Is Your Business Profitable... or Just Keeping You Busy?

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Before we even got here, I spent 300 grand.
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When I did that challenge in the past, we got about 20 to 30 customers in the first month.
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If I don't get a hundred plus in the first month here, we are failing big time.
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The speed at which you grow, growth sucks cash.
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I see individuals confused about what growth is because they're telling themselves we're growing.
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And so this is acceptable.
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I don't have a problem.
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And they're ignoring a problem.
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Why we have so many turn around around that 1 million to 1.3, because they're kind of past the point where they need an operations manager, but they're going to realize more than half of their profit walks out the door.
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The minute they hire that person at a six figure salary, a lot of people think, oh, I'm really profitable.
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I'm making 22%.
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No, you're not.
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You're not paying yourself a salary.
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And we would have to be scrappy.
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And I think many times that mentality gets us to grow the business or start the business, but it's also the thing that holds us back from ever building a business that we love.
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And the idea that any of us are going to start a business and get it all right from the beginning and not have to clean stuff up is absolute utter nonsense.
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We all did this.
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The question is, how soon will you do it?
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And how long do you want to live with unnecessary stress?
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Hey, everyone.
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Welcome back.
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Mike, great to see you.
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He goes, well, I'm now close to you.
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I know.
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I can tell by the location.
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Well, I can tell because you're not in the studio.
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Yes, that's very nice background.
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Is that a plant behind you?
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It is.
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It is.
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I had to switch this all around just to make sure the lighting was half decent.
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And also, I'll be honest.
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You're like, why are you in a sweater in Dallas?
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I'll be honest.
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Everything's gone bad.
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All of our clothes have not showed up.
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They're going to be delayed like four more days.
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So here, here.
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I have one shirt.
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I have one shirt that I flew on the plane here with.
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And so currently that's in the laundry.
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Well, there are plentiful Walmarts around you if you need a shirt.
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But not one with Homeworks or Augusta on it.
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I'm like, look, we're not gonna cop out here and just wear a random t-shirt in the vlogs.
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Come on now.
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All right.
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Well, speaking of being poor, because you're poor right now with nothing, we're going to talk about profit this week.
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That's right.
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That's right.
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So the idea here is that we want to talk about how do you make your business more profitable?
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And if your business is unprofitable, how do you fix it?
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So how do you fix an unprofitable business?
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And then what I think is a big one is, how do you actually even know if you're legitimately unprofitable or if the reason you don't have money or don't feel like you're making profit or your P&L doesn't show you're making profit is because it's all growth.
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And I think oftentimes there's a confusion between
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Is the lack of profit a growth?
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Is it growth or is it a problem?
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And a lot of people, I think, call it growth when it's actually a problem.
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And so that's what we want to talk about.
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So I think the summary here would be we just want to make your business more profitable.
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And we're going to talk through ways to do that and ways we've done it inside our businesses.
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So, again, we're going for an actionable episode here.
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So.
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I want to kick this off by sort of framing what is profit and what do you look at and things of that sort.
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So, Mike, will you kind of define for everybody how you think about profit?
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And then I'm going to dig just a little deeper.
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Yeah.
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So like the technical aspect, this is where it's very difficult.
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Whenever someone says I'm X amount percent profitable, like, well, what kind of profit are you talking about?
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Because theoretically there's three different types of profit when you think about accounting.
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And so one that some people throw around is gross profit.
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And we've talked about that on the podcast here before.
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That's essentially your total revenue minus your cost of goods sold.
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Cost of goods sold being your direct labor, your materials, your subcontractors, those direct costs.
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And that really just measures the production efficiency.
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So it excludes all your overhead, interest, taxes, all of that stuff.
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And so for some people, they would consider that profit.
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I think the more commonly termed use of this word is operating profit.
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And so that's the second type of profit.
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And that's going to be your gross profit.
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So we've already taken out your cost of goods sold minus your operating expenses.
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Some people will shorthand this as OpEx.
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This could be anything from your admin, your rent, your insurance, all these other operating costs that go into the business, but usually it excludes financing costs and tax obligations.
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So those are usually removed from this when it comes to profit.
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And I'll give kind of some targets.
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So like when it comes to gross profit as a general rule of thumb for home services is very dependent on industry and whether or not using materials and subs, et cetera, as a broad rule of thumb though, you want to be over 50% gross profit in the business.
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I think that's a relatively decent rule of thumb, um, depending on your industry again,
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For the operating profit, I generally like to see over 25% profit.
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This is the operating profit.
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Now, the net profit, which some of the people use when really they're talking about operating profit, but net profit is the operating profit minus any interest and any taxes.
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And this is ultimately what most of us would consider the financial gain from the business or from the location and represents the real bottom line of the company.
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And I think for most home services, again, to your point, they think they have 0% here because they are in growth and they're just constantly investing in.
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But realistically, you want this to be, in my opinion, over 15%.
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You know, the best businesses are over 15%, over 10% is okay.
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If you start getting single digit net profit margins,
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you probably should just put your money into an index fund, especially if you are not growing very quickly.
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And so I think this is a great topic to discuss.
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If I have low profit, is that because I'm growing?
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Or is that because I have an unprofitable business?
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And then what can I do to fix that?
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And so that's how I kind of determine what profit is, those three ways.
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And I'm sure there's other ways to measure it, but those are three ways I always think about it.
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Those are the typical ways I would as well.
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And for the purpose of this conversation, we're really going to be focusing on net profit, although in the sense that that's the money you have left over to grow the business with.
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That's the money you have left over to live a life.
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That's what we all started a business for is that net profit number.
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Now, all these other things.
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numbers are imperative.
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And what we're going to talk about impacts the other two types of profit that Mike talked about.
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But at the end of the day, they all drive down to this net profit number, which could be your take-home number.
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And so that's the number I tend to think when most people say I'm highly profitable or I'm not profitable that they tend to be talking about is that net profit number that is usually shown at the bottom of, well, not usually, it's shown at the bottom of your profit loss statement.
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That's where you go to find that number.
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There's a lot
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but that's the gist of what we're talking about.
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So I wanted to add a little more detail to this before we get into ways to fix the profit and kind of talk through...
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maybe a question you have, or a lot of people have, which is, why is it that I'm not making money?
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Or why does it look like I'm not making much profit or enough profit?
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And so the way that I kind of talk you through this to help you answer that, the question I think you're probably asking is, am I not making money because I'm investing in growth?
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Kind of back to what you said at the beginning.
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Or am I not making money or enough money because something's wrong with the business?
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Like that's the question that I want to dig a little further into before we get into the actionable items.
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And one of the biggest challenges, frustrations I see is I feel that most owners predominantly look at their bank balance.
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They look at their bank balance to understand how things are going.
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I've got $7,000 in the bank.
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On average, I can afford to hire somebody.
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I've got $21,000 in the bank.
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I can afford to buy another piece of equipment.
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The problem with the bank balance, and there's...
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Lots of people that teach to even run your business looking at your bank balance, but they're oversimplifying for people that they can't get to do anything else.
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The real way you run a business is by looking at your profit loss statement, your other financial statements.
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And so...
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We have to, to be able to answer this question, have you keep your profit, your statements, your profit loss statement, your balance sheet, your other financial statements accurate.
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And to answer this question, we have to have you look at and understand your profit loss statement.
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There's just no way to get around that because the profit loss statement is...
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it tells you where your money's going.
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Just like unlike anything else, that tells you where your money's going.
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So you have to run your business that way.
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And I would argue that sure, it's okay for a short bit when you're first getting started to follow some of these methods where you're basically looking at your bank balance and you're putting money into different bank accounts.
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But if you're gonna be a sophisticated business owner and you really wanna know what's going on, you have to understand your financials.
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There is no way to get around that.
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And so there's a lot of people, and Mike, by all means, because I'm gonna spend a little time on this, jump in if you want to add any color or commentary to this.
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Yeah, I would just say for anyone that we've already lost when it comes to talking about profit, or even when Jonathan says, you need to know your P&L, it's like,
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Okay, I don't.
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Yeah.
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Like, I'm just lost.
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This is where I think, again, the use of AI is so important.
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This is essentially a consultant that is going to be able to walk you through cleaning up your P&L, what is valid, what is not, what is considered cost of goods sold.
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These are things that can absolutely, AI can help you clean up.
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You put your bank statement in there, you put what you do have of your P&L from QuickBooks into AI, and it'll help you clean it up, and it'll produce more accurate numbers that actually reflect percentages and something you can actually work with.
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Yeah, I'm glad you said that.
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I would also tell you if you're listening and you don't really pay attention to your profit loss statement.
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That's what the P&L is profit and loss.
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It just tells you, are you making money?
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Are you losing money and gives you all the details.
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But if you've looked at it and your brain sort of shuts down, and you're like, I hate this stuff.
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You shouldn't beat yourself up.
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You shouldn't feel like something's wrong with you.
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I think a lot of people hate this stuff a lot.
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I mean, the number of kids that go through college and have to go through accounting 101, that way you learn this and hate it or fail it or it doesn't stick, it's not unusual.
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And I would also tell you that if you...
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You kind of go through the P&L, you learn it, you read a little bit about it.
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It's like, oh, okay, this is making sense.
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And then you go about running your business for the next 60 days and you come back and look at it again and then you feel like an idiot because you can't remember what you learned 60 days ago.
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Totally normal.
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I'm telling you, this is normal.
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So don't beat yourself up about this.
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Some people love this stuff and they just get it immediately, but the majority do not.
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And I don't think that's...
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I don't think you're...
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You're in the norm if you don't immediately get all this stuff.
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And the only way you learn it is to continually listen to things like this.
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And it's the repetition of asking your accountant questions.
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But even better, like Mike said, just ask AI now.
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I mean, and just tell it to teach you like you're a fifth grader and ask me questions and quiz me and help me understand this.
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You're going to have to do it a bunch of times, at least most people do.
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And then you'll eventually get it.
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I just want to make sure, you know, this is like totally normal.
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I've been doing this long enough to know.
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When I started in business, I liked this stuff.
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And I didn't immediately remember all the details or get all the stuff.
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I had to go back through it several times.
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Connecting what a number on your P&L is to what's happening in the real world just doesn't immediately stick for everybody.
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So just don't feel bad about it is all I'm saying.
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So if you feel like you're kind of losing us here, dig in a little bit more, kind of like Mike said.
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Returning to what I was saying, one of the common things I hear is somebody will say, hey, I'm not making any money because we're growing really fast.
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It's really hard to define what fast growth is for me to say, you're right, you're growing really fast, that's your problem.
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Or no, you're wrong, that's not the problem, you just have a crummy business.
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It's very hard to define what fast growth means.
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So...
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At a very elementary level, I'd say, hey, if you're doing 200,000 in revenue and you grow the business by 100,000 or 200,000, that's 100% growth, 200,000.
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That's not fast growth for CityTurf.
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That's not fast growth for Mike.
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That would be a very, very bad year for us.
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But it is fast growth.
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It was fast growth for somebody like me or Mike when we were really small because we were learning, figuring things out.
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And also, when you only have $200,000 in revenue, that means you're having to take a salary.
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That doesn't leave a whole lot of money to pay for the truck, the equipment, the marketing, the next person.
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So that's fast growth because it's painful growth because it's expensive.
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Right?
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Yeah.
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And just, I'll jump in here just a little bit, because this is like a big topic right now in like on my channel, my people following me is because I'm starting this new challenge in Texas and my budget's big, like comparatively to where three years ago I started a location and under $50,000 was the budget.
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And I'm out doing door hangers and knocking on doors, holding a sign next to the road.
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Very different than, you know, what I'm doing this month where before we even got here, I spent 300 grand.
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When I did that challenge in the past, we got about 20 to 30 customers in the first month.
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If I don't get 100 plus in the first month of the year, we are failing big time.
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And so the speed at which you grow, growth sucks cash.
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And I think to your point, whether it be growing from zero to 100 fast or going from 100 to 1,000,
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it's going to be different for every business what growth really looks like i also like to look at number of technicians as a better metric when we're talking between our owners of how many how many technicians did you add this year is it a better indicator for most of us instead of saying a percentage because a percentage on a 20 million dollar business like city turf if they grow by 30 next year that's seven eight million dollars worth of revenue with trucks equipment facilities like
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you might not need a new technician, you might just make your current operations more efficient.
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And so I think growth rate is one of those things that is a bit of a vanity metric.
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And I think if you're talking between owners, sometimes technician count is helpful to, are you actually growing?
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Because more technicians mean more management, more overhead, more trucks, more equipment, and it's usually a better indicator, really, are you growing the business?
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Yeah, I think that's good.
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And it's it points to this challenge of defining what does fast growth mean, where it's justifiable to say, you know what, it is the growth of my business that's killing my profits.
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And so I shouldn't.
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So I'm the business is okay.
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You know, a couple of a number of things I just kind of want to point out here.
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I see individuals confused about what growth is because they're telling themselves, we're growing.
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And so this is acceptable.
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I don't have a problem.
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And they're ignoring a problem.
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And that's the biggest.
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That's maybe what I'm trying to get to here.
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I want you to not ignore a problem.
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If the real problem, if there's a real problem, it's not a gross story.
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So oftentimes, there will be a lot of money spent on marketing.
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And you have a big marketing expense, but it's not really growing the business.
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All it's doing is replacing existing clients.
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That's not growth.
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Like that's just, that's a cost just to keep the business alive.
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You can't count that as growth.
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That's an expense that it, that just to maintain the business.
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Or another one is, you know,
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People eventually have to replace, we all have to eventually replace worn out equipment, trucks, not growth.
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That is a cost just to keep the business alive.
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So I see those, there's many other examples, but those are two examples right there where we think, oh, add a truck, that's growth.
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Maybe, maybe did you add the techs that necessitated the truck?
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If not, that's just operating the business expense.
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So, again, my point here is most of the time, the problem isn't fast growth.
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And one way you might think about this, and again, this is now I'm going to go back to your profit loss statement if it's something you look at.
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And what I'm about to say, you could also do what Mike said.
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You could upload this to Claude or ChatGPT, and you could kind of run this exercise.
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So the exercise would be if you didn't grow next year, so you've got your business as it is today and you don't grow at all next year.
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So you don't add, you add no new people, you add no equipment, you add no trucks, you do near zero marketing, only enough marketing just to replace the people that are leaving your business so you can stay at a steady state.
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How much money would you make in that year?
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Because that tells you the whole story right there on how you're really doing.
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And so let's say that I was looking at my profit and loss statement.
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This is where, again, an AI model can help you figure out by asking you questions what in that those numbers might be growth expenses versus running the business expenses.
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OK, so if, for example, I legitimately added a.
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I had marketing of $5,000, and I could equate that $5,000 to growing the business.
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I would add that number back into my profit.
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I wouldn't have spent that if we hadn't grown.
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So there's, I'm going off the top of my head.
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What would be some other things?
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Like adding in a new person that increased revenue, adding a truck.
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But that's where I got stuck.
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Adding a truck is a whole confusing conversation because of the depreciation.
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Insurance.
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Thank you.
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Yeah, yeah.
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So there's a variety of expenses like that that get a little challenging to figure out
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per seat pricing for software, things like that.
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Exactly.
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Yeah.
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Oh, good.
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Thank you.
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I needed some examples there.
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And those are, that's the way you want to run through this.
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You're not going to be perfectly accurate, but if you can just get in the ballpark, you can start to figure out like what the business would look like had you not incurred those expenses.
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Okay.
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And then that's the slippery slope.
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That's the slippery slope right there.
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Right.
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Cause some people are just going to throw in every expense and, Oh, this is a growth expense.
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Like I wouldn't need all of these things.
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It's like,
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Be careful, and to your point, everything you described, there's what we call profit mode at Augusta.
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It's like when you switch from growth mode into profit, and we believe it's one or the other.
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Trying to skid between two makes things very murky, and it's hard to determine whether or not you're profitable if you're like, well, we're kind of growing, adding trucks and equipment, but we're also raising prices, and we're still spending a lot of money on marketing.
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That's what we try to push owners, like you are in growth mode, which is we are spending money on marketing, we're buying trucks, we're hiring people, we're expanding.
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versus profit mode is if you turn off all of your ads, and all, you can consider that a growth expense all you want, but if your revenue dropped by 50%, because it's depending on a whole bunch of lead flow to replace your turn, is that really growth expense?
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Or is it actually required for you to keep the business operating at its current level?
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And I think it's a great stress test, and you talk a lot about growing the business in steps.
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And I think what's healthy is like, okay, if we dialed our marketing back, is the business actually profitable?
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Can this business maintain at least the churn on a recurring based business?
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Do we have enough referrals?
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Do we have enough word of mouth?
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Do we have enough reviews that are driving in enough leads?
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Or are we on this constant drip of more lead, more ads, more budget for that?
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And then we're just convincing ourselves, oh, we're growing.
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But if you were to turn that off, that growth expense, the business would fall apart.
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Yeah.
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And that illustrates everything I've said, what Mike just said, kind of illustrates this idea that if you're not seeing strong numbers after you go through that exercise, that's the red flag that tells you this is not a gross story that's causing the challenge to add a few more things to look at.
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This is a common one in small businesses, but boy, I've seen this go into the millions.
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Are you actually paying yourself?
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So there's a lot of, so you would cost the business some amount of money, 20 an hour, 30 an hour, some amount of money to produce the work you produce in the business.
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If you're not paying yourself that wage, your business is less profitable than you think.
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You're subsidizing the business with your free labor.
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That's got to be accounted for as well because a lot of people think, oh, I'm really profitable.
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I'm making 22%.
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No, you're not.
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You're not paying yourself a salary and then the leftover is the profit.
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And so that's really critical to clean that one up.
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I see that.
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Another one sometimes, this is where it gets a little bit confusing, but if you're looking at your profit loss statement and you're looking at the bottom line, you're looking at the
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if you're, so most of the time when you buy equipment or trucks, they're going to get logged on your P&L and they're going to get depreciated over time.
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Sometimes I'll see people log their purchases and fully expense it on their profit and loss statement.
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So you bought a $20,000 truck.
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It came out of profits immediately that year.
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And so it looks like,
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you're doing worse than you are and they're beating themselves up.
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So this can go both directions.
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Sometimes, you know, you're doing better than you realize.
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In my example, just remember that your equipment, this is out in the weeds for people, but your equipment, your trucks, those go on a different document called the balance sheet.
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Okay.
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They're reflected on your profit loss statement.
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That would be another thing that's really valuable to learn.
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But I'll move on.
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I just want to say I've seen that too, where somebody is actually doing way better than they think.
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And they're writing big checks, paying for trucks and equipment, but they think something's wrong with them.
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It's like, actually, not really.
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It's how you're recording this in your books.
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Then the last thing I would say before we get into how you do it is...
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We talked about the profit loss statement as this document you can look at that will give you a picture of where you're at.
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But the profit loss statement and the balance in your bank account will pretty much never match.
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And so you may look at your P&L and say, well, it looks like I'm making money, but my bank account isn't telling the same story.
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And why could that happen?
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So I tend to think of a variety of things.
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One of the big ones is I see a lot of times early in a business, companies will get themselves into debt.
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They'll get themselves into, they bought a business, they bought a lot of trucks, they made a few mistakes or whatever the case might be.
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Or they didn't make mistakes.
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They used debt and they were killing it.
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They were growing the business.
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But when that debt gets paid back, it brings down your cash balance, but it does not reflect in your profit loss statement.
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So you will have less cash
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but you'll look like you have a bunch of profit.
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You'll be like, where's my profit?
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Well, you paid down a lot of debt.
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You did a great thing, but that's why it might not match.
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Other reasons why it might not match would be that you are paid cash for trucks and equipment.
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We kind of talked about that earlier.
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So a lot of money left the bank account, but...
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It's not recorded as you bought a $40,000 truck, $40,000 left your bank account, $40,000 doesn't show up on your profit and loss statement as an expense in that moment.
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Another would be you have...
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I'll just add one thing to that first example because when I do turnarounds, almost always when someone says, it seems like every single... Like we're working and like my P&L looks good, but I just don't see the money in the bank account.
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Almost always they have debt.
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And it is because your bank account has, it's, I kind of think of it like, this is a simplified version that you have your P and L and everyone's like, oh, bottom line, I had, I, it looks like I have money, but before it goes to your bank account, that's where you got to pay for loans.
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And principal pay down, or let's say out of a $700 truck payment, 550 of that is principal pay down.
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It's not showing up on the P&L.
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Only the interest shows up on the P&L as an interest expense.
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And so that $550 evaporates before you're seeing it inside of your bank account.
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And so almost always when someone says, I see my P&L, my accountant sends it to me.
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QuickBooks says I have all this money, but I don't see my bank account.
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Almost always it's a function of debt.
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Yep.
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Two others would be accounts receivable.
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So like you have a bunch of money outstanding from clients, not in your bank account, but it shows as money earned in your profit loss statement.
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And then another one would be distributions.
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So in other words, you don't take a salary.
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Instead, you just take money out of the bank account as in the form of a distribution.
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The distributions hit your balance sheet, not your profit loss statement.
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And another thing I'll like to do your second one, I want to go through each of these three if possible.
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So on the second one, when I just always think about the turnarounds, because almost always our best turnarounds and the most pain is when someone's not profitable.
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They don't have any money.
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Because all of us know that pain.
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Like it's one of the easiest ways for us in a turnaround to connect the audience to the pain of the entrepreneur.
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It's like they have no money in their bank account.
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We all know what that feels like.
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And to your point around accounts receivable, I would be very cautious to anyone that says,
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Oh, we don't have a lot of money in the bank, but we have accounts receivable.
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It is a slippery slope because many times that cashflow problem just gets bigger as the business grows.
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And so a lot of people say, well, I only have 10 grand in the bank, buy $70,000 in accounts receivable.
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So I basically have $80,000.
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Like no, no, that money is not realized.
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You don't have that money in your bank account.
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And when you go bankrupt,
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At a small business, they're not going to like, yes, pay us with your accounts receivable.
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At a very large business, there's ways to do that.
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And you can get pennies on the dollar for your accounts receivable from a collections agency, et cetera.
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But at a small business, that doesn't pay the bills.
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And so this becomes more of an operational problem that I'm not being able to cash in on the revenue that I've earned until it's actually collected.
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And so be very careful because if you're having a cash crunch with a whole bunch of accounts receivable, as the business grows, that problem only gets worse.
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It doesn't get better because as you make five times, if I just got more revenue, well, now your accounts receivable goes from 70 grand to 150 grand.
383
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And the problem just escalates.
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It's a slippery slope.
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So my four examples were you pay cash for trucks and equipment.
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So my other one was paying back debt.
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They are balanced.
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We just talked about counts receivable.
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And then my last one was distributions.
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Yeah.
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Uh, was there any others you would add to that list based on your experience?
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I think the distribution ones is great because I think that's why a lot of times businesses around that million dollar marker, they get tripped up because they start realizing, okay, I was 20% profitable.
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So $200,000 on a million dollar business.
394
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But for me to continue, I'm either going to work 90 hours a week or I got to hire an operations manager.
395
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And if I hire an operation manager that really knows what they're doing, that's going to take a hundred to $120,000, which is more than half of my profit.
396
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And this is why it tends us to be micromanagers, because when you give half of your profit away to an overhead position, you're like, what are you doing?
397
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And like, why is the business not growing?
398
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Why is this not done?
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Because you are giving half of your profit away, but it is what is required to get past two, three, four million is that critical role.
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And so the distributions, the ability to force yourself to realize you cost $100,000 of the business.
401
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So you're not really 20% profitable.
402
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The business is 10% profitable.
403
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making $100,000 after you pay yourself a reasonable salary and that should be accounted for inside of the operational expense of the business, your overhead.
404
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And so it's a good way to, as a forcing function, to realize how profitable is the business separate from how many hours am I working in the business?
405
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For that, that's why it's so difficult and why we have so many turnarounds around that 1 million to 1.3, because they're kind of past the point where they need an operations manager, but they're gonna realize more than half of their profit walks out the door the minute they hire that person at a six figure salary.
406
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That's smart.
407
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So that whole first part was,
408
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just thinking through, is there a problem in my business?
409
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That's just in kind of painting a picture of how you would think through this.
410
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So now let's dig into how to, maybe you have a problem, let's fix it.
411
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Maybe you don't have a problem, you just wanna be more profitable, that's awesome.
412
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So that's what we're gonna talk about now.
413
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We're gonna walk through this.
414
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That's great, that's great.
415
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So, Mike, why don't you kick us off with one of the areas you look at when you're trying to optimize a business?
416
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Yeah, so I actually have a bit of a framework for this that I use for the turnarounds.
417
00:28:02.738 --> 00:28:03.939
I don't really talk about it too much.
418
00:28:05.139 --> 00:28:07.441
So there's sales, operations, and admin in every business.
419
00:28:07.821 --> 00:28:12.965
Sales, I define that as getting the work, operations, doing the work, admin, getting paid for the work.
420
00:28:13.845 --> 00:28:18.588
How I like to think about profit is there are offensive measures and there are defensive measures.
421
00:28:19.209 --> 00:28:22.731
So when it comes to offensive, I'm thinking like how do I grow this department?
422
00:28:22.871 --> 00:28:25.553
Whether it be sales, operations, or admin, how do I grow it?
423
00:28:26.368 --> 00:28:28.770
Or another way to think about it is like increase throughput.
424
00:28:28.950 --> 00:28:31.692
How do I increase the volume of this business?
425
00:28:31.712 --> 00:28:38.557
Because the amount of calls that CityTurf takes is probably 100x or the volume of a business that's just getting started.
426
00:28:38.877 --> 00:28:39.898
Might have a couple calls a day.
427
00:28:40.278 --> 00:28:42.480
And so offense is how do I grow?
428
00:28:42.520 --> 00:28:46.223
How do I improve the ability to grow this department of sales, operations, admin?
429
00:28:46.663 --> 00:28:50.026
Defense is how do I make it more efficient or how do I make it better?
430
00:28:50.046 --> 00:28:52.968
How do I improve sales, operations, or admin?
431
00:28:53.408 --> 00:28:58.333
I think most of us as entrepreneurs, we generally like the offensive side of each of these departments.
432
00:28:58.734 --> 00:29:06.442
Like we just like, man, how do I get more ads, more leads, put more creatives in Facebook, more channels of distribution?
433
00:29:06.702 --> 00:29:08.684
We are always thinking about offense.
434
00:29:09.525 --> 00:29:14.530
This is why a lot of times, Jonathan, you always talk about like operations manager, making sure that a savage.
435
00:29:15.067 --> 00:29:18.391
They're a lot of times thinking more of the defensive measures of each of these departments.
436
00:29:18.952 --> 00:29:25.439
I think some of the most, the best businesses I've seen, the entrepreneur generally is an offensive person.
437
00:29:25.459 --> 00:29:28.222
They like to find problems and like, how do we deconstrain this?
438
00:29:28.242 --> 00:29:30.625
This is why we talk about constraints and bottlenecks in the business.
439
00:29:30.886 --> 00:29:35.331
What we're trying to do is we're trying to increase the throughput or how much we can grow the business.
440
00:29:36.219 --> 00:29:41.024
And I think a great operator will be kind of that counterbalance of, well, how do we make it better?
441
00:29:41.044 --> 00:29:41.805
How do we make it efficient?
442
00:29:41.825 --> 00:29:47.611
Like, let's not double the amount of ad spend before we just think about how do we improve our close rate here?
443
00:29:48.051 --> 00:29:49.593
How do we do a follow up process?
444
00:29:49.613 --> 00:29:50.794
How do we do an automation?
445
00:29:51.175 --> 00:29:56.200
Usually the more boring things, like in any sport, defense doesn't usually get on the front cover of a magazine.
446
00:29:56.480 --> 00:29:57.201
It's the offense.
447
00:29:57.601 --> 00:29:59.044
And so that's how I kind of break it down.
448
00:29:59.064 --> 00:30:01.748
I can go in more granular examples of each one.
449
00:30:01.868 --> 00:30:02.870
I wrote a couple of those down.
450
00:30:03.311 --> 00:30:06.736
But how I like to break it down is I have sales, operations, and admin.
451
00:30:06.776 --> 00:30:08.820
And in each of those departments, I can either...
452
00:30:09.421 --> 00:30:11.563
Grow the business, offense or defense.
453
00:30:11.643 --> 00:30:14.766
And usually the defense one is the one where you see more profit.
454
00:30:15.207 --> 00:30:16.888
That's the one that is not as fun or sexy.
455
00:30:16.908 --> 00:30:18.450
That's why people grow into oblivion.
456
00:30:18.470 --> 00:30:22.274
It's like, it's so fun to get more trucks, get more people, hire more people.
457
00:30:22.334 --> 00:30:23.915
These are all offensive measures.
458
00:30:24.236 --> 00:30:33.004
But each of those departments, having someone that can be really looking at the bottom line, making it more efficient, like, okay, how do we go from 70% efficiency for the crew to 85%?
459
00:30:34.657 --> 00:30:36.039
There's all our profit right there.
460
00:30:36.139 --> 00:30:43.811
If we don't think about that and we just think about buying the next truck, hiring the next person, and he's constantly on the offensive all the time, that's where we can go off the rails.
461
00:30:44.492 --> 00:30:46.555
So I really like the offense defense frame.
462
00:30:47.416 --> 00:30:49.840
Hadn't really thought about it that way, frankly.
463
00:30:51.265 --> 00:30:54.606
And offense, like you said, tends to be a CEO.
464
00:30:55.246 --> 00:30:58.266
Defense tends to be the COO in a bigger business.
465
00:30:58.487 --> 00:31:00.227
It is really well-framed, I like that.
466
00:31:00.967 --> 00:31:03.548
Interestingly, all of mine are defense that I picked.
467
00:31:04.008 --> 00:31:06.408
Let's go, that's great, because that's really where the profit is.
468
00:31:06.488 --> 00:31:07.448
That's really where the profit is.
469
00:31:07.468 --> 00:31:14.070
That's why so many of us grow so big, it's like we're usually the founder is like much more growth oriented and often like just peddle to the metal.
470
00:31:14.310 --> 00:31:15.090
Well, that's what I like.
471
00:31:17.269 --> 00:31:20.491
I think I've been doing this long enough though that I didn't even think through it.
472
00:31:20.511 --> 00:31:21.231
That's my point.
473
00:31:21.251 --> 00:31:23.032
I didn't even think through this as offense and defense.
474
00:31:23.072 --> 00:31:24.212
It's an interesting frame.
475
00:31:24.533 --> 00:31:26.353
I truly don't know if I've ever thought of it that way.
476
00:31:27.334 --> 00:31:28.855
And my brain is all offense.
477
00:31:28.975 --> 00:31:30.996
I love offense, but when it comes to making money,
478
00:31:32.082 --> 00:31:33.062
I didn't think about this way.
479
00:31:33.102 --> 00:31:35.763
My brain naturally went to defense, probably because I've been doing this long enough.
480
00:31:35.783 --> 00:31:36.923
I've seen exactly what you said.
481
00:31:37.183 --> 00:31:38.504
So really resonates.
482
00:31:38.524 --> 00:31:46.246
I'm going to go out on a limb and say the things that you're about to talk about are not the things you enjoy doing all the time because you think much more growth minded and most growth strategy.
483
00:31:46.726 --> 00:31:47.766
Oh, you would be 100% correct.
484
00:31:50.505 --> 00:31:53.348
And if I had to do them all the time, the business wouldn't be as profitable as it is.
485
00:31:53.768 --> 00:31:53.929
Yeah.
486
00:31:53.949 --> 00:31:54.189
Yeah.
487
00:31:54.289 --> 00:31:56.932
So do you want me to jump into one or do you have one to say there?
488
00:31:56.972 --> 00:31:57.672
I'll bounce off of yours.
489
00:31:58.093 --> 00:31:58.653
Okay, perfect.
490
00:31:58.673 --> 00:32:01.276
So I'm sort of starting at the top.
491
00:32:01.897 --> 00:32:06.741
I'm sure we've talked about this in the last however many weeks we've been doing the show now.
492
00:32:07.302 --> 00:32:09.704
But this is, to me, the top level.
493
00:32:10.645 --> 00:32:16.290
And so this is the time it takes to produce the work on the job site.
494
00:32:16.691 --> 00:32:16.871
Okay.
495
00:32:17.071 --> 00:32:18.492
So all defensive stuff here.
496
00:32:19.153 --> 00:32:23.297
I often, and other people say the same thing, I think about it as ignition to ignition time.
497
00:32:24.125 --> 00:32:27.246
I pull up in front of the property, commercial, residential, don't care.
498
00:32:27.266 --> 00:32:32.468
It's from the moment we turn off the ignition, do all the work, get back in the truck, and fill out the paperwork.
499
00:32:32.488 --> 00:32:38.290
Now, in Texas, you get back in the truck, you turn on the ignition, you fill out all your paperwork, you do your mobile app thing, then you go.
500
00:32:38.330 --> 00:32:39.530
But you get the idea.
501
00:32:39.610 --> 00:32:44.172
It's from you're completely done with the logging of the paperwork, putting the door hanger on the door.
502
00:32:44.332 --> 00:32:46.673
Anything that has to be done, you turn on the ignition to drive away.
503
00:32:46.753 --> 00:32:47.453
That's the moment.
504
00:32:47.853 --> 00:32:49.353
You arrive to the moment you leave.
505
00:32:49.433 --> 00:32:50.554
That's the ignition to ignition.
506
00:32:54.115 --> 00:32:59.279
based on what I've experienced or learned over the years is the number one expense in our businesses is labor.
507
00:32:59.939 --> 00:33:01.220
And this is where you control.
508
00:33:01.240 --> 00:33:03.161
This is the top place to control labor.
509
00:33:03.822 --> 00:33:05.943
Labor is the people doing the work, building the time.
510
00:33:06.063 --> 00:33:06.344
Okay.
511
00:33:06.384 --> 00:33:08.165
It's also the only thing that customers pay for.
512
00:33:08.788 --> 00:33:10.569
And this is a really good frame.
513
00:33:10.649 --> 00:33:14.491
I think it was Elon's operations person from way back when I saw an interview.
514
00:33:14.771 --> 00:33:17.273
And he's like, the only thing people actually pay for is operations.
515
00:33:17.593 --> 00:33:22.176
But yet we focus on sales, we focus on admin, like operations is what people pay for.
516
00:33:22.516 --> 00:33:29.380
And if we started optimizing what people pay for, which is the customer, then we usually get to where profits hiding the fastest.
517
00:33:30.000 --> 00:33:30.741
Oh, I like that.
518
00:33:31.081 --> 00:33:31.801
I hadn't heard that one either.
519
00:33:32.121 --> 00:33:34.143
Yeah, so we wanna start here.
520
00:33:34.503 --> 00:33:36.004
And when I think about this one,
521
00:33:37.049 --> 00:33:39.731
Let's kind of talk about it in terms of like, well, how do you understand it?
522
00:33:40.052 --> 00:33:41.353
And please, Mike, just chime in.
523
00:33:41.393 --> 00:33:42.614
We're going to volley back and forth here.
524
00:33:43.034 --> 00:33:45.456
But how do you understand it?
525
00:33:45.657 --> 00:33:46.658
How do you improve it?
526
00:33:46.958 --> 00:33:48.559
What does it impact by understanding this?
527
00:33:48.579 --> 00:33:50.441
So I'll start with the understanding.
528
00:33:50.601 --> 00:33:54.905
This is, in my example, kind of thinking back through my history of business.
529
00:33:55.485 --> 00:33:57.127
And we'll use CityTurf as an example here.
530
00:33:58.723 --> 00:34:00.204
this is the one thing I got right.
531
00:34:01.505 --> 00:34:02.205
I've told the story.
532
00:34:02.225 --> 00:34:05.507
I was working on all these businesses at the exact same time.
533
00:34:06.327 --> 00:34:12.270
And I had never really done, I did lawn care in high school and I made money.
534
00:34:12.290 --> 00:34:12.971
It went great.
535
00:34:13.111 --> 00:34:16.933
But I had never done a city turf business like this before.
536
00:34:16.953 --> 00:34:19.254
I didn't really know my stuff.
537
00:34:19.594 --> 00:34:20.615
I didn't want to be in the business.
538
00:34:20.635 --> 00:34:21.255
I ended up in it.
539
00:34:21.615 --> 00:34:24.457
And so I wasn't, I was so busy.
540
00:34:24.497 --> 00:34:26.198
I wasn't, I was more thinking about growth
541
00:34:26.738 --> 00:34:28.640
I wasn't thinking about all the right stuff.
542
00:34:28.660 --> 00:34:31.043
I wasn't learning all the things I needed to learn about the business.
543
00:34:31.143 --> 00:34:37.311
But intuitively, from some previous experiences, I got this right from literally minute number one in the business.
544
00:34:37.891 --> 00:34:40.715
I was tracking how long it took to do a job.
545
00:34:41.702 --> 00:34:48.668
and how many people were on that job and dividing it by what we made on the job, which I didn't invent this.
546
00:34:48.688 --> 00:34:50.390
This is what's called per man hour rate.
547
00:34:50.630 --> 00:34:54.073
It's how much money you're making per man hour when you're producing the work, when you're doing the job.
548
00:34:54.494 --> 00:34:58.577
To me, it is the most elementary and must-do job
549
00:34:59.458 --> 00:35:02.760
must get number in the business because here's what it tells you.
550
00:35:02.820 --> 00:35:05.901
Like it allows you to compare jobs.
551
00:35:06.261 --> 00:35:09.603
So I can compare Ms. Smith's job to Mr. Jones job.
552
00:35:10.083 --> 00:35:13.265
And I can understand at Ms. Smith's job, I make $68 an hour.
553
00:35:13.605 --> 00:35:15.265
And at Ms. Smith's job, I make $42 an hour.
554
00:35:16.526 --> 00:35:20.268
Don't need to be a genius to just figure out like something's not right here.
555
00:35:20.708 --> 00:35:22.209
We've mispriced that job.
556
00:35:22.769 --> 00:35:31.553
There's something or we priced it right, but there's something about Mr. Jones job at 42 an hour that we didn't expect that is slowing down our team.
557
00:35:31.813 --> 00:35:32.994
So I'd be an example.
558
00:35:33.054 --> 00:35:33.914
That backyard gate.
559
00:35:33.954 --> 00:35:34.915
Yeah, that backyard gate.
560
00:35:34.955 --> 00:35:35.915
Yeah, something.
561
00:35:35.935 --> 00:35:36.476
There's something.
562
00:35:36.776 --> 00:35:39.257
The guys are blowing grass in the pool every week and then they're having to clean out.
563
00:35:39.277 --> 00:35:39.817
There's something.
564
00:35:40.057 --> 00:35:42.118
There's dogs that they got to wait for the dogs to be put up.
565
00:35:42.158 --> 00:35:42.779
You get the idea.
566
00:35:42.879 --> 00:35:43.119
Okay.
567
00:35:43.699 --> 00:35:45.400
We can also then compare services.
568
00:35:46.040 --> 00:35:52.464
So I make $98 an hour doing fertilization, weed control, and I make $62 an hour doing mowing.
569
00:35:52.624 --> 00:35:53.824
It doesn't mean mowing is bad.
570
00:35:54.325 --> 00:35:55.485
And I made those numbers up, by the way.
571
00:35:55.825 --> 00:35:56.826
It doesn't mean it's bad.
572
00:35:57.406 --> 00:36:03.089
It just means that one job makes us a lot more money per man hour than another.
573
00:36:03.589 --> 00:36:04.090
It could be.
574
00:36:04.630 --> 00:36:06.691
give you clues as to where you want to grow the business.
575
00:36:06.911 --> 00:36:09.491
Not necessarily, but it's informative.
576
00:36:09.651 --> 00:36:14.373
There's information that comes from that, that can lead to decisions you make in the business.
577
00:36:14.833 --> 00:36:16.233
It also lets you compare technicians.
578
00:36:16.974 --> 00:36:21.055
So I can, if these technicians running their route...
579
00:36:21.893 --> 00:36:28.117
make on average $60 an hour, and these technicians make on average $70 an hour, could be a clue.
580
00:36:28.498 --> 00:36:28.958
Maybe not.
581
00:36:29.038 --> 00:36:30.359
Maybe one route's less efficient.
582
00:36:30.439 --> 00:36:31.880
Well, no, we're just talking job time here.
583
00:36:32.200 --> 00:36:33.101
So that doesn't count.
584
00:36:33.181 --> 00:36:35.343
I almost said inefficiencies in the route.
585
00:36:35.363 --> 00:36:36.403
That's not true.
586
00:36:36.523 --> 00:36:37.684
But it could be...
587
00:36:38.845 --> 00:36:39.365
something else.
588
00:36:39.405 --> 00:36:41.866
It could be the size of the properties are mismatched.
589
00:36:42.206 --> 00:36:43.246
We'll use a mowing example.
590
00:36:44.006 --> 00:36:48.687
One crew is mowing properties that tend to be 10 to 12,000 square feet of grass.
591
00:36:48.747 --> 00:36:52.108
And another group is mowing properties that tend to be 5,000 to 7,000.
592
00:36:52.728 --> 00:36:55.909
May not be the crew's fault that one's making more than the other.
593
00:36:55.929 --> 00:36:58.670
It could be a pricing scenario, but it gives you clues.
594
00:36:58.830 --> 00:37:00.570
And that's the beauty of this.
595
00:37:00.990 --> 00:37:06.151
This number gives me clues about how I might improve the business,
596
00:37:09.232 --> 00:37:11.113
It allows me to measure people.
597
00:37:12.354 --> 00:37:15.135
It gives me a lot of information that allows me to run the business.
598
00:37:15.155 --> 00:37:23.258
It also allows me to measure efficiency and productivity from one week to the next within the same crew.
599
00:37:23.879 --> 00:37:28.261
Or as I trade out people on the crew, if there's a drop, it just tells me so much.
600
00:37:28.761 --> 00:37:32.983
So then when it tells me something, this is when...
601
00:37:34.753 --> 00:37:40.495
the way that you, in my opinion, the way you make change in a business is you have to kind of get your hands dirty.
602
00:37:41.256 --> 00:37:47.278
And this is where when you see, so these are like the warning signs going off in the business like, wait, we got a problem over here.
603
00:37:47.318 --> 00:37:51.439
So that then tells you maybe we need to go on site and observe the work being done.
604
00:37:51.759 --> 00:37:52.920
Maybe it's a new team.
605
00:37:52.940 --> 00:37:54.580
We need to do more on-site training.
606
00:37:55.040 --> 00:38:01.603
Maybe we need to do more inspections and spot checking work and then taking pictures and having discussions with the team and training them.
607
00:38:02.383 --> 00:38:05.786
This data tells you when action needs to be taken.
608
00:38:06.286 --> 00:38:13.391
And again, I will tell you, this is the main number I got right in CityTurf from day number one.
609
00:38:14.192 --> 00:38:17.674
And it saved my butt because I got a bunch of other stuff wrong.
610
00:38:18.235 --> 00:38:18.875
I really did.
611
00:38:18.895 --> 00:38:20.897
I just was running so fast.
612
00:38:21.277 --> 00:38:27.581
There was a lot of information that I talk about today that I was fully clueless on back when we started the business.
613
00:38:28.602 --> 00:38:35.614
And had I not got this number right, we wouldn't have, we would have been way less profitable and we would have made not great decisions.
614
00:38:35.694 --> 00:38:36.295
I'll put it that way.
615
00:38:36.315 --> 00:38:38.439
So I generally say, start here.
616
00:38:39.860 --> 00:38:45.122
And I think the only ingredient really anyone needs that it agrees with you, but feels like they don't have that number.
617
00:38:45.462 --> 00:38:48.203
Then thing you got to have is clean clock in and clock out numbers.
618
00:38:48.384 --> 00:38:49.004
That's really it.
619
00:38:49.544 --> 00:38:59.928
And so like, it's very top of mind because recently we made it where if someone drives within, I think it's a hundred or 50 yard radius around an address, it reminds them, Hey, do you want to clock in?
620
00:39:00.228 --> 00:39:03.830
And if they leave that address without clocking out, it's like, Hey, did you, what did you mean to clock out?
621
00:39:04.230 --> 00:39:24.609
because if that data gets skewed that's when now all of a sudden we can't come up with an accurate because again you can have all the numbers in the world but it's not accurate now i have less confidence to actually make the decision whether it be raise prices adjust services adjust technicians like if you're going to fire someone based on them being inefficient based upon what we just talked about we better make sure that the data is clean
622
00:39:25.325 --> 00:39:26.127
Yeah, that's a good one.
623
00:39:26.167 --> 00:39:33.543
And I would add to that, based on my service autopilot experience, the volume of people that told us we can't get our people to clock in and out.
624
00:39:33.944 --> 00:39:34.165
Yeah.
625
00:39:35.565 --> 00:39:42.529
Dude, we handwrote all of our start and stop times forever at CityTurf, and we got them to do it.
626
00:39:43.610 --> 00:39:44.270
You could do it.
627
00:39:44.530 --> 00:39:45.971
And then eventually, we built Service Autopilot.
628
00:39:45.991 --> 00:39:47.772
We put it into Service Autopilot.
629
00:39:48.012 --> 00:39:48.673
You could do this.
630
00:39:48.733 --> 00:39:50.014
This is like a non-negotiable.
631
00:39:50.034 --> 00:39:50.754
You have to do it.
632
00:39:50.794 --> 00:39:51.935
This is how you run the business.
633
00:39:51.995 --> 00:39:54.416
So I promise you can get people to do it.
634
00:39:54.436 --> 00:39:58.439
You just have to manage them, and you have to fire people that won't do it.
635
00:39:58.999 --> 00:39:59.960
I don't know how else to say it.
636
00:40:00.100 --> 00:40:03.402
All right, so what would you add to this list of...
637
00:40:04.410 --> 00:40:13.155
improving profitability i 100 agree with you when it comes to the labor it's just the most unsexy thing to improve because you're both it's
638
00:40:14.626 --> 00:40:22.670
It is things that take a long time is not fun to improve things like onboarding, training, quality control, making a crew more efficient.
639
00:40:23.290 --> 00:40:32.814
And I think the biggest thing as I was thinking about, because these are the defensive measures, most are in operations, improving the quality and the employee training, standardizing the equipment.
640
00:40:32.914 --> 00:40:35.476
All of these things are defensive measures when it comes to operations.
641
00:40:36.596 --> 00:40:42.659
And one thing that I was it just kept hitting me in my head was like, well, it is very difficult to improve efficiency.
642
00:40:43.607 --> 00:40:48.008
or have a defensive measure for operations and improve efficiency by 5 or 10%.
643
00:40:48.228 --> 00:40:51.129
Like there's a lot of changes and a lot of work.
644
00:40:51.789 --> 00:40:53.369
And that's why most people won't do it.
645
00:40:53.889 --> 00:40:59.350
I think even before that, if you want low hanging fruit, the vast majority of home service business owners, we're just undercharging.
646
00:40:59.970 --> 00:41:07.272
And when you look at being able to raise prices by 15 or 20% and very few people leaving, that is actually the lowest hanging fruit.
647
00:41:07.592 --> 00:41:10.673
And if someone's watching this and you're like, I don't have a profitable business.
648
00:41:10.733 --> 00:41:12.773
I just ran all their math and it's not looking good.
649
00:41:13.549 --> 00:41:39.907
best way to make your efficiency score go up or the hourly rate that you're charging a client is literally to raise their prices it's the fastest easiest way to do it now if you're doing a bad quality service and half of them are going to leave once you do raise the prices then we got a problem and i think the reason i say that is because as i was doing the math i'm like well still a price increase of 15 or 20 or 25 still beats out the net profit that i get at the end of the day if i do all of these other things
650
00:41:40.925 --> 00:41:50.229
I think though, when it comes to if I spend a day on boarding with my technicians, the there's a huge delay in when that actually hits the bottom line.
651
00:41:51.050 --> 00:41:57.013
Whereas if I start running ads tomorrow, I get leads tomorrow, I get the phone is ringing, I get new customers, I get new revenue.
652
00:41:57.033 --> 00:42:03.656
This is why we all focus on offense, because usually the feedback cycles on offense is shorter than the feedback cycles on defense.
653
00:42:04.662 --> 00:42:05.984
and it's just less sexy.
654
00:42:06.424 --> 00:42:15.195
The doing an onboarding, I'm documenting ours next week where we spend a whole day and we watch videos, we answer questions, we go out and walk through the vehicle, we do one-on-ones.
655
00:42:15.395 --> 00:42:21.623
Like that's not fun or sexy and it could take months before you get return on that versus the more offensive measures of,
656
00:42:22.265 --> 00:42:45.725
like it is this is why i kind of don't like facebook ads it's one of those platforms where you can keep having fun with tweaking your creative and getting a very fast feedback look oh this one's better okay split test this oh what about this picture what about this video and you're on this treadmill of an offensive measure around sales versus where most of our profit sits which is can i get the same technician that i pay the same amount to do 30 or 40 more in the day and
657
00:42:48.351 --> 00:42:51.053
Does that mean I need to create a new compensation model around pay for performance?
658
00:42:51.374 --> 00:42:54.936
Does that mean I need to do incentives around good quality work and getting reviews?
659
00:42:55.277 --> 00:43:01.021
What do I, those are things that take longer to see the results of, and it's less dopamine immediately.
660
00:43:01.782 --> 00:43:14.092
But having a great trained technician that is thinking about quality, that can upsell customers, that does such a high quality that you can raise prices and customers don't want to leave, that's really where all the wins and the profit is at.
661
00:43:14.852 --> 00:43:15.392
Yeah, that's good.
662
00:43:15.552 --> 00:43:20.135
I had pricing on my list as a bonus in case we had too many conflicts here and I needed something else.
663
00:43:20.175 --> 00:43:31.041
So I totally agree and I will connect my first item to pricing to say that for many of us, we don't have confidence to raise the pricing.
664
00:43:32.816 --> 00:43:36.899
And we in confidence could be, should I raise the pricing?
665
00:43:36.939 --> 00:43:37.960
Would I be charging too much?
666
00:43:38.000 --> 00:43:41.442
But confidence also might be, are they going to leave me when I raise my pricing?
667
00:43:41.762 --> 00:43:48.827
So if you go back to my ignition to ignition, we're tracking your revenue per man hour.
668
00:43:50.708 --> 00:43:53.250
When you do that, you can see where you have problems.
669
00:43:53.691 --> 00:43:54.852
So I'll go back to my example.
670
00:43:54.912 --> 00:44:03.800
If Ms. Smith is 60-something an hour and Mr. Jones is 40 an hour, that should give you the confidence that, hey, there's a legitimate problem.
671
00:44:03.900 --> 00:44:11.006
It's completely reasonable to be raising Mr. Jones's price because most of our clients are in the $60 range.
672
00:44:11.026 --> 00:44:11.947
He's down here in 40 hours.
673
00:44:12.287 --> 00:44:13.068
We've got to fix this.
674
00:44:13.448 --> 00:44:17.090
It's pretty obvious that we're hurting ourselves.
675
00:44:17.310 --> 00:44:21.513
So that data can give you the confidence to know, oh, I'm getting this wrong.
676
00:44:21.593 --> 00:44:27.557
A great insight that CityTurf had way back in the day was we had our whole pricing model set up.
677
00:44:28.077 --> 00:44:34.221
And then we discovered that the, what is our number one market today in terms of dominating the market?
678
00:44:34.241 --> 00:44:34.721
I think we have like,
679
00:44:35.802 --> 00:44:37.703
12 or 14% of all the homes in the market.
680
00:44:38.043 --> 00:44:38.244
Okay.
681
00:44:38.964 --> 00:44:53.052
So in that market, we discovered way back in the day before we were dominating like we were, that was our single worst pricing of all because those homes tended to be like 10,000 to 13.
682
00:44:53.192 --> 00:44:56.754
I'm getting my, it's a little bit wrong, but we'll call it 10,000 to 13,000 square feet.
683
00:44:58.255 --> 00:45:00.236
They were on the bigger side of what we did.
684
00:45:00.296 --> 00:45:05.998
Our single most profitable accounts were 7,000 to 7,999 gross lot square feet.
685
00:45:06.298 --> 00:45:08.839
Most profitable back in the day based on that pricing model.
686
00:45:09.659 --> 00:45:12.220
When we saw that data, well, I guess it was me.
687
00:45:12.320 --> 00:45:16.962
When I saw that data back then, it was like, my gosh, we're underpricing this bigger stuff.
688
00:45:18.282 --> 00:45:18.762
Problem solved.
689
00:45:19.103 --> 00:45:19.863
Confidence right there.
690
00:45:19.883 --> 00:45:21.784
It's like, we can't run the business like this.
691
00:45:21.804 --> 00:45:22.364
This is dumb.
692
00:45:22.384 --> 00:45:22.484
Yeah.
693
00:45:23.435 --> 00:45:24.396
The data is hitting me in the face.
694
00:45:24.416 --> 00:45:24.976
We're going to fix it.
695
00:45:25.056 --> 00:45:25.657
And we fixed it.
696
00:45:26.277 --> 00:45:28.719
And so, yeah.
697
00:45:28.819 --> 00:45:47.913
So I just want to tell you, this is another reason why, whether you're using HomeWorks or Service Autopilot or Service Titan or whatever software system you're using, if you've got to track this data because it does so much more than just accountability, it gives you the confidence to raise pricing, which is probably the top level thing.
698
00:45:48.508 --> 00:45:53.211
And to your point, I think a lot of times people miscalculate the impact of a price increase.
699
00:45:53.251 --> 00:45:59.775
For example, especially in cost of goods sold heavy industries like we have where we have lots of labor.
700
00:46:00.136 --> 00:46:11.143
For example, if you have a $40 lawn and it costs you $35 of direct labor and cost of goods sold and everything else that goes into that job and you're charging $40, you're like, well, we're making money.
701
00:46:11.720 --> 00:46:14.623
$5, $5, let's just call it profit for the sake of this example.
702
00:46:15.103 --> 00:46:19.147
Well, if I raise the prices to your point, $60, you're like, well, we're not 50%.
703
00:46:19.207 --> 00:46:20.568
So we're making 50% more profit.
704
00:46:20.608 --> 00:46:21.028
No, you're not.
705
00:46:21.289 --> 00:46:24.111
You went, you're still going to have the $35 cost of goods sold.
706
00:46:24.572 --> 00:46:28.055
But when your price goes from 40 to 60, you just what?
707
00:46:28.575 --> 00:46:36.799
four X four extra profit on that job from $5, five X that went from $5 to $25 of profit on that job.
708
00:46:37.299 --> 00:46:46.064
And so theoretically you could lose 70%, 80% of your customers in that price increase and still make more money on the other side.
709
00:46:46.884 --> 00:46:52.286
And when you start running the math of profit that I get from the job, because raising your price is 100% profitable.
710
00:46:53.965 --> 00:47:19.503
uh everything meaning it all goes to the bottom line on that profit loss statement it's like the five dollar price increase if that job was profit or profitable if it wasn't already losing money goes straight to the bottom is pure profit that's why they're so valuable yeah and if you lose the customers you're actually losing profit on guess what losing them is also net positive if you made more money so like when you run the math that's when that's when usually people get confident i think i say for anyone to your point that is
711
00:47:20.348 --> 00:47:22.690
lacking the confidence, you don't have to raise it on everyone.
712
00:47:23.050 --> 00:47:25.672
Raise it on 5% or 10% of customers that you know you need to.
713
00:47:26.112 --> 00:47:28.553
And usually doing that is the thing that gives you the confidence.
714
00:47:28.593 --> 00:47:30.295
Okay, one person left.
715
00:47:30.835 --> 00:47:32.516
I think this is probably something I should roll out.
716
00:47:32.976 --> 00:47:33.677
Yeah.
717
00:47:34.317 --> 00:47:36.138
You kind of said it, but I'll add one more thing.
718
00:47:36.659 --> 00:47:38.980
Way back, I don't even remember the name of this book.
719
00:47:39.020 --> 00:47:40.762
I read a couple books on pricing strategy.
720
00:47:40.782 --> 00:47:42.483
This was at the beginning of Service Autopilot.
721
00:47:43.323 --> 00:47:53.593
And there was a book that basically, and you alluded to it, Mike, but it gave this example of if you raise your prices by this amount, it gave all these tables.
722
00:47:53.673 --> 00:47:55.875
You can literally lose this percentage.
723
00:47:56.296 --> 00:47:58.738
This is going to be wrong, but you can raise your price by 25%.
724
00:47:59.038 --> 00:48:02.682
You could lose 32% of all your clients and you break it up.
725
00:48:03.002 --> 00:48:03.382
Let's go.
726
00:48:03.963 --> 00:48:06.264
But now the business is easier to run.
727
00:48:06.424 --> 00:48:07.124
It's that kind of thing.
728
00:48:07.425 --> 00:48:10.486
So today I would tell you, I have the fan's idea what book that was.
729
00:48:10.747 --> 00:48:14.269
Just go to ChatGPT and ask that question.
730
00:48:14.289 --> 00:48:16.070
It's like, hey, help me model this out.
731
00:48:16.530 --> 00:48:28.257
Ask me the questions one at a time that I need to answer that will give you the data you need so I can figure out what each tier of price increases if they were to cost me X number of clients
732
00:48:29.321 --> 00:48:30.843
Like what would be break even?
733
00:48:30.923 --> 00:48:33.485
Like, because where I've got, maybe that wasn't clear.
734
00:48:33.666 --> 00:48:43.456
My point is, if you could raise your prices 25% and you in the model said you could lose 36% of your clients, would you believe for a moment you'd really lose 36% of your clients?
735
00:48:43.856 --> 00:48:47.400
Like the risk is really low when you see that data.
736
00:48:47.460 --> 00:48:50.083
And that's another confidence builder to go out and do it.
737
00:48:50.423 --> 00:48:53.785
And then we've said this before, you never just have to go out and do it.
738
00:48:54.086 --> 00:48:58.148
If you need to raise the price on 200 people, raise it on 20 and see how it goes.
739
00:48:58.508 --> 00:49:01.811
And when it goes great, because it will raise it on the other 180.
740
00:49:01.831 --> 00:49:03.111
So, okay.
741
00:49:03.131 --> 00:49:03.992
That's our price discussion.
742
00:49:04.012 --> 00:49:05.273
Anything else on that one?
743
00:49:05.293 --> 00:49:05.413
Nope.
744
00:49:05.693 --> 00:49:06.133
Sounds great.
745
00:49:06.354 --> 00:49:06.594
All right.
746
00:49:06.674 --> 00:49:06.874
Good.
747
00:49:06.974 --> 00:49:07.915
I'll take us back to boring.
748
00:49:09.016 --> 00:49:12.239
So we're back to the unsexy stuff, the defensive stuff.
749
00:49:12.259 --> 00:49:18.105
So I'm going next with focusing on what I've long called your non-billable expenses.
750
00:49:19.006 --> 00:49:20.147
All right.
751
00:49:20.167 --> 00:49:21.389
So operational stuff.
752
00:49:22.009 --> 00:49:22.990
And yes...
753
00:49:23.631 --> 00:49:24.853
This stuff takes some time.
754
00:49:24.893 --> 00:49:25.474
It's not fun.
755
00:49:25.514 --> 00:49:27.297
I agree with Mike, but it works.
756
00:49:28.118 --> 00:49:29.160
This is where the money's at.
757
00:49:29.701 --> 00:49:34.268
Because, okay, so first we are focused on making the job as profitable as possible.
758
00:49:34.889 --> 00:49:38.294
So let's just say to produce the work of the day,
759
00:49:39.200 --> 00:49:51.727
So if a team member works for eight hours, but they only bill five and a half hours, or they only bill seven hours or whatever that is, whatever those hours are that aren't getting billed, I call those the non, I didn't invent this.
760
00:49:52.088 --> 00:49:54.169
It's called the non-billable time, okay?
761
00:49:54.529 --> 00:50:01.213
So if I, if team members out for eight hours a day, they only work for six, we have two non-billable hours that day.
762
00:50:01.793 --> 00:50:07.217
If you can claim back that non-billable time and re-bill it, it's magic.
763
00:50:07.897 --> 00:50:23.485
So as an example, if I could go from billing six hours a day to seven hours a day across every person in my company and my average billing rate is $60 an hour, it cost me no additional money.
764
00:50:24.125 --> 00:50:24.425
None.
765
00:50:24.845 --> 00:50:25.806
Overhead was covered.
766
00:50:26.326 --> 00:50:27.567
I was already paying the labor.
767
00:50:28.687 --> 00:50:35.830
Maybe I have like an incremental fuel cost to drive the guy to a next house or something like some little minuscule doesn't even matter.
768
00:50:35.850 --> 00:50:37.270
Don't even need to track an expense.
769
00:50:38.231 --> 00:50:41.852
It's almost again, the example of all pure profit, like the pricing.
770
00:50:42.072 --> 00:50:47.614
So every reclaimed minute of non billable time that's flipped to billable is magic.
771
00:50:47.975 --> 00:50:49.235
This is where the money happens.
772
00:50:49.255 --> 00:50:49.615
Okay.
773
00:50:49.635 --> 00:50:53.957
This is one of the big reasons why we're testing this out in Texas with the vehicles going home with the driver.
774
00:50:54.782 --> 00:51:23.022
because like when you take if they can get an extra hour per day at an hourly rate of 100 120 an hour over the course let's call it 20 days a month that makes a lot of sense to like that's two thousand dollars that could be potentially the extra incremental cost of paying for the van payment and equipment yeah and so this is like the obsession of like route density i'm sure you're probably gonna go this i'm sorry route density and getting the guys out the door as fast as possible and
775
00:51:23.905 --> 00:51:39.428
I'm willing to take the hit on having extra van, more equipment to have the individual vehicles go home, but I'm making the bet that when they go from six and a half budget hours per day to 7.8 on average, that that delta pays for the extra van.
776
00:51:40.388 --> 00:51:53.370
And it's when you start playing with this math of, if I can get them on the road, off the road, and doing the work more often, you start looking at usually drive time between jobs, very valuable, but what about the time at the shop space?
777
00:51:54.144 --> 00:51:56.885
the meetings, the maintenance on the equipment.
778
00:51:57.566 --> 00:52:00.007
My big one that I'm attacking right now is driving to and from work.
779
00:52:00.467 --> 00:52:04.069
Like no one thinks about that because we think about them clocking in at the office and then clocking out.
780
00:52:04.229 --> 00:52:06.630
But what about the fact that they drove 45 minutes because of traffic?
781
00:52:06.950 --> 00:52:12.593
When they left, they hit traffic and were in traffic for an hour and 15 minutes on the way home, especially if you're in a metropolitan area.
782
00:52:13.093 --> 00:52:22.778
And so this is very top of mind for me, specifically when it comes to not only the time between jobs, which is we also have route density and that's important, but what about all the time around it?
783
00:52:23.198 --> 00:52:23.398
Yep.
784
00:52:23.779 --> 00:52:26.061
And I'll give some examples that definitely overlap with yours.
785
00:52:26.101 --> 00:52:28.503
But this is such a massive consideration.
786
00:52:28.523 --> 00:52:30.825
I'll use in a CityTurf example back in the day.
787
00:52:31.586 --> 00:52:38.052
And this is probably a decade ago, well before we built the office we're in now, which golly, so probably more than a decade ago.
788
00:52:38.332 --> 00:52:39.793
This is maybe like 14 years ago.
789
00:52:41.737 --> 00:52:43.959
made up that number, but it's a long time ago.
790
00:52:44.559 --> 00:52:50.904
We were looking at a location that was closer to center of our market.
791
00:52:51.905 --> 00:53:04.896
And I don't remember the number now, Philip may tell me I'm insane, but I'm remembering something like 5 million bucks to buy this location and then comply with the city on the amount of concrete we had to put down versus asphalt.
792
00:53:05.136 --> 00:53:07.118
It turned this into a very expensive project.
793
00:53:07.858 --> 00:53:15.401
And I was not excited about doing this project at all because it felt like such a big number of big outlay, especially because we tend to pay cash for everything.
794
00:53:15.922 --> 00:53:20.824
It was a big outlay for a business that just didn't seem that big yet.
795
00:53:21.704 --> 00:53:22.345
And so...
796
00:53:23.746 --> 00:53:33.099
But the math actually made sense because moving all of our people to the center of our market allowed us to bill more time.
797
00:53:33.240 --> 00:53:37.706
But it also, when you think about reclaiming expenses, it brought down overtime.
798
00:53:38.467 --> 00:53:41.989
So we were not only bringing down overtime, we were billing back additional time.
799
00:53:42.369 --> 00:53:47.111
And so we could justify this crazy expensive property.
800
00:53:48.091 --> 00:53:51.293
And ultimately, we couldn't get the deal done.
801
00:53:51.353 --> 00:53:52.653
And that's why we didn't end up buying it.
802
00:53:52.673 --> 00:53:56.995
But we were able to make the math work for this exact concept, this non-billable concept.
803
00:53:57.015 --> 00:54:03.818
I think it's the one time where I think about ShopSpace or CapEx in general being a good use of debt.
804
00:54:04.417 --> 00:54:13.707
And that is when I can look at the monthly payment and say, I get twice as much efficiency just by cutting down on labor and getting guys on job sites instead of in trucks driving.
805
00:54:14.388 --> 00:54:16.510
But you've got to know your numbers to be able to have the confidence.
806
00:54:16.590 --> 00:54:22.977
Okay, I will take on a, in that case, probably a $25,000, $30,000 mortgage if you were financing it per month.
807
00:54:23.197 --> 00:54:25.499
But I'm going to save $50,000 a month in labor.
808
00:54:25.820 --> 00:54:26.040
Yep.
809
00:54:27.057 --> 00:54:29.581
I feel compelled to give a little disclaimer here.
810
00:54:30.182 --> 00:54:39.595
I'm pretty negative on building buildings for people, and I could talk about why, but I just don't want to give you permission to go build a building too soon in your business.
811
00:54:39.836 --> 00:54:40.837
Too soon being the key part.
812
00:54:40.857 --> 00:54:41.138
Even rent.
813
00:54:41.358 --> 00:54:41.979
When I say shops,
814
00:54:42.219 --> 00:54:42.900
I meant more rent.
815
00:54:43.160 --> 00:54:47.924
I think when I was talking about debt, I was talking about equipment, vans, trucks, and investing more in those.
816
00:54:48.104 --> 00:54:49.466
I didn't hear anything you said wrong.
817
00:54:49.506 --> 00:54:53.129
I just have had so many friends that I've dealt with over the years and it's like you want to own real estate.
818
00:54:53.149 --> 00:54:54.470
It's like, hey, real estate's where you make money.
819
00:54:54.610 --> 00:54:55.051
I agree.
820
00:54:55.311 --> 00:54:59.414
Real estate can be a great investment, but it tends to limit the growth of the business in the long term.
821
00:54:59.474 --> 00:55:04.419
And as a good friend of mine in the business says, it usually costs you a year of growth in your business while you're building your building.
822
00:55:05.015 --> 00:55:07.638
And so that's my little disclaimer.
823
00:55:07.858 --> 00:55:09.419
I'll give one other real life example.
824
00:55:09.500 --> 00:55:14.925
And then it's like way before CityTurf, I was involved in this commercial cleaning company and we cleaned movie theaters.
825
00:55:15.445 --> 00:55:19.950
And we were doing carpet cleaning in Florida, Texas, Louisiana, Alabama, Texas.
826
00:55:21.347 --> 00:55:22.348
No, those are the big states.
827
00:55:22.488 --> 00:55:26.170
And then we were doing screen cleaning, we were doing wall carpet cleaning.
828
00:55:26.230 --> 00:55:38.016
And so we had these big Isuzu vans that were, in addition to our nightly cleaning all over the country, we were running these vans on these routes from Texas to Miami and about, and we had trucks stationed.
829
00:55:38.856 --> 00:55:44.645
And this is the 20-something-year-old version of Jonathan and the partners in that company.
830
00:55:44.825 --> 00:55:47.970
And we were getting the cleaning cost right while we were there.
831
00:55:48.410 --> 00:55:54.579
But boy, were we not getting it wrong to get that truck sometimes from Texas all the ways to Tampa because –
832
00:55:55.561 --> 00:55:59.384
Sometimes you had to get a truck to Tampa because the truck in Tampa broke down or in Florida broke down.
833
00:55:59.884 --> 00:56:06.911
And so that business was just never overly profitable because that part of the business, that business was good.
834
00:56:07.191 --> 00:56:12.115
That part of the business just took a while to figure it out because we were really getting the pricing right.
835
00:56:12.856 --> 00:56:23.446
And we were at the right price and competing with people in the local market, but we were running a business that was doing a lot of trucks over the road and we were missing the total expense, the overhead expense on that business.
836
00:56:23.466 --> 00:56:29.932
And that's another area where we can, a lot of us can make mistakes when you get into these non-billable expenses.
837
00:56:30.673 --> 00:56:30.893
Okay.
838
00:56:31.274 --> 00:56:32.655
Now, what are non-billable expenses?
839
00:56:32.695 --> 00:56:35.358
Mike talked about some, but what are some like real examples?
840
00:56:35.378 --> 00:56:35.738
Okay.
841
00:56:36.465 --> 00:56:42.588
The idea that you're running a three-truck team or a three crew, three team members on a truck.
842
00:56:43.489 --> 00:56:47.811
And in the morning, all three team members show up at the same time and clock in.
843
00:56:48.291 --> 00:56:50.593
Well, basically, one loads the truck.
844
00:56:50.753 --> 00:56:56.636
Or you've got one guy, the crew leader, who's talking to the...
845
00:56:57.714 --> 00:57:02.499
his team lead or dispatcher or whomever, the other two are just like standing around, but they're clocked in.
846
00:57:03.220 --> 00:57:05.282
So there's a million ideas here.
847
00:57:05.503 --> 00:57:06.324
You could stagger them.
848
00:57:06.344 --> 00:57:11.169
You could have the main guy show up, main guy loads the truck, the other guy show up later, clock in.
849
00:57:11.549 --> 00:57:13.912
You're just like, it's little time, but it adds up.
850
00:57:14.032 --> 00:57:16.074
So what's the clock in and clock out routine?
851
00:57:16.395 --> 00:57:19.318
What's the morning routine, the efficiency through your property,
852
00:57:19.378 --> 00:57:32.024
the efficiency if you're using storage lockers, if you're using public storage, like what's the efficiency of how people are bumping into each other, how people are needing to deal with broken equipment or get a replacement piece of equipment.
853
00:57:32.044 --> 00:57:36.666
And what's that whole morning routine, getting the ice, getting the water, that whole deal.
854
00:57:37.087 --> 00:57:37.967
What does that look like?
855
00:57:37.987 --> 00:57:39.928
How do you make that ridiculously efficient?
856
00:57:40.488 --> 00:57:44.010
Or you could just like eliminate all of it and send your truck, let you guys take their trucks home.
857
00:57:44.050 --> 00:57:47.332
Like there's like, that's an idea, you know, what's fueling?
858
00:57:47.612 --> 00:57:47.772
Like,
859
00:57:48.640 --> 00:57:53.142
Are you fueling in the morning where every other service company in the United States is fueling their trucks?
860
00:57:53.162 --> 00:57:57.184
Are you fueling at the end of the day when everybody just wants to be home and nobody's fueling their trucks?
861
00:57:58.004 --> 00:58:01.526
So how do you handle breakdowns?
862
00:58:01.806 --> 00:58:06.048
Like, are you not upgrading trucks and equipment frequently enough?
863
00:58:06.688 --> 00:58:07.889
You're being short-sighted there.
864
00:58:07.949 --> 00:58:09.369
That's leading to a breakdown.
865
00:58:09.709 --> 00:58:10.750
Your most expensive...
866
00:58:12.251 --> 00:58:13.671
Cost in the business is labor.
867
00:58:13.711 --> 00:58:18.133
You've got one to three individuals sitting in a truck waiting for parts to be delivered.
868
00:58:18.673 --> 00:58:26.515
So sometimes spending more money on the equipment, in our case at CityTurf, we just sell off all the equipment every year and buy new, not every piece, but a lot of stuff and buy new.
869
00:58:27.116 --> 00:58:30.697
You knock out almost all of that in the business and you keep your labor going.
870
00:58:31.917 --> 00:58:37.962
And then the other one, I could keep going, but another city turf example, we have somebody else sharpen all the blades.
871
00:58:38.002 --> 00:58:39.583
We have somebody else do all the fuel.
872
00:58:40.824 --> 00:58:47.068
If I say it's really hard to find arborists, then my arborist should only diagnose and build.
873
00:58:47.408 --> 00:58:52.952
If I say I can't find people to mow, I should just have my guys mow and they shouldn't do anything else.
874
00:58:52.992 --> 00:58:54.253
That's the philosophy we've taken.
875
00:58:54.613 --> 00:58:57.615
Now, that model won't work if you're sending the truck home.
876
00:58:57.635 --> 00:58:58.776
You're making a trade there.
877
00:58:59.216 --> 00:59:16.336
and that trade could be totally justifiable i would not argue against it but for your business however you've chosen to run it however you need to run it these are examples of how you go through everything that's happening in the business and you say how can we optimize this how can we get rid of it might got rid of some expenses by sending the truck home
878
00:59:17.223 --> 00:59:18.303
Or how can we improve it?
879
00:59:18.883 --> 00:59:20.764
We stagger how our, we are a big business.
880
00:59:20.804 --> 00:59:22.324
We stagger how the crews come in.
881
00:59:22.764 --> 00:59:26.225
We think strategically about where the ice and water is placed on the yard.
882
00:59:26.265 --> 00:59:26.865
You're a big company.
883
00:59:26.885 --> 00:59:28.725
We think about where fuel's placed on the yard.
884
00:59:29.525 --> 00:59:31.665
All of that stuff has to be thought through.
885
00:59:31.685 --> 00:59:37.827
But every one of those little decisions, and there's lots of them, add up to a lot of money at the end of the day.
886
00:59:38.167 --> 00:59:40.407
And all that time can get rebuilt.
887
00:59:41.147 --> 00:59:42.687
And I'll go back to what I said earlier.
888
00:59:43.027 --> 00:59:44.588
What do all of us complain about?
889
00:59:44.628 --> 00:59:45.908
We can't find enough people.
890
00:59:46.862 --> 00:59:48.823
That's generally our biggest problem.
891
00:59:49.103 --> 00:59:59.007
The more efficient you make the company, the more efficient you make the route, the more efficient you make the day, the more time you can bill of the people you've already got before you have to find the next person.
892
00:59:59.587 --> 01:00:00.367
So that's non-billable.
893
01:00:00.407 --> 01:00:01.168
That's my second one.
894
01:00:02.668 --> 01:00:03.028
I love it.
895
01:00:03.769 --> 01:00:10.511
I think it's also a function of, even when it comes to admin and sales, we can kind of look at, it's very easy for non-billable time for technicians.
896
01:00:10.951 --> 01:00:12.232
I also like to think of it as like,
897
01:00:13.099 --> 01:00:16.600
to your point, like if the bottleneck is arborist, they should only be doing these tasks.
898
01:00:16.961 --> 01:00:23.143
I think it's really, even when it comes to sales and admin, I see this happen a lot, especially in a business where they kind of start juggling multiple things.
899
01:00:23.843 --> 01:00:27.625
And that is like, how much of their time is actually spent doing the thing?
900
01:00:28.165 --> 01:00:30.267
Like, well, they do their estimate full time.
901
01:00:30.347 --> 01:00:30.467
Okay.
902
01:00:30.487 --> 01:00:31.248
How many estimates they do?
903
01:00:31.448 --> 01:00:32.329
They did five today.
904
01:00:32.689 --> 01:00:32.869
Okay.
905
01:00:32.909 --> 01:00:35.151
How, how many hours were they in front of a customer?
906
01:00:35.332 --> 01:00:38.294
Which is like their objective and like a design build, for example.
907
01:00:38.575 --> 01:00:40.396
Oh, well maybe about an hour and a half or two hours.
908
01:00:40.677 --> 01:00:40.897
Okay.
909
01:00:41.017 --> 01:00:42.138
What were we doing between that?
910
01:00:42.278 --> 01:00:51.807
Like, and that's where sometimes the hard conversations, if you see profit leaking out of the business, it has a hard conversation you have with an admin person or salesperson, because there's straight overhead.
911
01:00:52.652 --> 01:01:18.159
and every single one of their minutes have to also be accounted for and the reason i see this actually being a huge leak for profit is they don't clock in and out of jobs typically they're not clocking in and out of the phone or clocking in and out of doing email or clocking in and out of running payroll or clocking in and out of making the proposal doing a drawing these are things they usually just kind of do throughout their day and that account of the ability to attract that and keep people accountable
912
01:01:19.059 --> 01:01:26.562
is where it takes the unsexy work of like, okay, how do we actually compensate people based upon being efficient in these roles that are overhead?
913
01:01:26.622 --> 01:01:31.744
And we don't have a clean cut start stop throughout our day like the technicians do.
914
01:01:32.485 --> 01:01:33.465
Yeah.
915
01:01:33.665 --> 01:01:37.627
I want to add to that one a little bit because I'm that salesperson, something I've observed over the years.
916
01:01:37.727 --> 01:01:39.808
And I really get this one.
917
01:01:41.448 --> 01:01:43.469
So you've got a salesperson that's killer.
918
01:01:43.769 --> 01:01:45.110
They're killer in front of the client.
919
01:01:46.122 --> 01:01:52.667
but they are horrendous at actually writing up the estimate or following up on the estimate or something.
920
01:01:52.707 --> 01:01:57.051
There's something, generally it's around the paperwork, it's something like that.
921
01:01:57.511 --> 01:02:00.353
Like they just wanna be in front of the client and they just wanna sell.
922
01:02:01.074 --> 01:02:02.755
And so what do a lot of companies do?
923
01:02:02.795 --> 01:02:11.822
And I totally understand this, they're so frustrated with that individual that they can't do their job appropriately that they don't really have a place in the company.
924
01:02:12.843 --> 01:02:15.444
And so this is another example of a creative thinking.
925
01:02:15.464 --> 01:02:17.245
Like I used the example earlier of mowing.
926
01:02:17.445 --> 01:02:23.107
Like how can I just have my guys mow and I have somebody else sharpen the blades, fill the gas, fill the trucks, mix the fuel, whatever you gotta do.
927
01:02:23.148 --> 01:02:25.609
Don't, I don't want them, I just want those guys to mow, okay?
928
01:02:26.269 --> 01:02:28.350
Well, can you just have your sales guys sell?
929
01:02:28.990 --> 01:02:37.752
Because some of the efficiency, maybe in the example you gave, Michael, maybe they're only doing five a day, might be they're really good and efficient at doing their five in-person.
930
01:02:37.792 --> 01:02:43.654
They're good at talking to the client on the phone, but their brain just shuts down as soon as they've got to write that thing up.
931
01:02:43.994 --> 01:02:47.475
And so they're talking to somebody in the office.
932
01:02:47.495 --> 01:02:50.275
They're texting with their buddy because their brain doesn't want to do that.
933
01:02:50.555 --> 01:02:56.237
But if they could just sell and they had an assistant, like I've got a buddy who has an assistant,
934
01:02:56.837 --> 01:02:57.678
I think he still does this.
935
01:02:57.719 --> 01:03:01.144
She just rides with him everywhere in the truck and she does everything else.
936
01:03:01.224 --> 01:03:01.925
He just sells.
937
01:03:02.586 --> 01:03:03.868
And he sells millions.
938
01:03:04.429 --> 01:03:06.032
And she just documents.
939
01:03:06.132 --> 01:03:07.634
And she writes, she follows up.
940
01:03:07.875 --> 01:03:09.197
Like, could you solve...
941
01:03:10.108 --> 01:03:20.215
just like layering onto what Mike said, but like, could you take some of your people that are killer in one little area, but weak in another area and make them great by just letting them do their area of expertise.
942
01:03:20.615 --> 01:03:28.681
So earlier when I said some was talking about non billable stuff and I said something like, I think I said, you know, can you have a focus on their expertise?
943
01:03:28.701 --> 01:03:31.523
That's, that's another example of what I was talking about.
944
01:03:32.163 --> 01:03:35.806
And one thing I always think about it, a lot of us think about this when it comes to technicians, but yeah,
945
01:03:36.303 --> 01:03:40.246
every time you have a start and a stop, there is going to be waste.
946
01:03:40.786 --> 01:03:43.548
So for example, if you have 20 stops in a day,
947
01:03:44.313 --> 01:03:56.957
and you have three people in a truck, let's talk about technicians for a second, you usually have a lower efficiency rating because efficiency score or percentage of their time is being spent on the job simply because there's more starts and stops getting in and out of the truck.
948
01:03:56.997 --> 01:04:01.538
And there's never a point, there's rarely a time when all three of them stop or finish the job at the same time.
949
01:04:01.838 --> 01:04:06.720
So we all kind of intrinsically know efficiency drops a little bit as you add more people to the crew.
950
01:04:07.660 --> 01:04:13.622
What I actually think is a better way of looking at it is the more stops on the job, every time they start and stop, there's a cost.
951
01:04:14.229 --> 01:04:26.545
there's in and out there is the fact that you know for technicians getting done at the same time there's the fact they switch context from working to driving driving to checking tick tock these are all switching costs and so
952
01:04:27.240 --> 01:04:52.858
to your point that sales person if i can just keep them in sales mode instead of switching them to an admin role of okay you got to type up these things or talk to add to ai you gotta do drawings the objective is to stop context switching as much as possible and this really became king like to me when several years ago we did time motion studies with when it comes to command center because every second there we are building for it's like it costs the owners we have to make sure it's efficient and what i realized is that
953
01:04:53.436 --> 01:05:01.063
A technician, we might get 90, 85 to 90% efficiency out in the field, which means most of their time is spent out on the job, getting the job done.
954
01:05:01.383 --> 01:05:03.745
They might have, let's call it 10 to 20 jobs in a day.
955
01:05:04.866 --> 01:05:07.428
But for the admin person, they're switching contexts.
956
01:05:07.448 --> 01:05:14.294
If they're on the phone, doing text, doing email, doing different departments, they might switch hundreds, literally hundreds of times in a day.
957
01:05:14.614 --> 01:05:17.597
And every single one of those switches, there's wasted time.
958
01:05:18.337 --> 01:05:26.624
And so this is where we started to, okay, we are just having a phone department, we are just having a text department, we are just having an email department, because they can get in the flow and there's less switches.
959
01:05:27.225 --> 01:05:41.377
And so whether it's sales, operations, or admin, reducing the number of stops or the number of start and stops is another way to reduce this loss of efficiency that happens regardless of where you're in the cycle of sales, operations, admin.
960
01:05:42.465 --> 01:05:42.805
I agree.
961
01:05:43.006 --> 01:05:43.366
That's good.
962
01:05:44.707 --> 01:05:45.228
You got another one?
963
01:05:45.808 --> 01:05:46.369
No, go for it.
964
01:05:46.969 --> 01:05:49.051
So I've got a couple just random thoughts I'd say.
965
01:05:49.251 --> 01:05:54.356
In general efficiency, maybe let's talk back and forth here on this one for a moment.
966
01:05:54.776 --> 01:06:04.465
I think we've kind of talked about it, but one thing that maybe didn't get mentioned would be how this is just a reminder how imperative it is to have the right person.
967
01:06:04.485 --> 01:06:06.567
At the end of the day, it all starts with the right person.
968
01:06:06.967 --> 01:06:07.067
Yeah.
969
01:06:07.617 --> 01:06:15.303
And I feel that most of us don't like our businesses because we let too many of the wrong people stay in the company too long.
970
01:06:16.632 --> 01:06:17.992
And we don't have that.
971
01:06:18.413 --> 01:06:19.353
We've all been guilty of it.
972
01:06:19.393 --> 01:06:20.093
I've been guilty of it.
973
01:06:20.653 --> 01:06:24.714
You don't have that difficult conversation and it could be incredibly well-intentioned.
974
01:06:24.734 --> 01:06:27.315
It could be your mother-in-law that works for you.
975
01:06:27.835 --> 01:06:31.056
But the mother-in-law is the reason you hate your business.
976
01:06:31.136 --> 01:06:32.216
It could be anything.
977
01:06:32.876 --> 01:06:38.678
But it truly does start with the right people because the wrong people in a great training program
978
01:06:39.773 --> 01:06:43.735
With checklists, with SOPs, they're still going to be the wrong people.
979
01:06:44.215 --> 01:06:49.237
And I would say, clearly, software is a huge part of this.
980
01:06:49.277 --> 01:06:51.157
I think people just do not understand.
981
01:06:51.177 --> 01:06:52.378
I have no software to sell anybody.
982
01:06:52.858 --> 01:06:53.138
I do.
983
01:06:53.198 --> 01:06:53.478
I do.
984
01:06:53.638 --> 01:06:54.759
Today, you can join.
985
01:06:54.779 --> 01:06:57.099
Today, probably.
986
01:06:57.120 --> 01:06:58.660
But I don't.
987
01:06:58.780 --> 01:06:59.841
And so I'll make the point.
988
01:06:59.941 --> 01:07:00.521
I just...
989
01:07:01.301 --> 01:07:10.807
I just, I do not think 98% of companies can measure and understand how impactful the right software is to their business.
990
01:07:10.827 --> 01:07:14.849
They just, especially after you implement it, it just becomes this invisible thing.
991
01:07:14.889 --> 01:07:21.753
And the additional implementation of good software and training your people on that software, it's like a game changer.
992
01:07:22.013 --> 01:07:23.174
It's just a game changer.
993
01:07:24.015 --> 01:07:24.135
Um,
994
01:07:24.855 --> 01:07:26.316
Training is another one.
995
01:07:26.416 --> 01:07:27.436
I'll add one thing there.
996
01:07:27.796 --> 01:07:36.939
I think one really useful key for that I've been trying to figure out, even as I start this location is whenever there's a bottleneck, just really quickly asking myself, could software AI fix this?
997
01:07:37.659 --> 01:07:46.942
And I think it's a slippery slope because you can spend hours on an automated process that is not really the constraint in the business, but the ability to be, I'll use a direct example.
998
01:07:46.982 --> 01:07:54.485
Yesterday, uh, we have a ton of indeed ads trying to bring in applicants, uh, obviously renew the market, so we can't rely on referrals.
999
01:07:55.177 --> 01:07:57.098
And so it has to be mostly people from Indeed.
1000
01:07:57.459 --> 01:08:06.465
Well, we drive a huge amount of applicants and then we give them an opportunity to submit a one way video using a software.
1001
01:08:07.067 --> 01:08:14.092
The challenging part is getting them from Indy to the video platform and inviting them to the one-way interview.
1002
01:08:14.412 --> 01:08:17.774
If there's a lot of time there, I know there's leakage in that process.
1003
01:08:17.794 --> 01:08:24.459
Just like with a customer, if you take five hours or five days to get an estimate, you're losing customers.
1004
01:08:24.739 --> 01:08:25.680
The same thing is true right now.
1005
01:08:25.700 --> 01:08:27.301
Our constraint is getting good technicians.
1006
01:08:27.641 --> 01:08:28.462
I can't wait.
1007
01:08:28.982 --> 01:08:33.123
two or three hours even for my GM to go into Indeed, look at the applicants, put them in and invite them.
1008
01:08:33.483 --> 01:08:37.484
But you can absolutely use Claude or Chat2BT and be like, hey, I want you to go every hour.
1009
01:08:37.784 --> 01:08:39.064
I want you to look at the applicants.
1010
01:08:39.264 --> 01:08:45.926
I want you to look for these three things and then send these people the interview link to submit their videos.
1011
01:08:46.266 --> 01:08:46.906
Little things like this.
1012
01:08:47.266 --> 01:08:52.167
And the reason I say this is because that is a $20 subscription on Claude or Chat2BT that
1013
01:08:53.196 --> 01:09:18.851
probably took me 10 minutes to create that automation and will probably save him again the switching time that's what i'm trying to save and i think as founders or as a ceo you're always trying to deconstrain not only your own schedule but also the people that directly report to you so they can focus on the highest leverage thing for them to focus on because for him it's doing the interviews it is training the technicians it is not moving things from indeed and emailing people and texting them it's like
1014
01:09:19.371 --> 01:09:20.652
Can I get this automated?
1015
01:09:20.692 --> 01:09:25.515
And can I spend 10 minutes to make sure that 10 minutes of their time is not spent every single day doing the same thing?
1016
01:09:26.255 --> 01:09:26.455
Yep.
1017
01:09:26.936 --> 01:09:27.276
I agree.
1018
01:09:28.217 --> 01:09:32.999
Anything else you would add on top of what we, there's so many things, but anything else you'd add to efficiency?
1019
01:09:33.560 --> 01:09:34.701
We talked about quite a bit already.
1020
01:09:35.121 --> 01:09:35.821
No, I think that's good.
1021
01:09:36.502 --> 01:09:36.762
Okay.
1022
01:09:37.882 --> 01:09:39.003
Two other thoughts.
1023
01:09:40.084 --> 01:09:40.264
Um,
1024
01:09:41.713 --> 01:09:43.054
I'm going to say what I said before.
1025
01:09:43.254 --> 01:09:44.235
I've just seen it too many times.
1026
01:09:44.275 --> 01:09:45.356
I'm sure Mike has seen it too.
1027
01:09:46.176 --> 01:09:50.920
If you're a smaller business, I would ask you if you're essentially working for free.
1028
01:09:52.181 --> 01:09:59.686
And so many individuals are not making money.
1029
01:10:01.067 --> 01:10:04.770
And it's even worse than they think it is because they're not even paying themselves.
1030
01:10:04.830 --> 01:10:08.133
So not only is the business barely making money, they're not making any money.
1031
01:10:09.307 --> 01:10:13.028
They're not getting paid for what it would really cost to hire a person to do the job they're doing.
1032
01:10:13.989 --> 01:10:15.569
And they see it as growth.
1033
01:10:15.689 --> 01:10:16.630
And that's not growth.
1034
01:10:16.810 --> 01:10:18.450
That's probably right there.
1035
01:10:19.471 --> 01:10:20.431
It could be inefficiency.
1036
01:10:20.471 --> 01:10:22.072
It's probably pricing, most likely.
1037
01:10:22.592 --> 01:10:30.815
And so that whole, going back to the beginning of our conversation, I know we spent probably at least 20 minutes talking about understanding growth.
1038
01:10:31.852 --> 01:10:34.315
how to know if you're making money or not making money.
1039
01:10:34.456 --> 01:10:36.719
I would encourage you to listen to that again.
1040
01:10:37.099 --> 01:10:46.211
I've just seen too many businesses that fall into that place and too many businesses where the owner, they're working their butt off and they're doing, I mean, almost everything right.
1041
01:10:46.291 --> 01:10:47.433
And they're so close.
1042
01:10:47.453 --> 01:10:47.673
Yeah.
1043
01:10:48.274 --> 01:10:51.555
But they're just not making, they're just not pricing right.
1044
01:10:51.755 --> 01:10:53.456
And that's why they're not getting paid.
1045
01:10:53.916 --> 01:10:59.998
And so if you're not getting paid, that is a, that like right there is a very, very clear signal.
1046
01:11:00.078 --> 01:11:02.259
Generally to me, something's not right.
1047
01:11:02.279 --> 01:11:06.120
Like not always, but really high percentage of the time.
1048
01:11:06.999 --> 01:11:18.966
I would also tell you, again, going back to the beginning, if you're taking distributions and you're not taking a salary, I would clean that up sooner than later because it's part of getting clear.
1049
01:11:19.586 --> 01:11:25.690
I know it'll cost you a little bit of tax, but it's part of running a real business, number one.
1050
01:11:25.890 --> 01:11:27.270
You have to clean it up eventually.
1051
01:11:27.291 --> 01:11:27.951
Mm-hmm.
1052
01:11:28.331 --> 01:11:30.895
Number two, it's part of really getting clear on your numbers.
1053
01:11:31.135 --> 01:11:36.122
It's easy to misunderstand your numbers when you don't get on the payroll with the rest of your team.
1054
01:11:36.623 --> 01:11:37.704
I'll layer on top of that.
1055
01:11:37.965 --> 01:11:43.172
If you're running a business that you intend to keep long-term and you're not paying your people on payroll,
1056
01:11:44.043 --> 01:11:45.445
Clean that up sooner than later.
1057
01:11:45.465 --> 01:11:46.325
You will never regret it.
1058
01:11:46.566 --> 01:11:48.908
Likewise, if you're not paying sales tax, clean it up.
1059
01:11:48.948 --> 01:11:51.971
Like these are the things that take people down in the long term.
1060
01:11:52.352 --> 01:11:56.496
And these are the things that one day the business just keeps getting bigger and bigger.
1061
01:11:57.017 --> 01:11:59.519
And the problem only gets harder to solve.
1062
01:12:00.700 --> 01:12:10.144
When the numbers, when it's like, my gosh, if I switch everything to payroll and I have to pay another X percent, whatever we'll call it, 10% of labor a year, where am I going to get that money?
1063
01:12:10.344 --> 01:12:16.146
That's a much easier problem to solve when you're at $100,000 in revenue versus you're at $2 million in revenue.
1064
01:12:16.427 --> 01:12:19.348
I have seen a lot of multimillion dollar companies have cleaned this stuff up.
1065
01:12:19.788 --> 01:12:21.649
Clean it up sooner or later, you'll never regret it.
1066
01:12:22.109 --> 01:12:23.690
I'm sure you've seen a bunch of stuff around that.
1067
01:12:23.730 --> 01:12:24.550
Anything you'd add there?
1068
01:12:25.270 --> 01:12:25.990
No, I 100% agree.
1069
01:12:30.698 --> 01:12:34.901
intention to sell the business, which is usually when people start thinking about cleaning up their books.
1070
01:12:35.901 --> 01:12:43.126
It's like, well, why would I pay an extra five or 10 grand a year in taxes by being a W2 employee and paying myself a salary?
1071
01:12:44.066 --> 01:12:57.375
And I think the more I have got legit when it comes to books, the more and more I have realized the value it gives to keeping the data clean and be able to make really good decisions because it's actually the real numbers of the business.
1072
01:12:58.295 --> 01:13:04.038
And yes, you could fudge the numbers and you could look like you have $200,000 profit business and have 20% margin.
1073
01:13:04.058 --> 01:13:10.902
In reality, you're 8% once you take out your $120,000 that you would have to pay someone to do your 80 hours a week of work.
1074
01:13:11.422 --> 01:13:16.945
And a lot of times, working more hours inside the business would actually take two people to replace you.
1075
01:13:17.565 --> 01:13:20.047
And so you might be a profit, like $200,000 in profit.
1076
01:13:20.067 --> 01:13:21.427
For a lot of us, that is the dream.
1077
01:13:23.170 --> 01:13:30.453
But if that's your distributions and you're not taking a salary and you're working 70, 80 hours a week, it is very likely you would not just need one person.
1078
01:13:30.693 --> 01:13:34.594
You'd probably need a sales manager and an operations manager just to cover what you're doing.
1079
01:13:35.075 --> 01:13:38.596
And I hate talking about this because there are people that...
1080
01:13:39.930 --> 01:13:43.832
They want to be the operator for a long time, and they're probably not going to sell anytime soon.
1081
01:13:44.393 --> 01:13:48.275
And that $200,000 in profit and being involved with the team every single day might be part of their goals.
1082
01:13:48.535 --> 01:13:54.199
But I also know there's a lot of other people that hate their business making $200,000 a year because they're tired of working 78 hours a week.
1083
01:13:54.379 --> 01:13:59.462
They're tired of missing every one of their kids after school activities, not having a date night with their wife.
1084
01:13:59.662 --> 01:14:01.923
And they're just wondering, like, why am I doing this?
1085
01:14:02.563 --> 01:14:06.486
And they never have the opportunity to hand it off because if they did, they wouldn't be profitable.
1086
01:14:07.126 --> 01:14:08.167
I would add to this.
1087
01:14:09.913 --> 01:14:19.939
If you own a business and you've been fortunate enough in life for it to work out that you actually started a business, you own it, and it's working, a lot of people dream of that.
1088
01:14:20.039 --> 01:14:23.041
You are right there in rare company.
1089
01:14:23.161 --> 01:14:24.802
This is what people dream of.
1090
01:14:26.086 --> 01:14:29.929
I know so many people that make a ton of money in corporate America.
1091
01:14:30.369 --> 01:14:34.912
I can't name many that like corporate America or their job, but they make so much money.
1092
01:14:34.992 --> 01:14:38.734
And they're like 40 years old now and they feel like it's too late to start a business.
1093
01:14:39.635 --> 01:14:43.997
So I'm just telling you, you're in a winning seat if you have a business.
1094
01:14:44.918 --> 01:14:47.159
So great.
1095
01:14:47.500 --> 01:14:50.962
Now, the second side of this is like, how do you build amazing life?
1096
01:14:52.305 --> 01:14:57.669
And I think part of it is if you wanna be a business owner, it's getting to be a business owner.
1097
01:14:57.709 --> 01:14:59.471
That helps lead to a great life.
1098
01:14:59.911 --> 01:15:12.701
The way I tend to think about things is trying to always optimize for a little bit more profit, trying to squeeze out a little bit more doesn't always lead to the better life category.
1099
01:15:13.502 --> 01:15:14.103
Okay.
1100
01:15:14.303 --> 01:15:15.204
And here's my example.
1101
01:15:15.445 --> 01:15:22.394
If you have this low level underlying concern about one day, I'm going to get busted for not paying this taxes.
1102
01:15:23.155 --> 01:15:24.838
One day I'm going to get caught for not paying sales tax.
1103
01:15:24.858 --> 01:15:25.819
I'm going to have to clean it up.
1104
01:15:26.520 --> 01:15:30.546
One day, the payroll taxes that I never paid are going to catch up with me.
1105
01:15:31.186 --> 01:15:38.773
One day, the contractors, like you could go down the list from really big things like not paying payroll taxes to the smaller stuff.
1106
01:15:38.813 --> 01:15:43.397
Like it's not really small, but paying people as contractors, that stuff will burn you.
1107
01:15:43.617 --> 01:15:46.439
It will legitimately catch you in some way someday.
1108
01:15:47.520 --> 01:15:49.002
And some of it will never get you.
1109
01:15:50.125 --> 01:16:02.749
But if you go through life, like winning part of the game, you've gotta be a business owner, but losing on the other side where you just have this nagging worry, like, that's not a good, that's not the best way to live life.
1110
01:16:02.769 --> 01:16:03.890
So I would just say,
1111
01:16:05.248 --> 01:16:08.092
just clean it all up and play the game legit.
1112
01:16:08.792 --> 01:16:10.194
That's how you have a peaceful life.
1113
01:16:10.234 --> 01:16:11.616
That's how you build a great business.
1114
01:16:11.896 --> 01:16:14.600
And someday, maybe you sell it, most won't.
1115
01:16:14.700 --> 01:16:18.545
And I think I would argue it's a who cares if you don't sell it as long as you got a great business.
1116
01:16:19.045 --> 01:16:21.528
But just optimize for peace.
1117
01:16:22.548 --> 01:16:25.150
and simplicity and like that's a good life.
1118
01:16:25.230 --> 01:16:26.391
At least that's how I'm wired.
1119
01:16:26.431 --> 01:16:29.213
I have to think that's how most people would prefer to walk through life.
1120
01:16:29.253 --> 01:16:38.160
And so I just see so many business owners again, I mean so many that have these little problems in their business, that's a stressor that just never goes away.
1121
01:16:38.620 --> 01:16:41.162
And I would encourage you to get it out of your life and just deal with it.
1122
01:16:41.682 --> 01:16:48.367
And I think too, like a lot of us from home services, maybe we didn't choose this industry.
1123
01:16:48.407 --> 01:16:50.469
It was like the only option because we didn't have a lot of money.
1124
01:16:50.569 --> 01:16:51.610
We just wanted to work hard.
1125
01:16:52.355 --> 01:16:53.456
And we would have to be scrappy.
1126
01:16:54.257 --> 01:16:58.601
And I think many times that mentality gets us to grow the business or start the business.
1127
01:16:58.881 --> 01:17:01.964
But it's also the thing that holds us back from ever building a business that we love.
1128
01:17:02.684 --> 01:17:05.187
It's that scrappy nature that I've got to cut corners.
1129
01:17:05.587 --> 01:17:06.908
I got to do things until I get caught.
1130
01:17:07.149 --> 01:17:11.693
I don't pay the sales tax or I don't get my cert or I don't pay the tonnage on the trucks.
1131
01:17:11.893 --> 01:17:12.754
These are all the little corners.
1132
01:17:13.787 --> 01:17:18.830
That was something that we were rewarded for in the past, which is finding every dime, every nickel, every penny.
1133
01:17:19.391 --> 01:17:22.412
And I very much like this is how I was wired back in the day.
1134
01:17:22.473 --> 01:17:31.118
And it comes back to bite in the form of being able to make solid, sound decisions in a state of knowing that the business can run without you and having peace.
1135
01:17:31.638 --> 01:17:33.159
To your point, I think that was a great line.
1136
01:17:33.299 --> 01:17:35.020
Peace and simplicity is what you optimize for.
1137
01:17:35.861 --> 01:17:37.302
And even coming out of this trip,
1138
01:17:38.090 --> 01:17:41.011
I told our accountant, I'm like, look, how much of this can I expense?
1139
01:17:41.431 --> 01:17:42.971
And like, well, we could do all these things.
1140
01:17:43.031 --> 01:17:44.472
I'm like, look, let's just keep this really clean.
1141
01:17:44.512 --> 01:17:46.012
I'll pay for everything personally.
1142
01:17:46.532 --> 01:17:49.113
And then here's the thing that we will cover from the business.
1143
01:17:49.133 --> 01:17:55.615
Like we got to keep this really, really clean because I don't want to be thinking about what this happens if this year I get audited because a new LLC got added to the C corporation.
1144
01:17:55.895 --> 01:18:01.837
And they're like, hey, you need to show me how eating out this one night you spoke about business like I don't want to deal with it.
1145
01:18:02.317 --> 01:18:04.460
And so I think optimizing for your, that was a great point.
1146
01:18:04.540 --> 01:18:09.265
Simplicity and peace is a great way to move the business as it evolves and grows.
1147
01:18:09.525 --> 01:18:14.270
And it is a hard wiring that needs to be changed in a lot of our brains because we didn't, we weren't raised with money.
1148
01:18:14.650 --> 01:18:16.252
Our parents and us were scrappy.
1149
01:18:16.512 --> 01:18:18.454
We were pinching pennies to get the business off the ground.
1150
01:18:18.474 --> 01:18:19.896
You have to be, you have to be.
1151
01:18:20.480 --> 01:18:23.822
And it's the thing, the exact thing that keeps you from building a business that you love.
1152
01:18:24.182 --> 01:18:24.362
Yeah.
1153
01:18:24.582 --> 01:18:30.726
And so at this point, I'm just going to say one more thing because I love that.
1154
01:18:31.406 --> 01:18:33.127
There's a lot of examples of what I'm about to say.
1155
01:18:33.627 --> 01:18:34.068
What got...
1156
01:18:34.750 --> 01:18:36.651
What got you here won't get you there would be a way to say it.
1157
01:18:36.671 --> 01:18:39.072
But we have to reinvent ourselves.
1158
01:18:39.112 --> 01:18:41.614
We have to grow ourselves into the next level of owner.
1159
01:18:42.014 --> 01:18:44.415
We have to change our mindsets.
1160
01:18:44.435 --> 01:18:53.520
Like the mindset that got us to survival is like, oh, thank goodness the business is going to make it is not the mindset that gets you to $5 million.
1161
01:18:53.861 --> 01:18:56.082
It's for sure not the mindset to get you to $10 million.
1162
01:18:57.043 --> 01:19:08.051
You really have to reinvent how you think, rewire your brain like, okay, what kind of person, leader, mindset, way of thinking do I need to have for this, for where we are now, where we're going?
1163
01:19:08.492 --> 01:19:12.555
Another argument for being around people that are ahead of you, like you see how they're thinking.
1164
01:19:13.176 --> 01:19:15.578
So this constant reinvention is very normal.
1165
01:19:16.238 --> 01:19:22.285
And the idea that any of us are going to start a business and get it all right from the beginning and not have to clean stuff up is absolute utter nonsense.
1166
01:19:22.625 --> 01:19:23.646
We all did this.
1167
01:19:23.947 --> 01:19:25.769
The question is, how soon will you do it?
1168
01:19:26.089 --> 01:19:29.012
And how long do you want to live with unnecessary stress?
1169
01:19:30.124 --> 01:19:31.665
but we're all going to have to do it eventually.
1170
01:19:31.925 --> 01:19:34.666
And so I'm just encouraging everyone to do it sooner.
1171
01:19:35.147 --> 01:19:35.727
It's normal.
1172
01:19:36.247 --> 01:19:39.429
And then constantly, like Mike said, just you're re we're reinventing ourselves.
1173
01:19:39.449 --> 01:19:39.949
We're learning.
1174
01:19:40.189 --> 01:19:43.991
What does it take to be the leader of the business where I'm at now and where I want to go?
1175
01:19:44.332 --> 01:19:45.432
That's who I'm going to learn to be.
1176
01:19:45.692 --> 01:19:47.853
And then I'm going to have to do that again when I get to the next level.
1177
01:19:47.893 --> 01:19:51.615
And again, when I get to the next level, that's what I got.
1178
01:19:52.756 --> 01:19:53.436
Any last words?
1179
01:19:53.957 --> 01:19:54.817
No, that's excellent.
1180
01:19:55.157 --> 01:19:56.238
I look forward to, uh,
1181
01:19:57.569 --> 01:20:00.590
I think in the comments, I'd love to hear for everyone.
1182
01:20:00.610 --> 01:20:02.510
I would like to know a couple of things.
1183
01:20:02.590 --> 01:20:07.892
Number one, what was something tangible that you're like, oh, I need to change that in my business because that's where the profit's hiding.
1184
01:20:08.592 --> 01:20:15.274
And then secondly, what mindset do you think you got to change to be able to get to that next level or break through that current ceiling that you're hitting?
1185
01:20:15.694 --> 01:20:20.175
We'd love to know that in the comments because that's really allows us to be able to know what to talk about more.
1186
01:20:20.895 --> 01:20:25.857
And I think one of the biggest changes kind of to that whole point you talked about there, Jonathan, for me has been as a leader.
1187
01:20:27.157 --> 01:20:45.079
that scrimping and saving in the past served me well by like watching every single minute and and like yes i gotta be efficient but do i need to micromanage my manager do i need to micromanage my salesperson or do i give them the freedom and within the constraints and just measuring from kpis that was one of the things
1188
01:20:45.875 --> 01:20:51.182
that really I had to change that mindset of like, I have found pride in knowing every number and every single person's wage.
1189
01:20:51.422 --> 01:20:53.745
And it gets to the point where now I need to lead very differently.
1190
01:20:54.345 --> 01:21:02.195
And, uh, but that would be my takeaway from this kind of an episode, but for anyone else mindset, and as well as a technical thing that you're going to change in the business down below, we'd love to hear it.
1191
01:21:02.656 --> 01:21:02.816
Yeah.
1192
01:21:02.836 --> 01:21:03.917
We appreciate your comments.
1193
01:21:03.977 --> 01:21:05.139
So great seeing everyone.
1194
01:21:05.579 --> 01:21:06.200
Good seeing you, Mike.
1195
01:21:06.861 --> 01:21:07.521
Thanks for you later.