 --> 00:28:43.630
I think there's more churn.
428
00:28:44.550 --> 00:28:52.873
And also, if you think about one of the biggest things you're trying to accomplish in your business is you can grow through acquisitions, getting more clients.
429
00:28:53.153 --> 00:28:55.433
You go through expansion, growing the value of your client.
430
00:28:55.453 --> 00:28:57.554
Those are two big ways you grow your business.
431
00:28:57.814 --> 00:28:58.334
There's others.
432
00:28:58.874 --> 00:29:00.636
I think expansion kind of falls apart.
433
00:29:01.216 --> 00:29:13.868
The idea that I'm going to win a client for mowing lawns and I'm going to sell them a new landscape or I'm going to win them and we're going to put in flowers or mulch or whatever your offerings are that is a version of expansion of selling them more.
434
00:29:14.129 --> 00:29:17.292
I think most of that doesn't happen in this type of world.
435
00:29:18.429 --> 00:29:33.155
Yeah, one thing I can do is like the property managers and where that business model as a whole goes, even with technology, like as someone that might have properties, like I don't want to deal with tenants.
436
00:29:33.596 --> 00:29:35.416
So there's got to be this property management layer.
437
00:29:35.517 --> 00:29:37.898
Usually they take, you know, five or 10% of revenue.
438
00:29:39.138 --> 00:29:41.822
off the top of a landlord just to be able to maintain the property.
439
00:29:42.343 --> 00:29:48.232
And how I've always looked at it is like, what can I do as the service provider to make the land, not the landlord's job easier?
440
00:29:48.252 --> 00:29:49.353
Because they don't do anything.
441
00:29:49.373 --> 00:29:50.655
They don't want to be called.
442
00:29:51.096 --> 00:29:53.119
It's the property manager that's my customer.
443
00:29:54.060 --> 00:30:20.215
the tenant a lot of times will contact the property manager when they have a problem with the lawn or the hvac or they like anything they're contacting the property manager and so i've always said okay if this is a renter and a property management company is involved the property management company is our customer and we serve them by reducing their workload at this property so like things like pictures of the job site before and afters recommendations with video to say hey this is going to cause a problem down the road that's gonna be a thousand dollar issue
444
00:30:20.755 --> 00:30:24.838
to as a property manager, I'm now helping them to do a visual inspection of the property.
445
00:30:25.279 --> 00:30:31.203
I'm also ensuring that they don't have egg on their face when there's $1,000 repair that should have been caught three months before.
446
00:30:31.764 --> 00:30:43.513
And so I really think like pictures, video, documenting of the work if you're on a recurring basis, and looking for opportunities to prevent damages down the road, because that's when a property manager perks their ears up.
447
00:30:43.933 --> 00:30:56.258
Because a damage, a leak, an issue at the house, pest in the house is a huge amount of work for them to resolve something versus raising the red flag as the vendor being like, hey, there's a problem here.
448
00:30:56.698 --> 00:30:57.478
I can fix it.
449
00:30:57.858 --> 00:31:07.302
And I have found a lot of property managers, given if the landlord is wealthy enough, they've been given a long leash to operate without bringing the landlord in.
450
00:31:07.622 --> 00:31:12.084
So for example, my property manager, I said, I don't want to hear about it if it's under five grand.
451
00:31:12.524 --> 00:31:13.644
Like just get it taken care of.
452
00:31:14.125 --> 00:31:15.745
Put your markup on whatever you get.
453
00:31:15.825 --> 00:31:16.565
Get me two bids.
454
00:31:16.785 --> 00:31:20.126
Get the, take the lower one and put your 10% markup on it.
455
00:31:20.246 --> 00:31:21.087
I don't want to hear about it.
456
00:31:21.667 --> 00:31:25.728
And so how can I get the property manager to accept my bids?
457
00:31:26.348 --> 00:31:29.970
Really comes down to how can I take more off their plate and do their job for them?
458
00:31:30.490 --> 00:31:33.050
And they realistically just want to take their cut of revenue.
459
00:31:33.491 --> 00:31:35.711
They want tenants to stay inside the house and be happy.
460
00:31:36.271 --> 00:31:40.553
And they don't want to turn turnover because that's when they have to start doing work.
461
00:31:41.233 --> 00:31:44.996
And what can I do to do that to facilitate as a vendor has always been helpful.
462
00:31:45.777 --> 00:31:46.818
I think it's smart.
463
00:31:47.238 --> 00:31:49.200
I think that makes the optimistic argument.
464
00:31:49.220 --> 00:31:51.902
I think there's actually a couple optimistic arguments here.
465
00:31:51.922 --> 00:32:00.830
So one, in this scenario, you're talking about a business that feels more like a commercial business than a residential business when you start talking about property managers.
466
00:32:01.170 --> 00:32:03.651
And I've got quite a bit of a commercial experience.
467
00:32:03.891 --> 00:32:05.011
It just goes back a long ways.
468
00:32:05.491 --> 00:32:07.272
And that is the client, exactly as you said.
469
00:32:07.292 --> 00:32:09.253
Like that's who you really are focused on.
470
00:32:09.553 --> 00:32:10.773
So 100% agreement.
471
00:32:11.033 --> 00:32:23.537
Now, what's good about that is that the positive argument here is that if you really kill it with the property manager and you do everything you just said, and they love you and you make their life better,
472
00:32:24.540 --> 00:32:25.801
who do they wanna get their business to?
473
00:32:26.201 --> 00:32:27.581
Like, so it's a faster way to grow.
474
00:32:27.601 --> 00:32:31.703
This is one of the reasons why commercial companies can go really quick.
475
00:32:32.023 --> 00:32:35.705
Once they get in with the property management companies, they'll just give them so many properties.
476
00:32:36.045 --> 00:32:37.786
So that's the positive.
477
00:32:37.946 --> 00:32:46.450
And the other thing that you said, I took a more negative tone, and I still hold to my general negative feeling about rental properties.
478
00:32:47.310 --> 00:32:50.391
And I did say that they're going to spend less.
479
00:32:50.411 --> 00:32:52.912
They're going to be more price sensitive.
480
00:32:53.032 --> 00:32:53.893
I hold to that.
481
00:32:53.913 --> 00:32:54.673
I agree with that.
482
00:32:54.953 --> 00:32:58.254
But what you just said did make me want to say something else.
483
00:32:58.375 --> 00:33:09.299
I think something that happens when we're talking to a homeowner, it's a little easier for us to picture the homeowner as a human, as a person.
484
00:33:11.020 --> 00:33:13.821
When we're talking to a business and we're marketing,
485
00:33:14.827 --> 00:33:18.569
I think we suddenly forget we're talking to a human.
486
00:33:19.429 --> 00:33:19.670
Okay.
487
00:33:19.890 --> 00:33:27.553
Like you're still selling to Bob, who's the purchasing manager at Starbucks, who's going to his kid's baseball game tonight.
488
00:33:27.854 --> 00:33:30.795
And his wife's angry because he's been on the road for the last six days.
489
00:33:30.835 --> 00:33:31.956
Like he's a human.
490
00:33:32.056 --> 00:33:33.056
He's the same guy.
491
00:33:33.076 --> 00:33:35.217
He's just like Bob that owns a house.
492
00:33:35.277 --> 00:33:36.058
And we forget that.
493
00:33:36.558 --> 00:33:37.218
The same is true.
494
00:33:37.258 --> 00:33:39.780
This is, I wanted to bring this up because the same is true with property managers.
495
00:33:40.080 --> 00:33:43.702
You're still dealing with a human and a human doesn't want to have to keep finding new vendors.
496
00:33:43.942 --> 00:33:45.823
They don't want to deal with no shows.
497
00:33:46.084 --> 00:33:48.245
They don't want to constantly have to apologize to the landlord.
498
00:33:48.265 --> 00:33:54.689
They still, so you are still selling, just as Mike said, like all the ways you can make their life easier, which is,
499
00:33:55.489 --> 00:33:59.794
which done right means they won't buy the absolute cheapest price.
500
00:34:00.275 --> 00:34:01.957
They're going to buy somewhere above that.
501
00:34:02.177 --> 00:34:04.079
I just don't think they bring emotion into it.
502
00:34:04.119 --> 00:34:06.962
Like a homeowner will bring emotion in to their purchases.
503
00:34:07.483 --> 00:34:15.712
What I'm interested to see is like, does the property management model start to become more and more popular at single family homes?
504
00:34:16.353 --> 00:34:21.821
Like, obviously, to your point, like commercial being apartment complexes and property managers, that's very common.
505
00:34:21.841 --> 00:34:29.090
But like if if people that have, say, net worth of five, 10 million, have three, four homes, they have a whole bunch of low interest rate debt on that.
506
00:34:29.531 --> 00:34:32.695
Are they going to be the person that's going to be the landlord that is taking calls?
507
00:34:32.775 --> 00:34:34.518
Are they just going to have property managers taking it?
508
00:34:35.392 --> 00:34:39.894
Yeah, I don't know because that brings up another topic that I don't have any data on.
509
00:34:39.914 --> 00:34:40.614
I've not looked into.
510
00:34:41.014 --> 00:34:48.897
Is there an evolution happening right now where I know that we had the Black Rocks and we had other major groups come in and buy up lots of homes.
511
00:34:48.937 --> 00:34:50.317
That's like a whole different thing.
512
00:34:50.997 --> 00:34:55.279
But if you were talking about because I actually think if I've read a few articles, I think that's kind of.
513
00:34:56.728 --> 00:34:57.929
Not popular and fading.
514
00:34:58.010 --> 00:34:58.750
Yeah, yeah.
515
00:34:58.850 --> 00:34:59.832
It did get outlawed?
516
00:35:00.172 --> 00:35:02.074
It did get outlawed, and it's only 1% of homes.
517
00:35:02.374 --> 00:35:02.875
Yeah, yeah.
518
00:35:02.975 --> 00:35:04.036
I knew it was a smaller number.
519
00:35:04.076 --> 00:35:05.298
I didn't know it actually got outlawed.
520
00:35:05.318 --> 00:35:06.139
I knew there was talk of that.
521
00:35:06.199 --> 00:35:06.599
Okay, Idra.
522
00:35:06.619 --> 00:35:10.944
Okay, so now that further makes my case for what I'm about to say.
523
00:35:11.004 --> 00:35:12.946
The one thing both sides of the aisle could agree on.
524
00:35:12.966 --> 00:35:15.129
We should not have private equity involved.
525
00:35:15.249 --> 00:35:16.150
Pying up all our homes.
526
00:35:16.330 --> 00:35:16.550
Yeah.
527
00:35:16.690 --> 00:35:17.131
Yeah.
528
00:35:17.591 --> 00:35:19.152
It's now happening in the car market.
529
00:35:19.172 --> 00:35:22.054
And the high-end car market is just insane right now.
530
00:35:22.374 --> 00:35:28.459
So private equity, just like back to the dang, it's when they bring that much money in, things get out of balance.
531
00:35:28.479 --> 00:35:30.100
Okay, we don't have to get on that topic.
532
00:35:30.340 --> 00:35:36.524
So where I was going with this, what I don't know, Mike, maybe you know, is there actually a shift in,
533
00:35:36.784 --> 00:35:45.231
in are there more individuals buying more homes or is it still the typical thing that an individual owns one or two rental homes?
534
00:35:45.551 --> 00:35:52.957
Is there some dramatic change that if the Black Rocks are gone, that the individual is starting to buy a lot more homes?
535
00:35:52.977 --> 00:35:57.781
Because my argument on whether they use property management or not is about the size of their portfolio.
536
00:35:58.181 --> 00:36:01.965
If they sold their home and they bought another home and they kept that home, they're probably managing it.
537
00:36:02.605 --> 00:36:09.870
But if we're seeing a trend where more people are buying a portfolio of homes, that's when I think you see the property management.
538
00:36:09.910 --> 00:36:11.571
That's my theory.
539
00:36:11.591 --> 00:36:19.255
If you had a secondary house that you rented out, would you be the property manager or would you just hire a property management company?
540
00:36:19.816 --> 00:36:23.058
Well, I have chosen not to play that game.
541
00:36:23.469 --> 00:36:23.809
Okay.
542
00:36:23.990 --> 00:36:24.690
Yeah.
543
00:36:24.890 --> 00:36:27.853
Very intentionally because I think it's a business and I don't want to be distracted.
544
00:36:28.253 --> 00:36:33.337
But when I used to own a small apartment building, I had a property.
545
00:36:33.477 --> 00:36:36.059
I did it for the first six years myself.
546
00:36:36.720 --> 00:36:39.362
Learned all the lessons I needed to learn and then I got a property management company.
547
00:36:40.003 --> 00:36:41.864
So I wouldn't want to mess with it.
548
00:36:42.185 --> 00:36:43.966
So I'd probably get a property management company.
549
00:36:44.426 --> 00:36:46.628
But I know people that own these homes and they don't...
550
00:36:46.848 --> 00:36:48.850
I know a lot of people that don't have property management companies.
551
00:36:48.970 --> 00:36:51.634
So that's why I don't know what people do.
552
00:36:51.674 --> 00:36:52.555
That's kind of what I was saying.
553
00:36:52.575 --> 00:36:53.496
I don't know what the trend is.
554
00:36:53.536 --> 00:36:54.457
I thought maybe you would know.
555
00:36:55.218 --> 00:37:01.086
You know, I'm just, I'm just interested to see something like Zillow or something comes along that makes that property management layer so easy.
556
00:37:01.987 --> 00:37:05.912
And there's, there's still that intermediary between landlord and tenant.
557
00:37:07.332 --> 00:37:14.254
But as an opportunity at the residential single family house level to be able to differentiate yourself, I don't know.
558
00:37:14.274 --> 00:37:14.834
I don't either.
559
00:37:14.854 --> 00:37:20.436
But I'm interested to see, because like right now, so many houses are being bought with cash, that's the people at the top of the shape recovery.
560
00:37:20.636 --> 00:37:23.457
And I gotta ask myself, okay, if someone's buying a house for $1.2 million in cash,
561
00:37:24.817 --> 00:37:30.382
Are they going to be the person that tenant calls or the house that they still have at a two and a half, 3% interest rate?
562
00:37:30.442 --> 00:37:34.286
Are they going to, when they rent that out, are they going to be the one that actually is the landlord?
563
00:37:34.326 --> 00:37:36.168
Are they going to pass this along to property manager?
564
00:37:36.448 --> 00:37:42.313
And if so, what's the opportunity for a home service business that is targeting that intermediary?
565
00:37:42.734 --> 00:37:42.974
Yeah.
566
00:37:43.993 --> 00:37:44.633
I have no idea.
567
00:37:44.993 --> 00:37:45.473
I don't either.
568
00:37:45.893 --> 00:37:52.975
One thing that did come to mind, because we rent a lot of homes, and we don't always use Airbnb or VRBO, so we rent in different ways.
569
00:37:54.155 --> 00:37:56.536
They're never managed by an individual owner.
570
00:37:56.736 --> 00:38:07.278
Now, they are usually expensive homes, but I have never that I can remember ever been in one that is not managed by some kind of a property management company.
571
00:38:08.492 --> 00:38:12.115
Um, yeah, I don't know the answer to this, but it's, it's interesting.
572
00:38:12.135 --> 00:38:15.658
It also comes down to like, if let's say it's a really, really nice house and you're going to rent that out.
573
00:38:16.118 --> 00:38:20.702
Is the person bought renting at that house going to also be the person that wants to buy their own home?
574
00:38:21.502 --> 00:38:30.750
That's where like at the higher end level of the market, if I'm going to pay five, six, $7,000 in rent, am I also the same person that wants to go out and just buy the house myself?
575
00:38:30.770 --> 00:38:33.212
Cause I'm in that top end of the K-shaped recovery.
576
00:38:33.847 --> 00:38:34.588
Again, don't know.
577
00:38:34.628 --> 00:38:36.590
This is why I just don't know where this market's going.
578
00:38:36.670 --> 00:38:40.053
And it's another argument to why I'm just not that terribly worried about it just yet.
579
00:38:40.113 --> 00:38:41.294
I don't know what's going to happen here.
580
00:38:41.955 --> 00:38:44.097
I think we've been seeing this trend for a long time.
581
00:38:44.137 --> 00:38:53.366
I think it's been called the Uber economy or whatever, where the younger crowd coming up is not inclined to buy stuff.
582
00:38:53.787 --> 00:38:56.189
But I think that's me to a degree.
583
00:38:56.309 --> 00:38:57.690
I only want to own one home.
584
00:38:58.391 --> 00:38:59.932
I do not want to own multiple homes.
585
00:38:59.952 --> 00:39:00.732
I just want to rent homes.
586
00:39:00.752 --> 00:39:02.152
I think a lot of people feel that.
587
00:39:02.393 --> 00:39:10.035
I just saw an article today that was talking about how the vacation market in certain markets, they're sitting on the market longer and longer.
588
00:39:10.696 --> 00:39:15.738
And it's a bunch of people that were buying in 2021, 22 that have now had their homes.
589
00:39:15.978 --> 00:39:18.038
Vacation homes tend to flip every four or five years.
590
00:39:18.278 --> 00:39:19.239
They've now got to the place.
591
00:39:19.259 --> 00:39:23.000
They've experienced what it means to have a second home and how much of a pain in the butt it is.
592
00:39:23.300 --> 00:39:24.781
And people are exiting those homes.
593
00:39:25.081 --> 00:39:27.703
Whether or not that's true or factual, I thought that was an interesting argument.
594
00:39:27.723 --> 00:39:38.089
So I think this is something that is happening both at the younger crowd buying homes for the first time or maybe not buying.
595
00:39:38.430 --> 00:39:39.150
They're just wanting to rent.
596
00:39:39.170 --> 00:39:45.194
But I also think it's even happening in other people are doing the very same thing at different ages.
597
00:39:45.234 --> 00:39:46.915
So I just don't know where this is going.
598
00:39:47.644 --> 00:40:01.430
Yeah, one thing you said earlier about people that have been burned multiple times from like a cheaper home service provider, and then kind of coming to the conclusion, hey, I'm not gonna just look at price now, I am gonna think more about the quality and the service and consistency, et cetera.
599
00:40:01.890 --> 00:40:08.293
I was thinking about this the other day and I was like, well, maybe that means I only market to people like 50 and up that have been burned several times.
600
00:40:08.933 --> 00:40:24.300
And I don't want to deal with that person that is even like in their first, like the reason I say this, because I think, I think so many people market to the customer that is switching from doing it themselves to having a professional service, like save time on the weekends, say when reality, it's like, that's a one-time decision.
601
00:40:24.340 --> 00:40:29.882
And then every single year after that, or anytime they switch providers, they're not considering doing it themselves.
602
00:40:30.142 --> 00:40:35.665
They're not considering whether or not they're going to save time on the weekend, it's whether or not you're going to show up and be the best provider that they can get.
603
00:40:36.408 --> 00:40:38.731
I learned that lesson at the beginning of city turf.
604
00:40:38.991 --> 00:40:39.872
We know.
605
00:40:40.052 --> 00:40:41.233
I might've heard that from you.
606
00:40:41.333 --> 00:40:41.994
I'm not going to lie.
607
00:40:42.154 --> 00:40:43.195
I might've heard that from you.
608
00:40:43.215 --> 00:40:44.537
I'm not trying to get credit for it.
609
00:40:44.577 --> 00:40:48.461
I'm just saying, I'm just saying, I was thinking that's the type of thing I think you would have said.
610
00:40:48.701 --> 00:40:53.967
Oh, I mean, I, I, I, I don't even think about this anymore, but it's such a great point.
611
00:40:54.467 --> 00:40:54.547
If,
612
00:40:55.423 --> 00:41:00.209
if your lawn looks like it needs mowing, you're not for us.
613
00:41:00.389 --> 00:41:03.413
If your flower beds are in bad shape, not for us.
614
00:41:03.433 --> 00:41:09.299
If you're trying to side, like the advertisement was like, hey, you could play more golf on the weekends.
615
00:41:09.340 --> 00:41:11.822
The advertisement where it's like you don't have to work on Saturday,
616
00:41:12.930 --> 00:41:14.010
Dude, I'm not selling to you.
617
00:41:14.130 --> 00:41:17.171
I'm selling to the guy that's already decided this is how he lives life.
618
00:41:17.651 --> 00:41:22.293
That person that's making the switch from golf course, they are usually more price sensitive because this is a big thing for them.
619
00:41:22.313 --> 00:41:28.314
This is like another thing I got to add to the budget versus the other person like, I'm not mowing my grass.
620
00:41:28.394 --> 00:41:30.255
I'm not going to switch out the HVAC system.
621
00:41:30.295 --> 00:41:31.175
Like, what are you talking about?
622
00:41:31.215 --> 00:41:33.316
I'm not spending my money to convince you.
623
00:41:33.456 --> 00:41:37.597
I'm spending my money on people that are already convinced and we're just switching them to a better company.
624
00:41:37.977 --> 00:41:41.898
There's only one service that we sell that I see this differently and it's Christmas lights.
625
00:41:42.538 --> 00:41:46.042
That one I will legitimately argue for a first time.
626
00:41:46.102 --> 00:41:48.966
I'll take a first time Christmas light buyer and I'll push it.
627
00:41:48.986 --> 00:41:54.092
But otherwise, no, I mean, I'll take you if you come to us, but I'm not going to direct any of my marketing to that crowd.
628
00:41:54.659 --> 00:41:56.800
Yeah, even the copy, we've recently been working on the website.
629
00:41:56.940 --> 00:41:59.221
The only thing focuses us versus them.
630
00:41:59.741 --> 00:42:02.122
It's like, here's what you've had, here's what you will have.
631
00:42:02.282 --> 00:42:03.182
Here's what we're different.
632
00:42:03.562 --> 00:42:04.583
Here's what their trucks look like.
633
00:42:04.683 --> 00:42:05.423
Here's what ours look like.
634
00:42:05.743 --> 00:42:06.584
It's just that.
635
00:42:06.944 --> 00:42:11.686
And because in the past, it was so focused on save time, save money.
636
00:42:12.306 --> 00:42:13.806
Not say money, but save time.
637
00:42:13.826 --> 00:42:14.507
And it's like...
638
00:42:15.427 --> 00:42:37.286
once someone's made that decision one time that i'm not you don't go back after five years of having a landscaping service i'm like i am now going to trim my bushes like it's a one-time decision and after that for the vast majority of people they're not going back to deal with yourself yeah yeah i think the save time can still be a well i will use the save time maybe i don't say save time but i'll use that but it
639
00:42:38.115 --> 00:42:40.159
But to your point, I don't use it the way you described.
640
00:42:40.279 --> 00:42:44.386
I would use it as CityTurf's client stays with us on average 7.2 years.
641
00:42:45.448 --> 00:42:46.529
You're not going to have to fire us.
642
00:42:47.618 --> 00:42:49.020
we're going to save you a lot of pain and time.
643
00:42:49.180 --> 00:42:52.423
It's that kind of like, that's the, because you people still worry about time.
644
00:42:52.463 --> 00:42:54.145
They still worry about their to-do list.
645
00:42:54.545 --> 00:42:56.367
So it's just, we're saving them a different kind of time.
646
00:42:56.407 --> 00:43:00.991
I'm not taking, I'm not saving you time mowing your lawn or killing bugs.
647
00:43:01.091 --> 00:43:02.633
I'm saving you time in different ways.
648
00:43:02.693 --> 00:43:04.034
I'm saving you trouble in different ways.
649
00:43:04.054 --> 00:43:05.836
So I think time still matters to all of us.
650
00:43:05.856 --> 00:43:11.081
So it still can have its place, but just the exactly way you described it, we're not saving them that kind of time.
651
00:43:11.993 --> 00:43:14.795
Now when I hear stuff like that, I'm always trying to put it in copywriting terms.
652
00:43:15.116 --> 00:43:19.659
So I heard what you just said, I'm like tired of changing presidents, tired of change.
653
00:43:19.900 --> 00:43:21.901
We last longer than four years in office.
654
00:43:21.941 --> 00:43:22.542
All right, right.
655
00:43:22.582 --> 00:43:25.244
We almost last for eight or two terms.
656
00:43:25.444 --> 00:43:26.645
Yeah, we're almost illegal.
657
00:43:26.765 --> 00:43:28.587
We have such a good term, we're almost illegal.
658
00:43:28.827 --> 00:43:29.808
Almost three terms.
659
00:43:30.668 --> 00:43:55.885
all right let's wrap it up with kind of some of the specific actions that uh business owners can take if we were to go into recession and i i kind of like this topic in in perpetuity all the time because i think it just makes a better business i agree yeah and so but what are some of those specific things that if let's just say someone is freaking out and they are listening to the news uh what are the actual things in our business we should be doing to create a moat um
660
00:43:56.425 --> 00:44:02.311
build a wall around the defensibility of our business as we prepare for what could be a recession.
661
00:44:02.752 --> 00:44:02.952
Yeah.
662
00:44:03.192 --> 00:44:04.274
So most of it's all money.
663
00:44:04.334 --> 00:44:08.178
But if I think about like kind of a first few things, we'll call them financial things.
664
00:44:09.079 --> 00:44:17.087
If you're not running, if you're worried about this and you haven't got your place to yourself to a place of good profitability or even profitability,
665
00:44:17.968 --> 00:44:28.536
Like that's step one, because you went in a bad market when things get harder, if you're not profitable, the losses just compound the debt compounds, the trouble compounds.
666
00:44:28.576 --> 00:44:31.779
This is how you miss making the sales tax payment or the payroll payment.
667
00:44:31.819 --> 00:44:32.839
Like this is how it happens.
668
00:44:33.079 --> 00:44:34.961
And it happens way more than most people realize.
669
00:44:35.361 --> 00:44:41.506
And so step level one is like we just got to get to a place of real profit, profitability inside this organization.
670
00:44:41.986 --> 00:45:04.323
one thing i always remember like every time i think about this is the end of 2021 going into 2022 all of a sudden the stock market it turned from how fast can you grow to are you making money yeah and it was just like where there were companies that dropped 90 95 98 percent that were growing really fast and were like stock market darlings and then all of a sudden it's like oh you're losing money interest rates have gone up
671
00:45:04.983 --> 00:45:34.462
we are slashing your your evaluation and i still remember that like in six months even three months it just switched and i always think about that when i start hearing like it's all about growth and growth and growth it's like ice that that for me is probably one of the ones i felt the most because i was investing in the market and seeing what was happening like okay now all of a sudden profitability matters and i think to your point like getting profitable now if you think you're going into a hard time is extremely important
672
00:45:34.932 --> 00:45:36.593
Yeah, and that was an interesting example.
673
00:45:36.613 --> 00:45:40.416
And that happens based on having been around a while, liking this stuff since I've been 20.
674
00:45:40.736 --> 00:45:44.018
This happens, what you just said, happens every single time there's a downturn.
675
00:45:44.359 --> 00:45:48.161
We shift from a growth investment mentality to a value investing mentality.
676
00:45:48.722 --> 00:45:51.604
Suddenly profits matter, stability matters, cash matters.
677
00:45:52.024 --> 00:45:55.266
Same, it's, because this is where I think people get really confused.
678
00:45:55.286 --> 00:45:56.187
They're like-
679
00:45:57.558 --> 00:46:02.602
they kind of tune out because the stock market feels like a trading machine.
680
00:46:02.622 --> 00:46:06.486
The stock market is nothing but investing in a business.
681
00:46:06.646 --> 00:46:11.050
It's exactly like our businesses, except you can buy their stock and sell their stock.
682
00:46:11.990 --> 00:46:15.854
And you get to see how their valuations change from day to day.
683
00:46:15.874 --> 00:46:17.495
You don't see any of that in our business.
684
00:46:17.515 --> 00:46:19.897
The stock market is exactly like private businesses.
685
00:46:21.619 --> 00:46:22.880
The stock market is not this...
686
00:46:24.038 --> 00:46:25.619
thing that most people imagine it is.
687
00:46:25.719 --> 00:46:29.400
And so the same rules apply in our business and their business.
688
00:46:29.640 --> 00:46:32.661
They may have more access to capital and debt than we have.
689
00:46:32.681 --> 00:46:34.962
They may be able to sell stock and generate cash.
690
00:46:35.282 --> 00:46:36.022
We can't do that.
691
00:46:36.042 --> 00:46:37.463
We could, we could take on investors.
692
00:46:38.923 --> 00:46:48.807
It's the same, but so when you give the example that suddenly as an investor in the stock market means as an investor in companies,
693
00:46:49.787 --> 00:46:52.608
I now really care that they're profitable and they have cash.
694
00:46:52.689 --> 00:46:53.009
Why?
695
00:46:53.269 --> 00:46:54.689
Because I don't want to go out of business.
696
00:46:56.130 --> 00:47:03.614
I don't want them to go from being a, you know, a 7 billion a year revenue business to a 4 billion a year revenue.
697
00:47:03.794 --> 00:47:07.115
I don't want them to go from a market leader to being fifth in their market.
698
00:47:07.616 --> 00:47:11.658
And those things all could happen if they aren't profitable and they don't have cash.
699
00:47:12.802 --> 00:47:14.703
And so it's the exact same rules.
700
00:47:14.763 --> 00:47:17.164
And that's why that stuff matters.
701
00:47:17.224 --> 00:47:18.284
So get profitable.
702
00:47:18.404 --> 00:47:19.364
That's like level one.
703
00:47:20.005 --> 00:47:28.748
Then if you're really believing this is a risk, earlier, Mike, you were talking about things like being careful where you spend your money.
704
00:47:28.808 --> 00:47:31.008
I don't remember how you worded it now.
705
00:47:31.068 --> 00:47:36.230
My example would be if you've been thinking, if you're worried about this and you've been thinking about building a building, that's gonna require a big cash outlay.
706
00:47:36.410 --> 00:47:37.031
Maybe you don't make it.
707
00:47:37.451 --> 00:47:38.871
Maybe you hold that and see what happens.
708
00:47:39.251 --> 00:47:40.512
Or maybe you don't buy...
709
00:47:41.252 --> 00:47:48.133
A bunch of new trucks right now, if the trucks you got are working, you hold that cash for a moment.
710
00:47:48.193 --> 00:47:49.474
You make those things last a little longer.
711
00:47:49.834 --> 00:47:53.855
Those are examples of how you be a little more conservative with your money.
712
00:47:54.135 --> 00:47:57.095
So you build more cash or you keep more cash.
713
00:47:57.375 --> 00:48:02.716
That way, you've got some protection if the market does turn down on you.
714
00:48:02.736 --> 00:48:04.777
You've got cash to defend your business.
715
00:48:06.117 --> 00:48:08.138
And then, so these are kind of financial.
716
00:48:08.158 --> 00:48:28.047
And then if you've got, if you believe interest rates are going to keep going up, if you believe that things are going to get tougher, you know, you think about, of course, your debt, but you also think about clearing up your variable interest rate debt first, credit cards, things like that, like you get rid of that stuff, you can all if everything melts down, you can always go back to putting money on credit cards.
717
00:48:28.787 --> 00:48:30.067
but get them cleared up.
718
00:48:30.347 --> 00:48:33.608
And those are some of the, I've got a number of additional things, but I'll pause there.
719
00:48:33.628 --> 00:48:37.229
But those are the big top level things I'm thinking about.
720
00:48:38.189 --> 00:48:43.650
Yeah, on kind of that financial note, one thing I had noted was just doing a stress test.
721
00:48:43.990 --> 00:48:50.032
Like a lot of times, you know, we have a lot of fear and it might keep us up at night and we're afraid of a recession.
722
00:48:50.052 --> 00:48:50.892
We're hearing all these things.
723
00:48:51.492 --> 00:48:54.653
One way that it's been really helpful for me is like, okay, so let's play this out.
724
00:48:54.753 --> 00:48:56.293
Let's say 10% revenue drop.
725
00:48:57.300 --> 00:48:58.000
Can I sustain that?
726
00:48:58.220 --> 00:48:59.781
Okay, what happens if we drop by 20%?
727
00:49:00.301 --> 00:49:02.102
Okay, what happens if, okay, what do I have to cut?
728
00:49:02.182 --> 00:49:03.682
Okay, we're gonna have to sell a couple trucks.
729
00:49:03.982 --> 00:49:11.105
Okay, if we drop by 30%, I've gotta let some of the equipment go, I've gotta lay out some of the admin, the overhead people off, maybe the sales people I'm gonna have to let go.
730
00:49:11.365 --> 00:49:14.546
And having a plan to actually know, okay, if it dropped by 20%, I have to do these things.
731
00:49:14.806 --> 00:49:16.546
If it drops by 30%, I have to do these things.
732
00:49:16.967 --> 00:49:26.410
And having that plan allows you to actually almost stay more offensive because like, worst case scenario, if we're really gonna drop by revenue this much, I have a plan to cut overhead,
733
00:49:27.130 --> 00:49:30.931
reduce my admin staff, sell off some of the equipment we don't use a lot.
734
00:49:31.351 --> 00:49:35.191
And having that plan in place almost puts at ease that fear, like what's gonna happen?
735
00:49:35.211 --> 00:49:37.332
Because I've been growing every single year for five years.
736
00:49:37.692 --> 00:49:39.072
What happens if I have a year where it's down?
737
00:49:40.452 --> 00:49:44.613
And making sure that I can actually stress test the business and survive those stress tests.
738
00:49:45.093 --> 00:49:46.313
Yeah, I actually love that.
739
00:49:46.433 --> 00:49:50.334
So there's another benefit to what you just said that you just made me think of.
740
00:49:50.714 --> 00:49:54.235
Like a lot of times when we live in fear, we're living in fear of the unknown.
741
00:49:54.255 --> 00:49:54.755
Yeah.
742
00:49:55.060 --> 00:49:58.183
We're imagining things that may or may not ever happen.
743
00:49:59.364 --> 00:49:59.644
And...
744
00:50:00.857 --> 00:50:03.259
In your example, you just gave somebody a plan.
745
00:50:03.880 --> 00:50:08.303
And so if I think that helps reduce fear, like, yeah, this could happen.
746
00:50:08.423 --> 00:50:09.084
It might happen.
747
00:50:09.104 --> 00:50:19.052
But if we've literally thought through, here are the 19 things I need to do and think about if this in fact happens, you've got a plan, which I think for many will bring relief.
748
00:50:19.533 --> 00:50:22.895
It's not this open loop in your brain where it's like, well, I don't know what I'm going to do.
749
00:50:23.236 --> 00:50:23.796
Is it going to happen?
750
00:50:23.816 --> 00:50:24.917
If it happens, what am I going to do?
751
00:50:25.137 --> 00:50:28.200
It's like, if this happens, this is exactly how we're going to deal with it.
752
00:50:29.432 --> 00:50:31.856
And I think that can bring a lot of comfort.
753
00:50:32.036 --> 00:50:35.582
And a lot of sophisticated companies do operate with those types of plans.
754
00:50:36.203 --> 00:50:37.625
That way they can act really fast.
755
00:50:39.448 --> 00:50:42.653
Another thing that I had kind of thought about is like analyzing things
756
00:50:43.649 --> 00:50:46.111
if customers are not coming into my funnel, i.e.
757
00:50:46.171 --> 00:50:47.752
accepting an estimate, I kind of need to know why.
758
00:50:47.772 --> 00:50:53.457
And then if they're leaving, so if you have any sort of recurring revenue, if they're leaving, I need to know why they're churning.
759
00:50:55.058 --> 00:51:03.605
The reason I like to know why they don't accept my estimate is I don't want to be fighting a ghost that I think it's all about price because I'm hearing all this stuff in the economy when in reality it has nothing to do with that.
760
00:51:03.905 --> 00:51:07.108
And they just accept it to someone else because I'm three days late on getting them the quote.
761
00:51:07.688 --> 00:51:13.389
And so knowing incoming, why are you not accepting and on your going out?
762
00:51:13.749 --> 00:51:15.290
If you're turned, I need to know why.
763
00:51:15.730 --> 00:51:24.052
And so this is something recently Augusta, we every single time any recurring series is stopped, it's going to open up a trigger for them to be able to enter why.
764
00:51:24.072 --> 00:51:27.913
So we can aggregate that data and be like, No, this has nothing to do with your price.
765
00:51:27.953 --> 00:51:28.473
It's because
766
00:51:29.373 --> 00:51:42.574
there's a drought so like let's not face this boogeyman go discount or bring our prices down when that's not the problem and so that we can act with intentionality and data instead of the emotion that is inevitably happening during an event like a recession
767
00:51:43.667 --> 00:51:47.649
To dig in on that one, do you have use estimating as an example?
768
00:51:47.669 --> 00:51:53.251
So you send an estimate, or it could be on the phone, or you sent an estimate or online, they get a price they don't buy.
769
00:51:53.632 --> 00:51:55.032
How do you capture that information?
770
00:51:55.072 --> 00:51:58.814
I mean, clearly, you can ask somebody if you're talking to them, you may or may not get a real answer.
771
00:51:58.834 --> 00:52:05.077
But how do you guys have any clever method to try to get a higher number of people to give you that information?
772
00:52:05.841 --> 00:52:30.798
put it on the t for me it's in homework yeah we we require them you can make it where you require them to give you a reason in order to decline the estimate so that way when you go back in the estimates you have a column of declined reasons right but if you send them an estimate they you actually present them with an option to accept or decline correct big product decision right there yes
773
00:52:31.427 --> 00:52:31.607
Yeah.
774
00:52:31.947 --> 00:52:34.570
And have you seen, this is very top of mind for me.
775
00:52:34.830 --> 00:52:37.192
Have you seen any, you may not even know the data.
776
00:52:37.212 --> 00:52:38.173
This is a very hard day to get.
777
00:52:38.193 --> 00:52:43.277
Do you have any idea of presenting somebody with a client has any negative impact on the invoice?
778
00:52:44.118 --> 00:52:46.620
Like meaning- On the invoice or estimate acceptance?
779
00:52:46.680 --> 00:52:47.701
On the estimate.
780
00:52:47.721 --> 00:52:54.827
What I mean by that is if you even present somebody with the ability to say no to the whole estimate, does it drive any additional no's?
781
00:52:56.398 --> 00:53:04.941
Well, the thing is this, if I'm going to have an automation with the exit trigger or the off-ramp of that automation being declined estimate, I need to give them the off-ramp.
782
00:53:05.041 --> 00:53:06.481
Otherwise, you get very mad customers.
783
00:53:06.921 --> 00:53:13.143
And so I can't religiously follow up with someone as long as that estimate is open if I don't give them an ability to.
784
00:53:13.343 --> 00:53:20.485
So it's more like when we talk about the long-term brand, you get mad people when you call them, text them, email them about a quote that's open.
785
00:53:20.525 --> 00:53:22.566
But they're like, I can't decline it.
786
00:53:23.166 --> 00:53:24.687
You call me during the day, I'm working.
787
00:53:25.607 --> 00:53:44.955
and i can't decline so like please shut up so it's more of a customer experience thing for us but then we do have the decline we of course make sure it's a smaller it doesn't have a circle around it it's smaller it's there but if they click it we do require them to select from several reasons as to why they are declining
788
00:53:45.322 --> 00:53:45.502
Yep.
789
00:53:45.762 --> 00:53:55.384
And you may not know this if somebody declines it or because you, since you've been offering the decline, do you feel like you're seeing a lot of people click that versus ghost you?
790
00:53:56.705 --> 00:53:58.245
Do you think people are actually using it?
791
00:53:59.645 --> 00:54:02.266
Well, we, my opinion is you follow up until they say no.
792
00:54:02.666 --> 00:54:02.866
Yeah.
793
00:54:02.926 --> 00:54:10.088
And so like, I will just keep pestering them until they like, okay, either tell me on the phone, text me back or click the button.
794
00:54:10.947 --> 00:54:14.811
And we just found if we didn't have the button, there was so many mad people.
795
00:54:15.292 --> 00:54:15.852
Okay.
796
00:54:15.952 --> 00:54:20.397
And this is a big decision we made end of 2024 in the product.
797
00:54:20.777 --> 00:54:30.186
And as like, we need to have a decline if we're going to allow an automation to have an off ramp of decline being the reason why, uh, and otherwise at least bad online reviews, so.
798
00:54:30.647 --> 00:54:32.809
Which is like the worst thing that can happen in a business.
799
00:54:34.030 --> 00:54:35.773
Why is it top of mind for you?
800
00:54:35.793 --> 00:54:38.356
Are you just thinking about what you could do in your emails?
801
00:54:38.436 --> 00:54:40.018
Or how are you thinking about that?
802
00:54:40.298 --> 00:54:42.021
Well, because I've been solving...
803
00:54:42.121 --> 00:54:47.948
I think I've told you I'm moving all of... We're moving city turf to every chat.
804
00:54:48.669 --> 00:54:48.869
Got it.
805
00:54:48.949 --> 00:54:49.510
And so...
806
00:54:51.607 --> 00:54:55.530
I had been telling Riley, I've got to have estimating in every chat to make this move.
807
00:54:56.030 --> 00:55:01.214
So I basically designed over a long period of time the entire estimating system.
808
00:55:01.795 --> 00:55:04.337
And this was one of my big product decisions.
809
00:55:06.078 --> 00:55:10.882
I could not decide if I should have a... You can decline a package.
810
00:55:10.902 --> 00:55:12.323
You can decline a line item.
811
00:55:12.343 --> 00:55:12.943
You can do all that.
812
00:55:12.983 --> 00:55:14.825
But should I let you decline everything...
813
00:55:15.465 --> 00:55:20.667
I debated this and I had it in there and I took it back out and I have, I have, well, I don't know.
814
00:55:20.788 --> 00:55:23.509
And that's why it's like, as soon as you said, it's like, wait, he may have data.
815
00:55:23.569 --> 00:55:24.989
I'm going to ask, but I absolutely.
816
00:55:25.009 --> 00:55:25.770
There's a lot of data.
817
00:55:25.830 --> 00:55:26.470
There's a lot of data.
818
00:55:26.510 --> 00:55:27.771
I would highly recommend keeping it.
819
00:55:27.831 --> 00:55:30.752
If you're going to do a really harsh, you know,
820
00:55:30.932 --> 00:55:31.832
Like follow up process.
821
00:55:31.992 --> 00:55:32.432
Yeah.
822
00:55:32.492 --> 00:55:35.813
And that's, I mean, that's what the goal is here is to get better at that.
823
00:55:36.053 --> 00:55:39.314
And we do, I do have, why did you decline?
824
00:55:39.394 --> 00:55:41.215
Like we want to try to get the answer.
825
00:55:41.255 --> 00:55:42.055
It's in the estimate.
826
00:55:42.075 --> 00:55:43.355
Like, why did they not take it?
827
00:55:43.435 --> 00:55:44.736
We also have, why did you win it?
828
00:55:45.296 --> 00:55:47.856
We also track where they came from and all this other stuff.
829
00:55:47.896 --> 00:55:49.377
I built all that, but I,
830
00:55:50.572 --> 00:55:54.574
It's like kind of like when somebody cancels, it's really hard sometimes to get the real reason.
831
00:55:54.594 --> 00:56:00.957
And sometimes it's really hard to just get a reason at all, depending on if you were on the phone, if you're dealing through text, email or online.
832
00:56:01.317 --> 00:56:07.360
And so when it came to the estimate, it's like, will people click this or will they just continue to ghost the estimate like they do?
833
00:56:08.320 --> 00:56:10.660
And if I present it to them, is there a negative?
834
00:56:10.761 --> 00:56:11.681
I don't have data on that.
835
00:56:11.761 --> 00:56:12.741
Anyway, that's it.
836
00:56:12.761 --> 00:56:14.381
So I've designed the whole thing.
837
00:56:14.401 --> 00:56:15.501
In fact, the whole thing's built.
838
00:56:16.162 --> 00:56:17.262
This I took out.
839
00:56:17.482 --> 00:56:21.743
And so you really like, but I don't know that you're wrong at all.
840
00:56:21.763 --> 00:56:22.623
I really want to know.
841
00:56:22.703 --> 00:56:25.163
So now you got me thinking, maybe it needs to go back in.
842
00:56:26.664 --> 00:56:31.685
I think for people that don't follow up religiously, probably heaping it out is a good move.
843
00:56:31.745 --> 00:56:33.025
Religious follow-up is like...
844
00:56:34.953 --> 00:56:36.814
Trying to bring that, we're trying to level up on that.
845
00:56:37.454 --> 00:56:42.155
Yeah, if you take it out, if you take it out, you just get so many negative reviews and people feel like you're annoying them.
846
00:56:42.275 --> 00:56:44.096
And again, it's like the person knocking at your door.
847
00:56:44.256 --> 00:56:52.378
It's just like that little bit of a, they kept calling me, they kept texting me, they kept following up and I, they wouldn't let me just can't like, it was that long-term brand perception.
848
00:56:53.313 --> 00:56:58.735
So also along those lines, have you ever tested in your ongoing marketing?
849
00:56:59.075 --> 00:57:03.017
So let's just go with email marketing to a non-buyer.
850
00:57:03.557 --> 00:57:06.358
Do you give them a link or an out right there in the email?
851
00:57:06.759 --> 00:57:07.519
Like something real?
852
00:57:07.559 --> 00:57:12.401
So do you use a similar concept where it's like, hey, I like where they could just click something and say, I'm not interested.
853
00:57:12.921 --> 00:57:16.342
And that would kill the ongoing follow up.
854
00:57:16.443 --> 00:57:17.363
Have you ever tested that?
855
00:57:18.376 --> 00:57:20.038
We have them, they can unsubscribe.
856
00:57:20.579 --> 00:57:22.281
Yeah, but I prefer they don't do that.
857
00:57:22.882 --> 00:57:23.303
Yeah, 100%.
858
00:57:23.343 --> 00:57:26.767
Like you're saying have them say, I'm not interested, is this a button?
859
00:57:27.127 --> 00:57:28.749
Yeah, so I don't want to unsubscribe.
860
00:57:29.630 --> 00:57:35.878
I want them to just say, I'm not interested right now, but I wanna keep talking to them over time in my reactivation campaigns.
861
00:57:36.519 --> 00:57:39.142
But if they unsubscribe, it kills all my reactivation campaigns.
862
00:57:39.783 --> 00:57:43.987
So I've not tested this, but I'm inclined to test this idea.
863
00:57:44.067 --> 00:57:48.452
Yeah, that'd be interesting because you would improve your click-through rate, which would help your deliverability.
864
00:57:49.553 --> 00:57:52.737
And it would prove that they take action on things.
865
00:57:54.023 --> 00:57:56.204
So even though they said no, that's better than doing nothing.
866
00:57:56.484 --> 00:57:57.084
Yeah, I know.
867
00:57:57.164 --> 00:57:58.085
I have data.
868
00:57:58.245 --> 00:57:58.805
I have an answer.
869
00:57:59.505 --> 00:58:01.146
But everything comes with a cost.
870
00:58:01.646 --> 00:58:02.486
Yeah, 100%.
871
00:58:02.546 --> 00:58:03.127
You never know.
872
00:58:03.147 --> 00:58:06.068
I'll give you an example back to the estimate thing.
873
00:58:06.088 --> 00:58:06.888
You have an estimate.
874
00:58:07.148 --> 00:58:13.591
If you propose three things, they're zipping through it on their phone, they're busy, and they just see a button when they land on the bottom, and it says decline.
875
00:58:13.611 --> 00:58:14.731
And they just click decline.
876
00:58:14.952 --> 00:58:15.872
They just declined everything.
877
00:58:16.152 --> 00:58:16.652
Oh yeah, yeah.
878
00:58:16.672 --> 00:58:19.034
Design, very important where that decline goes.
879
00:58:19.074 --> 00:58:20.075
Yeah, I think so.
880
00:58:20.556 --> 00:58:24.599
But maybe if I had had them go through each thing and say decline, they would have kept one.
881
00:58:24.939 --> 00:58:25.640
I mean, I don't know.
882
00:58:25.660 --> 00:58:26.721
I don't know what the data would tell me.
883
00:58:27.522 --> 00:58:29.583
That's a very hard test to get.
884
00:58:29.623 --> 00:58:33.406
The other thing, the other button we found really helpful is request changes.
885
00:58:34.207 --> 00:58:37.710
So if you just have accept and decline, it's going to hurt you.
886
00:58:38.270 --> 00:58:47.777
If you have request changes and you make that from a design perspective UI, actually forefront of decline, they'll go, they'll look at accept and then below request changes.
887
00:58:47.837 --> 00:59:00.867
And then below that with a much more inverted color, like being decline, they'll request changes first to fix the problem of, I want that one tree gone or that mulch reduced or like that's not in my budget request changes.
888
00:59:01.793 --> 00:59:04.415
This is super smart and a great lesson right there.
889
00:59:04.435 --> 00:59:07.056
It's like I was looking at this black or white.
890
00:59:07.637 --> 00:59:10.859
We either give them a global decline or we don't.
891
00:59:11.539 --> 00:59:13.040
But that's introducing a new variable.
892
00:59:13.060 --> 00:59:14.181
It's like it's not black or white.
893
00:59:14.201 --> 00:59:17.102
It's like we could give them a decline or we could give them a request changes.
894
00:59:17.162 --> 00:59:18.963
And that changes the outcome.
895
00:59:19.464 --> 00:59:20.344
That's really smart.
896
00:59:20.444 --> 00:59:22.045
I like that a lot.
897
00:59:22.285 --> 00:59:26.288
That little idea right there would make me want to put the feature back in.
898
00:59:26.838 --> 00:59:36.244
I actually think it's kind of back to our topic of recession, like the ability to know why someone's declining, the ability to know what they want changed about the estimate is really, really valuable.
899
00:59:36.724 --> 00:59:45.870
Because if we're going to a market where people are going to be more price sensitive and we just all assume, oh, we need to be more price conscious and we reduce our prices by from $100 to $70, you just gave away all your margin.
900
00:59:46.191 --> 00:59:47.471
You just gave away all your profit.
901
00:59:47.892 --> 00:59:49.413
And so the ability to be more...
902
00:59:49.953 --> 00:59:53.696
If you're like, well, we got to get these numbers to keep my crew busy, keep asset utilization.
903
00:59:53.796 --> 00:59:54.196
Okay, great.
904
00:59:54.536 --> 01:00:11.388
Can we build into our estimating some way to be able to reach that audience, reach that person that might be a little more price sensitive, improve our service, get them back up to prices down the road, but not jeopardize everybody if you have a very hardcore way of how the estimate has to be accepted.
905
01:00:12.455 --> 01:00:12.835
I agree.
906
01:00:13.076 --> 01:00:21.064
And along those lines, something we've talked about many times that goes hand in hand with what you just said is we've talked about what are some of the metrics that matter?
907
01:00:21.204 --> 01:00:23.627
CAC, like what's it costing me to get a client?
908
01:00:23.647 --> 01:00:25.249
My accounts receivable?
909
01:00:25.269 --> 01:00:26.090
Is that growing?
910
01:00:26.110 --> 01:00:26.790
Is it shrinking?
911
01:00:26.830 --> 01:00:28.672
How long is it taking you to pay it?
912
01:00:29.353 --> 01:00:32.955
or get it paid down, churn, cancellations.
913
01:00:33.235 --> 01:00:38.798
Another one would be year over year, or month over month from year to year, client growth.
914
01:00:38.858 --> 01:00:41.059
Like how many leads are we bringing in, how many clients?
915
01:00:41.279 --> 01:00:42.460
These are all things we've talked about.
916
01:00:42.620 --> 01:00:48.043
All these things could be leading indicators that something could be going on in the market.
917
01:00:48.243 --> 01:00:51.225
And I think people are, as I said earlier in this conversation,
918
01:00:51.945 --> 01:01:02.531
I think people are seeing that in their data, in their businesses right now, where something is going on that, again, I attributed a lot of it to, you know what I did?
919
01:01:02.551 --> 01:01:05.392
There's a whole area I didn't even talk about that I want to talk about today.
920
01:01:05.692 --> 01:01:07.473
I attribute a lot of that to psychology.
921
01:01:08.073 --> 01:01:09.094
But, yeah.
922
01:01:10.262 --> 01:01:13.684
We can come back to this, but I actually am a little worried about consumer debt as well.
923
01:01:14.324 --> 01:01:16.886
And I think maybe that may have a place to talk about or not.
924
01:01:16.906 --> 01:01:29.933
But as we talk about these financial things, profitability, build cash, pay down variable debt if you can, be careful on where you spend your money, like your capital outlays, that's building cash, conserving cash.
925
01:01:30.213 --> 01:01:34.816
And then to what Mike said and what I just added on, the numbers, like are you watching your numbers?
926
01:01:34.856 --> 01:01:39.158
It becomes really critical to be watching those numbers on a frequent basis because it can give you...
927
01:01:39.518 --> 01:01:44.280
a leading indicator as, ooh, there could be a problem here, which might need to change my behavior.
928
01:01:44.600 --> 01:01:49.642
If you're seeing accounts receivable growing, that might tell you, I need to get more deposits.
929
01:01:49.942 --> 01:01:53.103
It may tell you, I need to actually do that idea of switching over to credit cards.
930
01:01:53.543 --> 01:01:55.444
It can tell you a lot.
931
01:01:55.504 --> 01:02:03.587
If you're seeing your CAC go up on LSA, but it's still good on Facebook, maybe you shift a little bit of your budget for some reason,
932
01:02:04.407 --> 01:02:07.411
Because you're being careful with your money, it's working better over there.
933
01:02:07.471 --> 01:02:12.598
So these are ways that you can conserve cash and frankly, then outmaneuver your competition.
934
01:02:13.209 --> 01:02:19.636
And I think that's really all of these things lead into is like, if we are going into a bad time, if we are going into recession, everyone feels it.
935
01:02:20.237 --> 01:02:30.407
And unfortunately, there will people go out of business and the people that prepared for it and taken some of the actions we've talked about today, they'll be actually in a great place to grow, a great place to take on more customers.
936
01:02:30.688 --> 01:02:35.132
And those customers that get displaced from the people who aren't doing these things will have to go somewhere.
937
01:02:35.153 --> 01:02:35.413
Yeah.
938
01:02:35.833 --> 01:02:38.514
And if you're ready, if you've been prepared, you can actually grow.
939
01:02:38.574 --> 01:02:54.140
If you look at 2008, 2020, 2001, those were actually the years when a lot of big businesses today were started because they are off the back of a recession when a whole bunch of customers were leaving their competition and they were able to absorb all that extra demand.
940
01:02:54.660 --> 01:03:05.967
And so I'm very much like when everyone zigs you zag, and if everyone's conserved, don't buy any more trucks, don't hire more people, don't market, don't spend any money marketing, don't spend, cut all your subscriptions, don't get anyone doing your advertising.
941
01:03:06.227 --> 01:03:09.569
If you can zag at that same moment, all of a sudden your cost per lead is lower.
942
01:03:09.789 --> 01:03:16.113
And all of what we just talked about is almost opposite because everyone's psychology is conserved, don't spend, don't hire.
943
01:03:16.173 --> 01:03:22.137
And all of a sudden you can hire people, you can buy trucks for pennies on the dollar because they're all getting rid of them because they're over leveraged.
944
01:03:22.737 --> 01:03:26.360
you can go out and advertise for the first time on Google and get your cost per lead way down.
945
01:03:26.380 --> 01:03:32.624
Like there's so much opportunity if you do these things we've talked about and planning for a quote recession to go on the offensive.
946
01:03:33.365 --> 01:03:33.765
I agree.
947
01:03:33.945 --> 01:03:39.729
I think one more thing I'd say, and I kind of already said it, but now is the time to really look at your collections process.
948
01:03:40.170 --> 01:03:45.653
I kind of said it when I said the AR thing, your accounts receivable, but this is the time to really get on top of that.
949
01:03:45.674 --> 01:03:51.538
Because if you're not aware of it and you don't have a process to deal with it, that thing can get out of control pretty fast.
950
01:03:52.192 --> 01:03:57.196
If I had a takeaway for you, I'd say, I don't know how to word this, like, don't lie to yourself.
951
01:03:58.116 --> 01:03:59.718
You have absolutely no idea what's going to happen.
952
01:04:01.039 --> 01:04:03.560
And that is advice that Jonathan says to Jonathan.
953
01:04:04.081 --> 01:04:15.329
Because if I go on the news or CNBC is playing somewhere and I hear it or I listen to podcasts, it is literally the end of the world.
954
01:04:15.469 --> 01:04:18.812
And I think it's been the end of the world since I was born, if I remember correctly.
955
01:04:19.132 --> 01:04:21.139
I can't remember when it hasn't been the end of the world.
956
01:04:21.660 --> 01:04:24.489
And it's just sometimes it's a little louder and sometimes it's a little quieter.
957
01:04:25.131 --> 01:04:26.395
And I don't know.
958
01:04:27.892 --> 01:04:29.093
It generally isn't the end of the world.
959
01:04:29.213 --> 01:04:32.656
And we have any, the smartest money in the world is invested right now.
960
01:04:32.756 --> 01:04:32.937
Yep.
961
01:04:33.297 --> 01:04:34.478
The smartest, they are invested.
962
01:04:34.498 --> 01:04:35.459
Taking more debt on?
963
01:04:35.939 --> 01:04:36.260
Yes.
964
01:04:36.320 --> 01:04:46.369
Like, I really believe in this concept, which is why I don't pay much attention to the news, that you only listen to people that are playing the game and have skin in the game.
965
01:04:46.429 --> 01:04:50.052
If you want financial advice, you listen to the guys that have billions invested.
966
01:04:50.933 --> 01:04:52.334
If you're a journalist, you're a journalist.
967
01:04:52.583 --> 01:04:55.905
Interesting, but you have very little vote in my mind until you put your money.
968
01:04:56.065 --> 01:04:59.648
Like, am I going to take advice from somebody on how to invest in the stock market that has no money in the stock market?
969
01:04:59.888 --> 01:05:00.308
Probably not.
970
01:05:01.009 --> 01:05:09.155
You know, they may still have good ideas, but so that's the big risk here is that we're listening to noise that will have us lift our foot off the gas pedal.
971
01:05:09.755 --> 01:05:13.656
I think it's always wise to do what we talked about, build cash, be profitable.
972
01:05:13.676 --> 01:05:16.217
Those are great ways to run your business all the time.
973
01:05:16.657 --> 01:05:27.159
But this fear, living in fear just perpetually has us not hiring, not marketing, lifting our foot off the gas and the pain and the problems continue for longer and longer periods of time.
974
01:05:27.519 --> 01:05:30.580
And that's why we eventually shut down our businesses or we wear out.
975
01:05:30.660 --> 01:05:36.121
And that's, that would be the biggest thing is just a reminder that how often are your predictions actually right?
976
01:05:36.141 --> 01:05:39.222
Because I know a lot of my predictions are not right because we have no idea.
977
01:05:39.782 --> 01:05:40.662
And so just keep going.
978
01:05:41.303 --> 01:05:50.586
My takeaway is that if you're if you're a client of CityTurf and you're getting an estimate, just click accept there's no other option.
979
01:05:50.706 --> 01:05:54.987
If you want your close rate to go higher, don't even give them the option to cancel.
980
01:05:55.007 --> 01:05:55.987
That's exactly right.
981
01:05:56.088 --> 01:05:56.828
Locked in.
982
01:05:58.842 --> 01:06:01.267
When we send estimates, we just send them already signed up.
983
01:06:01.708 --> 01:06:02.370
Exactly.
984
01:06:02.470 --> 01:06:04.154
They have to call to cancel.
985
01:06:04.475 --> 01:06:08.163
Yeah, we actually go scrub, scrub, get their credit card information.
986
01:06:08.183 --> 01:06:09.426
Just say here, set up for next Thursday.
987
01:06:09.446 --> 01:06:10.869
If you'd like to opt out, let us know.
988
01:06:10.929 --> 01:06:11.450
Just tell us.
989
01:06:11.771 --> 01:06:12.573
You're already signed up.
990
01:06:13.034 --> 01:06:13.214
Yeah.
991
01:06:13.375 --> 01:06:13.655
Awesome.
992
01:06:13.756 --> 01:06:14.297
All right, everyone.
993
01:06:14.317 --> 01:06:15.159
We'll see you all next week.
994
01:06:15.179 --> 01:06:15.560
Great seeing you.
995
01:06:15.580 --> 01:06:15.940
Take care.
996
01:06:16.001 --> 01:06:16.221
Bye.
997
01:06:16.502 --> 01:06:16.702
Bye.