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Hey everyone, it's Mike Andes and today I'm actually sharing a segment of a mastermind I did for the Co-Pilot members.
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There's some really good questions about how to incentivize your office team, create systems and training for them, as well as questions about whether or not you should have one big location or a whole bunch of smaller locations.
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We have one of these every single week for all the members of Co-Pilot, so I look forward to seeing you inside the community.
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How do you hold accountable, motivate, track, reward, and office manager to harvest your customer database?
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We have 4,300 contacts and we need to do a better job selling to our existing clients, but I don't know how to get our office manager really pushed for it.
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Unless they're doing outbound where they're going to go out, reach out and talk to all these customers themselves.
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I would just create a system around this.
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So I would create like, hey, let's create a monthly calendar of emails, a monthly calendar of texts that go out on a specific day.
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And the only thing the office manager has to do is use a certain filtering on the client's list and then send out that email or send out that text.
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I am not going to try to motivate them to do outbound emails.
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most of the time, admin folks, if you look at sales operations and admin, you're at the person who signed up for an admin job or an office job usually doesn't like sales a whole lot.
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If they did, they would go out and be a salesperson, they'd be an estimator.
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And so instead of trying to go against that grain, which again, I'm not opposed to that you can train someone get them up to decent levels of effectiveness.
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I would rather just
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systematize things where like they have to say certain things on the phone they have to do you know send this email you have to send out this text message and i would create you know every single month of the year what text or email i'm going to send out based upon the timing my climate what services are popular etc i shall continue to annoy you over here until i get banned kidding huh
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I am currently working on creating an office and admin role for my pressure washing business that can be handed off to someone.
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I have been creating a ton of Loom videos and Google Docs.
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I just wanted to know if you had any big picture advice that could be helpful to me or just something you learned from when doing this for your companies.
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I am just generally trying to figure out what CSRs, that's customer service reps, respond best to and what is actually helpful to them.
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Yes, like leaning into your checklists, etc.
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for a day prioritization, you got to show them what good looks like, you got to give them metrics of success.
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So how do they benchmark against those?
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And then they you got to give them prioritization, usually in the form of checklists.
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And so if you if you don't do the latter, then they will be doing all the right things in the wrong order and you will be very frustrated because they will be, you know, sending out text messages to customers for new jobs when there's a pile of overdue invoices that haven't been haven't been addressed.
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So having a checklist is extremely important.
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I would also keep in mind that your Loom doc and, and keep, be careful of over documentation of your admin process because it does change as you grow very fast.
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Like every 12 months, our admin process looks very different as we scale.
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And so, and it did the same thing when we went from like, you know, 500,000 to a million to 3 million to 10 million.
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It just changes so quickly.
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I would recommend making sure that you're not doing massive two-hour videos.
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Do it in bite size.
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So if one process changes or you change your deposit flow or you change the way you do your scheduling or you change a certain service, then you can just quickly jump in there.
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The reason I'm against annual price increases is usually people do it against inflation.
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And unless you hate money, you don't do that.
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Unless you are doing this more out of the goodness of your heart or you're trying to give back to the community, you do not do price increases based upon inflation.
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You do it based upon your demand.
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You're based upon when you're maxed out, when you're at capacity.
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And more importantly, I would rather raise prices by 15 or 20 percent at a time.
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And as much as inflation has happened, that takes a long time to take place.
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The target inflation point is 2 percent.
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Right now it's around 2 to 3 percent inflation in the U.S. You're talking about five to six years worth of inflation before you raise prices by 15 percent.
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So instead of doing that, I'm just going to raise my prices 15 to 20% every few years.
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That's the way to make the most money.
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If you're trying to be the most fair, if you're trying to create most systems, make it really, really simple, not have any blowback and be really, really customer first, then yes, maybe you would do annual price increases at a certain percentage.
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But if you raise your prices by 3% or 4%, you're going to lose the same number of customers if you raise it by 10% to 15% or 20%.
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And so any price increase will scare some people away, and they're usually your worst customers.
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So I'm not a huge fan of the annual thing because there's so much more juice to squeeze.
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And if you'd only been doing annual inflation adjustments over the past, like, three to five years, you would be left in the dust because wages have gone so much higher than the rate of inflation.
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So, you know, the vast majority of us six, seven years ago—
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Let's just say, for example, we're paying $20 an hour or $18 an hour, and now we're paying $29, $30 an hour.
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So it's a lot more than inflation, the cost of everything.
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So I would just be careful of that.
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I'm not a huge fan.
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I would rather increase value to the point where I get so many customers where I'm at capacity.
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I cannot do any more jobs.
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I'm overbooked.
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People are saying no because I'm booked out so far.
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And then I raise my prices by a significant margin, which to me is at least 15%.
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Kaylee from Amory Lawn Care.
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I'm Kaylee, admin and girlfriend of nine years for Jonathan, the owner of Amory Lawn Care in the Washington.
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Right now, we are only mowing four days a week, but three of those days he's working past 8 p.m. just to keep up.
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He's doing projects on one of his off days, estimates and door hanging on another, and only taking one day off.
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He still has three budget hours of recurring revenue weekly.
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With shorter days coming, he won't be able to keep this pace.
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Oh, I see.
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Like with the weather, with the shorter days in terms of daylight.
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He won't be able to keep this pace.
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Our close rate over the last 30 days is 45%.
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Labor efficiency, 128%.
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Okay, that needs to be addressed.
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And we've gone through everyone's budget hours and made them really accurate.
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Okay, I would push back on that because if everyone's budget hours are accurate, there's no way you're doing 128% labor efficiency.
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No, I'm not doubting your 128.
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I'm saying your budget hours aren't accurate.
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And so assuming – take that back.
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You could potentially have a huge seasonal thing where like you go, you go way faster in June and July.
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That could be the case maybe.
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So maybe I'm wrong there.
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But assuming that's not the case, you know, like this is a kind of average month for us, you want budget hours to be accurate.
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And if they are actually accurate, which is like every job budget hours are correct.
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you should be between 70 and 90% efficiency.
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If you start getting above 100 and that's normal, then we are not accurate.
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No, no, no, let's take this for a second.
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What you can do is just raise your hourly rate.
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And I don't even raise your prices.
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If you just raise your hourly rate, you'll bring down your efficiency score.
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Because if you take your budget hours and decrease them by raising your target hourly rate.
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So if your budget hours, it's the same, you're charging $80 for a mowing job right now.
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And your budget hourly rate, your hourly rate is $80 per hour.
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That would be one budget hour on that job.
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Okay.
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So it takes you one hour to mow the lawn.
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One, that's 100% efficiency score.
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Now, if we, instead of doing $80 per hour, we charge $100 per hour.
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Now, we don't change the price of the customer, but we just simply are changing the rate from $80 to $100 per hour.
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Now, we have like, what is it, 0.8?
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Is it 0.8?
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0.8?
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Something around 0.8 budget hours.
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0.8 divided by one.
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Okay.
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And so now your efficiency score is much more on 80%.
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Without changing the price of the customer, you just increased your hourly rate and therefore decreased your budget hours.
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And when you decrease your budget hours on the efficiency score ratio, which is budget hours divided by clocked hours, you decrease your labor efficiency.
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So you don't change their prices.
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You don't affect pay for performance if you're using it.
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It's simply a function of your labor efficiency is incorrect because your hourly rate is incorrect.
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Oh, whoa, whoa, okay, I should have kept reading.
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Our effective hourly is $46, but we're still ending the week with zero money in the bank.
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Okay, that changes everything.
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I should have read that last sentence.
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Let me finish the whole thing.
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Johnson's torn between raising prices and restructuring the schedule or hiring someone under the table to help with the long days.
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I told him you should raise prices and not bring someone on because we'd have to claim the profit we're paying out and still owe taxes on it, and of course that's not legal.
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Even your AI said to raise prices, but he still hasn't.
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How would you approach this?
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Okay.
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This is why Michael needs to finish the whole question.
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Okay.
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So this is the part that's killing you.
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So if you're at 128% labor efficiency and your effective hour is $46, if those two things are actually true, what that tells me is that your hourly rate to the customer, your target hour is 40 bucks an hour.
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Okay, because if your target hourly rate is 40 bucks an hour, and your effective hourly rate, like what you're actually making, including all your drive time, etc, is $46 an hour.
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And with that kind of labor efficiency that you have 128, that tells me that you're like, yeah, you are priced way too low.
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Now, I will say this, here's the good news.
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Here's the good news.
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Your target hourly rate, even though right now is $40 an hour, it's actually probably in the realm more of 55 to 60 because you have such a crazy high labor efficiency.
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So your labor efficiency is 128% of $40 an hour approximately.
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So you're really actually your target hourly rate.
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Let's make this real is more like $60 an hour and your effective hourly rate at 46 puts you on a 78, 79 percent efficiency score.
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That's the real real.
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And so if you take all of your budget hours and divided by $60 an hour, that will put you at correct budget hours in my opinion.
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All right.
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So that will mean your efficiency, your labor efficiency around 80%.
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And that's a very good spot to know that you actually have extra budget hours, your effective hourly rate will still say $46.
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You're not changing the price of the customer at all.
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But you have $60 is your target hour rate now $60 per hour as your target hourly rate, you're not going to make any money.
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You're just not.
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um and so um i would personally say when you're working that many hours you 100 unless you're going to raise capacity you need to raise prices so when we look at raising prices as a function of simply are you at capacity you are at capacity you cannot work anywhere hours you literally are running out of daylight you're working six days a week i say you i mean your husband and so you know feel free to use this for him
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I would 100% across the board, raise prices, hold the phone by 25%, 25% minimum.
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That's going from $60 an hour to $75 an hour.
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And I happen to believe you will lose too few customers.
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I've just seen this over and over and over again.
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So like I'm not, I have a high degree of confidence.
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And here, let's check this out.
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Let's assume that one out of five people leave.
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to 20% of your customers leave, which will not happen, by the way.
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Let's assume that happens for a second.
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You increased prices by 25% and lost 20% of your customers, which means you are going to now have one day off a week and make the exact same amount of money that you're making right now.
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Sounds like a good problem for me.
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So I would I would highly recommend raising your prices or at capacity.
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Nothing, nothing determines whether or not you raise prices besides two factors.
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One is my close ratio, which 45% is not like super high.
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It's not super low.
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And more importantly is
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by capacity and you are above capacity.
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You are working six days a week.
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You have tons of work coming in.
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You cannot physically do the work.
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You're above capacity.
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And as I think it's Kaylee, as Kaylee outlined here, when you're above capacity for a short period of time, you will make more money.
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But if you're over capacity in your personal capacity, your asset capacity or your labor capacity, this talk about this in the book, if you're above those capacities at all,
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in the long term, you will burn out.
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And so 100% rate prices by a minimum, minimum 25%.
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Jeremy from Klein Lawn Care and Snow Plowing.
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We recently ordered a trailer built to fit our needs for $8,500.
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It came in different than ordered.
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Was provided the opportunity to purchase misordered trailer already painted our brand color for $3,000 off.
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Oh, for $3,000 off.
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If we would still take the trailer we ordered to fit our needs at full price, even though we didn't need two new trailers.
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Currently, we made the purchase money.
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Other would otherwise be an emergency fund.
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How would you know what opportunities you should take and which one you should let pass by?
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So it is rare.
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It is rare that opportunities, quote unquote, like this are super useful when it comes to assets.
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Very infrequently.
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Because if you're like, man, I just got to the point where I need a trailer.
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I'm going to go buy one.
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To double that capacity, assuming you're a smaller business.
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I'm going to assume right now that this is like your first or second trailer.
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And it's like, do you want another one?
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You are baking in your capacity.
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If you think about asset capacity, it's just like how many trailers do I need?
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Right now you need one.
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And you probably won't be using it.
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I bet you aren't using it every single day for this new trailer.
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And then you're going to add another trailer on it.
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So the thing is this trailer is going to sit there for like three to five days a week.
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And I don't like assets that are not moving at least four days a week.
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If they're not moving four days a week, I don't want them.
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And so the thing is, there is additional insurance cost.
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There is storage cost.
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There is training.
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There is security.
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There are a lot of other costs that go into your trailer.
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So personally...
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I'm a huge fan of asset capacity, asset utilization.
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I do not want to be getting a second trailer until I need it.
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There's a big fatal flaw I did early on in Augusta when I was just like grow at all costs kind of thing.
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I just bought more trailers.
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I just bought more trucks.
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And like all of a sudden I'd be walking out and something like, there's like five trucks sitting here on a Friday.
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And there's like out of our eight trailers, three of them are sitting here three to four days a week.
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Like not good.
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Not good.
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Especially with things, if it's something you can rent, like if you can go rent a trailer, if you can go rent anything, there's no reason to be having excess capacity.
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Now, if it's difficult to rent, like backups are really hard to come by, then having a secondary truck or trailer, usually trucks, but like trailer or a piece of equipment sitting around as backup, then it makes more sense.
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I'd give you, I'd give you that.
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Adam Burgett from Pristine Green Lawn and Landscape.
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When does it make sense to run a multi-location business model rather than one big location?
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If I don't want to be an absentee owner, does it make more sense to grow one location?
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How hard is it to find a GM?
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How long should I expect to find someone qualified to run a location?
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What is a reasonable percent of the population to service while offering residential mowing and simple service landscaping?
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I would like to figure out how big I could grow my company in my current market before I need to expand.
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Okay, so let's go backwards.
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First question, in terms of the size of business you can build, I would look at if there are other competition in your market that has built a certain size business, it means it is possible.
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And so if there's a business next to you that does 2 million, you at least know it's possible to do 2 million.
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Does that mean you can't do 5 million?
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No.
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But you know for certain,
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that you can do too.
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So I'm usually just, that's the easiest way to do it.
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The more difficult way is like, all right, what's my total adjustable market?
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How many of these people can I actually sell to based upon their income, based upon their house type, if they're their homeowner.
225
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And then I extrapolate a lot of other factors, but a lot of times I'm guessing because one person in one state making $150,000 versus someone else in a different state making $150,000, very different lifestyles.
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And so sometimes the numbers can do a little bit of hunky-dory tricks on you, and I would be careful of that.
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So I'm very much of the opinion that look at your competitors.
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If they have a big business, it means that the market can afford that, and it can sustain that size of business.
229
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How hard is it find a good gym?
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Very hard.
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If you have never hired a general manager, I see it usually taking three years to figure that skill out.
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I have yet to see that go much faster.
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I've seen a couple unicorn cases where their first GM works out really good.
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But usually it takes three years to figure out how to find, train, retain, and compensate a GM correctly.
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Now, even when you have perfect information, even when you know exactly what to pay them, even when you exactly know how to train them, even when someone else can do the training for you, you're still going to run into problems because you as a leader don't have the skills.
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That's where the breakdown happens.
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Like, how do you deal with one-off situations?
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How do you deal with disagreements?
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How do you deal with things when you don't see eye to eye?
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Those are the things that actually take time to learn and see a pattern of what works and what does not.
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And usually people don't learn that unless they make a few mistakes.
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I've just seen it over and over and over.
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So in terms of finding a general manager, if you look on the Home Service Millionaire channel, I have a couple videos about this.
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Last year's conference, I spoke for about an hour and a half on it.
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where to find the GM, how to find the best traits of a GM, how to compensate them, all of that.
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It's all in there.
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So check that out.
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It's an hour and a half long video on the Home Service Millionaire channel from like February or March of this past year.
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Okay, when does it make sense to run a multi location business rather than one big location?
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So several things if you want to get out of daily operations and not show up to the to up to the to the office, usually a lot easier to replace yourself with general managers that are going to hot that are going to manage six to eight people and be fully responsible for that unit of business.
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Also, if they leave and get hit or get a bus or anything,
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It's easier to replace them versus someone who is needing to manage 20, 30, 40 people.
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Because the person that can manage 20, 30, 40 people is an entrepreneur.
254
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And if you are going to hire them, it can be extremely expensive.
255
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If you're going to hire someone that can manage 20, 30, 40, 50 people with a mid-level management team or a C-suite underneath them, that person is extremely expensive.
256
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And if they get hit by a bus, the amount of key man risk is so high, he will be back in the business.
257
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I've just seen it too many times.
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So a lot of times the big businesses, if you notice, are usually passed down from generation to generation or like a family member.
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And the reason for that is because there's so much inherent trust built up.
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So if you had a really good family network that you just like, you know, they're not going to walk on you.
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You know, no one's leaving or going anywhere.
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Everyone's working inside the business.
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Those are the ones where I see big businesses built around because there's so much inherent trust in terms like there's not as much key man risk.
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Because if Bob, if Bob leaves, you know, Billy's been here for 10 years and he's his brother and he just stepped into that role.
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And so that's really where I see big businesses usually start to grow.
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Also, you'll notice the most businesses and home services that are above 2 million, the owner is still there every single day as a leader at least, at least as the general manager, even if they have a team underneath them.
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I'm not saying that's a good or bad thing.
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Ideally, they're able to move on.
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But I see the path to getting into quote absentee or being able to leave the business for a few weeks at a time.
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I see the path to that as a rule of thumb, being much more on 15 to 20 years to build the large business.
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Because you need to build it usually three to 5 million.
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Then you need to build an executive team, and then you need to build redundancy.
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And to do that usually is a 15 to 20 year window.
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Um, whereas you can do the smaller pieces and parts in five to 10 years.
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So in terms of multi-location, I would say you're probably looking at speed to be able to get out of daily operations.
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I look at off the truck very different than out of daily operations.
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Out of daily operations is like, I don't know what's going on.
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People are getting hired without me there.
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Their marketing is getting done without me being there, et cetera.
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Yeah.
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So if you want to get out daily operations, use it faster to do it the smaller way, because you're going to also simplify services a lot more generally when you're doing these smaller units.
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Also, if you have a centralized office, it makes it way easier to do multi-location, because now the spaces that you're finding are very, very cheap.
283
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You don't need an office space.
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You don't need commercially rated.
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You don't need industrially rated.
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You can just get land.
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It's like one of my locations.
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I've never even been there, but they're just on a farm.
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And that location will probably do $750,000 this year in revenue with four trucks and one general manager that was working out in the field.
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But they can only do that because they have command center, essentially an office that they can...
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calls and everything else goes through here.
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And so the general manager can be on the field doing work throughout the day.
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It has several employees and it's very profitable.
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And so I like that model and replacing that general manager is easier than if I have one location that has 30, 40 employees.
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Trying to replace that person if that person was to leave is extremely difficult and expensive and also very risky when it comes to leadership.
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Putting a new leader in that size of business.
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So there's no right or wrong.
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And obviously, I'm a big proponent of the model that we built at Augusta, which is that, you know, around three quarters of a million dollars in annual revenue, six to eight employees, one general manager that's out in the field still doing work.
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That's my go-to because I have seen what, when you have 20, 30 people and I hand it off to someone, what can happen if that goes wrong versus what goes wrong if I have a smaller location, I can get that thing turned around in a month.
300
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Nathan from Heart and Sons Landscape.
301
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What's your opinion of using an AI receptionist to answer all calls?
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I'm still a little nervous.
303
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I'm a little nervous what clients will think.
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Apparently, they can schedule estimates for you too.
305
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I know having a live person of receptionist is the much better option, but for my business, I don't have enough time to answer any calls.
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and they get a voicemail and I can call them back anyways.
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What do you think?
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Okay, so this is what I would say, if they're going to voicemail, and you're not even getting the voicemail use for hours, if not the next day, then yes, get a call, get an AI receptionist.
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But if you can have a human, and that human is trained well, then I would use them.
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I think that AI receptionists right now are better than not answering the phone, better than going to voicemail, better than you not responding back to the customer.
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But they are not that an AR receptionist is not better than a well-trained human that knows how to upsell, knows how to empathize and and connect with the customer.
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There is no AI receptionist that will do that.
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So even the best, the best, even the ones that you actually think are taught, you're talking to human.
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It's not about the hearing.
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It's the other things that a human can do still that the AI receptionist cannot.
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Will it get there?
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Perhaps, maybe.
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But there's also been a bunch of, we've seen the past 12 months, an increase in the pushback to AI.
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I think it's most because it's become a political thing, it's become in the news, all these big companies, big tech, etc.
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We actually saw an adoption of our AI receptionist far better
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at the beginning when people didn't even know what AI was.
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But now it's in the general public zeitgeist and everyone kind of has their targets set on these and it's been villainified.
323
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And so especially your target, your older target demographic, so 60 plus, unfortunately that has happened.
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And so we are spending more time, energy and money actually on our live agents
325
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on training and how to upsell and like yes, okay, you are going to cost more than AI in AI phone person.
326
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But can you sell three times as many services to the customer?
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Because you're empathizing with them, you hear what they're saying, you ask them about their, their their parent that's in the hospital,
328
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You then tie that into the fact that they also need a property cleanup.
329
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Oh, they're going to be selling the house in a few months and then you get them on a multi-installing.
330
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That is what AI is not good at.
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Um, and the reason is not because it can't do it technically, they can, the reason that it doesn't work is because people don't open up to it once they know it's AI.
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And if you don't tell them it's AI, then they feel tricked.
333
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So there's a juxtaposition of like, if you don't tell them this is a virtual agent and they can't distinguish because we've gotten it to where like most people can't distinguish it.
334
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But if you don't tell them and then they figure out later in the call, they feel strict and they feel a little bit bad.
335
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It's a bad feeling for them.
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And if you do tell them, they will not open up about like, for example, like I mentioned, their parent in the hospital, the fact that they're going to sell the house in a few months.
337
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All these little cues that would tell you that you could sell this person not just $1,000 but $5,000.
338
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And that one upsell, that one saved customer because you empathize with them instead of you losing them, that is worth a lot more than the savings of the AI agent.
339
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So that's how I would stack rank is like don't miss your calls, don't get voicemails.
340
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Above that, better than that is an AI agent.
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An AI agent is probably better than like a low level, new trained employee that just takes calls.
342
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It just takes calls.
343
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It's above that, though.
344
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If you can afford it, I still would say trained, well-trained.
345
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People are looking for upsell opportunities, empathization with the customer, making sure that when someone's trying to cancel, they try to derail that cancellation.
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Highly valuable.
1
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Hey everyone, it's Mike Andes and today I'm actually sharing a segment of a mastermind I did for the Co-Pilot members.
2
00:00:05.574 --> 00:00:15.838
There's some really good questions about how to incentivize your office team, create systems and training for them, as well as questions about whether or not you should have one big location or a whole bunch of smaller locations.
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00:00:15.898 --> 00:00:20.660
We have one of these every single week for all the members of Co-Pilot, so I look forward to seeing you inside the community.
4
00:00:20.781 --> 00:00:25.803
How do you hold accountable, motivate, track, reward, and office manager to harvest your customer database?
5
00:00:26.344 --> 00:00:33.842
We have 4,300 contacts and we need to do a better job selling to our existing clients, but I don't know how to get our office manager really pushed for it.
6
00:00:34.246 --> 00:00:39.448
Unless they're doing outbound where they're going to go out, reach out and talk to all these customers themselves.
7
00:00:39.828 --> 00:00:41.229
I would just create a system around this.
8
00:00:41.809 --> 00:00:47.852
So I would create like, hey, let's create a monthly calendar of emails, a monthly calendar of texts that go out on a specific day.
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00:00:48.352 --> 00:00:56.056
And the only thing the office manager has to do is use a certain filtering on the client's list and then send out that email or send out that text.
10
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I am not going to try to motivate them to do outbound emails.
11
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most of the time, admin folks, if you look at sales operations and admin, you're at the person who signed up for an admin job or an office job usually doesn't like sales a whole lot.
12
00:01:10.762 --> 00:01:13.303
If they did, they would go out and be a salesperson, they'd be an estimator.
13
00:01:13.803 --> 00:01:22.267
And so instead of trying to go against that grain, which again, I'm not opposed to that you can train someone get them up to decent levels of effectiveness.
14
00:01:22.967 --> 00:01:24.028
I would rather just
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00:01:24.889 --> 00:01:42.664
systematize things where like they have to say certain things on the phone they have to do you know send this email you have to send out this text message and i would create you know every single month of the year what text or email i'm going to send out based upon the timing my climate what services are popular etc i shall continue to annoy you over here until i get banned kidding huh
16
00:01:43.264 --> 00:01:48.967
I am currently working on creating an office and admin role for my pressure washing business that can be handed off to someone.
17
00:01:49.607 --> 00:01:52.148
I have been creating a ton of Loom videos and Google Docs.
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I just wanted to know if you had any big picture advice that could be helpful to me or just something you learned from when doing this for your companies.
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00:01:59.352 --> 00:02:06.735
I am just generally trying to figure out what CSRs, that's customer service reps, respond best to and what is actually helpful to them.
20
00:02:07.255 --> 00:02:09.577
Yes, like leaning into your checklists, etc.
21
00:02:09.617 --> 00:02:17.021
for a day prioritization, you got to show them what good looks like, you got to give them metrics of success.
22
00:02:17.181 --> 00:02:18.842
So how do they benchmark against those?
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00:02:19.362 --> 00:02:23.365
And then they you got to give them prioritization, usually in the form of checklists.
24
00:02:24.045 --> 00:02:41.595
And so if you if you don't do the latter, then they will be doing all the right things in the wrong order and you will be very frustrated because they will be, you know, sending out text messages to customers for new jobs when there's a pile of overdue invoices that haven't been haven't been addressed.
25
00:02:41.995 --> 00:02:43.936
So having a checklist is extremely important.
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00:02:44.296 --> 00:02:55.519
I would also keep in mind that your Loom doc and, and keep, be careful of over documentation of your admin process because it does change as you grow very fast.
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00:02:56.060 --> 00:03:00.061
Like every 12 months, our admin process looks very different as we scale.
28
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And so, and it did the same thing when we went from like, you know, 500,000 to a million to 3 million to 10 million.
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It just changes so quickly.
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I would recommend making sure that you're not doing massive two-hour videos.
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Do it in bite size.
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So if one process changes or you change your deposit flow or you change the way you do your scheduling or you change a certain service, then you can just quickly jump in there.
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The reason I'm against annual price increases is usually people do it against inflation.
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And unless you hate money, you don't do that.
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Unless you are doing this more out of the goodness of your heart or you're trying to give back to the community, you do not do price increases based upon inflation.
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You do it based upon your demand.
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You're based upon when you're maxed out, when you're at capacity.
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And more importantly, I would rather raise prices by 15 or 20 percent at a time.
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00:03:47.787 --> 00:03:52.730
And as much as inflation has happened, that takes a long time to take place.
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00:03:53.010 --> 00:03:54.731
The target inflation point is 2 percent.
41
00:03:55.111 --> 00:04:03.095
Right now it's around 2 to 3 percent inflation in the U.S. You're talking about five to six years worth of inflation before you raise prices by 15 percent.
42
00:04:03.595 --> 00:04:08.319
So instead of doing that, I'm just going to raise my prices 15 to 20% every few years.
43
00:04:10.201 --> 00:04:11.462
That's the way to make the most money.
44
00:04:11.662 --> 00:04:24.474
If you're trying to be the most fair, if you're trying to create most systems, make it really, really simple, not have any blowback and be really, really customer first, then yes, maybe you would do annual price increases at a certain percentage.
45
00:04:24.814 --> 00:04:31.078
But if you raise your prices by 3% or 4%, you're going to lose the same number of customers if you raise it by 10% to 15% or 20%.
46
00:04:31.818 --> 00:04:35.561
And so any price increase will scare some people away, and they're usually your worst customers.
47
00:04:35.981 --> 00:04:39.763
So I'm not a huge fan of the annual thing because there's so much more juice to squeeze.
48
00:04:40.063 --> 00:04:50.310
And if you'd only been doing annual inflation adjustments over the past, like, three to five years, you would be left in the dust because wages have gone so much higher than the rate of inflation.
49
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So, you know, the vast majority of us six, seven years ago—
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Let's just say, for example, we're paying $20 an hour or $18 an hour, and now we're paying $29, $30 an hour.
51
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So it's a lot more than inflation, the cost of everything.
52
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So I would just be careful of that.
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I'm not a huge fan.
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I would rather increase value to the point where I get so many customers where I'm at capacity.
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I cannot do any more jobs.
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I'm overbooked.
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People are saying no because I'm booked out so far.
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And then I raise my prices by a significant margin, which to me is at least 15%.
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Kaylee from Amory Lawn Care.
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I'm Kaylee, admin and girlfriend of nine years for Jonathan, the owner of Amory Lawn Care in the Washington.
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Right now, we are only mowing four days a week, but three of those days he's working past 8 p.m. just to keep up.
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He's doing projects on one of his off days, estimates and door hanging on another, and only taking one day off.
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He still has three budget hours of recurring revenue weekly.
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With shorter days coming, he won't be able to keep this pace.
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Oh, I see.
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Like with the weather, with the shorter days in terms of daylight.
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He won't be able to keep this pace.
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Our close rate over the last 30 days is 45%.
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Labor efficiency, 128%.
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Okay, that needs to be addressed.
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And we've gone through everyone's budget hours and made them really accurate.
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Okay, I would push back on that because if everyone's budget hours are accurate, there's no way you're doing 128% labor efficiency.
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No, I'm not doubting your 128.
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I'm saying your budget hours aren't accurate.
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And so assuming – take that back.
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You could potentially have a huge seasonal thing where like you go, you go way faster in June and July.
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That could be the case maybe.
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So maybe I'm wrong there.
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But assuming that's not the case, you know, like this is a kind of average month for us, you want budget hours to be accurate.
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And if they are actually accurate, which is like every job budget hours are correct.
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you should be between 70 and 90% efficiency.
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If you start getting above 100 and that's normal, then we are not accurate.
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No, no, no, let's take this for a second.
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What you can do is just raise your hourly rate.
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And I don't even raise your prices.
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If you just raise your hourly rate, you'll bring down your efficiency score.
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Because if you take your budget hours and decrease them by raising your target hourly rate.
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So if your budget hours, it's the same, you're charging $80 for a mowing job right now.
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And your budget hourly rate, your hourly rate is $80 per hour.
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That would be one budget hour on that job.
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Okay.
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So it takes you one hour to mow the lawn.
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One, that's 100% efficiency score.
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Now, if we, instead of doing $80 per hour, we charge $100 per hour.
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Now, we don't change the price of the customer, but we just simply are changing the rate from $80 to $100 per hour.
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Now, we have like, what is it, 0.8?
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Is it 0.8?
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0.8?
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Something around 0.8 budget hours.
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0.8 divided by one.
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Okay.
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And so now your efficiency score is much more on 80%.
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Without changing the price of the customer, you just increased your hourly rate and therefore decreased your budget hours.
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And when you decrease your budget hours on the efficiency score ratio, which is budget hours divided by clocked hours, you decrease your labor efficiency.
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So you don't change their prices.
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You don't affect pay for performance if you're using it.
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It's simply a function of your labor efficiency is incorrect because your hourly rate is incorrect.
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Oh, whoa, whoa, okay, I should have kept reading.
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Our effective hourly is $46, but we're still ending the week with zero money in the bank.
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Okay, that changes everything.
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I should have read that last sentence.
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Let me finish the whole thing.
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Johnson's torn between raising prices and restructuring the schedule or hiring someone under the table to help with the long days.
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I told him you should raise prices and not bring someone on because we'd have to claim the profit we're paying out and still owe taxes on it, and of course that's not legal.
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Even your AI said to raise prices, but he still hasn't.
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How would you approach this?
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Okay.
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This is why Michael needs to finish the whole question.
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Okay.
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So this is the part that's killing you.
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So if you're at 128% labor efficiency and your effective hour is $46, if those two things are actually true, what that tells me is that your hourly rate to the customer, your target hour is 40 bucks an hour.
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Okay, because if your target hourly rate is 40 bucks an hour, and your effective hourly rate, like what you're actually making, including all your drive time, etc, is $46 an hour.
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And with that kind of labor efficiency that you have 128, that tells me that you're like, yeah, you are priced way too low.
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Now, I will say this, here's the good news.
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Here's the good news.
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Your target hourly rate, even though right now is $40 an hour, it's actually probably in the realm more of 55 to 60 because you have such a crazy high labor efficiency.
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So your labor efficiency is 128% of $40 an hour approximately.
128
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So you're really actually your target hourly rate.
129
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Let's make this real is more like $60 an hour and your effective hourly rate at 46 puts you on a 78, 79 percent efficiency score.
130
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That's the real real.
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And so if you take all of your budget hours and divided by $60 an hour, that will put you at correct budget hours in my opinion.
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All right.
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So that will mean your efficiency, your labor efficiency around 80%.
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And that's a very good spot to know that you actually have extra budget hours, your effective hourly rate will still say $46.
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You're not changing the price of the customer at all.
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But you have $60 is your target hour rate now $60 per hour as your target hourly rate, you're not going to make any money.
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You're just not.
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um and so um i would personally say when you're working that many hours you 100 unless you're going to raise capacity you need to raise prices so when we look at raising prices as a function of simply are you at capacity you are at capacity you cannot work anywhere hours you literally are running out of daylight you're working six days a week i say you i mean your husband and so you know feel free to use this for him
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I would 100% across the board, raise prices, hold the phone by 25%, 25% minimum.
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That's going from $60 an hour to $75 an hour.
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And I happen to believe you will lose too few customers.
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I've just seen this over and over and over again.
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So like I'm not, I have a high degree of confidence.
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And here, let's check this out.
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Let's assume that one out of five people leave.
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to 20% of your customers leave, which will not happen, by the way.
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Let's assume that happens for a second.
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You increased prices by 25% and lost 20% of your customers, which means you are going to now have one day off a week and make the exact same amount of money that you're making right now.
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Sounds like a good problem for me.
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So I would I would highly recommend raising your prices or at capacity.
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Nothing, nothing determines whether or not you raise prices besides two factors.
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One is my close ratio, which 45% is not like super high.
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It's not super low.
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And more importantly is
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by capacity and you are above capacity.
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You are working six days a week.
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You have tons of work coming in.
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You cannot physically do the work.
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You're above capacity.
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And as I think it's Kaylee, as Kaylee outlined here, when you're above capacity for a short period of time, you will make more money.
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But if you're over capacity in your personal capacity, your asset capacity or your labor capacity, this talk about this in the book, if you're above those capacities at all,
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in the long term, you will burn out.
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And so 100% rate prices by a minimum, minimum 25%.
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Jeremy from Klein Lawn Care and Snow Plowing.
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We recently ordered a trailer built to fit our needs for $8,500.
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It came in different than ordered.
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Was provided the opportunity to purchase misordered trailer already painted our brand color for $3,000 off.
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Oh, for $3,000 off.
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If we would still take the trailer we ordered to fit our needs at full price, even though we didn't need two new trailers.
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Currently, we made the purchase money.
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Other would otherwise be an emergency fund.
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How would you know what opportunities you should take and which one you should let pass by?
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So it is rare.
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It is rare that opportunities, quote unquote, like this are super useful when it comes to assets.
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Very infrequently.
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Because if you're like, man, I just got to the point where I need a trailer.
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I'm going to go buy one.
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To double that capacity, assuming you're a smaller business.
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I'm going to assume right now that this is like your first or second trailer.
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And it's like, do you want another one?
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You are baking in your capacity.
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If you think about asset capacity, it's just like how many trailers do I need?
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Right now you need one.
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And you probably won't be using it.
185
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I bet you aren't using it every single day for this new trailer.
186
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And then you're going to add another trailer on it.
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So the thing is this trailer is going to sit there for like three to five days a week.
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And I don't like assets that are not moving at least four days a week.
189
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If they're not moving four days a week, I don't want them.
190
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And so the thing is, there is additional insurance cost.
191
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There is storage cost.
192
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There is training.
193
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There is security.
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There are a lot of other costs that go into your trailer.
195
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So personally...
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I'm a huge fan of asset capacity, asset utilization.
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I do not want to be getting a second trailer until I need it.
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There's a big fatal flaw I did early on in Augusta when I was just like grow at all costs kind of thing.
199
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I just bought more trailers.
200
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I just bought more trucks.
201
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And like all of a sudden I'd be walking out and something like, there's like five trucks sitting here on a Friday.
202
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And there's like out of our eight trailers, three of them are sitting here three to four days a week.
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Like not good.
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Not good.
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Especially with things, if it's something you can rent, like if you can go rent a trailer, if you can go rent anything, there's no reason to be having excess capacity.
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Now, if it's difficult to rent, like backups are really hard to come by, then having a secondary truck or trailer, usually trucks, but like trailer or a piece of equipment sitting around as backup, then it makes more sense.
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I'd give you, I'd give you that.
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Adam Burgett from Pristine Green Lawn and Landscape.
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When does it make sense to run a multi-location business model rather than one big location?
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If I don't want to be an absentee owner, does it make more sense to grow one location?
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How hard is it to find a GM?
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How long should I expect to find someone qualified to run a location?
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What is a reasonable percent of the population to service while offering residential mowing and simple service landscaping?
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I would like to figure out how big I could grow my company in my current market before I need to expand.
215
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Okay, so let's go backwards.
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First question, in terms of the size of business you can build, I would look at if there are other competition in your market that has built a certain size business, it means it is possible.
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And so if there's a business next to you that does 2 million, you at least know it's possible to do 2 million.
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Does that mean you can't do 5 million?
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No.
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But you know for certain,
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that you can do too.
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So I'm usually just, that's the easiest way to do it.
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The more difficult way is like, all right, what's my total adjustable market?
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How many of these people can I actually sell to based upon their income, based upon their house type, if they're their homeowner.
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And then I extrapolate a lot of other factors, but a lot of times I'm guessing because one person in one state making $150,000 versus someone else in a different state making $150,000, very different lifestyles.
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And so sometimes the numbers can do a little bit of hunky-dory tricks on you, and I would be careful of that.
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So I'm very much of the opinion that look at your competitors.
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If they have a big business, it means that the market can afford that, and it can sustain that size of business.
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How hard is it find a good gym?
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Very hard.
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If you have never hired a general manager, I see it usually taking three years to figure that skill out.
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I have yet to see that go much faster.
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I've seen a couple unicorn cases where their first GM works out really good.
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But usually it takes three years to figure out how to find, train, retain, and compensate a GM correctly.
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Now, even when you have perfect information, even when you know exactly what to pay them, even when you exactly know how to train them, even when someone else can do the training for you, you're still going to run into problems because you as a leader don't have the skills.
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That's where the breakdown happens.
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Like, how do you deal with one-off situations?
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How do you deal with disagreements?
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How do you deal with things when you don't see eye to eye?
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Those are the things that actually take time to learn and see a pattern of what works and what does not.
241
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And usually people don't learn that unless they make a few mistakes.
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I've just seen it over and over and over.
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So in terms of finding a general manager, if you look on the Home Service Millionaire channel, I have a couple videos about this.
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Last year's conference, I spoke for about an hour and a half on it.
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where to find the GM, how to find the best traits of a GM, how to compensate them, all of that.
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It's all in there.
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So check that out.
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It's an hour and a half long video on the Home Service Millionaire channel from like February or March of this past year.
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Okay, when does it make sense to run a multi location business rather than one big location?
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So several things if you want to get out of daily operations and not show up to the to up to the to the office, usually a lot easier to replace yourself with general managers that are going to hot that are going to manage six to eight people and be fully responsible for that unit of business.
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Also, if they leave and get hit or get a bus or anything,
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It's easier to replace them versus someone who is needing to manage 20, 30, 40 people.
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Because the person that can manage 20, 30, 40 people is an entrepreneur.
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And if you are going to hire them, it can be extremely expensive.
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If you're going to hire someone that can manage 20, 30, 40, 50 people with a mid-level management team or a C-suite underneath them, that person is extremely expensive.
256
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And if they get hit by a bus, the amount of key man risk is so high, he will be back in the business.
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I've just seen it too many times.
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So a lot of times the big businesses, if you notice, are usually passed down from generation to generation or like a family member.
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And the reason for that is because there's so much inherent trust built up.
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So if you had a really good family network that you just like, you know, they're not going to walk on you.
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You know, no one's leaving or going anywhere.
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Everyone's working inside the business.
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Those are the ones where I see big businesses built around because there's so much inherent trust in terms like there's not as much key man risk.
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Because if Bob, if Bob leaves, you know, Billy's been here for 10 years and he's his brother and he just stepped into that role.
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And so that's really where I see big businesses usually start to grow.
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Also, you'll notice the most businesses and home services that are above 2 million, the owner is still there every single day as a leader at least, at least as the general manager, even if they have a team underneath them.
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I'm not saying that's a good or bad thing.
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Ideally, they're able to move on.
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But I see the path to getting into quote absentee or being able to leave the business for a few weeks at a time.
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I see the path to that as a rule of thumb, being much more on 15 to 20 years to build the large business.
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Because you need to build it usually three to 5 million.
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Then you need to build an executive team, and then you need to build redundancy.
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And to do that usually is a 15 to 20 year window.
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Um, whereas you can do the smaller pieces and parts in five to 10 years.
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So in terms of multi-location, I would say you're probably looking at speed to be able to get out of daily operations.
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I look at off the truck very different than out of daily operations.
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Out of daily operations is like, I don't know what's going on.
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People are getting hired without me there.
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Their marketing is getting done without me being there, et cetera.
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Yeah.
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So if you want to get out daily operations, use it faster to do it the smaller way, because you're going to also simplify services a lot more generally when you're doing these smaller units.
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Also, if you have a centralized office, it makes it way easier to do multi-location, because now the spaces that you're finding are very, very cheap.
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You don't need an office space.
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You don't need commercially rated.
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You don't need industrially rated.
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You can just get land.
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It's like one of my locations.
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I've never even been there, but they're just on a farm.
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And that location will probably do $750,000 this year in revenue with four trucks and one general manager that was working out in the field.
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But they can only do that because they have command center, essentially an office that they can...
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calls and everything else goes through here.
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And so the general manager can be on the field doing work throughout the day.
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It has several employees and it's very profitable.
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And so I like that model and replacing that general manager is easier than if I have one location that has 30, 40 employees.
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Trying to replace that person if that person was to leave is extremely difficult and expensive and also very risky when it comes to leadership.
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Putting a new leader in that size of business.
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So there's no right or wrong.
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And obviously, I'm a big proponent of the model that we built at Augusta, which is that, you know, around three quarters of a million dollars in annual revenue, six to eight employees, one general manager that's out in the field still doing work.
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That's my go-to because I have seen what, when you have 20, 30 people and I hand it off to someone, what can happen if that goes wrong versus what goes wrong if I have a smaller location, I can get that thing turned around in a month.
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Nathan from Heart and Sons Landscape.
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What's your opinion of using an AI receptionist to answer all calls?
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I'm still a little nervous.
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I'm a little nervous what clients will think.
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Apparently, they can schedule estimates for you too.
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I know having a live person of receptionist is the much better option, but for my business, I don't have enough time to answer any calls.
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and they get a voicemail and I can call them back anyways.
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What do you think?
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Okay, so this is what I would say, if they're going to voicemail, and you're not even getting the voicemail use for hours, if not the next day, then yes, get a call, get an AI receptionist.
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But if you can have a human, and that human is trained well, then I would use them.
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I think that AI receptionists right now are better than not answering the phone, better than going to voicemail, better than you not responding back to the customer.
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But they are not that an AR receptionist is not better than a well-trained human that knows how to upsell, knows how to empathize and and connect with the customer.
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There is no AI receptionist that will do that.
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So even the best, the best, even the ones that you actually think are taught, you're talking to human.
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It's not about the hearing.
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It's the other things that a human can do still that the AI receptionist cannot.
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Will it get there?
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Perhaps, maybe.
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But there's also been a bunch of, we've seen the past 12 months, an increase in the pushback to AI.
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I think it's most because it's become a political thing, it's become in the news, all these big companies, big tech, etc.
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We actually saw an adoption of our AI receptionist far better
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at the beginning when people didn't even know what AI was.
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But now it's in the general public zeitgeist and everyone kind of has their targets set on these and it's been villainified.
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And so especially your target, your older target demographic, so 60 plus, unfortunately that has happened.
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And so we are spending more time, energy and money actually on our live agents
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on training and how to upsell and like yes, okay, you are going to cost more than AI in AI phone person.
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But can you sell three times as many services to the customer?
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Because you're empathizing with them, you hear what they're saying, you ask them about their, their their parent that's in the hospital,
328
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You then tie that into the fact that they also need a property cleanup.
329
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Oh, they're going to be selling the house in a few months and then you get them on a multi-installing.
330
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That is what AI is not good at.
331
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Um, and the reason is not because it can't do it technically, they can, the reason that it doesn't work is because people don't open up to it once they know it's AI.
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And if you don't tell them it's AI, then they feel tricked.
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So there's a juxtaposition of like, if you don't tell them this is a virtual agent and they can't distinguish because we've gotten it to where like most people can't distinguish it.
334
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But if you don't tell them and then they figure out later in the call, they feel strict and they feel a little bit bad.
335
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It's a bad feeling for them.
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And if you do tell them, they will not open up about like, for example, like I mentioned, their parent in the hospital, the fact that they're going to sell the house in a few months.
337
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All these little cues that would tell you that you could sell this person not just $1,000 but $5,000.
338
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And that one upsell, that one saved customer because you empathize with them instead of you losing them, that is worth a lot more than the savings of the AI agent.
339
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So that's how I would stack rank is like don't miss your calls, don't get voicemails.
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Above that, better than that is an AI agent.
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An AI agent is probably better than like a low level, new trained employee that just takes calls.
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It just takes calls.
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It's above that, though.
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If you can afford it, I still would say trained, well-trained.
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People are looking for upsell opportunities, empathization with the customer, making sure that when someone's trying to cancel, they try to derail that cancellation.
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Highly valuable.
