Growing into BANKRUPTCY... $3M Business can't get PAID!

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No, we need to make more money.
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It could have taken us out of business.
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Today, we're in Pennsylvania, visiting Malan from Good Hands Roofing.
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And if right now you're doing a hit and miss and is creating 30% of your leads, we should probably focus on that.
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A family owned business that did $1.6 million in revenue last year.
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You guys are doing good.
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You literally are gonna double the business.
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But there's a major problem.
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They don't know their numbers.
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We're paying like 12 to 15 grand a month in online stuff.
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Do I know the actual return on revenue?
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I don't.
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That's $120,000 to $150,000 of revenue.
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So if it's not producing that, we're losing money on it.
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In just the first four months of this year, their bank balance dropped by $120,000.
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If this continues in this direction, then we're going to be out of cash real quick.
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Everyone's like, I will take checks.
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And then they wonder why we have $200,000 in outstanding invoices.
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According to their reports, more than $278,000 of completed work still hasn't been paid for.
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They're robbing from you.
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It's unethical.
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Suddenly people get dementia once they owe us money.
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This is the business breakthrough show.
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Collecting money later is never, ever a good idea.
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I always want the money sooner.
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My name is Mike Andes.
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I'm the founder of Augusta Lawn Care.
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We have over 170 locations worldwide.
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And I travel the country helping small businesses scale to the next level.
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It opens up my mind to the pain points that I've been feeling and how to solve them.
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So I appreciate that.
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Our goal is to give Malin a six week strategy to get the business to $3 million in revenue this year.
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Hey Mike!
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How are you doing?
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Good to see you.
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I'm Malin.
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Malin?
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Yes.
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Awesome.
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And then your brother's Melvin, right?
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So my name is Malin Fisher.
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I'm the owner of Good Hands Roofing, co-owners with my brother Melvin Fisher.
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Just as we've been grown and God's blessed our business, it's been niching.
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It's systems and software putting them in place.
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This is a sick shop!
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Do you guys own this?
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My dad built it for us.
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Sweet!
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So we rent it from him.
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Sweet, that's awesome dude.
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Do you wanna kind of do a little bit of a shop tour?
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Just show me around a little bit?
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Yeah, last year we really went all in on the business.
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We built this in the fall, but we already kind of outgraded it a little bit.
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Business has been the most homely experience of my life.
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It's not easy, but it's tremendous amount of effort and responsibility, but it's a good time at the end of the day.
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Like I enjoy the responsibilities.
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Where were you beforehand?
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Just kind of like a little rundown, probably like one fourth the size of this.
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Really, wow.
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Yeah.
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Yeah, you've already outgrown this basically.
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We got the important things, let's go.
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Yeah, I got the pull up contest.
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Yeah, I mean we try to stay organized in here the best we can.
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Obviously it's not,
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The most cleaned up, but we're working with what we got at the moment.
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They have no structure around follow-up for invoices.
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That's like where I currently see the hole because on the P&L it has so much in overdues.
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Like $280,000 in invoiced work that hasn't been collected.
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We do roofing, siding, gutters, soft fascia, work on primarily the exterior of the home.
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putting a lot of time, a lot of money, a lot of effort into this now to set it up for my brother and family.
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My ultimate goal is for our employees to be able to be part of the business, if they want to, if they want to buy and pay them well, but also make a profitable business for the owners.
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Because I think a lot of businesses out there, you pay the guys well, and then the owner doesn't make anything, and it's just a vicious cycle.
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Manlon's done a good job with that.
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He's great with numbers.
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Just the back end of things.
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Good at setting up systems.
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We have 11 employees, and we're looking to go from 1.6 million to 3 million.
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Last year was 1.6 million.
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What are you kind of targeting this year?
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So I was thinking like lofty goal-wise, we could hit 5 million.
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This year?
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Yes.
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For myself personally, I would like to sell $300,000 in a month.
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I think $280,000 is the best, or last August.
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But this month we were at $250,000.
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So I'm trying to close some today and last week.
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They're on pace for $2 million here.
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I want to say they're shooting for $3 million.
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Yeah, but they're on pace for two.
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I think we could have.
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Yeah.
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But then during February, we were investing a lot into like a new website, a sales process.
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And I just realized like there's just so many different processing systems that we don't have in the business yet to go to that level.
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If I don't build the foundation of the business, then I'm just going to build a house that's going to crumble down on itself.
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I'm always someone that if something's not working, then I'm always going to reach out and talk to people and figure out how to make it better.
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I don't want to diminish the importance of systems.
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They're very important.
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But I think it's such a nebulous term, and it's actually used against many home service business owners because it's so nebulous, and it seems so theoretical that you need to hire a consultant, or you need to go get education or pay for a course to get systems.
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You need to unlock these secrets.
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It's like, look...
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A system is simply simplification and standardization of a process and is the opposite of complex and custom.
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So I think realistically probably around 3 million this year, which is already, you know, 100% increase, which is good.
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Like, that's phenomenal.
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But the biggest thing is build something that's sustainable, something that runs without Melvin and I always being hands-on.
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Earlier this year and even towards the end of last year, I was just running everywhere and meeting with old customers, you know, running some of the scheduling, and mail-in coming off the field more has helped a ton.
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So your role with Melvin, so is he mostly sales?
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Yes.
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Got it, so you're more ops?
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Ops and then I work in the field.
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Right, so you're very hands on operations, like you're out with the crew.
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Yeah.
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And is there two crews or one right now?
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Technically two.
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I mean we have like six guys out in the field, seven with me.
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When you see how much money they have in the bank and then realize that four times that is sitting there in accounts receivable, and you just gotta ask yourself, what would happen to this business if they could immediately just have all that money in their bank account?
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Like, oh, they'd be like less stressed out.
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They'd be able to grow, they'd be able to expand.
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And then they just go over to the office there?
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Yeah.
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Yeah, this is our little office.
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We actually bought this and we had it at our other shop location.
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And then we moved it here.
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Oh, cool.
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Evan, he's in here full time, takes phone calls, manages production, gets like work orders ready for the crew.
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Good to meet you, man.
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Nice to meet you, Mike.
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You hustling over here.
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So these are each of our jobs.
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I kind of sign each crew.
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So it's basically Zeep that's doing them.
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These are our bigger jobs.
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About a month booked out then?
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Yeah, about a month and a half.
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Yeah.
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Somewhere down there, honestly.
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The one thing is to buy everything cash.
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So we have so far, except one of the shingle buggies we bought way back.
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First one we bought, we bought it with a
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alone so we're still paying off on that but everything else has been cash and sometimes that's been stressful and hard but it's I think it's it's the way we want to set up our businesses that we don't want to pay a bunch extra in interest.
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What's up Mike?
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What's up brother?
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I'm Melvin.
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Melvin good to see you.
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I'm trying to get 300 these guys motivated me.
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265, we're playing.
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You have to get more days in.
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Not yet.
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I think she's gonna sign today.
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The fact that you're gonna do 280, 300,000 a month in revenue, and two months ago, do 80 to 90,000?
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is very scary.
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That's like a huge seasonal swing.
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This year, the big change in February, like the website, starting ads.
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Did you need that from last year?
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Do you think that's just gonna go to the next level?
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Or what was?
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Yeah, I mean, the whole thing with the website is, we had an original one built.
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It didn't have like any SEO built into it.
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We have a marketing company that we spend 3,000 a month on.
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They content create for us, and then they also handle our social media.
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They also do a ton of marketing for what they're getting.
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It's not like a great return.
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Spend $40,000 in the quarter and make about $500,000.
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Like a 12x return on roofing you should have higher.
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That's it's $3,000 for that and the $3,000 for the website separate.
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But that $3,000 will go up to $6,000 once we're done with the free performance because we didn't pay the $18,000 initially.
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We did.
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We broke it out $3,000 a month.
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It's basically $9,000.
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So $3,000 website stuff.
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The other $6,000 is managing the ads but then also creating content.
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For every dollar I spend in marketing, I wanna be able to make $20 of revenue within the next year.
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That's like a very general rule of thumb.
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Project-based work, I'm looking for a 20X multiple on marketing in the first year.
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And the reason I need a higher return than recurring is because recurring I can keep them longer.
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From there it was during February whenever that cash got really low and it was looking like it would continue to go low just because sales were pretty low.
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Like our sales for February were our break even for as far as revenue produced wise.
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In February things got pretty tough.
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Our bank account went from like 160K down to 40K.
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There was even a job that we had to go back on that we still have, like, we're probably have to pay out like 15K to fix it.
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We had to go back on and fix.
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Thankfully, we were able to fix all the damage, but the amount of costs that it took to fix the job was,
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If it would have gone worse than it did, it could have taken us out of business.
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All this stuff kind of piled up at one time.
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So I was like, okay, if this continues in this direction, then we're gonna be out of cash real quick.
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When you see how much money they have in the bank and then realize that four times that is sitting there in accounts receivable, like literally 20% of the revenue is sitting in uncollected revenue.
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And that's what turned a profitable quarter last quarter for them into a negative profit margin.
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I was definitely,
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Yeah, anxious about the whole situation.
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And then in March, what did it jump to?
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So 91,000 in February did it jump to like 150?
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We hit 240 in March and now we hit 250 in April.
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Have you heard the 4.0 framework?
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Kinda what it is?
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The 4.0 framework is about solving the constraints in growing a business.
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Liquidity, leads, labor, and leadership in that order.
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Once you have liquidity or cash, I'm gonna turn that into customers or leads using advertising.
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When I get a bunch of customers, I'm gonna need more labors.
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Employees actually go do the work in the home service industry.
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Once I get a bunch of employees or labors on the field, I need to go get managers or leadership.
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And that costs more money, causing more pressure on liquidity and the business cycle continues.
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From a liquidity perspective, usually we wanna have like a month's worth of revenue to be comfortable.
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In that case, we'd be at like 200 grand in the bank right now.
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And so when you have 30 or 40, it's certainly difficult.
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So when I look at the books, there's two things I looked at.
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One is you got a cash accounting and you have accrual accounting.
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Cash being when money hits the bank, accrual being when the jobs are done.
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Big tip off with our financials is the fact that when you look at their cash accounting,
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which is money, when does the money hit the bank account versus their accrual accounting, in other words, when the work was completed, it's way different.
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On one of them, they had like a 10% profit margin and the other one they were losing like 10% profit, like negative profit, like $70,000.
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When you see that difference in a cash accounting versus accrual, you know they don't do a good job collecting the money.
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Because you shouldn't have that much of a difference.
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There shouldn't be the 20% swing when you switch from accounting, accrual and cash accounting, unless you have a very, very long time to collect the money.
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Now, on the books right now, like on your balance sheet, there is $278,000 of accounts receivable.
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But how much in the real world do you actually have that's outstanding invoices?
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Actually produced.
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Does that sound like a decent number?
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Yeah, well I wouldn't say that much necessarily.
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I know there was a job that we did, like a reframing over the wintertime, reframed inside of this wedding venue that burnt down.
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The guy that was there, he struggled to like pay us up.
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It was a job that we broke even on.
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But then he owed us like 40k.
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I just wanna see how they're collecting on the money.
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There's, cause this is an easy fix.
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If this is simply a function of we don't collect the money fast enough, boys, this is gonna be a fast turnaround.
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There's like four things they need to do.
228
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And then the other money, cause there's another hundred grand of uncollected is probably just older stuff.
229
00:11:36.690 --> 00:11:41.452
It'd probably be more jobs that paid their deposit, but that revenue is not produced yet.
230
00:11:41.653 --> 00:11:41.913
Got it.
231
00:11:42.073 --> 00:11:42.493
Okay, cool.
232
00:11:42.633 --> 00:11:45.955
So we're like 150 to 200 maybe of like uncollected.
233
00:11:46.175 --> 00:11:46.955
Yeah, I would say 150.
234
00:11:47.055 --> 00:11:47.456
Okay.
235
00:11:47.656 --> 00:11:53.118
Usually when we do a turnaround or a business breakthrough, we're trying to talk about each of the four L's in the framework.
236
00:11:53.158 --> 00:11:57.961
However, today we recognize the most important bottleneck in the business, and that is liquidity.
237
00:11:58.181 --> 00:12:02.083
They're not collecting money fast enough after a job has been completed.
238
00:12:02.203 --> 00:12:06.508
When I look at the constraint currently, I actually think liquidity is the main thing.
239
00:12:07.149 --> 00:12:08.310
And that's just money in the bank.
240
00:12:08.470 --> 00:12:14.097
Because right now, if you had $200,000 in the bank, you would feel A, less stress.
241
00:12:14.638 --> 00:12:18.642
B, you could continue growing and it not be a huge risk to the business.
242
00:12:19.343 --> 00:12:23.726
And so liquidity, I think the biggest opportunity here is actually just your collections process.
243
00:12:23.766 --> 00:12:24.767
Did you guys start it together, right?
244
00:12:25.147 --> 00:12:25.547
Yeah.
245
00:12:25.687 --> 00:12:26.328
Is it 50-50?
246
00:12:26.828 --> 00:12:26.988
Yeah.
247
00:12:27.008 --> 00:12:27.349
Good stuff.
248
00:12:27.549 --> 00:12:30.331
Some days the one puts more work in than the other.
249
00:12:30.411 --> 00:12:34.013
It really cleans out in the wash. And we work well together as a team.
250
00:12:34.033 --> 00:12:35.094
Like we're best friends.
251
00:12:35.174 --> 00:12:36.575
We hang out a lot, play golf.
252
00:12:36.655 --> 00:12:38.496
But the biggest thing is you have to respect each other.
253
00:12:38.676 --> 00:12:40.538
You have to respect each other and love each other.
254
00:12:40.778 --> 00:12:44.220
And you each have a lane and you each have gifts that the other person doesn't.
255
00:12:44.300 --> 00:12:45.081
And it's been a blessing.
256
00:12:45.241 --> 00:12:46.722
It's been super, super fun.
257
00:12:46.882 --> 00:12:48.883
We're both gifted in different areas.
258
00:12:48.923 --> 00:12:52.124
But the biggest thing is we have a very strong relationship.
259
00:12:52.224 --> 00:12:55.885
You can do more with two brothers than you could with just two friends.
260
00:12:55.985 --> 00:12:57.565
It's like two and a half people.
261
00:12:57.745 --> 00:12:59.286
You just have to have respect and love.
262
00:12:59.326 --> 00:13:03.007
You each have gifts with the other one, doesn't it?
263
00:13:03.107 --> 00:13:04.167
And communication, too.
264
00:13:04.487 --> 00:13:19.313
It's rare that we come to a turnaround, like any sort of, you know, where we come out for a breakthrough or a turnaround and it's not related to leadership and labor, especially for breakthrough, because usually the biggest constraint to growth in a business is really just the leader.
265
00:13:19.773 --> 00:13:21.094
But I actually don't believe that's the case here.
266
00:13:21.234 --> 00:13:23.174
They're capable of building a massive business together.
267
00:13:23.354 --> 00:13:24.695
Evan's a big part too, man.
268
00:13:24.715 --> 00:13:26.316
He helps a ton.
269
00:13:26.416 --> 00:13:29.977
I felt like a chicken with my head cut off before he came in.
270
00:13:30.057 --> 00:13:32.478
He's huge, so I like it that way.
271
00:13:32.878 --> 00:13:33.899
They're great owners.
272
00:13:34.019 --> 00:13:34.819
Honestly, they're great.
273
00:13:34.939 --> 00:13:36.700
Everybody loves working for these guys.
274
00:13:37.000 --> 00:13:39.201
And they're just so good together.
275
00:13:39.261 --> 00:13:40.902
Honestly, they work really good together.
276
00:13:41.382 --> 00:13:42.003
I appreciate that.
277
00:13:42.343 --> 00:13:45.685
It's better to serve than to create something that serves yourself.
278
00:13:45.945 --> 00:14:00.392
So for me, my goal is to hire a young man, provide them with a job that provides good income so they can provide well for their families and their children, and build a business that supports not only the customer and the business, but a business that supports the employees.
279
00:14:00.612 --> 00:14:02.533
They're capable of building a massive business together.
280
00:14:02.753 --> 00:14:08.777
It's simply just coming down to like, I think they underestimate how much they know and therefore they pay people to learn stuff.
281
00:14:08.957 --> 00:14:10.899
Also just basic systems like,
282
00:14:11.907 --> 00:14:12.387
collect money.
283
00:14:12.467 --> 00:14:13.788
You're not robbing people.
284
00:14:14.009 --> 00:14:15.349
Get the money beforehand.
285
00:14:15.530 --> 00:14:17.371
We need to get 120 grand in the bank.
286
00:14:17.671 --> 00:14:19.292
How far away from that now do you think?
287
00:14:19.312 --> 00:14:21.554
We're probably like 60k right now.
288
00:14:22.034 --> 00:14:24.156
It's just like with this size of business there's fluctuations.
289
00:14:24.536 --> 00:14:26.898
You basically have a week's worth of revenue in the bank right now.
290
00:14:26.998 --> 00:14:29.419
That's when I look at the business I'm like it's not a bad business.
291
00:14:29.439 --> 00:14:30.200
It's doing well.
292
00:14:30.760 --> 00:14:33.823
It's just simply all the money that they've earned is sitting there
293
00:14:35.097 --> 00:14:42.079
ready to be collected, and just needs a system around, like literally 20% of the revenue is sitting in uncollected revenue.
294
00:14:43.059 --> 00:14:45.700
Like, job done, have not been charged.
295
00:14:45.960 --> 00:14:47.400
That's all your profit, and some.
296
00:14:47.640 --> 00:14:52.401
Unless you're financing charges, you should never, the customers should never owe you money.
297
00:14:52.741 --> 00:14:56.742
Right, like 60,000 on a 240,000 a month business, were basically a week.
298
00:14:57.122 --> 00:15:02.584
And the gyrations on a 240,000 a month business, like 40 or 50 grand can,
299
00:15:03.204 --> 00:15:03.844
Go like that.
300
00:15:03.965 --> 00:15:06.847
I actually don't think that's a horrible thing because you're growing so fast.
301
00:15:06.967 --> 00:15:07.947
We try to move fast.
302
00:15:07.987 --> 00:15:11.790
Like we try to identify and react and just move fast.
303
00:15:11.850 --> 00:15:16.773
And biggest thing is have faith, not be afraid, and just go for it, you know?
304
00:15:16.893 --> 00:15:19.055
I wouldn't take it as like, oh, I'm doing a bad job.
305
00:15:19.375 --> 00:15:20.956
It's just simply, grow sucks cash.
306
00:15:20.976 --> 00:15:22.357
You're growing extremely fast.
307
00:15:22.377 --> 00:15:23.998
You're almost going to double this year in revenue.
308
00:15:24.018 --> 00:15:24.839
Like that's awesome.
309
00:15:25.019 --> 00:15:28.623
At 23 years old, he's accomplished a lot already.
310
00:15:29.223 --> 00:15:33.628
And, you know, for all the chitter-chatter in the comments saying, that's not a profitable business.
311
00:15:33.708 --> 00:15:35.229
It's not anything hard to grow.
312
00:15:35.249 --> 00:15:39.513
Okay, well, were you 23 running a $1.6 to $2 million business?
313
00:15:39.594 --> 00:15:40.334
Probably not.
314
00:15:40.815 --> 00:15:41.676
He's done something right.
315
00:15:41.856 --> 00:15:47.782
When you have that much momentum and you have a solid team in place, focus on one thing, and right now that one thing is collections.
316
00:15:48.282 --> 00:15:50.484
If he fixes that one thing, he'll have more cash in his pocket.
317
00:15:50.504 --> 00:16:00.792
And if he has more cash in his pocket, I happen to believe he'll do a better job of running the business, marketing the business, selling, and then ultimately give back to the community, which he cares a lot about.
318
00:16:00.852 --> 00:16:04.896
From a quality of life perspective, getting a 120 would be a big win, I think.
319
00:16:05.376 --> 00:16:06.797
Now, the question is, how do we do that?
320
00:16:06.817 --> 00:16:08.999
And I think there's several things.
321
00:16:09.099 --> 00:16:09.659
Collections.
322
00:16:10.460 --> 00:16:14.602
Like people who don't pay right away at the end, we need to have a process in place.
323
00:16:14.702 --> 00:16:22.145
Now when we look at trying to improve how much money we collect on overdue invoices, there's a lot of ways to attack it throughout the entire sales process.
324
00:16:22.385 --> 00:16:26.326
One is simply like changing the terms and conditions on our estimate.
325
00:16:26.626 --> 00:16:30.228
So for example, right now, do you charge any fees after say 30 days?
326
00:16:30.468 --> 00:16:31.709
We don't enforce it.
327
00:16:31.749 --> 00:16:32.089
Okay.
328
00:16:32.170 --> 00:16:36.633
The first place I'm going to tack in the sales process is when the customer gets the estimate.
329
00:16:36.654 --> 00:16:39.456
I'm going to have clear terms as to when the payment is due.
330
00:16:39.516 --> 00:16:41.238
First off, so we kind of create a six-week plan.
331
00:16:41.478 --> 00:16:43.159
Like, how do we actually solve some of these constraints?
332
00:16:43.179 --> 00:16:47.643
So payment conditions and terms of payment terms, we're going to actually enforce them.
333
00:16:47.783 --> 00:16:51.086
Right now, does it say 30 days is your invoice is 30 days?
334
00:16:51.106 --> 00:16:51.286
Yeah.
335
00:16:51.687 --> 00:16:51.967
Yeah.
336
00:16:52.107 --> 00:16:52.908
It'll say on there.
337
00:16:53.188 --> 00:16:54.829
Yeah, man, we just can't do that.
338
00:16:55.129 --> 00:16:56.509
We are a bank right now.
339
00:16:56.709 --> 00:17:03.892
Sometimes what happens is people look at very successful companies and home services and they say, oh, they're doing X, I should do that as well.
340
00:17:04.052 --> 00:17:07.993
When in reality, they did not grow the business to that size because of that.
341
00:17:08.513 --> 00:17:09.073
those tools.
342
00:17:09.433 --> 00:17:11.814
So it's like, Oh, all these, all the companies around me have brand new trucks.
343
00:17:11.994 --> 00:17:13.014
I should get brand new trucks.
344
00:17:13.114 --> 00:17:18.915
No, the reason they got brand new trucks is because they are really good at selling and marketing because they're really good at leading people.
345
00:17:18.935 --> 00:17:19.756
They're a great boss.
346
00:17:20.136 --> 00:17:21.036
Get good at those things.
347
00:17:21.056 --> 00:17:23.557
Like those are the actual skills that build the business.
348
00:17:23.837 --> 00:17:31.178
And then all those other things we just attribute success to like new trucks, or they got a software, they got this tool, they do it this way.
349
00:17:31.658 --> 00:17:34.799
It's like, that's not necessarily why there's a time value of money.
350
00:17:34.819 --> 00:17:37.440
Like if I can just hold money away from you, I am making money.
351
00:17:37.460 --> 00:17:38.180
You're losing money.
352
00:17:38.660 --> 00:18:01.720
Right This is how the banking system is built Okay Is you give me money today And then I will give it back to you in three years from now But the holding cost is where I make my money Okay And so you are paying those fees right now There's no actual fees going for your P&L But that cash flow churn is what you're feeling right now And that's why February was so brutal Because revenue goes down for just a little bit And immediately you get hit Business is very basic
353
00:18:02.260 --> 00:18:05.583
You simply need leads, you need a team, and you need to lead them.
354
00:18:06.063 --> 00:18:07.885
And if you do those things, you'll grow a big business.
355
00:18:08.145 --> 00:18:12.108
And then if you tack on all this other stuff, people will attribute the success of the business to those things.
356
00:18:12.789 --> 00:18:15.051
And that's like a very faulty thing.
357
00:18:15.291 --> 00:18:17.012
We are collecting 30% of a job.
358
00:18:17.232 --> 00:18:22.617
We're paying out all the materials, all the wages, all this extra stuff, and then we're hoping they pay us.
359
00:18:22.817 --> 00:18:23.037
Right.
360
00:18:23.217 --> 00:18:24.538
That's funny that you say that because...
361
00:18:25.339 --> 00:18:27.140
It's kinda how it's been feeling lately anyway.
362
00:18:27.180 --> 00:18:29.241
Yeah, yeah, cause that's what's been happening.
363
00:18:29.621 --> 00:18:31.563
Like, your employees aren't gonna wait four weeks.
364
00:18:31.803 --> 00:18:32.003
Right.
365
00:18:32.023 --> 00:18:33.123
Your vendors aren't gonna wait four weeks.
366
00:18:33.284 --> 00:18:35.205
You pay for the materials before the job gets done.
367
00:18:35.325 --> 00:18:40.508
Like, if we were gonna go the next level with him, is I would've said, we would've talked about how to delay payment to his vendors.
368
00:18:41.088 --> 00:18:49.711
Because if he can figure out a way to pay his vendors every 90 days instead of every 30 days, that gives him more time to collect on the invoices without going negative cash flow.
369
00:18:49.851 --> 00:18:56.553
You always want to delay payment to vendors and you want to reduce the amount of time, I should say, that it takes for customers to pay you.
370
00:18:57.233 --> 00:18:59.875
That's why in Copa we track time to get paid.
371
00:19:00.475 --> 00:19:08.860
I never want to have negative cash flow, being where I've only collected 30% and I'm paying out 67% of job in material costs, direct labor, et cetera.
372
00:19:09.300 --> 00:19:12.682
So we're in the hole in every job because just the materials cost more than 30%.
373
00:19:12.882 --> 00:19:16.784
Like the payment terms on the estimate, I think we need to go seven days overdue.
374
00:19:17.504 --> 00:19:19.786
So like after seven days, we need to start to charge fees.
375
00:19:20.626 --> 00:19:25.409
But I do expect that when I do the inspection and everything's good, that I collect the final bill.
376
00:19:25.589 --> 00:19:29.734
Really what it is is my time has been in the sales a lot.
377
00:19:30.155 --> 00:19:35.221
So, because usually I would follow up with those customers and kind of keep it all in my head.
378
00:19:35.742 --> 00:19:37.604
But now we have to have delegate that.
379
00:19:37.844 --> 00:19:43.071
Delegate that to office manager or Malin was on the project manager on the job site more.
380
00:19:43.191 --> 00:19:48.454
Just because if a job gets done on a Friday, my Monday, Tuesday the following week is already booked out.
381
00:19:48.574 --> 00:19:54.278
And so I'm like, I can't call them and just say, hey, can I do a sales follow-up Monday, collect a check?
382
00:19:54.458 --> 00:19:55.919
And so then it gets pushed back.
383
00:19:56.660 --> 00:19:57.941
So that's what we're working on.
384
00:19:57.961 --> 00:20:01.383
We really addressed that and started attacking that last week.
385
00:20:01.403 --> 00:20:04.805
Basically put that out to the customer before the job is sold.
386
00:20:04.965 --> 00:20:06.846
And I think I make it part of the sales process.
387
00:20:06.986 --> 00:20:07.767
And I think it's a good thing.
388
00:20:08.287 --> 00:20:29.385
Because what you're showing there is like we need this money to pay our team and we can't be footing the bill I would change your sales process to actually bake it in I actually think it's a huge value proposition My biggest goal for this year is to set up a sales process So that if I get hit by a bus like Mike says that it would be able to be taken on You know what happens when I'm not here?
389
00:20:29.585 --> 00:20:30.626
He's gonna fill that role
390
00:20:30.826 --> 00:20:32.849
People hire you right now because of the higher value.
391
00:20:33.430 --> 00:20:36.254
You're not the low cost subcontractor out there.
392
00:20:37.015 --> 00:20:37.716
They want that.
393
00:20:38.017 --> 00:20:39.339
So you just lean into it.
394
00:20:39.399 --> 00:20:41.442
Melvin's like, hey, we have a local team.
395
00:20:41.582 --> 00:20:42.644
We pay our workers comp.
396
00:20:42.964 --> 00:20:43.826
We do our insurance.
397
00:20:43.866 --> 00:20:45.709
To do that, we need you to pay as soon as possible.
398
00:20:46.121 --> 00:20:47.122
So that's the first part.
399
00:20:47.162 --> 00:20:49.345
The next part is I don't even want my seven days.
400
00:20:49.545 --> 00:20:51.708
I want that money as fast as possible.
401
00:20:51.868 --> 00:20:54.771
Now I don't even want to have to charge any sort of late fees.
402
00:20:54.832 --> 00:20:58.075
My goal is to get the money right after the job is completed.
403
00:20:58.156 --> 00:20:59.457
And so the question is, how do we do that?
404
00:20:59.697 --> 00:21:03.061
Is we're going to have either a credit card on file or an ACH on file.
405
00:21:03.222 --> 00:21:04.243
So payment on file.
406
00:21:04.423 --> 00:21:08.849
Do you charge credit card fees when customers use credit cards then?
407
00:21:09.029 --> 00:21:10.171
So right now, how do people pay?
408
00:21:10.411 --> 00:21:11.593
They can pay with credit card.
409
00:21:11.853 --> 00:21:13.756
We don't have the fees set up yet.
410
00:21:13.996 --> 00:21:16.099
I usually tell them to pay with check.
411
00:21:16.219 --> 00:21:19.663
You're either paying the fees or you're paying in holding costs.
412
00:21:20.264 --> 00:21:22.165
holding costs, everyone's like, I will take checks.
413
00:21:22.465 --> 00:21:28.528
And then they wonder why we have 120, 30, 150, 100, $200,000 in outstanding invoices.
414
00:21:29.108 --> 00:21:32.250
And so I would rather eat the fees and raise my prices by 3%.
415
00:21:32.850 --> 00:21:41.274
I'm always amazed at how business owners are afraid to A, pay 2 to 3% in processing fees, or B, give a 5 to 10% discount to get the money up front.
416
00:21:41.634 --> 00:21:43.195
And yet they're willing to pay the bank
417
00:21:43.795 --> 00:21:51.403
10 to 20% in interest on credit cards and lines of credit that are required to bridge the gap because they don't collect money soon enough.
418
00:21:52.184 --> 00:21:52.705
Bonkers.
419
00:21:53.105 --> 00:21:59.532
Right now you're worried about processing fees when literally 20% or more of our revenue is sitting wrapped up just
420
00:22:00.408 --> 00:22:01.349
waiting to be collected.
421
00:22:01.369 --> 00:22:02.630
That's true, yeah.
422
00:22:02.770 --> 00:22:05.452
But then do you pass those fees on to the customer then?
423
00:22:05.632 --> 00:22:07.814
I personally just want the money as fast as possible.
424
00:22:07.834 --> 00:22:10.496
I don't want to create any friction for people giving me money.
425
00:22:10.596 --> 00:22:16.521
I guarantee if tomorrow you just went into QuickBooks and it's changed all of your pricing to 5% up, your close ratio would hardly change.
426
00:22:16.681 --> 00:22:17.902
It's at 40%, it's pretty good.
427
00:22:18.123 --> 00:22:23.367
But what I do know, if you were immediately able to offer credit card processing, your customers would pay faster.
428
00:22:23.587 --> 00:22:29.992
And furthermore, they'd be able to click a button and just pay instead of having to send you a check, which now it comes down to, oh, I have my checkbook, I'm out of town, I'll get it to you.
429
00:22:30.173 --> 00:22:33.035
And then that's where this cycle of invoices stacking up happens.
430
00:22:33.435 --> 00:22:41.602
This is like the ultimate treadmill of every seasonal business, whether it be home services, whether it be retails, like, ah, the next season we will make it back.
431
00:22:42.022 --> 00:22:43.824
Like if I just make it through the next season.
432
00:22:43.984 --> 00:22:48.708
It's like, no, no, like, just focus on the fact that if we don't collect the money, we will go out of business.
433
00:22:48.948 --> 00:22:52.510
It always is a factor of like, if I just go a little longer, I will get the money.
434
00:22:52.550 --> 00:22:53.630
Like eventually they will pay.
435
00:22:54.571 --> 00:22:58.673
And that's true, but by the time that they've paid, you have other invoices that are also overdue.
436
00:22:58.973 --> 00:23:03.695
And so you're on this treadmill and constantly like, oh, in a few more months, we'll be fine, we'll be fine.
437
00:23:04.136 --> 00:23:05.376
We'll get back to the busy season.
438
00:23:05.396 --> 00:23:07.477
And the busy season comes and then guess what?
439
00:23:07.898 --> 00:23:12.380
End of the year, you're feeling like you have a little bit of cash going into another off season where the same thing will happen.
440
00:23:12.560 --> 00:23:18.163
So what you could do, because of processing fees, if that's a big deal, say, hey, if it's ACH on file, no charge.
441
00:23:18.943 --> 00:23:20.785
If it's a credit card on file, then you can pay 2%.
442
00:23:20.965 --> 00:23:22.627
And you will do that beforehand.
443
00:23:22.807 --> 00:23:25.190
We require this before they even start the job.
444
00:23:25.470 --> 00:23:29.494
Before they accept, like when they go to click accept estimates, it says fantastic.
445
00:23:29.534 --> 00:23:31.316
You will pay deposit and put card on file.
446
00:23:31.456 --> 00:23:32.457
I can see the numbers.
447
00:23:32.557 --> 00:23:35.000
You guys give money away like to charity and stuff like that.
448
00:23:35.380 --> 00:23:38.763
10% of all of our profits goes back to local charities.
449
00:23:38.923 --> 00:23:42.086
One thing that we're adamant about is giving back to the community.
450
00:23:42.306 --> 00:23:46.710
So like, we can do more of that if we just do a better job of collecting the money.
451
00:23:46.910 --> 00:23:51.554
And the best time to collect money is when the customer's like, yes, I want you guys to do my job.
452
00:23:52.234 --> 00:23:54.777
It's not the end of the job when they're like, thank you, that looks great.
453
00:23:55.197 --> 00:23:56.578
And now you have no leverage on them.
454
00:23:56.738 --> 00:23:59.541
So you're gonna bake in with Melvin on the sales process.
455
00:23:59.561 --> 00:24:01.983
He's gonna collect card information and or ACH.
456
00:24:02.523 --> 00:24:18.120
I think one of the advantages is I'm one of the owners, so I care a lot, and that's one thing that we're trying to learn is how do we incentivize and build so that the next salesperson or the 10 that come after us, after me, what's gonna motivate them to care and go the extra mile?
457
00:24:18.200 --> 00:24:22.625
Yeah, I just don't think it's the current constraint of the business because I believe that if they,
458
00:24:23.746 --> 00:24:48.230
systematize the way they're doing their marketing there they'll get less leads higher quality leads increase their close ratio to 60 i think they can easily be three to four million in revenue with just the one salesperson so that's why i didn't spend any time like how to scale up the sales team and do commissions and like it's like you got something that's good you can double the business without having to figure out that constraint and so figuring that out at this size is a waste of time in my opinion
459
00:24:49.340 --> 00:24:53.784
Like just focus on the current pin issue, which is we don't collect on invoices fast enough.
460
00:24:53.804 --> 00:25:01.072
So he can have QuickBooks here, Rufour here, Rufour is we've signed everything and then we go over to QuickBooks and they put in their payment information.
461
00:25:01.212 --> 00:25:07.158
That's stored on file and the day they walk off that job, you're charging that card or you're charging their ACH.
462
00:25:07.218 --> 00:25:07.458
Cool.
463
00:25:08.319 --> 00:25:10.140
And the 30% when the job gets sold.
464
00:25:10.870 --> 00:25:11.790
We haven't got there yet.
465
00:25:12.251 --> 00:25:13.251
I still think it needs to be higher.
466
00:25:13.431 --> 00:25:20.535
Now right now, Good Hands is charging 30% as a deposit or down payment on any invoice that's more than $250.
467
00:25:20.655 --> 00:25:23.056
And I like the fact that they're at least collecting deposits.
468
00:25:23.136 --> 00:25:24.557
We have a deposit threshold.
469
00:25:25.988 --> 00:25:28.790
already of 250 bucks, I like that.
470
00:25:30.671 --> 00:25:33.053
But we need to increase the percentage to 50%.
471
00:25:33.373 --> 00:25:37.556
The reason is because otherwise we are losing money on every job before we get the money back.
472
00:25:37.736 --> 00:25:40.899
We get 30%, but then we're paying 30 or 40% to materials.
473
00:25:41.179 --> 00:25:43.561
Another 30 or 40% out to direct labor.
474
00:25:43.601 --> 00:25:48.924
And we're actually going in the hole until finally, and hopefully, the customer pays us after the job.
475
00:25:48.984 --> 00:25:55.249
On a $10,000 job, you're getting three grand, you're putting six to seven grand into it, and then you're hoping you get the other seven grand.
476
00:25:55.409 --> 00:25:58.292
Collecting money later is never, ever a good idea.
477
00:25:58.653 --> 00:26:03.718
I always want the money sooner, because then I'm gonna use that money to pay my employees and buy the materials, the direct cost of the job.
478
00:26:03.778 --> 00:26:13.970
By not getting the money upfront with a deposit or not collecting on the money right when the job is done, these are the hidden costs that don't show up on a P&L, but they're costing you money every single day.
479
00:26:14.030 --> 00:26:15.952
This leads to a treadmill of cash flow,
480
00:26:16.112 --> 00:26:20.076
where you're constantly running, trying to get the next job, but you're still falling behind.
481
00:26:20.136 --> 00:26:24.880
And the faster you run, the more you fall behind because you're not collecting on the money that you've already earned.
482
00:26:25.020 --> 00:26:30.565
And I can't afford to go 40,000 in the hole before I get the $50,000 at the end of the job.
483
00:26:31.758 --> 00:26:34.019
So 50% minimum.
484
00:26:34.079 --> 00:26:35.499
Why would we not do that?
485
00:26:35.659 --> 00:26:43.302
I've just seen it being used as a selling point to not have to pay as much money upfront versus paying more at the end of the job.
486
00:26:43.322 --> 00:26:50.244
That way you can be satisfied with the work and have a right to be satisfied with what's been done on the project and then pay the rest of them.
487
00:26:50.644 --> 00:26:52.045
But see, here's the thing.
488
00:26:52.205 --> 00:26:58.850
If you hadn't grown by 4x year over year and you're on pace to double, I would say that's a problem because we need more leads.
489
00:26:59.570 --> 00:27:00.371
Leads is not a problem.
490
00:27:00.451 --> 00:27:03.473
We're doubling, tripling, and quadrupling the size of the business year over year.
491
00:27:03.873 --> 00:27:04.774
I don't see it as a constraint.
492
00:27:04.994 --> 00:27:07.415
The constraint is the work that we're doing, we're not collecting the money.
493
00:27:07.716 --> 00:27:12.519
When I look at this, the reason this is helpful is because, you notice we haven't filled in anything else because this is the only problem.
494
00:27:13.299 --> 00:27:20.000
The only problem is that we do good work, we have leads, we have good laborers, really solid team, and a really good leadership team.
495
00:27:20.420 --> 00:27:23.021
We just don't collect the money once we've made it.
496
00:27:23.641 --> 00:27:23.921
Right?
497
00:27:24.101 --> 00:27:26.561
I thought that was our least problem.
498
00:27:26.581 --> 00:27:29.262
No, no, money is important, money is important.
499
00:27:29.282 --> 00:27:36.763
You know, when I took a look at our business, I thought this was our least pain point, but it turns out that in order for us to scale, it is our most pain point.
500
00:27:36.803 --> 00:27:41.884
I had no idea, but because Mike came out here and we're so generous with your time,
501
00:27:43.122 --> 00:27:46.183
I've been able to see that, so I'm very grateful to you guys for that.
502
00:27:46.283 --> 00:27:49.944
I think you separate yourself from the competition though when you have these sort of requirements.
503
00:27:50.104 --> 00:27:57.846
The reason we do all this is because the people showing up on your job site and working on your property are fully insured, they're fully licensed, everything's good to go.
504
00:27:58.226 --> 00:27:59.927
And just include that in the sales process.
505
00:27:59.987 --> 00:28:02.967
Yeah, and that, it seems way more legit when I require this stuff.
506
00:28:03.127 --> 00:28:05.208
That's why like big companies have big contracts.
507
00:28:05.468 --> 00:28:09.751
If someone else, let's just say a customer was like, well, so-and-so is like willing to do it, just get the job started.
508
00:28:10.772 --> 00:28:15.515
Well, first off, I don't want a customer that is even comparing based on like, potentially not having to pay.
509
00:28:16.095 --> 00:28:20.939
I want a customer that trusts us, and if we haven't built that trust for them to pay me a deposit, I haven't done my job.
510
00:28:22.239 --> 00:28:28.284
Like, we have to focus on the sales process of selling good hands roofing and the value compared to the other guy.
511
00:28:29.542 --> 00:28:31.444
If we do that correctly, this all makes a lot of sense.
512
00:28:31.864 --> 00:28:33.526
And that was a big paradigm shift for me.
513
00:28:33.546 --> 00:28:37.729
I was realizing that customers don't just buy based on price.
514
00:28:37.889 --> 00:28:40.772
I used to think that was the reason customers buy, but they don't.
515
00:28:41.112 --> 00:28:47.377
And it's that and also the lowest price person is generally going to go out of business or isn't going to make any money.
516
00:28:47.397 --> 00:28:48.858
He's not going to have a profitable business.
517
00:28:49.118 --> 00:28:50.740
I would just change your deposit threshold to 50%.
518
00:28:51.260 --> 00:28:53.846
That would be 20% of your revenue in your bank account.
519
00:28:53.866 --> 00:28:57.715
So like 20%, that'd be an extra 30 to 40 grand right now in your bank.
520
00:28:57.796 --> 00:28:59.901
If we would have just had that one thing different,
521
00:29:00.781 --> 00:29:01.261
a few months ago.
522
00:29:01.301 --> 00:29:02.401
Yeah, that makes sense.
523
00:29:02.481 --> 00:29:04.682
I see where you're coming from now.
524
00:29:04.842 --> 00:29:13.144
And you need something to separate yourself from every other, whether it's a lawn care company or roofing company, you need something to separate yourself from the package.
525
00:29:13.184 --> 00:29:18.185
Especially in today's information age, we see everything a lot more deeper now.
526
00:29:18.325 --> 00:29:24.706
Like you see so many more roofing companies simply because of the social media age and everyone's on social media that has a roofing company.
527
00:29:25.606 --> 00:29:29.069
We're gonna change the payment terms, we're gonna get payment on file, and we're gonna charge at least 50% down.
528
00:29:29.509 --> 00:29:32.772
I would also offer a paid in full discount.
529
00:29:33.413 --> 00:29:40.439
In the perfect world, every single one-time project would be paid in full 100% before the job even takes place.
530
00:29:40.499 --> 00:29:47.645
But a lot of times, home service business owners were concerned by the fact that if we require that and we make it mandatory, that we will lose out on jobs.
531
00:29:47.705 --> 00:29:48.485
And you could be right.
532
00:29:48.786 --> 00:29:51.488
But what if you could give them the option to pay in full?
533
00:29:51.608 --> 00:29:56.529
When they had a $15,000 job, you were acquired, 50% down, but you gave them the option to pay in full.
534
00:29:56.669 --> 00:30:01.871
And you might even give them a discount if they were to pay 100% of the job before it even got on the books.
535
00:30:01.971 --> 00:30:08.232
Now you all don't have a ton of recurring customers coming back to you, but there are people that know, like, and trust you.
536
00:30:08.332 --> 00:30:09.553
They've seen your stuff online.
537
00:30:09.633 --> 00:30:10.573
They've seen your website.
538
00:30:10.633 --> 00:30:11.293
They trust you guys.
539
00:30:12.053 --> 00:30:14.054
10% off if you pay this up front.
540
00:30:14.094 --> 00:30:15.734
15% is a good profit margin for the roofing.
541
00:30:15.774 --> 00:30:18.235
And so I would prefer maybe to do 5% off if you pay full.
542
00:30:18.915 --> 00:30:19.756
given a discount.
543
00:30:19.897 --> 00:30:26.467
Like if you're able to save $1,000 off of your roof because you paid in full, that might be of importance to someone.
544
00:30:26.728 --> 00:30:27.769
There's also, I use it.
545
00:30:28.070 --> 00:30:30.053
Someone says, hey, we're really watching the budget.
546
00:30:30.093 --> 00:30:32.197
Like we really, can you guys squeeze this down at all?
547
00:30:32.676 --> 00:30:35.177
Well, you know what, Mr. Jones, we do have another discount.
548
00:30:35.377 --> 00:30:38.317
If you pay the whole thing in front, then you do get 5% off.
549
00:30:38.597 --> 00:30:39.438
Saves you after $1,000.
550
00:30:39.458 --> 00:30:42.218
So I actually use it as a sales tactic to bring the price down.
551
00:30:42.318 --> 00:30:45.139
We're launching this feature at Copilot called Paid in Full.
552
00:30:45.939 --> 00:30:50.200
Every single estimate, they just have the option of paying the whole thing up front instead of paying a deposit only.
553
00:30:50.380 --> 00:30:55.842
And you get like 25% of people to just pay the whole invoice up front without doing any payment terms.
554
00:30:55.962 --> 00:30:57.302
Would you lead with this one then?
555
00:30:57.502 --> 00:30:57.722
No.
556
00:30:58.302 --> 00:31:01.003
I would leave that in my back pocket for a price-sensitive customer.
557
00:31:01.463 --> 00:31:02.344
I like that.
558
00:31:02.464 --> 00:31:03.325
That's a good call.
559
00:31:03.406 --> 00:31:06.309
I would also say I'd probably put another one in my back pocket for seasonality.
560
00:31:06.329 --> 00:31:09.093
Because you have such a massive ramp from February, March, and April.
561
00:31:09.193 --> 00:31:11.295
Like 90,000 to 200 something thousand.
562
00:31:11.936 --> 00:31:12.897
We have a seasonal problem.
563
00:31:13.078 --> 00:31:15.441
And so the other thing, if someone's like, I can't afford that.
564
00:31:15.970 --> 00:31:21.035
No worries, we can save more if you're willing to wait eight months to do the job in the middle of our off season.
565
00:31:21.255 --> 00:31:29.302
I am willing to go in half the cost if someone's willing to reduce the scope of work, pay me up front eight months in advance, and I do the job in eight months in the middle of my off season.
566
00:31:29.443 --> 00:31:34.127
Honestly, the vast majority of home service business owners, including myself, don't really like to ask for money.
567
00:31:34.307 --> 00:31:41.273
What we like to do is use the office of the admin person as a scapegoat and say, yes, the office will take care of the money, like I'm just here to do the work.
568
00:31:42.074 --> 00:31:47.239
the office will get the money from you versus just be like setting the expectation that it's part of the process.
569
00:31:47.319 --> 00:31:51.042
And that is like, we get the deposit, we lock you in the office, gets you on the schedule.
570
00:31:51.342 --> 00:31:53.264
When we do the walkthrough, we collect the rest of the payment.
571
00:31:53.544 --> 00:32:06.395
And I know that's not comfortable, but it's the difference between growing the business this year to 3 million for him versus having to keep it at 2 million simply because he cannot afford the massive cashflow gap that's being caused by not collecting money up front.
572
00:32:06.515 --> 00:32:11.517
And so I would really craft with Melvin, like when someone comes down to the end, I give them a price.
573
00:32:11.617 --> 00:32:13.298
If they're not happy with it, I can move.
574
00:32:13.918 --> 00:32:15.258
But there's three ways I get to move.
575
00:32:15.579 --> 00:32:16.699
I like that, I like that a lot.
576
00:32:16.879 --> 00:32:20.080
There is no world in which you would rather have money later than sooner.
577
00:32:20.401 --> 00:32:21.521
None, zilch, nada.
578
00:32:21.621 --> 00:32:30.750
This is why in Copilot, when we make the feature, all new members to Copilot will have it defaulted on to where every single customer just sees the option of paying in full.
579
00:32:30.890 --> 00:32:35.335
Like you would be shocked at how many people would just rather pay the whole bill up front than wait after the job.
580
00:32:35.575 --> 00:32:41.020
And you get like 25% of people to just pay the whole invoice up front without doing any payment terms.
581
00:32:41.240 --> 00:32:44.324
Last thing we need to do is automate collections.
582
00:32:44.824 --> 00:32:48.405
Now let's just assume for a moment that Good Hands doesn't collect a deposit.
583
00:32:48.425 --> 00:32:56.567
They don't collect the money right when the job is completed and they don't get a card on file or a bank account on file to charge the customer if things go awry.
584
00:32:56.627 --> 00:33:06.830
They've got to at least have an automated system for collecting on that invoice after the job is done with texts, emails, and phone calls going to the customer day one, day three, day five.
585
00:33:06.930 --> 00:33:12.632
I'm gonna harass that customer until they pay me because until they have, they're robbing from me and it's costing me money.
586
00:33:12.832 --> 00:33:13.753
every single day.
587
00:33:13.793 --> 00:33:20.259
Now, because we have our payment terms ironed out, because we have credit cards on file, this shouldn't really happen much.
588
00:33:20.599 --> 00:33:21.941
And that is, customers not paying.
589
00:33:22.001 --> 00:33:24.483
But we do need to create some of our automated follow-up.
590
00:33:24.543 --> 00:33:26.325
Texts and emails, going out to the customer.
591
00:33:26.485 --> 00:33:28.487
I'm doing one day, three day, five day, seven day.
592
00:33:29.007 --> 00:33:30.269
You can do it as much as you want.
593
00:33:30.469 --> 00:33:32.230
I even will harass the person until they pay me.
594
00:33:32.351 --> 00:33:34.833
They'll rob me from you until they give you the money.
595
00:33:35.073 --> 00:33:39.515
Now in any CRM or software system that you're using, you should be able to set this up.
596
00:33:39.535 --> 00:33:43.297
For example, inside Copilot, I'm gonna create after one day a text message.
597
00:33:43.377 --> 00:33:45.218
Day three, I'm gonna send them a phone call.
598
00:33:45.298 --> 00:33:46.799
After day five, I'm gonna send them an email.
599
00:33:47.019 --> 00:33:49.661
I'm gonna keep following up with the customer until they pay me.
600
00:33:49.741 --> 00:33:51.882
And in every one of those messages, there's gonna be a link
601
00:33:52.202 --> 00:33:54.143
to the invoice to get payment right away.
602
00:33:54.203 --> 00:34:03.589
But again, all of that shouldn't even be happening because we should have collected a bigger deposit, we should have collected the invoice right when the job was done, and we should have had a card on file or ACH just in case that didn't happen.
603
00:34:03.669 --> 00:34:06.971
Again, we are trying to avoid this by all this other stuff.
604
00:34:07.011 --> 00:34:13.535
Card on file, payment terms, the fee stacking up after seven days, painful discounts, deposit threshold being high.
605
00:34:13.635 --> 00:34:19.719
All of this should prevent this from happening, but this is your last line of defense, and that is, like, we need to collect the money.
606
00:34:20.299 --> 00:34:21.180
That's funny because...
607
00:34:23.033 --> 00:34:27.236
You're not gonna like this one, but last week we just finished up a 70K job.
608
00:34:27.276 --> 00:34:27.396
Cool.
609
00:34:27.496 --> 00:34:32.060
And he paid 30% down, so he was, I think it was around 40K, 42K.
610
00:34:32.080 --> 00:34:35.182
So I said, hey, I'm gonna call you up, can I do the job inspection now?
611
00:34:36.183 --> 00:34:37.164
He's like, yeah, go ahead.
612
00:34:37.284 --> 00:34:45.690
And so I did the final walkthrough, and he's like, oh, are you guys gonna come back up for the check, or do you want us to, how do you wanna do it?
613
00:34:45.710 --> 00:34:48.372
Do you wanna, and I was like, oh, don't worry.
614
00:34:48.392 --> 00:34:50.474
No, the office will send that to you later, oh!
615
00:34:51.234 --> 00:34:52.896
No, we need to make more money.
616
00:34:53.036 --> 00:34:55.238
We need to collect every dollar possible.
617
00:34:55.338 --> 00:34:55.798
Okay.
618
00:34:56.238 --> 00:34:59.241
Final inspection equals money in pocket.
619
00:34:59.261 --> 00:35:03.744
So we're going to completely avoid overdue invoices by attacking three distinct areas.
620
00:35:03.905 --> 00:35:07.347
First, during the estimate process, I'm collecting a larger deposit.
621
00:35:07.387 --> 00:35:12.732
Then at the job being done, the inspection, the walkthrough with the customer, I'm collecting all of the invoice.
622
00:35:12.832 --> 00:35:13.012
And if
623
00:35:13.152 --> 00:35:19.877
If all else fails, I'm going to have a card on file, the third part, a card on file, or an ACH bank account on file if you'll charge the customer.
624
00:35:19.957 --> 00:35:23.159
I should never have an invoice overdue by more than seven days.
625
00:35:23.339 --> 00:35:27.983
I would really look at your sales process and your inspection process as that is when we collect money.
626
00:35:28.223 --> 00:35:32.486
No job walkthrough or inspection happens without money going into your pocket.
627
00:35:32.686 --> 00:35:38.110
And also it would be probably good for us to schedule a job walkthrough as soon as possible after the job is done.
628
00:35:38.170 --> 00:35:39.351
Oh, it's like within 24 hours.
629
00:35:39.871 --> 00:35:44.273
Because the longer that sits, the more they're gonna come up with all these random little things.
630
00:35:44.734 --> 00:35:50.356
Once you've solved the problem, all the materials have been spent, all the direct costs have been spent, that is not when I wanna be collecting money.
631
00:35:50.517 --> 00:35:52.698
Like any time after that, all bad news.
632
00:35:53.158 --> 00:35:54.839
They're like, oh, that one shingle looks off.
633
00:35:55.179 --> 00:35:57.360
Oh, and then all of a sudden it's like, oh no, you do a horrible job.
634
00:35:57.840 --> 00:36:00.702
And then you have all the leverage against you get 70% of the job sitting there.
635
00:36:00.782 --> 00:36:01.743
You have $42,000 against you.
636
00:36:02.723 --> 00:36:03.564
They're robbing from you.
637
00:36:03.724 --> 00:36:04.464
It's unethical.
638
00:36:04.504 --> 00:36:08.066
And we will sit on that property and we'll just sit there and be like, yo, you gotta pay us.
639
00:36:08.486 --> 00:36:10.648
And if you're not, I have a credit card, I'm gonna go ding it right now.
640
00:36:10.768 --> 00:36:15.030
Right, and that's also gonna look a lot cleaner than on our cash basis accounting.
641
00:36:15.190 --> 00:36:16.151
It'll line up perfectly.
642
00:36:16.391 --> 00:36:16.591
Right.
643
00:36:16.771 --> 00:36:18.112
It'll be beautiful.
644
00:36:18.633 --> 00:36:21.014
Cash accounting would be ahead because we collect money faster.
645
00:36:21.214 --> 00:36:21.414
Right.
646
00:36:21.694 --> 00:36:24.956
But then our accrual, the moment we finish the job, we're getting paid.
647
00:36:25.156 --> 00:36:26.457
I mean, this is really cool.
648
00:36:29.058 --> 00:36:35.942
It opens up my mind to a lot of the pain points that I've been feeling and how to solve them.
649
00:36:36.022 --> 00:36:37.043
So I appreciate that.
650
00:36:37.403 --> 00:36:44.487
I think one question would be, how do you like build systems and processes and SOPs inside of a business?
651
00:36:44.808 --> 00:36:50.091
So this is another thing that I, words that people use to sell fancy things.
652
00:36:50.415 --> 00:36:58.720
Unfortunately, we have a whole bunch of people wanting to sell systems and process and checklists and procedures and SOPs as if it's a magic sauce.
653
00:36:58.740 --> 00:37:02.442
When all that is, is, hmm, does this simplify this process?
654
00:37:02.502 --> 00:37:03.863
Does this standardize this process?
655
00:37:04.203 --> 00:37:05.124
Ah, let's create a script.
656
00:37:05.344 --> 00:37:08.586
All that script is, is a standardized way of doing X.
657
00:37:08.646 --> 00:37:09.846
Systems and process.
658
00:37:10.167 --> 00:37:10.527
SOPs.
659
00:37:10.767 --> 00:37:12.028
I agree it should be done.
660
00:37:12.788 --> 00:37:13.689
I like to think of it like this.
661
00:37:13.709 --> 00:37:14.869
I think of it like this.
662
00:37:14.889 --> 00:37:15.370
It's like, look.
663
00:37:16.090 --> 00:37:19.892
How do we create a place in which systems occur?
664
00:37:20.292 --> 00:37:20.512
Right?
665
00:37:20.752 --> 00:37:22.633
So there is two ways of doing something.
666
00:37:22.733 --> 00:37:26.995
Either the simple way, or we can do things the complex way.
667
00:37:27.936 --> 00:37:28.136
Okay?
668
00:37:28.516 --> 00:37:29.596
There's two ways to do a job.
669
00:37:30.117 --> 00:37:32.198
One is a standard way.
670
00:37:34.238 --> 00:37:36.960
The other way is custom.
671
00:37:39.041 --> 00:37:39.261
Boom.
672
00:37:39.761 --> 00:37:41.002
We want to live right here.
673
00:37:42.302 --> 00:37:43.883
Simple standardized services.
674
00:37:45.219 --> 00:37:46.660
Now, what you talked about is very true.
675
00:37:46.700 --> 00:37:47.600
You're pruning things.
676
00:37:47.720 --> 00:37:48.620
Hey, we're growing the business.
677
00:37:48.720 --> 00:37:48.960
Why?
678
00:37:49.140 --> 00:37:51.521
Because as you scale, simple will work better.
679
00:37:52.242 --> 00:37:53.342
Standardized will work better.
680
00:37:53.762 --> 00:37:59.064
When you start doing every job as custom and every job as complex, you live in the land of treadmill operator.
681
00:37:59.824 --> 00:38:01.525
You have to be on every single job site.
682
00:38:01.565 --> 00:38:02.885
Every single job site goes wrong.
683
00:38:03.105 --> 00:38:04.326
There's mistakes made on all the time.
684
00:38:04.526 --> 00:38:05.906
You do not want to be living over here.
685
00:38:06.107 --> 00:38:06.887
So instead of like...
686
00:38:07.507 --> 00:38:22.182
like getting all focused and paying a bunch of money and like feeling inadequate that's what i hate the most i hate the fact that like we just talked to someone that runs a two million dollar business and feels inadequate to like run their business do marketing and hiring when they are fully capable of learning this eight hours on youtube
687
00:38:22.502 --> 00:38:25.323
I just don't like the nebulous terms of systems and SOPs.
688
00:38:25.663 --> 00:38:28.243
It makes everyone feel inadequate to be able to run their business.
689
00:38:28.643 --> 00:38:34.445
When in reality, all it is is simplification and standardization, and it is avoiding complex and custom, period.
690
00:38:35.025 --> 00:38:43.107
So in my opinion, instead of saying how do I systemize the business, I say how do I create simple everything and standardize everything, and by doing that, I create a system.
691
00:38:43.587 --> 00:38:46.248
Because if you standardize the way you answer the phone, you create a system.
692
00:38:47.128 --> 00:38:52.189
If you standardize the way you do invoicing, the way you do your sales process at the Melvin, that's a system.
693
00:38:53.531 --> 00:39:04.408
we just call these SOPs it's like you just standardize it we do it the same way every single time that's what standardized means if you just live in this world you will create systems by osmosis
694
00:39:06.790 --> 00:39:10.352
So anything that's complex, anything that only you can do, bad news.
695
00:39:10.552 --> 00:39:15.976
Anything custom where every single job is different, every single, we need different types of equipment, just get rid of it.
696
00:39:15.996 --> 00:39:18.718
That's what you're already doing as you're beginning to grow.
697
00:39:19.378 --> 00:39:24.541
The first thing when we get to a customer's job, brand new customer, they're interested in a new roof.
698
00:39:24.581 --> 00:39:26.122
What's the first thing you're doing?
699
00:39:26.142 --> 00:39:27.323
I do a full roof inspection.
700
00:39:27.843 --> 00:39:28.043
Great.
701
00:39:28.484 --> 00:39:30.685
Number two, what's the next thing we're doing?
702
00:39:30.705 --> 00:39:34.127
We have like an inspection checklist on company cam.
703
00:39:34.347 --> 00:39:34.688
And then...
704
00:39:35.669 --> 00:39:38.170
From there we go and create the estimate in Rufur.
705
00:39:38.190 --> 00:39:40.591
Okay, and is that in like the truck and then you go back in the house?
706
00:39:40.611 --> 00:39:40.871
Yes.
707
00:39:41.151 --> 00:39:41.411
Got it.
708
00:39:41.651 --> 00:39:43.071
So then I'm gonna say we're gonna do price.
709
00:39:43.491 --> 00:39:46.052
And then I'm going to assume we present that price to the customer.
710
00:39:46.072 --> 00:39:46.332
Yes.
711
00:39:46.692 --> 00:39:48.053
All right, so then we're gonna do presentation.
712
00:39:48.393 --> 00:39:49.053
Yes.
713
00:39:49.273 --> 00:39:52.014
They're going in their truck for 20 minutes and they're copping back in, right?
714
00:39:52.194 --> 00:39:52.594
Yes, exactly.
715
00:39:52.634 --> 00:39:57.196
Okay, so he's printing out some pictures, he's showing that, he's I'm assuming showing pricing information.
716
00:39:57.256 --> 00:39:57.516
Yeah.
717
00:39:57.696 --> 00:39:59.536
Showing different products that we have.
718
00:39:59.776 --> 00:40:03.378
And then trying to, the goal was to get a close on the spot.
719
00:40:03.998 --> 00:40:04.138
Yep.
720
00:40:04.778 --> 00:40:06.260
Yeah, that'd be one.
721
00:40:06.361 --> 00:40:07.943
Let's go close.
722
00:40:08.464 --> 00:40:08.764
And uh,
723
00:40:12.633 --> 00:40:12.933
Payment.
724
00:40:13.193 --> 00:40:15.355
Hey, got it.
725
00:40:15.755 --> 00:40:16.956
Let's go.
726
00:40:18.136 --> 00:40:18.777
Five things.
727
00:40:18.817 --> 00:40:22.759
There's your simple standardized process for every single sales call.
728
00:40:23.140 --> 00:40:23.340
Right?
729
00:40:23.580 --> 00:40:26.081
Now the presentation part sounds like it's gonna be improved with software.
730
00:40:26.322 --> 00:40:26.522
Yes.
731
00:40:26.762 --> 00:40:27.022
Great.
732
00:40:27.402 --> 00:40:30.124
But now there's five things that he's gonna work through every single time.
733
00:40:30.584 --> 00:40:34.427
And then what I would do is I would do a recon on every single estimate.
734
00:40:34.907 --> 00:40:38.908
especially big ones or however you want to figure this out, where do we lose this job?
735
00:40:38.948 --> 00:40:40.049
Do we lose it in the inspection?
736
00:40:40.589 --> 00:40:41.489
Do we lose it in the price?
737
00:40:41.749 --> 00:40:42.929
Do we lose it in the presentation?
738
00:40:42.949 --> 00:40:44.710
Do we lose it in the clothes or do we lose it in payment?
739
00:40:46.310 --> 00:40:48.651
Then you're gonna find out, so, because right now, this is what you're thinking.
740
00:40:48.671 --> 00:40:50.792
You're thinking close ratio, 40%.
741
00:40:51.512 --> 00:40:55.333
I look at it as I lost 5% here, I lost 10% here, I lost 4% there, I lost 8% there, I lost 6% there.
742
00:40:58.455 --> 00:40:59.175
I want to know that.
743
00:40:59.715 --> 00:41:04.256
Because right now, you are assuming that if we change payment terms, we're going to lose more customers.
744
00:41:04.916 --> 00:41:05.736
I don't believe that's going to happen.
745
00:41:06.376 --> 00:41:08.197
I think you have less than 1%, that would be a problem.
746
00:41:09.017 --> 00:41:09.977
You're losing it up here.
747
00:41:10.157 --> 00:41:13.478
And honestly, like what I did with him with the sales process, he made the sales process.
748
00:41:13.498 --> 00:41:14.818
I just asked, so what's the next step?
749
00:41:15.238 --> 00:41:16.078
And what's the next step?
750
00:41:16.238 --> 00:41:16.898
And what's the next step?
751
00:41:16.918 --> 00:41:17.639
That's all I did.
752
00:41:18.619 --> 00:41:24.980
And so some people just sit down with ChatGPT and YouTube for about eight hours, and they figure out most of these problems.
753
00:41:25.775 --> 00:41:28.316
And they're capable, like, yeah, they're fully capable.
754
00:41:28.596 --> 00:41:31.797
They're more capable than a lot of the people that tell them about the systems and processes.
755
00:41:32.757 --> 00:41:35.918
Like, just because you can use ChatGPT better than someone else doesn't mean anything.
756
00:41:36.438 --> 00:41:38.099
Liquidity is the only thing I care about.
757
00:41:38.119 --> 00:41:39.519
We need $120,000 in the bank.
758
00:41:39.539 --> 00:41:41.720
We need to work on the collections process.
759
00:41:41.740 --> 00:41:44.021
That collection process is all the six-week plan.
760
00:41:44.661 --> 00:41:49.222
The rest of it I'm not talking about, not even putting the six-week plan, because I don't think it's actually the bottleneck for the business.
761
00:41:49.602 --> 00:41:54.324
I think if you fix this, the business can grow, and it won't be as stressful.
762
00:41:56.785 --> 00:41:59.246
I have a little chart here with me.
763
00:41:59.546 --> 00:42:09.349
A couple of days after you guys left, I would say maybe a week or two after you left, I was going over to the bank account and on paper we were of course like pretty profitable.
764
00:42:09.629 --> 00:42:14.770
But then I looked at the bank account and our checking account went from like 100K all the way down to like 11,000 in,
765
00:42:16.591 --> 00:42:18.352
in like the matter of like three days.
766
00:42:18.853 --> 00:42:24.337
It was just like a light bulb moment of, okay, now I know this is what Mike is talking about.
767
00:42:24.397 --> 00:42:28.760
It's just opened my eyes to see it a little bit more from Premier's perspective.
768
00:42:28.960 --> 00:42:38.348
So we updated our payment terms, 50% deposit down, rest of the job due upon job completion, deposit threshold of 50%, paid in full discount.
769
00:42:38.368 --> 00:42:40.029
We didn't do that one much yet.
770
00:42:40.069 --> 00:42:44.072
That hasn't been, we haven't seen too many objections as of now, as far as price.
771
00:42:44.272 --> 00:42:47.573
Automating collections, business has been going very good.
772
00:42:47.613 --> 00:42:53.455
Like we had our record month in sales in April and we're hoping for another record here in May.
773
00:42:53.575 --> 00:43:00.257
I think our goal was to do like over 200K in April and then we ended up doing like 340K.
774
00:43:00.837 --> 00:43:04.558
As far as getting money in the bank, like getting the money off of what people owe us.
775
00:43:04.918 --> 00:43:07.619
We've been cleaning up the accrual based accounting as well.
776
00:43:07.739 --> 00:43:10.340
Yeah, we've definitely been able to do a better job of it.
777
00:43:10.580 --> 00:43:14.206
So as of now, I end up checking and saving if we combine the two.
778
00:43:14.386 --> 00:43:16.930
We are currently at... Wow, what a blessing.
779
00:43:16.950 --> 00:43:18.432
I didn't even know we were at this much.
780
00:43:18.512 --> 00:43:21.837
But we're at 130 plus.
781
00:43:21.977 --> 00:43:23.279
Dang, that's crazy, man.
782
00:43:23.420 --> 00:43:24.401
We're like 180,000 right now.
783
00:43:25.803 --> 00:43:30.148
Yeah, so that was like, yeah, that's a good feeling, man.
784
00:43:30.609 --> 00:43:34.834
That's a really good feeling because recently after you guys left, one of our trucks broke down.
785
00:43:35.135 --> 00:43:37.578
A tree fell on one of our vans during a storm.
786
00:43:37.838 --> 00:43:40.241
One of our trucks blew a transmission line.
787
00:43:40.261 --> 00:43:44.046
We had some extra money in the bank that helped us go out and buy a new van.
788
00:43:45.287 --> 00:43:55.215
really not see a big stress on the bank account because we were able to collect on money ahead of time and also collect on money that was actually owed to us.
789
00:43:55.456 --> 00:44:02.441
The thing about Mike and your guys' teaching really that I really appreciate is like, Mike is such a down-the-earth guy.
790
00:44:02.962 --> 00:44:13.551
And the way that he cared about us, about our business, mentored us, and the way your whole team, dude, really yourself, that meant so much to me.
791
00:44:14.791 --> 00:44:19.394
It finally settled in my spirit that like, okay, wow, I'm running an actual business.
792
00:44:19.674 --> 00:44:21.695
And the way Mike was so encouraging to me.
793
00:44:22.496 --> 00:44:26.938
And then it also showed the guys on my team that we care about improving the business.
794
00:44:27.238 --> 00:44:30.060
And this isn't just something I'm experimenting with.
795
00:44:30.140 --> 00:44:31.621
Like, I'm serious about this.
796
00:44:32.361 --> 00:44:36.904
And yeah, like, it really lit a fire underneath our whole team.
797
00:44:37.244 --> 00:44:39.305
So, man, I'm just super thankful for that.
798
00:44:39.405 --> 00:44:40.906
Thank you so much, man.
799
00:44:40.926 --> 00:44:43.648
What's like one piece of advice that you'd give to...
800
00:44:44.052 --> 00:44:44.133
Um
801
00:44:44.801 --> 00:44:47.562
I have a ton of respect for what you've done and accomplished.
802
00:44:47.742 --> 00:44:50.142
It's satisfying to me.
803
00:44:50.942 --> 00:44:57.364
But if you were to talk to somebody in my shoes or look at yourself, that's one piece of advice that you give to them.
804
00:44:57.544 --> 00:44:59.124
Just focus on one thing at a time.
805
00:44:59.184 --> 00:45:04.166
I know right now, it's all beating the dead horse of collections.
806
00:45:04.226 --> 00:45:05.446
That is the current constraint.
807
00:45:05.806 --> 00:45:08.707
It's easy to get, like, I've got to do the leads thing and the website thing.
808
00:45:08.727 --> 00:45:09.787
I've got to do all this.
809
00:45:09.967 --> 00:45:10.907
Just focus on one thing.
810
00:45:11.347 --> 00:45:14.488
And if you do that and you fix one thing every two, three months in the business,
811
00:45:15.509 --> 00:45:16.009
You'll crush it.
812
00:45:16.109 --> 00:45:19.972
And then time will go on, you'll focus on other aspects of life too, right?
813
00:45:20.012 --> 00:45:22.634
So like family and stuff, get out of focus on this for a bit.
814
00:45:23.195 --> 00:45:23.535
That's fine.
815
00:45:24.496 --> 00:45:25.276
So, you'll crush it.
816
00:45:25.897 --> 00:45:33.263
I think taking it a day at a time, and one piece of advice that I got from you guys was just to take it one thing at a time, and one step at a time.
817
00:45:33.283 --> 00:45:35.965
And really, like, tutoring well what we've been given.
818
00:45:36.365 --> 00:45:40.749
How can I max out every area of my business before I try anything else new?
819
00:45:41.340 --> 00:45:42.844
I would say that's the biggest focus.
820
00:45:42.944 --> 00:45:48.138
And then whatever comes next is just a result of the input that we've put into the business.