The Home Service Expert Podcast - Building a Business That Thrives Without You with Mike Andes

Episode Date: March 28, 2025

Tommy sits down with Mike Andes, CEO of Augusta Lawn and host of the Home Service Millionaire podcast. Mike discusses his journey in the landscaping industry, the challenges of franchising, and the im...portance of building systems in your business. They discuss the challenges faced by young entrepreneurs and the strategies for turning around struggling businesses, emphasizing the need for a mindset shift towards profitability and growth.    Don’t forget to register for Tommy’s event, Freedom 2025! This is the event where Tommy’s billion-dollar network will break down exactly how to accelerate your business and dominate your market in 2025. For more details visit freedomevent.com   For more information about Mike, visit mikeandes.com

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Starting point is 00:00:00 Think of your career in 10 year swings. And if you think of that way in your 20s, you have five, six solid swings left in you. And if you actually committed yourself for 10 years and let's just say it didn't work out, I happen to believe you would have learned so much more and gone so much deeper in that industry, your second swing would be that much more precise.
Starting point is 00:00:15 Welcome to the Home Service Expert, where each week, Tommy chats with world-class entrepreneurs and experts in various fields, like marketing, sales, hiring, and leadership to find out what's really behind their success in business. Now, your host, the home service millionaire, Tommy Mello. Before we get started, I wanted to share two important things with you.
Starting point is 00:00:38 First, I want you to implement what you learned today. To do that, you'll have to take a lot of notes, but I also want you to fully concentrate on the interview so I asked the team to take notes for you. Just text notes n-o-t-e-s to 888-526-1299. That's 888-526-1299 and you'll receive a link to download the notes from today's episode. Also if you haven't got your copy of my newest book, Elevate, please go check it out. I'll share with you how I attracted and developed a winning team that helped me build a $200 million company in 22 states.
Starting point is 00:01:14 Just go to elevateandwin.com forward slash podcast to get your copy. Now let's go back into the interview. All right. Welcome back to the home service expert. I got a special one for you guys today. Mike Andes is here. I've known Mike for a long time now spoke at your event. I don't know six years ago now Yeah, has it been that long? I think it's been three or four three or four time flies the funny thing is is Mike's a badass when it comes to landscaping and I had a landscaping company in Michigan and Arizona and
Starting point is 00:01:44 I love landscaping company in Michigan and Arizona and I love landscaping because there's a lot of money to be made in landscaping. It's kind of hard if you're just mowing lawns with a 22-inch Honda, but once you really master it, it's something that a lot of people could get into and you had a lot of successful people at the event. But you're a busy man. You've got your own CRM, at the event, but you, you're a busy man. You've got your own CRM, you've got Augusta Lawn Care, you've got Anytime Fitness, and you're the host of your own podcast called The Home Service Millionaire Podcast.
Starting point is 00:02:16 Very similar to mine, but mine's a home service expert. Yeah, I still remember way back in the day listening to your podcast when I was just my first location before we franchised, did the software, anything like that. And I remember very specifically one time, I think I might have shared this with you when you went on my podcast, and that was I was at a camp. And the only thing I wanted to do though was go like listen to your podcast. I just found it. And I was just binging on it.
Starting point is 00:02:39 And so I appreciate everything you've done for younger guys like myself in the industry. How old are you these days? 29. 29. 29. Well, that's awesome because to get started and be as passionate as you were, when did you get into the business? So I was 11 years old when I first started pushing the lawnmower around. 11 when you started pushing it and then you started Augusta in 2014, is that right?
Starting point is 00:03:03 Yep. So I was 18 when I started. I dropped out of medical school, because I went to college when I was 13, that's when I started. So I dropped out of medical school at 18, and started Augusta Longhair then, and five years later is when we franchised. Okay, so you've been in the franchise industry
Starting point is 00:03:16 about five or six years? Yep, going on our sixth year now. There's a lot of people that want to do franchises. Everybody and their brother's like, I think I should franchise. I'm like, why? Yeah. Like like you better be the best of the best in like five markets take market share. What would you tell somebody? Knowing what you know now yeah like I would say if you're doing it just for the money Usually it's actually not the best and fastest route to money
Starting point is 00:03:42 Usually if you have a good model, and you don't have a huge amount of startup capital that is required to start in the service industry, it's actually just faster to cash in terms of just corporate expansion. You have more control, you don't have to worry about the aspect of training new franchisees and that whole aspect of liability and insurance and the legalities of it.
Starting point is 00:04:01 Also, for anyone that's tempted by it, I would also caution, look at the stats of the number of franchises that actually succeed. There was over 400 that were started last year in the United States and let's statistically speaking less than six of them will get to a hundred locations and the vast majority of franchises will not be profitable until they pass a hundred locations and anyone that says otherwise usually is stripping a lot of profits in terms of royalties away from the franchisees and not supporting them at the level that's required for them to be successful. So it's just one of those industries that's very difficult. The reason I got into it is because I wanted to get as much expansion and just the... Our goal is to change the level of professionals in the industry. And as you know, like, we talk behind a microphone or make videos people just don't listen even if it makes perfect sense and we have all the
Starting point is 00:04:46 data and so I only found that when I competed with them they would listen we talk about pay for performance and P4P or we talk about estimate videos we talk about you know knowing numbers etc it was like hey like that's a nice you know influencer or you know consultant or someone who puts on an event but once we start competing with people we can actually see who's joining the software. We can see the impact that like we answer our phone 24-7. And so like that puts pressure on them to do the same thing. And to your point, like with landscaping in general, we have a bad rap.
Starting point is 00:05:15 We are the guys who show up, maybe we show up, and if we do, it's in cut off shirt and beat up truck. Can we change that level of professionalism? And I think the only way to do that is change the expectation of the customer and the only way to change the level of You know what the customers expecting is is much faster expansion That's why we went franchising model But I would just say for most people like it took me three years to make as much revenue at in the franchise system for me personally then
Starting point is 00:05:42 Took me three years to get just get just my revenue from my first location was making. And so if you're in a sprint to make more money, franchising is many times, it's a completely different business than usually what you're actually doing the service. 100%. You're no longer in the landscaping business. You're in the turnkey business. And by the way, what I've noticed and I've spoken to probably 20 different keynotes for franchises and When I talk to the franchise or they're like those four companies there are bread and butter Yeah, the other 60 or whatever it is. They're barely getting by yeah, cuz they're not bought in blah blah blah blah blah But here's the thing. It would be very hard to get into my franchise. I would not sell you a franchise
Starting point is 00:06:21 You know what McDonald's does they make sure you're a millionaire? Yeah, you gotta go to their McDonald's school for a long time like you can't just say hey, I'm worth a billion I want to buy a bunch of stories. They're like no you got to learn everything from A to Z which What would you say? about How how many franchise do you have I just under 160 160? We're on so you got 160. How many of those would you consider just murdering it? Like just out of the park?
Starting point is 00:06:51 Like you would, they're emulating what you build. It's the classic 2080. 8020, well yeah, the Pareto. Right, you have 20% of the owners that are probably making 80% of the profits. And so what we've really focused on the past year is, like, how do we make it dummy proof? And I don't mean that in the way that people
Starting point is 00:07:08 that use the systems are dummies, but rather how do we take all the variables of their success away? Because what you're doing is you're like, what is the 20% doing? And then can we make that enforce it for everyone else? So whether that be, okay, answering your phone is important. Well, we're gonna answer your phones for you.
Starting point is 00:07:23 We're gonna run your payroll for you. We're gonna run your payroll for you We're gonna run pay for performance for you And then a matter of like what most recently we've really been going after is like we know from getting someone just from zero to five Hundred thousand is the biggest hurdle if we do that We have exactly zero people have ever quit the franchise So getting them that level is like the activation point that we have to focus on and so the number one thing from zero to Five hundred thousand like sell sell, sell baby, sell. And so-
Starting point is 00:07:46 But marketing requires that, are they outbounding or are they, or not? What do you do as far as marketing to get them to sell because you can't have a sale without marketing? Right, and so what we've done in the past is more or less, here's the guide for your Facebook ads, here's the guide for your Google ads, here's the templates that you use,
Starting point is 00:08:02 and we have it all there. But it's more like done for you not it's not as much done for you What they want is like we want to pay you and we want you to give us customers, right? And so really like the thing we're focusing on next couple years is like how do we actually can I actually tell you like? Hey when you start you're going to get 200 customers within the first 60 days And here's how much is gonna cost and we to like, we take on the shoulder the burden of actually figuring out the customer acquisition costs, your cost per click and your cost per lead.
Starting point is 00:08:29 Because that's the part that most people come into this business and they don't know. And so even though we have the tutorials, I can track and see still half of them don't put up their Google tracking code. Still half of them don't do their Facebook pixel, even though I show them how to do it. And so we're really trying it's
Starting point is 00:08:46 Franchising is a matter of like you're giving up some control for the constraints that hopefully is leading to success See, I you know what it's hard for me is you just said we're gonna handle the payroll We're gonna do the call center now. We're gonna handle the marketing It's like I'm gonna we're gonna do the purchasing you're gonna buy my stuff You're gonna buy my best soil my best fertilizer you're gonna buy from our vendors at what point are you like man if I did this on my own? number one you got all these CC and ours like this covenants and restrictions, and you got all these things where there's like Someone does something wrong runs over a dog or a cat and like you're gonna lose I get your own franchise Yeah, screwed your franchise or gets busted
Starting point is 00:09:29 Yeah, is that really like going back? And I know what you mean by changing the clients perspective of what to expect from a really good landscaper But I think what you're gonna realize is wait a minute now. I'm doing their hiring Yeah Now I'm training them on a corporate level from the franchise or that we're flying them out to the franchise. And I think every year that goes by,
Starting point is 00:09:49 you're gonna be saying, well now we're doing all the purchasing of the vehicles. And now we're actually offering financing through the SBA and doing the handling that for them. And now we're actually doing, like, after all this is said and done, when you say, it's still gonna be the 80-20 rule, by the way, it's just the way it is.
Starting point is 00:10:06 Is it worth it? And I'm not saying if it is or not, and I don't think you know that yet, because I think it's gonna take you a decade, and I think you're gonna be successful no matter what you do. But I think you're always gonna wonder in hindsight, man, was the juice worth the squeeze?
Starting point is 00:10:16 But either way, you're gonna do very, very well. You know, I would 100% agree. The corporate expansion route is easier because I don't have to worry about all the other parties involved in the decision. Yeah. So, like, when I make a decision for the franchise level, I'm not thinking about what's best for my locations because I own personally locations in the systems.
Starting point is 00:10:35 I have to think about 160 other people and their opinions and get their buy-in, even though I might have all the data and know 100% this is the right way, the way I have to roll that out is completely different. And so I think it comes down to like what is the goal of franchising? And if it's simply the money, I don't believe it's the right path. It's much more a matter of I don't believe I could have the level of like 150 locations, 160 locations now that we've done in five years if I was doing all my own capital. So the advantage from a franchisor's perspective is I can access the capital of other people
Starting point is 00:11:07 And they actually pay to be in that system Yeah, what percentage you take of their revenue just a flat flat monthly fee, so it's not a percentage of revenue. No, correct So it really is incentivizing the scale up, you know Because it's a flat monthly fee of 1200 bucks And so anything in addition to that is simply what they would recharge per minute at our command center for all those back-end admin tasks, but those are all completely optional. So the way I've pitched your franchise, and by the way, this podcast is not all about franchising.
Starting point is 00:11:37 I think it's a good starter point. So I think about franchising and I go, okay, if I charge just 6% of revenue, that's fair. It's less than most. You use 6 you six percent neck a two percent marketing fund and then what I would charge him is a bunch of shared services Like you're gonna pay me for my call center, but it's better than yours You can have your own but ours is better right you're gonna pay me for the CRM You're gonna pay me for this you're gonna pay me for the vendors you're gonna pay me for this And you know what I probably do too is you're gonna use my real estate. I'm gonna buy the real estate You're gonna put it like McDonald's does yeah, but that's next level. That's expensive to do. Yeah
Starting point is 00:12:10 But yeah, I thought a lot about this because people are like would you do a franchise I'm like, yes I would but I was too far down owning a one to want to do that But if I did a franchise I'll go I need to own payroll. I need to own recruiting I need to own merchant serve every aspect I just tap into the money yeah because I could scale the people that do franchising Well like I happen to know very well the new CEO of neighborly okay His name is Mike Davis yep, and we were on the phone the other day And he was asking me about a few tools we use he used to be the CEO of L pack
Starting point is 00:12:42 That's how I knew he had me always come speak at his events Did he come in recently after the KKR? Yeah, he just he just on boarded like two or three months ago Okay, okay, cool dude is sharp as it to act and he's like You realize Tommy out of all my franchises We only control less than 1% because if we get to 2% we're worth 24 billion And he was explaining to me all these things and I'm like, yeah, you know that the home service is well over a trillion dollar industry. Just HVAC plumbing electricals, 200 billion. That's crazy. When you include home improvement and home service, it's nutty.
Starting point is 00:13:15 And it's the golden years for us. So we talked a little bit about franchising. Landscaping is a tough industry. What do you think was the key? And landscaping is really open. If you're talking about just cutting lawns versus I know guys that charge $90,000 for landscaping, they deck it out. They do like their arborist, they set up the trees and they do the bushes and the rocks and sometimes they even interact with the pool and whatnot. It's the curb and pill of the home. But what was that stepping point that you were like,
Starting point is 00:13:47 this is more than just a career. This is actually gonna be a massive, massive company. Yeah, so it was about three years in to starting Augusta Long Care. I was the classic working 80, 90 hours a week situation. Didn't have systems and procedures. I got underneath the dump truck and was turning on the PTO
Starting point is 00:14:06 of an old dump truck as a manual line had broken from inside the cab. PTO is a power takeoff, makes the thing spin, dumps the bed. My hoodie got caught in that. And so basically I was in the hospital for two weeks recovering from that and realized my business had no systems.
Starting point is 00:14:21 And fortunately enough, I didn't have a family, I didn't have kids, I didn't have dependents, but if I would have, I would have gone bankrupt. And so I realized that the business was personality dependent and not system centric. I was on the hospital bed with my phone, FaceTiming my crew to walk through the next project. And so from that time, two weeks later,
Starting point is 00:14:39 I started Landscape Business Course and just started making videos online about like, hey, here's what I'm doing. This is what worked and this is what didn't work. And so from, from that's really why to me, even when it comes to franchising, yes, the money is not the fastest way when it comes to franchising, but being able to see these owners that,
Starting point is 00:14:55 that don't have systems in their business, get the systems, and then turn things around. It's like, that's all I care about. And so, you know, to your point, there's landscapers that do $90,000 projects, but sometimes I'm labeled as the guy who just who just tells you to do the simple services. When in reality, it's just, I want you to be able to build a business that has systems and procedures. And for the vast majority of people, it's easier to create systems for simple and standard services instead of complex and custom services. Yeah.
Starting point is 00:15:20 And so, I'm just being more to the masses when I speak about like systematization and like build a business, like build to sell is a great book. I think about like build to leave. John Warlow, yeah. Right. Build to leave that thing and let it run without you. And many times the systems built to do that is through simplification and standardization. 100%.
Starting point is 00:15:39 That's what I meant. Al Levy, the seven-part contractor. You know, I'm building a house right now. I'm building two houses one in Idaho cool Just Sam point on pond array Lake and one just on the north side of Paradise Valley mountain I'm sorry camelback mountain and My brother-in-law came into town. He goes listen, I think we need help. He goes there's this company I heard about they're called advocates It's the company's called advocate and their lawyers, but they also I
Starting point is 00:16:07 Met this guy several months ago, and he's like There's a process and how you build a house. He goes you're gonna have every single price in advance There's gonna be a contractual agreement. We're gonna get five bits for every sub He goes I'm gonna save you millions and millions and millions of dollars. There's going to be a lot of money they have to pay if they don't start on time. We're not going to get held up. We're going to use people with an ROC that have been around 20 years with a proven track record. It's going to make your house more valuable because they're sought after. And I'm watching this process come together. And I should have known this, but I thought building a house, man, you know,
Starting point is 00:16:43 you just one brick at a time, you start, you get the next. And I'm not a subcontractor by any means or a contractor that subs out. I wasn't going to be the guy. But when I watched the precision and the process, and he's like, you got to have a, it's your designer after you pick the architect, but before you pick the builder and the order of operations, I mean, I'm blown away. Yeah. And I'm like, man, a lot of me feel stupid for not finding this guy sooner. And walking like we're already halfway done with my, my process here in Idaho. And the guy's doing great. It's my buddy Mitch.
Starting point is 00:17:18 But ultimately, I still didn't have a price on the final project was just an issue. Yeah. And he promised me 800 square foot. We think we're going to be at 1000 now. So there's got to be some type of, you know, you told me this. So we're redoing the contract. It's complicated. But that's a good example is it's a hard process. But once you've done thousands of them, it becomes easy. And Graduators, we service 20,000 homes a month because we. Because we built these processes. We've got manuals, standard operating procedures, checklists, a checklist on everything with a CRM that captures the proof with a data integrity team to make sure everything was right. Some clients say, I don't think you replaced my mom's springs. I think it's the old springs.
Starting point is 00:17:59 We got pictures of the before and after. We've had that happen a dozen times. We don't think you did the work. We were out at grandma's house oh no we've here it is time stamped and everything yeah so like there's a process for everything including how do you do PTL are you ought to have tattoos on your face what happens if there's an issue with your payroll mm-hmm see you had all the answers before now someone else has the answers when you're not there they could run the playbook, right? Yeah, I love that. What other pivotal things did you learn? Just just that that third year in business when you were in the hospital for two years or two months two weeks
Starting point is 00:18:35 Yeah, like ultimately, you know You talk a lot about like the importance of the people like without the one or two key people that had at that time The business would have gone under and so realizing that I had to build a business that I could not be there for a week, two weeks, I could indefinitely not be there and it's still run, was really what was right for the business, but also right for the team. Because I think for someone that wants to be a good steward
Starting point is 00:18:57 of whether they're religious or not, what God has given you or what you are responsible for, it is a matter of build the business in a way that if you did get hit by a bus, or in my case, like almost died, that the team doesn't have to worry about their job. Like is that really being a good steward of what you have? Well, you know, there's a lot of people that think
Starting point is 00:19:16 it's Jim Collins built to last where certain CEOs, founders, owners, whatever you wanna call them, they want the business to crumble without them there They want to show that they're the most important person I think most business owners want people to be like without me you guys can't function right and I think that's a weakness Yeah, why do you think that's why do you think a lot of people are like that? We're looking for meaning and purpose Right, and that's why we started our our business many times meaning and purpose. Right. And that's why we started our business many times. But if the only purpose for you going to work is to simply keep turn the lights on and punch
Starting point is 00:19:51 in time stamps and make sure your crew shows up on time, the business will likely not scale. And so the reason we build systems and procedures is for it to a run without you and B to scale the thing. And so if you're if you have the desire to either have the business not run your life and you're able to actually run your life inside of the business or you're trying to scale the thing is in your best interest and the best interest of your team and of the business to be able to have these sort of SOPs and standards and it becomes where once the business can run without you, then you can step away from it. And we get locked up in manager mode of like, okay, you do that and you do this and you do this
Starting point is 00:20:27 and okay, you make sure the truck is done this and we're constantly managing. But really if you're gonna, to your point, build a house, it's the architect that steps away from the house. They're not managing, they're not managing the labors. They step away from the house to architect. And so if you're actually gonna have a massive infrastructure and a massive skyscraper, you need architects.
Starting point is 00:20:44 You don't need as many labors as the people actually thinking about how do we build this structure and That's that can only be done once the systems are in place to that allows the business to run without you How do you maintain that the systems are being followed? To your point like technology is a huge leg up. That's what technology was the next thing. Yeah, and so I I truly believe like the past, like if you look at 2010s, a great home service business many times, the distinguishing factor is do you have a great looking website and you answer your phone. If you did that, you are ahead of like 95%, 98% of home service business owners.
Starting point is 00:21:20 And so I believe like in the 2020s, it'll be the determining factor will be technology and software. And I think in 2030s is where robotics and AI will actually impact our industry the most. Because so much of our work is manual. And I believe that the software and parts of AI on the admin side will be really important in the next five years, as we head to 2030. But as we go into 2030s, like it will be the robotics companies that will start to take over this very fragmented market. This is why, you know, venture capital and private equity are just salivating at home services because it's so super fragmented. Well, it's fragmented. And the fact is, during COVID, we were deemed essential when hotels, nail salons, movie theaters, everything was closing down.
Starting point is 00:22:01 And they looked at us And they said maybe these guys Have a business and service thing just went public last week I mean literally looking at this we're looking at like wait a minute they show up they have key performance indicators They have outcomes and key results. They have training and if you look at my service site It it goes like this every year. It's never gone down. It's never had a bad year, never had a bad month. I mean, 31 days is better than 28, I figured out. And I look at working days versus weekends, even though we work seven days a week.
Starting point is 00:22:35 Yeah, you're right, technology is gonna be a changer. I was talking to my C-suite today, and I go, I'm kinda worried about AI, not in a bad, dark way, but I'm like, I think it's gonna be like whoever wins. And I got, there's a strong, strong possibility A1 will be, continue to be the largest because people come to me because of what we've done online
Starting point is 00:22:54 and our Facebook groups and the way we've spoken at events, they come to me when they've got something. And I'm the first one to research and implement. And I do think there's not gonna be a whole lot of winners. There's gonna be a couple winners and a whole hell of a lot of what losers and you better join the winners quickly That way you can participate and if you look in history like technology whether you're talking 200 years ago with like steam engines or just the way war has fought Yeah, we're bow and arrow and then other cannons and then what and even more recently what comes to business like you look at the in?
Starting point is 00:23:23 2005 2006 2007 the the cab industry no one had more than 1% of the market Even more recently when it comes to business, like you look at the, in 2005, 2006, 2007, the cab industry, no one had more than 1% of the market. Now 76% of the US market is by two companies, Uber and Lyft. And so this is what technology does. Well, what happens? It's a big disruptor. The iPhone came in 2007,
Starting point is 00:23:43 and in 2014, these companies started to just grow and scale and grow and capital came in once the technology was ready for it. And so that's what I think will happen to home services because in landscaping for example there's 600,000 landscapers in the United States. And so the biggest company is public, it's Brightview. They do primarily commercial, almost 100% commercial and they control less than 2% of the market. And so I truly believe consolidation will happen once technology and capital meet. And so, like, even when it comes to the franchising,
Starting point is 00:24:14 like, I'm not really in it for the software side or the franchising side. It's like I think it'll take the capital, and it will take the distribution with software to be able to actually take the market share. And it's exactly the same thing you're doing. Well, yeah, that's what's so nice is like when you win at the capital game and you've got access, it's so easy. Like, right now, our database is probably one of the largest in home service. Not to mention, like, I'm already looking at electric vehicles. There's so many opportunities, but I'm jumping on all of them right away with AI
Starting point is 00:24:47 Man, there's so much the call centers and now the way we dispatch and and like the marketing like the power bi thing We built it cost millions of dollars, but it's we've got more data to make decisions We're now we're applying the same things towards recruiting and it's like we're playing a different game Yeah, more people are like worrying like how they're gonna buy their parts better. I'm like how are we gonna do regression testing of all the data? That's why I'm like listen I don't really worry about private equity because private equity sucks at blue collar industries because they don't know how to treat people and I think they need us more than we need them because there's a lot of PE out there. There's a lot of money but there's not a whole lot of people that know how to treat people that didn't have a mom
Starting point is 00:25:26 You know like some of our my co-workers You know some of them didn't have the greatest upbringing And I don't think white-collar people are gonna get into home service anytime soon like to go do the work Yeah, no, and that's why you know a lot of my guys make six figures Yeah, and I think that's okay because no one else wants the jobs before they were a dime a dozen now Six figures yeah, and I think that's okay because no one else wants the jobs before they were a dime a dozen now Very few people are getting into the industry so now you got to pay them more because there's not a lot of them out there I mean don't get me wrong. I was a landscaper I know it's hard to make pay some landscaper six figures
Starting point is 00:25:57 But why put a cap on what they could make if they could out produce anybody? Yeah, you know the paper performance side of it is don't limit it. Yeah Hey, I hope you're enjoying today's podcast quick update last week anybody. You know, the pay for performance side of's future. If you miss the bonus, it's gone forever unfortunately, but you can still get our $5,000 bonus bundle when you lock in your Freedom 2025 tickets now. Here's what's inside. Freedom 2023 Sessions. Proven strategies from guys like Dan and Tonelli from Kick Charge, who will show you how to charge more and keep your customers happy so you're not stuck competing on price. My marketing playbook, the exact strategies that I used to scale my $240 million company and keep my phones ringing off the hook. My ebook plus audio book of Elevate. My book
Starting point is 00:26:54 on becoming the greatest leader, hiring eight players and building a business that runs without you. And here's the big one, surprise time sensitive bonuses that will be rolling out leading up to the event. When you sign up now, you lock in every single bonus we release from here on out. By the time you show up to Freedom 2025, you'll already have the tools to keep your phones ringing and dominate your market. Go to freedomevent.com and grab your tickets now. That's freedomevent.com.
Starting point is 00:27:21 Now let's get back to today's episode. What did you find out when you started Pay For Performance? What were your takeaways? So yeah, Pay For Performance was basically a matter of when I first started, I did it as a necessity. We were basically break even at best, you know, seven figure company, but nonetheless break even at best. And it came as a result of one of my employees coming and asking for a raise because of course
Starting point is 00:27:42 I did not have a system around how do you actually give raises to somebody. It was just simply a matter of like, when I needed more people to stick around, I'd probably give out raises to keep people around. He asked for a raise, he probably deserved it, he was making less than other people inside the business, and I just walked away from that conversation, no, I did not have the money, could not give him the raise,
Starting point is 00:28:00 and said, we're doing this. Because it's something that I think everyone wants to do. It's like, it makes total sense logically, but then you have 10 different reasons why it won't work for you. Everyone has that. And so in landscape, it's like, well, if you go too fast, if they go too fast and they start making mistakes,
Starting point is 00:28:14 then now you're incentivizing them to start making mistakes. And so, okay, well then let's fix that. It's a yellow slip system. If they make the mistake, they have to go back and fix it. Also it can come out of their bonus if they do damage cases. If they lose the customer, it can also come out of their bonus. Okay, well, what happens if they got to sharpen the blades or they got to change the oil? Okay, well, then we're going to have non-billable time. Okay, let's
Starting point is 00:28:35 bake that in. Okay, what happens if there's one person who's really, really skilled on the crew and the other people are less skilled? How are we going to handle that? So there's all these little variables that people have as to why they can't switch to P4P. And many times that's what keeps them from going that direction, and they just switch back to hourly because it's honestly lazy. Well, there's another problem, I will say this, with data. Like when you're doing pay for performance,
Starting point is 00:28:56 if you screw up the data at all, then they don't trust you, and they're gonna quit because they're gonna think you're disingenuous. I think people have a hard time tracking. Right, but I would go back to, I still think it's lazy because the reason you don't have the data is not because there's software not to do it, not because you're incapable of doing it. It's because you don't want to do the work to go get the data or build the systems to collect the data or you don't want to spend the extra two minutes a day to track the data or create a report.
Starting point is 00:29:20 And so, yes, it is easy to say, how long did you clock in for today, multiply that by an hour late and give someone a paycheck. And because of that, we keep doing it the lazy way. And then we wonder why we don't get any better results from our team. And if they're not compensated like an owner, pay for performance, and then on the information of an owner, i.e. open book management, how in the world do we expect them to work like an owner? Because that's what they lack is information and compensation. And so that's the part I get fired up about because like, for example, we have the P for P software to track, you know, this sort of thing to help them save the time and track this stuff.
Starting point is 00:29:54 And so I can see that less than 15% of people that sign up will actually implement it. And you give them all the tools and everything. But there's always that one thing, well, we do some jobs by the hour. And so we can't really do pay for performance or we do we do some jobs where it's like You know by the square foot or we can't necessarily adopt pay for performance because these multiple or we do commercial 20 30 percent of our work is commercial. We can't really mix that in so there's always a reason why you can't do it But it's is it just laziness because that's why I find many times is they're just creating a system I think it has a lot to do with incompetence like I don't think people have the brain They don't even know how to use an Excel sheet. I mean no no offense
Starting point is 00:30:30 They just weren't school to do this stuff. Yeah, yeah, like literally like if I look at a pivot table I'm not the guy to go create this complex pivot table, right? I'm not gonna go redevelop and code something But I would all argue you'd probably the type person to go on YouTube and figure out if you knew your business depended on it I would but look at'd probably be the type person to go on YouTube and figure out if you knew your business depended on it. I would but Look at the end of the day. I can't say that about everybody. I mean, I'm the biggest fan of Pay-per-Performance, but I made a lot of mistakes Here's the deal. Yeah, I Made really really big mistakes. So here's what I've learned when you do pay-per-performance start out with one guy. Mm-hmm the most
Starting point is 00:31:01 The most important person that'll get the rest of the people to follow. And say, this is not permanent, we're gonna test this stuff. I went over the last three months of your work, and I got an idea we're gonna try out, and I'm gonna pay whichever one's more each week. Yep, 100%. And then, once he's making more money, but you know you're making more money, and you knew, you know, this, it's got tried and true, we tried it for 90 days, everything's working out great, you have him deliver it to the team, and they're gonna figure out a way to break it and that's okay
Starting point is 00:31:27 I I used to call two guys in my company every time I wanted to break the way we pay And they figure out a way to break it like I pay them to figure out how to break it Yeah, and now I watch pay for performance and they're like, what if a guy makes more than you? I'm like, there's a lot of people that make more than my salary. Yeah, like they make more than me Yeah, and in sales, you're allowed to. But I get the enterprise value of the company. And by the way, I don't care what I've never logged into payroll to see how much I make. In fact, I've never looked at my W2 or 9 or whatever.
Starting point is 00:31:58 I don't know how to look at how much I make. I just trust that it's coming through payroll. I don't make any draws anymore either. I literally am building the enterprise value of this company. That's what I think a lot of business owners screw up, is they live off the business. They take these draws. They join these clubs. They got the cars. They got their wife and their kids on payroll.
Starting point is 00:32:16 And then they go to sell. They're like, -"Why isn't my business worth anything?" -"Yeah." -"Well, you should have built to sell," like John Rorolo says. -"Yeah." So what would you say about that? Instead of divesting out of the business and picking up that nice house and having the nice vacation house and having two Mercedes and having a Harley
Starting point is 00:32:36 and going to Sturges and everything else, what if you just said, I'm gonna build this business as fast as possible for five years, sell 70% of it, roll the 30, work there for another three or four years. I'm going to walk away with millions and millions and millions and millions and millions of dollars. And then I learned so much during the process, I could go start buying these businesses because now I got money to work with. Everybody that I know says, oh, no, I'm going to do this for at least 10 more years. I'm like, okay, so
Starting point is 00:33:00 you're going to miss your kids growing up. Cool. Yeah. What do you think? It's the instant gratification part. As soon as the first level of that success happens is usually when people take chips off the table And so people aren't willing to hold their breath of the five or ten years Yeah, and so I really encourage like think of it think of your career in ten year swings And if you think of that way in your inner 20s, you have five six solid swings left in you Yeah
Starting point is 00:33:23 And if you actually commit yourself for ten years and let's just say it didn't work out, I happen to believe you would have learned so much more and gone so much deeper in that industry, your second swing would be that much more precise. And if you think of it that way, in years two, three, and four, when you have no evidence of success and things aren't working out, and you aren't making money, you'll stick with it. And then when you're in year six, seven, and eight, when you start to see success and have money, you'll stack it aside. Because every time I see the Mercedes or the boat or whatever that someone's purchase
Starting point is 00:33:49 I know that 30 to 40 percent of every dollar they made before they made that purchase went to the government Yep And if that money would have just been kept in the business and build the enterprise value what would have been a dollar Extracted 30 cents gone to the government and then they keep 70 70 cents is now a dollar invested in the business that becomes $5 in 10 years or five years. Yeah, I will say people overestimate what they can do in one year and estimate what they can do in five. And I will be, I just want to say a little caveat here is most people say reinvested in the company. The fact is they're not profitable. Right. They invest in the wrong things. They're on cash accounting. You should be on accrual accounting when you're
Starting point is 00:34:24 sophisticated or otherwise you can't even get a loan. You can't get an SBA loan. You can't get a loan to grow You can't get a loan on your building to buy a building you can't like If the financial side is what most entrepreneurs are missing Yeah, if they knew the facts with an FP and a financial planning and analysis I got three full-time people that do that And I think it's so important to understand the numbers and I'll tell you this compared to My CFO. I'm useless when it comes to financials Like he'll understand below the line above the line capex all this random stuff that just beyond me
Starting point is 00:34:54 He's with he goes every six months for three days with a hundred other CFOs Once a week he hangs out and learns the newest what's going on with the gap accounting and everything Like there's no way I can keep up. He's way smarter than me. I like this. Imagine if you walked into a room and you had a big business and you said, I'm smarter than every one of the people
Starting point is 00:35:12 that work for me in every single aspect. That means you fail as a leader. What have you found when you hired people that are better than you at certain things? Yeah, well, so most recently with the software, I made massive errors in trying to scale a software company without a huge amount of experience. And I did that with a team that had never done it before. And so I kind of think of it as like, if someone is a cultural fit, that's like 101.
Starting point is 00:35:36 That's like hiring 101, that is culture 101, business 101 is cultural fit. Then if they have experience, 201. But the 301 level of hiring in my opinion has been there done that. And then what I always say is like, expect to pay accordingly. Yep. Right. And that was the mistake I've made always in the past. Instead of, I have always taken someone at the 101 level and trying to try to invest and pour into them and go, and that can take five, six years and it's painful. Or you just pony up and you pay what they're worth and you go to the 201 level or better
Starting point is 00:36:07 yet go to the 301 level. And so that's what that was the painful thing I had to learn this year was instead of trying to cobble this thing together, make it profitable immediately, I need to go get someone who's taken done an IPO as a CTO and bring that person into the company. And that's not going to be cheap. No, you know, I remember signing like for the on their wage agreement and like I made less than this this year. Like my take home pay was less than what I'm
Starting point is 00:36:30 offering this person. Oh, yeah. And they're giving equity away, et cetera. And so like the idea like even you look at Elon, for example, he owns 20 percent of Tesla and you look at Bezos, he owns nine percent of Amazon. Yeah, eight point six. And then even Mark Zuckerberg owns like 13% of Facebook.
Starting point is 00:36:46 Yeah, Jensen Yang of NVIDIA owns 4%, I think it is, of NVIDIA. And so it's like, do we think so small that we don't get the big person that's done it before? We don't give away stock options, we don't give away equity, we don't give these other people the opportunity. Because if you don't give them that opportunity that 301 level you will lose them And that was the thing I had to learn I made so many mistakes around this time time again equity It's called an EAP equity incentive program. It could be called phantom shares
Starting point is 00:37:14 It could be called profit units There's a lot of names could be called stock options if you go public But every smart company on the planet knows this but at home service and and home improvement, in the blue collar industries, we're like, no, it's all mine. And we'd rather have the whole pie, but it's tiny. I'd rather take a small sliver and give these slivers away and give away 30, 40% of the business.
Starting point is 00:37:37 In fact, once you sell and take chips off the table, there's a company in town called Parker & Sons. He does 300 million a year. He's on his fifth turn. I mean, it's crazy to me. And once you learn how to buy and sell businesses, it's like everything I invest in, I have a rule. Three to five years max. Typically, I want to do three years. And it's all in the contract. But we'll get them the resources they need to scale quickly. And some people are like, why are we waiting three years? Like a year and a half through,
Starting point is 00:38:06 they're like, we're worth $80 million. And I'm like, no, no, no. You're gonna be worth 200 million. We are just starting to rock and roll. We're not even in that 12 months period yet. When we turn it on, this is when it's like, when you plan to go into that 12 months, and you're like, you know what levers to pull
Starting point is 00:38:23 and what knobs to turn? It's so much fun. If people only understood how fun it is to sell businesses, I mean the first time you'll lose some hair, you won't sleep, you'll probably be stuck on alcohol, but once you get through the first one, it gets to be fun on the next one. Speaking of alcohol, you've been off for a while, right?
Starting point is 00:38:41 Yeah, so I will do like once a month, but not a lot. Like I'm really, really focused right now on fitness. Right. And like I'm going to go to the next, next, next, next, next level. Breathing techniques. I was with Jaco Willick and Mark Devine. OK, OK. The seal.
Starting point is 00:38:55 Yep. And just discipline, consistency, this idea of creating a new me in 2025. Breathing techniques, believe it or not, yoga. I'm not a yoga guy. I want to be able to put more flexible flex and just eating. I wanna see just, this is crazy, but I wanna see just how disciplined I could be.
Starting point is 00:39:15 What was like Jaco says, discipline equals freedom. Discipline is the most important thing in someone's life. I think discipline is more important than motivation. Discipline is discipline with consistency Because discipline for four days and screwing off three days. Yeah, you're not gonna get any results, right? It's hard, man How do you apply discipline in your life? I? Think it's one of those things like the opposite of gratification today is simply putting it off for an expected future that you would rather have than then what would
Starting point is 00:39:44 Otherwise feel pleasurable and so whether that to your point drinking it is nice to have that or putting it off for an expected future that you would rather have than what would otherwise feel pleasurable. And so whether that to your point, drinking, it is nice to have that or the Cheetos or the pizza or whatever vice you might have, but is the ability to basically offset that temporary pleasure for the goals you have. And so it's like, what do you value more, the temporary pleasure or your goals? And every time you are making a vote, you're making a decision on do I want the temporary pleasure or do I want to have the goals that I've set out to say I put on my wall, I put in my journal, I put in my new year's resolutions. It's like really how like
Starting point is 00:40:14 the deciding factor of how much that actually is worth to you is whether or not you're willing to discipline yourself and set aside the temporary pleasure. And I think most people have great ambitions of what they want to accomplish, but then their actions don't actually line up with it. It's like, if you're not willing to actually work an all-nighter, if you're not willing to work a weekend, do you really, really want this? Like, I want to be a millionaire. Okay, great. Do you realize that a small fraction of people are going to do that? And that means that the 98% of people that won't get there, you have to do what they weren't willing to do. Yeah.
Starting point is 00:40:45 And it's just like, how much do you love your goals? Well, a lot of people to me say the only thing that matters in my life is my family. And I'm like, show me your calendar and your credit card statements. Because I don't see family on there on any of them. So you keep telling yourself my family is the most important thing,
Starting point is 00:41:01 but you don't show up to your kids' games. And when you do show up, you're on your phone the whole time You don't take your wife on dates anymore bring her flowers or tell her how much you love her on a daily basis So you say these things but you lie to yourself Oh you lie to yourself your brain can't even trust who you are You see you're getting up at 6 a.m. You haven't got up at 6 a.m. All year except for once yeah because I Will say sometimes nighttime Tommy wants more than morning time
Starting point is 00:41:23 I think we all have that little nemesis and I call it delayed gratification Yeah, and I think that it's important to to really but you got to stay away from your Achilles heels, too Yeah, like if you know you drink Don't go to the bar with the people you used to drink with all the time. Yeah, if you know that You got a problem with social media Yeah, if you know that You got a problem with social media Figure out a way to stay away from that But block like I have a hard time staying in the cold plunge for four minutes
Starting point is 00:41:50 Yeah, so I always invite somebody over to do it with me and I'm like dude four minutes Yeah, I've never got out early when there's someone there. Yeah, like witness me Yeah, you know like we're gonna do this together and that they're like go to get out I'm like no, you're not you little punk better go the whole time and like we So you set your this is the best cheat code I have is set yourself up for the things you know are tough for you And if you set yourself up for that which few people do like when you got a plan in a system You want to be better like it's a reward system small goals
Starting point is 00:42:20 Specific you know measurable attainable realistic and time-bound I think some people they just set these goals like I'm gonna work out two hours A day, and I'm like, but you don't even work out ten minutes. Yeah, yeah, attainable, realistic, and time-bound. I think some people, they just set these goals like I'm gonna work out two hours a day, and I'm like, but you don't even work out 10 minutes. Yeah. Why? How does somebody get started with discipline? Yeah, one of the things that has served me really well when it comes to goals in the past couple years
Starting point is 00:42:36 has been, especially for business owners, the type of person listening to this podcast, I like to simplify it because a lot of times, well, I wanna spend more time with my family, or I wanna be able to do X, Y, and Z. Like these are my goals. Then I always tie it back to like, how is that going to be accomplished? And then that's usually when people start falling. So reverse engineering it. Always comes back to one thing for us as business owners. And that is we need to make more money.
Starting point is 00:42:59 Because see, if you actually cared about your family and you wanted to spend more time and get to their games, you would make enough money in the business so you could hire a general manager and you weren to spend more time and get to their games You would make enough money in the business You could hire a general manager and you weren't having to work and be on call 24-7 Yeah if you actually cared about spending time and having date night for like less than $25,000 a year you can have someone clean your house do your laundry and get all your groceries for you And so if you spent that time instead of doing those things with your spouse that would actually align with I want to spend more time with my spouse and have date night and so it all comes back to if you really want to simplify make the
Starting point is 00:43:30 business more money because if you did that you'd be able to then use those economic resources to then buy your way into and buy back your time to the point of that book you know Dan Martell wrote buy back your time and one of his best lessons that I've learned is when you buy back time there's so many good things you could be doing to make you the best version There's this thing called the law of the lid and the business only growing your relationships only grow as far as you take them As your lid grows the opportunities grow the potential of growth for the business your relationships your faith That the relationships you have in your family grow and most people don't spend enough time on themselves So when people come to work with me, I say work on yourself more than you do at the company
Starting point is 00:44:08 Like whatever you ever you want to learn to put you through classes. You want to go to a seminar? I'm paying for it. Yeah, listen to a podcast. I'll get you introduced to the podcast host whatever it is, but you got to want it I don't want to have to force it. Yeah, one of those things that Jaco says is it's got to be intrinsic You got an intrinsic Discipline meaning you can't even though I have people help me. I still got to show it to the gym Yeah, I can't say my my trainer drives me to the gym and makes me work out like no one makes me do anything Yeah, if he had a gun to my head, he would be making me but no one lives in that life in America, right? Your book total business turnaround documents the systems and the playbooks that transformed
Starting point is 00:44:46 your business. Thousands of home service businesses have used the 13 playbooks. Which one do you think is the most immediate impact for struggling businesses? It's the first chapter of the book. So basically the turnaround show we do on YouTube. And then the problem with the YouTube channel is in order for me to go out, fly out and do a turnaround show, they have to get a bunch of cameras in their face. And no one wants that when you're in your lowest moment.
Starting point is 00:45:11 So we just left the company here, did 1.2 million revenue, is doing 1.2 million revenue. We've been in business for 40 years. They have 22 employees. They're charging $40 to $45 per hour. And so the fact that matters, it's extremely embarrassing to have cameras show up in your face and talk through the fact that you have a 3% Margin business and you have a hundred seventy thousand dollars in receivables From probably percent of 1.2 is like 30 some odd million thirty some a thousand a year Yeah, exactly that's on the bottom line and they're not taking much out as owner distributions
Starting point is 00:45:43 And there's a hundred and seventy,000 in overdue invoices you haven't collected on. And so that's not fun to have me come out and have the world see what's going on in your business. And so what we did with the turnaround book is like, hey, here's the manual if you don't wanna be embarrassed. Cause it is embarrassing. And so the number one most important chapter
Starting point is 00:46:02 in that book is the first one. And it's just about cash. Because you if you run out of cash, the business will die. Cash flow cash. And so there's there's simply two two factors. You can you can you can have a very, very profitable business on your P&L and be and be completely broke on your balance sheet because you're not collecting the money fast enough.
Starting point is 00:46:21 And you can also you have plenty of cash like from a balance sheet perspective. But if you're losing fuel in a car, eventually you can have plenty of cash, like from a balance sheet perspective, but if you're losing fuel in a car, eventually you'll run out of fuel. And so if you're running an unprofitable business model, you will eventually run out of cash. So there's two factors of cash. It's like, how much do you have and how fast are you burning it? Or are you collecting more of it and you're a profitable business? And so that's like the number one thing.
Starting point is 00:46:42 It just cash is top of mind, make more money is like such a, it's so simple, but it is ultimately the fix for so many aspects. Like, well, I'm just working like the gentleman I was with him and his wife are fantastic people but working seven days a week. And every single day wakes up at four o'clock with thinking of his phone, hoping that some people aren't going to not be showing up to work to that day. The fix is make more money, like $40, $45 an hour. You're never going to be able to scale this. You're never going to be afford a general manager or an operations manager to take those calls for you.
Starting point is 00:47:12 No, the deal is with them is they feel bad about it. But if you were to add up, this is a simple thing that someone taught me, the guy from Australia, he called it the break even analysis. And he sent me this stuff this was 2017 and it had pagers and yellow pages this is like from like the 90s and he said add up every bill you have and when you add it all up back then he used to have to charge $400 an hour for what service this is for a check plumbing electrical got it okay because literally you got to think for us to show up to a job sales just just
Starting point is 00:47:49 during the doorbell yeah Tom Howard did a great job of this I've done a pretty good job of this it cost about 270 dollars to ring the doorbell yep cuz you got overhead yeah you've got air conditioning you got service time you got your trucks you got your fuel you've got we run about 15 softwares here insurance run intact we got insurance we got workers comp we've got your trucks. You got your fuel. You've got we run about 15 softwares here insurance on intact. We got insurance We've got workers comp. We've got recruiters. We've got trainers. We've got dispatchers. We've got warehouse guys We've got like the overhead There's a lot of money. Yeah, and people think
Starting point is 00:48:15 Here's something that's funny if if you said a check unit cost $2,500 and you guys saw it for five and you said I make $2,500 profit if You're working out of your house your wife's working for free And that you didn't have a truck like someone gave you the truck and you had a free gas card And you had no insurance you didn't have to pay any EIN updated any licenses It still wouldn't be that yeah, I don't think people understand $45 an hour if you're paying 20. Yeah, it's what it was.
Starting point is 00:48:47 You're really burning. If you look at your complete, there's costs that you don't even realize. Yeah, like working 80 hour weeks. How much do your blades cost to sharpen? How much of your equipment breaks down? Your gas, your oil, your truck use. Yeah. Makes no sense.
Starting point is 00:49:05 So many bad business models are hidden by an entrepreneur that is working 80 hours a week. I worked at a couple of my buddies, I helped them start a Christmas late business. After the first year I said, guys I'm looking at this, we gotta double prices. No, you're kidding. I go, no, they're like, we can't do that.
Starting point is 00:49:24 Did I tell you this story? No. We doubled the prices. Guess how many people canceled less than 10% It was up 40% Oh really? 120% collected so if you were collecting a million dollars now you're collecting 1.2 million Yeah, and you were only doing a little more than half the work. Yeah. Yeah. So I said guys, this is amazing Yeah, I said you got rid of the worst 40% Yeah, and most of the people I tell the razor price I don't tell them to double it I say just add 20% doubling is pretty sharp if you're paying $1,500 for less now
Starting point is 00:49:57 You're paying 3,000 right clients are like dude, but but 60% said you guys did a great job. It's Christmas Yeah, we'll do that. Yeah, I thought you guys were given a smoking deal anyway Yeah, and uh, that's the deal. So what do you do with somebody? How do you fix their you said they've been doing this 40 years. Yeah, they're charging 40 45 dollars an hour there How do you that's a mindset they're broken It's tough because I don't like to go in there like the Gordon Ramsay and yell at people Yeah, although it's like so how I approach it honestly. A bar rescue.
Starting point is 00:50:27 Is I, yeah, well John Taffer is coming to our event here in a couple weeks. I'm looking forward to that. He's the best. That's not my, my genre of dealing with it. But like my thought is I get mad at the problem for them because I know what it's like to be in that situation. Yep. And I remember the pain that I went through
Starting point is 00:50:41 and I hate to see someone in their 60s going through that pain because they have not dealt with the problems of the business and they still are clouded with the pain that I went through, and I hate to see someone in their 60s going through that pain because they have not dealt with the problems of the business. And they still are clouded with the mindset that I can't charge more, and everyone else is more expensive. And I'm like, wait, wait, wait, what's your close ratio? Almost 100% of my jobs get accepted. I said, I don't care about the cost of what you charge versus your competitor, or if a customer says it's too expensive. If you're closing 100% of of your jobs you are too cheap the mark is yelling at you to raise your prices 70% raise your price if you're closing anything more than 70 raise your prices 100% and I had a buddy I told this to
Starting point is 00:51:18 he's like I've already tripled my prices I like to keep going because guess what you're booked out three months yeah Yeah, exactly. There's no limit. Yeah, like I guess what he got to 49% net let's go, but his service was that good Yeah, I think the problem too with the home services is when we hit that capacity instead of booking out three months We just go buy more trucks and equipment instead of raising our prices and they just extend it out further Yeah And and that's a the fallacy of like being stuck in growth mode for so long and then people like well It's an unprofitable industry. Well. Yeah, you stay in you got stuck in growth mode for ten years
Starting point is 00:51:49 Yes kept buying more trucks and equipment instead of raising your prices when you hit capacity and I think I'd rather have a 49% margin business than running a 10% margin business, but being five times larger Well, the deal is I tell people if you're into growth don't't ever fall below 10% profit. Don't ever fall. If you fall below 10% And by the way, I've been at 10% I've been at 20% I've been at 30% I think there's a happy medium when you're trying to take market share Yeah, it's kind of like I tell that like I tell the best story is when you're trying to gain muscle It's very hard to get cut. Mm- Arnold will tell you, listen, during the off
Starting point is 00:52:25 season I used to gain a lot of weight and right before three months out I'd cut. And I think cutting means becoming extremely profitable. So planning on selling means I'm cutting 18 months in advance, going into that 12 month spur because that's what I get valued on as a multiple of EBITDA. Yeah, in software they have the 40% rule which is a good benchmark. Yeah, you've got to grow EBITDA and you've got to grow growth. Yeah, it's like look, you have 40% but if you're grew by 20% rule, which is a good benchmark. Yeah, you gotta grow EBITDA, and you gotta grow growth. Yeah, it's like, look, you have 40%, but if you're grew by 20%,
Starting point is 00:52:47 then you should have a 20% profit margin. And if you're grew nothing last year, you should have a 40% profit margin. And so that's kind of like a healthy rule of thumb. I love that. Software, it's how sticky is it? What's their change costs? Service sites really hard to change.
Starting point is 00:53:03 I mean, we've been using that since the last seven eight years It's gonna be very hard to change but I told them straight up because I talked to their investment committee Yeah, I said if you guys doubled my prices, I seriously start looking at another opportunity because what's stopping you for doing it again? right and The thing is is that's why they got valued at five six billion dollars. Well, yeah, I mean They got twelve thousand Well, yeah, I mean, look, they got 12,000 companies on them. Yeah. I'm going to see what the market does.
Starting point is 00:53:30 I did pretty well with the stock already, but now that I think about it, it's going to continue to go up. It's going to have a little bubble. It's going to fall. And then, I don't know. Don't ask me about stock. Well, listen I Let's go through a couple more here. What has been the largest challenge you faced as being a young entrepreneur in business?
Starting point is 00:53:53 I think if you're really young sometimes easy to default to like the age thing yeah, I think being young is it's like so when I went to college when I was 13 and Everyone always asked like was like, was that weird? Was that strange, et cetera. Ultimately, because like the way my parents raised me and the way we never mentioned, it was never a thing. We never talked about me being young. In hindsight, a kid going through puberty
Starting point is 00:54:15 in like college and university seems really strange. And so I do think it's like, who do you surround yourself with and what are they telling you? Because if they tell you it's weird that you're young and that it's strange that you're hiring people that are older than you, then you will believe that. But like, I was very privileged to have parents that like, we never talked about it. Yeah, it was like, I'm just going to school. I took the bus and I went
Starting point is 00:54:34 to school, I couldn't drive. I took the bus. And I think the same thing is true if you're in a circle of friends, or even in your family, you might have to break away from them. And like I've said, sometimes sometimes your goals will outgrow your friends. And in the event that you're a young entrepreneur needing to hire and interact with people that are older than you, you might have to break away from your friend group and your age group in order to chase the goals you have. I think you should break away. I told so I just did my orientation last three and a half hours I told the whole group I said, you know what people tell me is that they feel like I'm
Starting point is 00:55:05 in a time machine because I'm able to pivot to different circles and I stay humble. I never look at an entrepreneur that's ahead of me and say, I'm going to beat you. Wait, just wait, just wait till I get started. I'm like, look, teach me. Yes, I've had some successes in my life. I'm very fortunate. I've got great parents. I love my family.
Starting point is 00:55:21 I just respect you so much. I want to learn more. I've read all your books. I will buy you lunch.. I wanna learn more. I've read you all your books. I'll buy you lunch, I'll buy you dinner. I'll always pay it forward. Any stage I talk on, I'm gonna tell them what you taught me. And I take notes, meticulous notes. Can I say something on that?
Starting point is 00:55:34 Yeah. I really respected you a lot more, although I've always had a lot of high regard for you. When I saw the Dan Martell vlog and the way that you interact with him and that of a student instead of that of a teacher. Yeah.
Starting point is 00:55:47 And it proved, to me, proved the fact that what you teach, you actually do yourself. Yeah. And that is when you went into learner mode and student mode, and there's certain aspects you have potentially even surpassed him in, to be honest, in terms of like dollars amount, certain industries, etc. However you were able to slip into learner mode student mode and that that I really respect I have a lot of consultants yeah and I asked them questions I never speak up I
Starting point is 00:56:13 never tell them what to do I hired them to teach me something yeah and that's when I ask questions and I write stuff down and I go alright and by the way I need those people yeah I need mentoring all the time. Yeah. The day I stop needing mentoring, I mean, you should bury me. So I do go into student mode all the time. I mean, when I'm around my parents, I still like to listen to them and learn from them. But do you got any few books that you'd
Starting point is 00:56:35 recommend that people start to try to kill at a business other than the E-Myth? Like some of these books on the wall? Yeah, like one that I actually really like is Made in America from Sam Walton I like that book a lot. It's just it's just the general ethos of like the way that he like even looks for new properties He'd fly in his plane around and just look for Traffic patterns where to put a Walmart. I think it's the coolest thing. Yeah, I like the stories
Starting point is 00:56:59 I just enjoy that more than yeah theory sometimes. That's great. Yeah Made in America and Listen if someone wants to get a hold of you Like what's the what's the best way to reach out to you just go on YouTube Mike Andes you'll find stuff there You choose your favorite way. Yeah, watch the turnaround shows They're fun, and if somebody wants to call you and get like coached or just reach out to your ass a question Well, there is a way to do that you go to Mike Andes calm, but you're not the best way to do it Okay, it's just I don't have a lot of that time yet. Okay. Yeah, you're a busy man And finally we talked about a lot of things Mike is there something we missed
Starting point is 00:57:31 I would just want you to take the time to close us out with whatever we might have missed or not talked about I just want to acknowledge you for all the work that you've done on yourself in the last three years Thank you the man I met three years ago when you came to Ferndale at that, or Bellingham at that event center is different than I see today. Thank you very much, I appreciate that. And by the way, you'll see somebody else
Starting point is 00:57:52 in hopefully another year. And you keep it up, man, you're doing great. Congratulations on everything. Thank you very much. Appreciate you, brother. Yes sir, absolutely. All right, thanks for listening, guys. Leave a review and like this channel.
Starting point is 00:58:02 Hey there, thanks for tuning into the podcast today. Before I let you go, I wanna let everybody know that Elevate is review and like this channel. anyone looking to build and develop a high performing team like over here at A1 Garage Door Service. So if you want to learn the secrets that help me transfer my team from stealing the toilet paper to a group of 700 plus employees rowing in the same direction, head over to elevateandwin.com forward slash podcast and grab a copy of the book. Thanks again for listening and we'll catch up with you next time on the podcast.

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