Augusta Lawn Care VS CitiTurf Business Models

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What I feel is like, quote unquote, the perfect size business is six to eight technicians optimizing over the course of a few years from 700,000.
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And as you raise prices up to a million dollars, I want growth.
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I think that's become the theme here.
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I just want to grow because I can I can always dial it back and I can clean things up.
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And I think you have to go through those phases.
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I want growth.
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Right.
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So for me, if I'm like growing at 7% a year, which I've had plenty of experiences doing, you know, CityTurf doing not super fast growth as it got bigger, it's more painful for me.
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statistically speaking only 9% of people will build a million dollar business I was always talking to that 9% and I realized that 91% of people can't they're not capable of it they would break I have the financial the metrics the people the technology I have all this experience I would love to roll up a bunch of companies in home services and build something really really big it's this idea that you need to know what you're going for and optimize for that and if you don't
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burned you out in every possible way and sucked all the life out of you.
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You don't have to do it.
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All right.
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Hey, Mike, how are you doing?
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Fantastic.
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I would say thanks for having me on, but this is still like...
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But it is your show.
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It is your channel.
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So what's been going on the last week?
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I haven't talked to you since last Wednesday.
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All right.
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Yeah.
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So the past week, last week, I mentioned the fact that we were...
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I was in this conundrum of the events bug hell situation.
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I kept having members being like, hey, I've been reporting this bug for months.
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And I'd go in the back and I'm like, I don't see this anywhere.
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Like, no, there's no report.
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There's I don't see them reporting this anywhere.
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Why?
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I don't want to call you a liar, but I don't see it.
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And sure enough, this week I go in there like, you know, I'm going to try submitting a bug.
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And the AI was basically caught in this loop of telling me to report the bug in the chat, but never actually taking it, creating a report for the human to see.
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Oh, it was so annoying.
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I was so frustrated.
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So we've decided like this, there's 90 day sprint.
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We have it split up in like four different things that we were going to attack.
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And so the next 90 days, we're focused on basically refactoring the events code.
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And then the second thing on a more fun note is we have our cloud connector that we've built for Homeworks.
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And so I've been playing with that, which has been a lot of fun just to see the capabilities of it and a lot of authentication stuff and making sure like someone can't get and do something stupid.
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So that's what we're working on.
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It's just in beta.
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We haven't released it yet, but- That's your MCP connection.
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Yeah.
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Yeah, but it's been a lot of fun just to be like talking to it and just using the agent line to like say, hey, I want to move this job.
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Like, is so-and-so behind today?
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Cool stuff like that.
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So.
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Okay, that's cool.
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I think that's a great idea.
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And I'll be curious in the future to talk with you and see what you figured out around throttling usage because that will potentially just pound the database.
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Totally.
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So what's interesting- It's a new world.
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Yeah, so like a couple of weeks ago, someone, one of the members just started building their own thing without any MCP access, without anything for us.
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They just used the GraphQL and just started jumping in.
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And a lot of it was like, they didn't really know what they were doing.
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It was mostly using just like a browser and a cursor, like moving around.
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Okay.
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And they made some errors on their end and man, it hit the database like crazy.
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And so, yeah, throttling that we had to change our terms and conditions like and just update everyone like, hey, just so you know, I know everyone's jumping, you know, jumping at the bit here.
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But, you know, if you do this sort of thing, it's like immediately Twilio SendGrid is like, hey, someone's like hammering out these emails that look fraudulent.
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And so, yeah, again, like we've been talking about like letting public in versus just playing in your own sandbox is very different.
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And what a new world.
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Yeah, and then, like, do you price based upon the usage of the MCP and how many times they're hitting?
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Or do you just say, hey, you've got to be, like, a higher tier?
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So, like, even how we price it, because it's, like, a whole team that now, like, it's a whole thing to support, right?
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So, anyways.
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That's awesome.
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Well, I think I've got this week.
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Last week, you did the lineup.
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This week, I did the lineup.
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I am very intentionally...
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answering some of our commenters questions yep so uh please keep those coming the more you ask us the more we'll know exactly what to give you so that you're getting great value out of listening to mike and i chat every week and so this week i've i'm going to address several of those and i hope you find it super valuable but i want to throw something at you first mike okay you know you don't know what's coming okay and i want to and what it is is i'm going to throw 10 questions at you 10 oh my word 10
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10.
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Oh, my word.
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I thought it was 10 too much, but in my normal fashion, we're going all in.
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We originally thought an hour for these podcasts.
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Oh, yeah, no, yeah.
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I'm going to blow that up, but I'm going to make you answer them fast.
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It's like you have to give me an either or answer, and you can't give me any explanation.
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All right.
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Very nonpolitically correct.
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Yeah, yeah.
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And then I will, if I comment, I will just say agree, disagree.
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Okay.
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This is what I'm most curious about.
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I was trying to come up with some stuff.
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Where are we going to disagree?
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Because I know we unfortunately agree quite a bit.
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Maybe that's a good thing for the viewers because maybe that means it's truth.
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I don't know.
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So agree, disagree, or maybe I'll just say interesting.
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We'll see what your answers are.
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Okay.
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So let's start at the top.
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I think this will be pretty quick.
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Okay.
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All right.
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Let's do it.
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I wrote these out.
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I gave them some thought.
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All right.
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More dangerous, growing too fast, or growing too slow?
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Okay.
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Growing too fast.
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Disagree.
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No, I 100% agree.
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Okay, sorry.
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Okay, I should have wrote down my answers.
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I 100% agree.
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Too fast.
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Okay, I'm supposed to be quiet.
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We're going to go fast.
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Okay, under $1 million, that's the business.
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Would you rather have a world-class operator or a world-class marketer?
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Am I trying to grow?
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Yes.
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Well, when would you not want to grow?
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Yes, in my mind, I always want to grow.
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Yeah, my default is, yeah, you're trying to grow.
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Okay, if you're trying to grow, then a world-class marketer, I would say.
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Okay, I agree.
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Same question at $5 million.
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Okay.
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Would you still say marketer?
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So you're at $5 million, you're trying to grow.
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Would you say marketer or would you say operator?
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Operator.
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Agree.
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Okay.
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I'm sure we're going to disagree at some point.
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Okay.
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All right.
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Again, at $1 million in revenue, what's more important, better pricing or better production efficiency?
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Are we trying to grow?
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Always trying to grow.
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I don't know.
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I don't know why you wouldn't want to grow.
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And I understand that sometimes maybe you don't care, but just assume I want to grow.
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I want you to grow.
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I would say pricing.
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I agree.
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Okay.
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All right.
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What belief about business have you changed your mind on the most in the last two years?
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Oh, okay.
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This is interesting.
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That you should always grow your business.
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Okay.
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Interesting.
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Okay.
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Harder for a founder to replace themselves in sales or operations?
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What service?
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Oh, that's a good question.
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All right, so we'll make this a two-parter.
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Okay.
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And since the following is generally green industry, first we're going to go with mowing and bush trimming.
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Harder to replace yourself in sales or operations.
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Okay.
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operations for that one great felt easy now landscape the other side of the industry that's design build installation you're trying to scale man you need well it's where you're trying to replace yourself and get out of that okay probably in sales yeah you move up to sales all right dang it we still agree yeah all right um more expensive mistake okay bad pricing or bad people oh bad people yeah okay three more more underrated recruiting or training
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training ah we got one okay i went recruiting on that okay well it depends what position are we talking about i'm not telling you you're crazy you're wrong it's like i just yeah agreed and that is the nuance that is the challenge when i was writing these i was thinking about them i didn't think about these little questions you might have and they're good ones so i was just thinking in the business in general as the business gets bigger
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Two more.
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And you're right.
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It depends on where you're at in the business at that stage.
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And if it's a technician versus like a manager.
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Yeah, 100% agree.
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So at $2 million in revenue, would you rather, and you're trying to grow.
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Let's be clear.
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Or you care about growth.
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You care about growth.
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I got it that way.
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At $2 million in revenue, would you rather have 25% net profit growing at 7%?
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Or would you rather have 7% net profit growing at 25%?
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The former because I'd take the profit and invest it back into marketing.
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Yeah, that's a little tricky one.
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So I went the following.
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Oh, really?
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Okay, so growing 25% with 7% margin.
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Yes.
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Okay.
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Yeah, I think that's a good one to talk about in the future.
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Okay, I'm assuming that's the snapshot.
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You like the snapshot better than like the future prospects.
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Yeah.
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I want growth.
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I think that's become the theme here.
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I just want to grow.
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Because I can always dial it in.
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I can always dial it back, and I can clean things up.
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And I think you have to go through those phases.
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I want growth.
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So for me, if I'm growing at 7% a year, which I've had plenty of experiences at CityTurf doing not super fast growth as it got bigger.
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It's more painful for me.
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I don't know, man.
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Okay, so if you get 140K profit, that's 7%, okay?
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Yep.
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And then if we have 25% profit, that's going to be, what is it, $500,000.
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And so theoretically, I can spend $360,000 on marketing.
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And all I have to do is go from 7% annualized growth.
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So that's 140 to 25%.
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All I have to do is make up this.
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Like all I need is a two to one ratio on LTV to CAC.
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I agree.
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I should have put rails around this.
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This is the world you have to live in for like, yeah.
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So in my analogy, like I agree.
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If the analogy is, Hey, um,
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How could I fix it like that?
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I want more money so that I can apply money to marketing.
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Right.
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But if I have to get stuck living in a world.
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Okay.
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Snapshot.
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Yeah.
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It's stuck in this world.
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Got it.
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Yeah.
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Okay.
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Cool.
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So I thought that one, I just wanted to like, how would you think about it?
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Like, so yeah.
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Cause 7% net would suck for the longterm.
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I wouldn't be happy with that.
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Right.
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Yeah.
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So, okay.
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One $10 million location.
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Oh, yeah.
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Or 10 $1 million locations.
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Ooh, okay.
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Okay, I can't say it depends.
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What are we trying to optimize for?
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Like profit?
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Profit?
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I just want to know what you, what your philosophy is.
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What I want, like what I want, or what's better?
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Yeah, we'll go with what you want.
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Maybe even, maybe what you would want versus even what you would advise a lot of people to do.
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Like what, what would matter to Mike?
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Okay.
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What I would want would be the 10 locations.
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From a profitability perspective, I would go one location, 10 million.
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Oh, one location, 10 million.
242
00:11:07.846 --> 00:11:08.026
Yeah.
243
00:11:08.346 --> 00:11:10.028
But I would want the 10 location one.
244
00:11:12.515 --> 00:11:13.936
10 locations doing 1 million?
245
00:11:14.076 --> 00:11:14.236
Yeah.
246
00:11:14.817 --> 00:11:19.100
Why would you want the 10 locations over one location if the one location is more profitable?
247
00:11:19.981 --> 00:11:23.444
Okay, so the first, so the 10 million- And maybe I should have read your book.
248
00:11:23.624 --> 00:11:26.627
I don't know if this might be covered.
249
00:11:26.687 --> 00:11:29.689
The $10 million location, for example, would not work in my market.
250
00:11:30.250 --> 00:11:31.551
And yeah, totally agree with that.
251
00:11:31.591 --> 00:11:34.313
And that's something I think that can lead a lot of people astray.
252
00:11:34.333 --> 00:11:37.636
They hear me talk or some other people talk with the big business, they're like, what's wrong with me?
253
00:11:37.656 --> 00:11:39.937
It's like, dude, I'm in Dallas Fort Worth.
254
00:11:41.038 --> 00:11:42.898
I'm not in whatever city you might.
255
00:11:42.918 --> 00:11:43.078
Yes.
256
00:11:43.138 --> 00:11:43.298
Okay.
257
00:11:43.318 --> 00:11:43.839
That makes sense.
258
00:11:43.939 --> 00:11:47.419
I personally would be doing 10 locations from myself down to Seattle.
259
00:11:48.179 --> 00:11:49.820
Um, and I would get that way.
260
00:11:50.140 --> 00:11:56.981
And then I would have each of those million dollar locations have six to eight technicians with one working GM, no overhead, other role.
261
00:11:57.041 --> 00:11:59.501
And then I have a centralized office in one spot.
262
00:12:00.261 --> 00:12:07.863
Um, that being said, if I lived in Seattle, the $10 million location would probably be much more feasible.
263
00:12:07.883 --> 00:12:08.623
Yeah.
264
00:12:08.643 --> 00:12:10.063
So you're just building to the market.
265
00:12:10.435 --> 00:12:20.359
to the market and then also like I really enjoy having the ability for them to get up into a GM role and getting out of the field themselves, the technicians, and kind of like having a path for that.
266
00:12:21.019 --> 00:12:30.143
And I've found it harder, like to your point, like the larger locations, the recruiting game becomes the hardest part because the level of skill required is so much higher.
267
00:12:30.643 --> 00:12:32.143
To run the bigger business.
268
00:12:32.163 --> 00:12:32.523
Correct.
269
00:12:32.563 --> 00:12:36.604
And so I'm much more of like, I don't want to be going to these locations.
270
00:12:36.784 --> 00:12:39.705
And so I want the level of skill required as low as possible.
271
00:12:40.245 --> 00:12:43.446
And if someone drops out, I can put someone else in pretty quickly.
272
00:12:44.146 --> 00:12:51.928
And the downside to that is I'm dealing with a lower skilled person, but they're also cheaper and easier to find because I've dumbed down people.
273
00:12:52.708 --> 00:12:59.293
the skill level down to, hey, you need to manage a few crews, six to eight technicians tops, and do simple services.
274
00:12:59.813 --> 00:13:07.179
But from a profitability perspective, centralizing everything, assuming your market can bear that, I would go that route to maximize profit.
275
00:13:08.700 --> 00:13:09.921
Yeah, that's a good explanation.
276
00:13:10.161 --> 00:13:13.363
Do you think you lose, and this wasn't planned, but I'm really curious about this.
277
00:13:13.383 --> 00:13:14.624
It kind of rolls into our first question.
278
00:13:14.944 --> 00:13:15.645
Yeah, yeah.
279
00:13:15.665 --> 00:13:17.086
It does kind of roll into the first question.
280
00:13:17.706 --> 00:13:18.207
Does this
281
00:13:20.300 --> 00:13:25.182
Yeah, so it's a little bit more of a, as I hear you describe it, a little bit more of a McDonald's concept in the sense.
282
00:13:25.402 --> 00:13:35.446
Now, actually, before I say that, does this necessitate, and I assume it necessitates, keeping the service structure pretty simplistic?
283
00:13:35.486 --> 00:13:37.827
We offer a few services of a certain type.
284
00:13:37.927 --> 00:13:39.187
Is that a given?
285
00:13:39.407 --> 00:13:43.949
Yeah, the other reason why I would tend for the 10 locations with $1 million is because of that.
286
00:13:44.089 --> 00:13:47.851
Like, almost every service in home services, I can build a million-dollar business.
287
00:13:48.671 --> 00:13:53.695
And I think what happens when people stretch past a million, they start hitting the churn catches up with them.
288
00:13:54.015 --> 00:13:55.756
And all of a sudden they start adding more services.
289
00:13:55.876 --> 00:14:00.400
And so now they have this basket of 15 services they offer to get to four or five million.
290
00:14:00.700 --> 00:14:01.921
And that's not a business I really want.
291
00:14:02.361 --> 00:14:08.986
But that's just, again, I'm looking at the generic what people will do instead of honing in the one service or two services or the simple service.
292
00:14:09.226 --> 00:14:11.768
Those add more complexity to the business to add more revenue.
293
00:14:12.228 --> 00:14:14.370
So that's generally why we would do it.
294
00:14:15.887 --> 00:14:16.527
I like the answer.
295
00:14:17.067 --> 00:14:23.709
Back in the day, early days of service autopilot, I think this was more talking to some guys that were really big in commercial.
296
00:14:24.149 --> 00:14:27.751
But I had observed, and maybe my sample size was too small.
297
00:14:28.191 --> 00:14:32.492
There were a whole bunch of individuals running locations that were about three and a half million dollars.
298
00:14:33.836 --> 00:14:36.197
And again, sample size could have been too small.
299
00:14:36.558 --> 00:14:38.158
I think it was predominantly commercial.
300
00:14:38.198 --> 00:14:39.179
I was observing this.
301
00:14:39.319 --> 00:14:44.222
The commercial guys tended to be more aggressive, I guess you'd say, than I noticed in the residential space.
302
00:14:44.242 --> 00:14:50.825
And I also think, I've always believed you could build a commercial business bigger in top line revenue because it took fewer customers to get there.
303
00:14:51.045 --> 00:14:53.367
So fewer moving parts in some ways.
304
00:14:54.407 --> 00:14:59.350
Yeah, so I've always kind of wondered, what is that perfect size for a location in most markets?
305
00:14:59.910 --> 00:15:03.092
So your number's around a million in residential is what I'm hearing.
306
00:15:03.463 --> 00:15:05.724
Yeah, it's not so much the revenue dollar amount.
307
00:15:05.764 --> 00:15:09.027
It's actually just the number of technicians being managed by one person.
308
00:15:09.347 --> 00:15:09.907
That makes sense.
309
00:15:10.067 --> 00:15:11.648
Actually, that makes the most sense.
310
00:15:11.848 --> 00:15:20.454
As soon as we go to nine or 10 people, 11, 12, a founder can usually manage that many people, but replacing themselves gets very difficult.
311
00:15:20.714 --> 00:15:26.898
And so what usually happens is they have to get an operations person or another full-time non-revenue producing team member.
312
00:15:27.358 --> 00:15:32.262
And that's usually when I see this wilderness of profitability between about a million and 1.5 million.
313
00:15:32.482 --> 00:15:33.743
You got to grow through that.
314
00:15:34.204 --> 00:15:38.807
As soon as you get a secondary ops manager, office manager, you get a bigger shop.
315
00:15:38.827 --> 00:15:42.170
So you kind of have to scale pretty quickly up above 1.5.
316
00:15:42.991 --> 00:15:46.173
And yeah, like this kind of goes in our first question.
317
00:15:46.593 --> 00:15:46.753
Yeah.
318
00:15:46.994 --> 00:15:50.316
But it's the whole concept of like that sometimes for most people.
319
00:15:51.399 --> 00:15:57.962
Growing with this perpetual treadmill of I want to keep growing is a thing that causes burnout and like mental health stuff.
320
00:15:58.422 --> 00:16:06.546
And this is why I said two years ago, my belief about business changed is and it's because it impacted my family and people close to me so so deeply.
321
00:16:06.867 --> 00:16:09.468
And the cause of it was the addiction to constant growth.
322
00:16:09.962 --> 00:16:10.142
Yeah.
323
00:16:10.162 --> 00:16:12.783
So tell me again, so everybody hears it in case they missed it.
324
00:16:12.863 --> 00:16:15.705
What was your answer to that question that you changed your mind on?
325
00:16:15.985 --> 00:16:17.946
Yeah, that we should keep growing the business.
326
00:16:17.966 --> 00:16:19.026
We should always just be growing.
327
00:16:19.446 --> 00:16:21.427
Because that was my mentality back in the day.
328
00:16:21.567 --> 00:16:23.168
It was my mentality when we started Augusta.
329
00:16:23.768 --> 00:16:34.433
And I quickly realized that there were people that started their business for freedom of their time, spending time with their family, being able to take some vacation, not being locked down to a nine to five.
330
00:16:34.913 --> 00:16:35.634
And because they had...
331
00:16:36.526 --> 00:16:50.649
subscribed or even watched what I was doing or wanted to grow a bigger business or other people growing big businesses, they started doing exactly the opposite of the whole reason they started the business, which was to have time, have freedom.
332
00:16:51.129 --> 00:16:53.470
And a lot of it, like it's mental health stuff.
333
00:16:53.490 --> 00:16:59.111
And I know you and I have talked about this before, like people even in your circles where it's like it's just like they lose it.
334
00:16:59.231 --> 00:16:59.691
They snap.
335
00:17:00.431 --> 00:17:05.072
And I've just consistently seen that the only way to lose in business is to quit.
336
00:17:05.692 --> 00:17:09.354
And so I always mitigate for disaster, which is quitting.
337
00:17:09.934 --> 00:17:16.758
And so if pushing someone past their personal capacity is going to cause them to quit, I just mitigate that hardcore.
338
00:17:17.218 --> 00:17:29.245
And so another thing was I just kept seeing on the turnaround show all these businesses at $1.2, $1.3, $1.4 million as this really unprofitable time because they have to go higher two or three overhead rolls.
339
00:17:29.905 --> 00:17:35.929
And now all of a sudden, they're not making any more money than they were when they had one or two crew members, and they're really profitable, and they had raised prices.
340
00:17:36.349 --> 00:17:41.172
And a lot of times, it's because they start hitting where churn does equal new growth, and they're stalling out.
341
00:17:41.192 --> 00:17:43.493
So they start pouring more money into marketing.
342
00:17:43.513 --> 00:17:44.554
They keep their prices low.
343
00:17:44.974 --> 00:17:49.456
And all of a sudden, you have a business that's unprofitable, deep in debt, and stall that 1.4, 1.5.
344
00:17:49.657 --> 00:17:51.678
You don't have enough money to pay a really good ops person.
345
00:17:52.338 --> 00:17:55.799
But you kind of need to get everyone working out in the field.
346
00:17:56.120 --> 00:17:59.581
And so it's hard to hire someone dedicated to operations and really managing the team.
347
00:18:00.161 --> 00:18:04.263
And so for me, I think if I was talking to...
348
00:18:06.399 --> 00:18:09.941
statistically speaking, only 9% of people will build a million dollar business.
349
00:18:10.641 --> 00:18:30.150
And I had, I was always talking to that 9% back in the day, and then I realized that by forcing everyone into this one model, or like grow to a seven figure business, that's like the starting line for where you start entrepreneurship, I was, 91% of people can't, they're not capable of it.
350
00:18:30.750 --> 00:18:33.792
And there's no shade on them, it's just that they would break.
351
00:18:34.532 --> 00:18:40.694
And like seeing that live up close with someone caused me to rethink the thought that we should keep growing.
352
00:18:41.394 --> 00:18:48.016
And that's why now I'm much more of the opinion, like optimize for the smaller size that you can manage without getting overhead.
353
00:18:48.376 --> 00:18:58.079
And then if you make it really profitable and you're 20, 30% profitable and you want to make the next jump, now you have the cash reserves to go hire a good ops person and get past 1.5.
354
00:18:58.519 --> 00:18:59.860
So anyways, that was a long answer.
355
00:19:00.240 --> 00:19:02.281
No, no, that was a fantastic answer.
356
00:19:02.701 --> 00:19:05.221
I'm really glad the conversation ended up going that direction.
357
00:19:05.261 --> 00:19:06.462
In fact, I kind of want to continue it.
358
00:19:06.762 --> 00:19:10.923
But I want to, I guess, let me tell everybody what the first question, what on our talk it was.
359
00:19:10.983 --> 00:19:14.704
And basically, it was this idea of how big should I grow my business?
360
00:19:15.884 --> 00:19:19.145
And it came from someone in the comments asking me.
361
00:19:20.453 --> 00:19:21.153
how big should they grow?
362
00:19:21.173 --> 00:19:22.354
And there was more context to it.
363
00:19:22.374 --> 00:19:28.096
If I remember correctly, they were around 700,000 approaching a million and they're trying to think through how big should this business be?
364
00:19:28.196 --> 00:19:33.619
I think it's one of the single most important questions that you can ask yourself.
365
00:19:34.339 --> 00:19:38.981
And I have a couple of thoughts on this that, I mean, Mike, frankly, you really articulated it well.
366
00:19:39.821 --> 00:19:43.983
I tend to live in this world of I want to grow things bigger and bigger because to me,
367
00:19:46.069 --> 00:19:48.670
I like forward progress and improvement and growth.
368
00:19:48.790 --> 00:19:50.251
And so that stimulates me.
369
00:19:50.271 --> 00:19:51.411
And we're all different people.
370
00:19:51.431 --> 00:19:53.092
We all want different things.
371
00:19:53.112 --> 00:19:53.973
We care about different things.
372
00:19:53.993 --> 00:19:54.993
We have different priorities.
373
00:19:55.033 --> 00:19:58.134
And so for me, bigger is better in that.
374
00:19:58.315 --> 00:20:00.536
But I'm not really, like, you also have to know about me.
375
00:20:01.036 --> 00:20:03.737
I'm not a guy that tries to optimize everything for myself.
376
00:20:03.797 --> 00:20:05.298
And I don't really, I'm...
377
00:20:06.458 --> 00:20:11.039
This doesn't even probably mean anything because I'm very well off financially.
378
00:20:11.419 --> 00:20:15.260
But there comes a point where I also don't believe in optimizing for more money.
379
00:20:15.320 --> 00:20:24.742
And the only reason I thought to say this is because I think most people I know who are as successful as I have been or more are still optimizing for more money in a massive way.
380
00:20:25.843 --> 00:20:29.083
And it becomes more of a game than anything else or an accumulation thing.
381
00:20:29.103 --> 00:20:30.984
So that's the reason why I said that.
382
00:20:31.004 --> 00:20:31.964
I think it's a trap.
383
00:20:32.104 --> 00:20:34.325
It's understanding what you want to get in life.
384
00:20:36.065 --> 00:20:39.428
Like power move in a sense in life is saying good is good enough.
385
00:20:39.608 --> 00:20:44.332
Like it's like I'm good and, and, and versus always going for more.
386
00:20:44.352 --> 00:20:47.715
So I do want to put that out there and let you know that that is my wiring.
387
00:20:47.735 --> 00:20:52.919
That's what I believe, but I still like growth in business because it feels like improvement in business.
388
00:20:54.000 --> 00:20:59.224
But man, you really hit on something that I'm aware of, but I don't give it a lot of thought.
389
00:20:59.304 --> 00:21:01.426
And that is that, um,
390
00:21:02.881 --> 00:21:06.682
Most people, and I've definitely talked about, because back when at Academy, we would talk about this.
391
00:21:07.342 --> 00:21:11.703
It's this idea that you need to know what you're going for and optimize for that.
392
00:21:11.723 --> 00:21:24.925
And if you don't want to build the big business or you've tried and it's just burned you out in every possible way and sucked all the life out of you, you don't have to do it because everybody around you is saying they want to do it.
393
00:21:25.185 --> 00:21:27.446
And to your point, the data says most people will never do it.
394
00:21:28.186 --> 00:21:29.527
And so I think that's really good.
395
00:21:29.988 --> 00:21:40.718
And to make a point on that, one of the questions I asked you was the first question, what's more dangerous, growing too slow or growing too fast?
396
00:21:41.638 --> 00:21:45.222
And when I wrote this question, my initial answer was growing too slow.
397
00:21:46.260 --> 00:21:47.541
But I'll give you why.
398
00:21:48.061 --> 00:21:50.422
Because I would have never thought of this except you said something, Mike.
399
00:21:51.122 --> 00:21:57.825
But I changed my mind because without question, it's for sure growing too fast because people run themselves out of money.
400
00:21:58.185 --> 00:21:58.745
They burn out.
401
00:21:58.765 --> 00:21:59.665
They destroy marriages.
402
00:21:59.705 --> 00:22:00.526
They destroy companies.
403
00:22:00.546 --> 00:22:02.226
They destroy relationships with children.
404
00:22:03.147 --> 00:22:04.287
There's no question that's it.
405
00:22:04.687 --> 00:22:10.690
But my first inclination, had you asked me that question, the first words that might have come out of my mouth would be growing too slow.
406
00:22:11.430 --> 00:22:15.235
And that's probably technically the wrong answer, but for a lot of reasons, I actually think it's the right answer.
407
00:22:15.255 --> 00:22:18.459
And here's the right answer or why I think it's the right answer.
408
00:22:18.559 --> 00:22:24.006
What I worry about for a lot of people is there's growing...
409
00:22:25.663 --> 00:22:30.645
There's this idea that you don't keep growing, and maybe that's okay.
410
00:22:30.745 --> 00:22:36.968
But that's only okay if you do it the way you teach, and that is you grow a really profitable business.
411
00:22:37.448 --> 00:22:47.592
Unfortunately, what I've seen is there are a lot of people that stop growing, but they never – if you grow big and you grow fast, you have to learn a lot of skills.
412
00:22:48.491 --> 00:22:57.794
If you don't choose to grow big or fast, that doesn't mean you don't have to do the hard work and learn all the skills because if you don't do that, then you don't have a very profitable business.
413
00:22:58.234 --> 00:23:02.315
And that is the flip side of the coin and that is destructive as well.
414
00:23:02.935 --> 00:23:16.659
I mean, there's so many individuals that have smaller companies that work 70 hours a week and it's them and a couple guys and they've done all the same destruction in life as they did as the guy building the giant company that went too fast.
415
00:23:17.079 --> 00:23:18.500
So I see that too.
416
00:23:19.160 --> 00:23:28.025
And the reason, going back to my question, the reason I thought too slow is one of the things I've most observed, you said it, I don't remember how you said it, but you're just, I don't, you'll, you'll probably know.
417
00:23:28.065 --> 00:23:29.645
It was something about keeping people in business.
418
00:23:30.486 --> 00:23:37.009
I don't know if that rings a bell, but you said something to the effect that you can make it in business as long as you don't screw it up.
419
00:23:37.049 --> 00:23:38.250
I don't remember how you worded it.
420
00:23:38.890 --> 00:23:41.751
Does that mean quitting is quitting is the only way to fail.
421
00:23:42.212 --> 00:23:42.592
There you go.
422
00:23:42.732 --> 00:23:42.932
Okay.
423
00:23:43.272 --> 00:23:44.653
Now, why might you quit?
424
00:23:44.773 --> 00:23:54.858
Sometimes I think it's you grow too slow and you don't get past certain milestones and you're still stuck working the 70 hours a week or more and you burn out.
425
00:23:56.018 --> 00:23:57.859
And you're just so done.
426
00:23:58.039 --> 00:23:59.680
And you could have stayed in the business.
427
00:23:59.700 --> 00:24:00.380
You could have made it.
428
00:24:00.640 --> 00:24:08.823
But you didn't learn and apply some of the really critical lessons to get more help inside the business to take more stuff off your plate or raise pricing.
429
00:24:09.083 --> 00:24:15.006
So another long answer, but to kind of piggyback on what you said, that's the other side of the coin that I worry about.
430
00:24:15.046 --> 00:24:20.048
So probably the secret sauce, whether you want to just grow to a certain size or you want to grow really big is...
431
00:24:21.010 --> 00:24:33.294
In either case, there are really, really critical principles you've got to learn and apply along the lines of getting clients and pricing and not doing too many services and not spreading yourself too thin and saying no.
432
00:24:33.854 --> 00:24:40.116
And whether you're big or small, if you apply those things, the odds of you staying in business long-term and being successful go up by...
433
00:24:41.263 --> 00:24:41.863
exponentially.
434
00:24:41.943 --> 00:24:43.023
Yeah, 100%.
435
00:24:43.363 --> 00:24:49.905
I think I always go back to supply and demand and the fact that if demand is greater than supply, I have an option.
436
00:24:50.425 --> 00:25:03.948
And that is I can either go into growth mode, which is I buy more trucks, I hire more people, I continue to market, I continue to expand my capacity in terms of asset capacity and my labor capacity.
437
00:25:03.968 --> 00:25:04.388
Yeah.
438
00:25:04.748 --> 00:25:07.710
Or I have this other option of raising prices, i.e.
439
00:25:08.110 --> 00:25:11.113
dampening down the demand and increasing profit margin.
440
00:25:11.553 --> 00:25:30.266
And I think the thing that I've fought hard for, and this is actually the reason for the Copy and Paste Millionaire book, it was all the logical side of what I'm talking about, but the actual crux of it, I saw so many people quitting around this trying to get past a million and just scale, scale, grow, grow, go into debt, have unprofitable years at the expense of all of it.
441
00:25:30.306 --> 00:25:31.206
I doubled in revenue.
442
00:25:31.467 --> 00:25:33.228
I think it's okay to take a year.
443
00:25:33.828 --> 00:25:34.889
Oh, I agree with that.
444
00:25:35.069 --> 00:25:37.010
Even if you're in growth phase, I totally agree with that.
445
00:25:37.070 --> 00:25:43.734
And like you mentioned a couple months ago, is like having plateaus where you jump and then you plateau, you jump and you plateau.
446
00:25:44.114 --> 00:25:53.220
And what I see people do is they just zero to 60 as hard as they possibly can and ramp straight up without taking that one season number.
447
00:25:53.240 --> 00:25:54.341
Hey, we're going to raise prices.
448
00:25:54.741 --> 00:25:58.903
Our close rate is going to go from 60% down to 40%, but we're going to put 150 grand in the bank.
449
00:25:59.884 --> 00:26:07.509
And we're not going to keep going paycheck to paycheck and putting pressure on the kids and the family because those things is the reason you started the business.
450
00:26:08.330 --> 00:26:09.711
And we lose sight of that sometimes.
451
00:26:09.731 --> 00:26:11.532
And I think a lot of it is we are comparing.
452
00:26:12.133 --> 00:26:14.874
And so I've really pivoted hard towards this.
453
00:26:14.934 --> 00:26:17.236
You're either in growth mode or you're in profit mode.
454
00:26:17.316 --> 00:26:23.841
And you got to choose one or the other because to say that I want to be profitable, I also want to grow by like 80% this year from a million to 1.8.
455
00:26:24.121 --> 00:26:25.822
Like you're kind of speaking at both sides of your mouth.
456
00:26:25.842 --> 00:26:26.843
Like which one are we doing here?
457
00:26:27.643 --> 00:26:30.444
And so we've tried to create two very distinct tracks of business.
458
00:26:30.825 --> 00:26:32.325
I'm in growth mode or I'm in profit mode.
459
00:26:32.345 --> 00:26:38.168
And then we give our recommendations around like, you wanna grow as fast as possible, to your point, past a certain size.
460
00:26:38.408 --> 00:26:41.570
Because if you're 250,000 annual revenue business, you will burn out.
461
00:26:41.850 --> 00:26:43.570
Like physically, you just can't do that long-term.
462
00:26:43.931 --> 00:26:45.711
Like 20, 30 years of that, you just can't.
463
00:26:46.172 --> 00:26:48.553
And so to your point, that will also cause someone to quit.
464
00:26:49.413 --> 00:26:58.823
But also I see the same thing happen when someone hits the ground running $300,000 their first year, $1 million the next year, $2 million the next year, and all of a sudden they have $500,000 worth of debt.
465
00:26:58.843 --> 00:27:07.933
They're not making any profit because their cash is so – they're just – they're demoralized and they just throw in the towel because it's on paper they're unsolvent.
466
00:27:08.013 --> 00:27:10.034
They have more liabilities than they have assets.
467
00:27:10.715 --> 00:27:20.541
And they've built the infrastructure to the point where even raising prices is difficult to make up for the huge gap they've created when you have $20,000, $30,000 a month going out to debt payments.
468
00:27:20.561 --> 00:27:35.011
So anyways, that's my, the real reason why I actually wrote the book and talk about this and talk about this like what I feel is like, quote unquote, the perfect size business is six to eight technicians optimizing over the course of a few years.
469
00:27:35.751 --> 00:27:36.412
from 700,000.
470
00:27:36.712 --> 00:27:51.863
And as you raise prices up to a million dollars, I also think though, for the three, four or 5% of people, you take that money and then you go hire great operations manager, you learn the skill of leadership, you get sales operations admin covered and become the CEO and build a 3 million plus business.
471
00:27:52.503 --> 00:27:52.664
Um,
472
00:27:53.344 --> 00:27:55.565
But yeah, that's my contrarian take now.
473
00:27:55.625 --> 00:28:16.752
And it is, it changed a lot, like just seeing it so close to me of what it did to family, what it did to someone's life, everything they had built, and just realizing that like, I have to be very careful to put that in front of anyone because statistically speaking, a very few percentage points of the population can handle that kind of psychological stress.
474
00:28:17.112 --> 00:28:20.313
Again, going back to Service Autopilot Academy, I was naive
475
00:28:21.013 --> 00:28:30.845
to how much debt people carried to get themselves where they got, which wasn't very exciting and just the unbelievable damage that came from it.
476
00:28:30.885 --> 00:28:31.385
I'm very...
477
00:28:32.347 --> 00:28:48.235
I'm very, like when we had Academy, my contest that we had where the Academy members were going for competing for an annual vacation, a $15,000 vacation we'd send you on where you had to prove changes in your world.
478
00:28:48.916 --> 00:28:53.338
I made 50% of the score personal, not business.
479
00:28:54.078 --> 00:28:56.860
Because the destruction, it's everything you said.
480
00:28:56.900 --> 00:28:59.321
Like we all start out in business and we say we want freedom.
481
00:28:59.681 --> 00:29:00.302
We want this.
482
00:29:01.202 --> 00:29:06.147
And then we find ourselves in traps greater than if we had a job.
483
00:29:06.628 --> 00:29:08.349
And there's just so much damage that comes from that.
484
00:29:08.369 --> 00:29:10.632
So I 100% see that argument.
485
00:29:10.952 --> 00:29:12.133
And I've seen that live out.
486
00:29:12.534 --> 00:29:14.556
Where I always get a little stuck is,
487
00:29:16.083 --> 00:29:20.864
I think maybe in the service autopilot world, I saw a large self-select of bigger companies.
488
00:29:20.884 --> 00:29:22.205
We had a lot of bigger companies.
489
00:29:23.085 --> 00:29:26.526
And so you meet a lot of the people that are going to build the bigger things.
490
00:29:27.026 --> 00:29:35.889
And then the other part of me is that there's a part of, I think a little the way I'm wired, I've worked with hundreds and hundreds and hundreds of people over the years.
491
00:29:35.949 --> 00:29:37.109
And just I've known so many people.
492
00:29:37.929 --> 00:29:40.410
I generally feel that a lot of people...
493
00:29:42.010 --> 00:29:49.358
could be and do way more if they were just exposed to people doing bigger things and way more.
494
00:29:49.639 --> 00:29:50.840
Like it's within them.
495
00:29:51.280 --> 00:29:52.982
They're completely capable of it.
496
00:29:53.022 --> 00:30:01.051
And so there's this part of me that also, it doesn't negate anything you said, I agree, but there's also this part of me that's always looking at people and thinking, hey,
497
00:30:02.231 --> 00:30:03.312
It's all inside of you.
498
00:30:03.332 --> 00:30:05.253
You're fully capable of this.
499
00:30:05.333 --> 00:30:08.556
We just need to get you doing these few things consistently.
500
00:30:09.116 --> 00:30:12.319
And you could transition from the business you have now to something.
501
00:30:12.339 --> 00:30:13.680
You're so close.
502
00:30:13.760 --> 00:30:15.261
That's like the best word, the words.
503
00:30:15.301 --> 00:30:16.241
You're so close.
504
00:30:16.562 --> 00:30:18.043
I just see that with so many people.
505
00:30:18.063 --> 00:30:22.846
And so there's this part of me that like my heart for them is like, you can do more, you can be more.
506
00:30:22.866 --> 00:30:28.410
And so that's a little bit of also why I like my messaging or I've gravitated to this messaging of go bigger.
507
00:30:29.231 --> 00:30:31.413
But I think the way you say it is...
508
00:30:34.193 --> 00:30:34.733
is wise.
509
00:30:34.793 --> 00:30:39.055
Like, it's, it's, it's an important picture to paint both sides of this.
510
00:30:39.495 --> 00:30:39.616
Yeah.
511
00:30:39.636 --> 00:30:42.437
What, what we do, we actually have three different capacities.
512
00:30:42.457 --> 00:30:47.439
So we have asset capacity, we have labor capacity, and we have personal capacity.
513
00:30:47.919 --> 00:30:57.584
And so we measure every single month for the owners of like, and I talk about like people could calculate it themselves, but like how much revenue can we do or how many customers can we serve using our assets?
514
00:30:58.544 --> 00:31:02.507
our trucks and our equipment, how much can we do based on how many employees we have?
515
00:31:03.168 --> 00:31:08.532
But then the hardest part to quantify is the personal capacity because I can't- It's ever expanding.
516
00:31:09.012 --> 00:31:09.572
What's that, sorry?
517
00:31:10.013 --> 00:31:11.394
It's ever expanding, hopefully.
518
00:31:11.574 --> 00:31:13.636
Right, and that's the part that's so beautiful is like-
519
00:31:14.396 --> 00:31:17.017
So many times people get the victim mentality like, oh, I can't.
520
00:31:17.297 --> 00:31:25.280
But the beautiful thing about personal capacity is I don't have to spend anything now with the with technology to be able to expect extend my personal capacity.
521
00:31:25.720 --> 00:31:29.661
And in the short term, any of those three capacities, if you go past it.
522
00:31:29.881 --> 00:31:40.785
So, for example, if you have three trucks, but they're running seven days a week, if you have three employees, but they're all working, you know, 60 hours a week in the short term, if you extend above capacity in any of those three, you'll make more money in the short term.
523
00:31:41.285 --> 00:31:47.970
And in the short term, if you extend above your personal capacity and you're working way more hours, you're stressing your personal relationships, your body's given out.
524
00:31:48.250 --> 00:31:49.451
In the short term, you make more money.
525
00:31:49.471 --> 00:31:50.792
But in the long term, you quit.
526
00:31:51.672 --> 00:31:55.355
Like long term, the truck breaks down, the employees leave it on mutiny.
527
00:31:55.675 --> 00:31:58.157
And eventually, no, your wife gives you the talk.
528
00:31:58.877 --> 00:32:04.701
And how we've always looked at it is like when you're coming up against those capacities is the time to go into profit mode.
529
00:32:05.362 --> 00:32:08.064
But then you've got to look at your lowest capacity and increase it.
530
00:32:08.704 --> 00:32:12.987
So if the reason I can't grow is because I need to buy another truck, increase your asset capacity.
531
00:32:13.367 --> 00:32:16.830
If it's because I can't get any employees, you've got to increase your labor capacity.
532
00:32:17.170 --> 00:32:20.753
And then the challenging one to really quantify is that personal capacity.
533
00:32:20.773 --> 00:32:23.695
But it's so beautiful because you can get around the right people.
534
00:32:23.755 --> 00:32:25.076
You can listen to books now.
535
00:32:25.136 --> 00:32:28.838
And I learned so much from you, and we never even met years ago.
536
00:32:29.299 --> 00:32:33.222
And so the ability to do that now and increase your personal capacity is the part that I think...
537
00:32:34.022 --> 00:32:35.443
Most people don't tap into it.
538
00:32:35.663 --> 00:32:38.684
I actually have kind of thought of it as it's pride.
539
00:32:39.465 --> 00:32:42.747
And the reason people's personal capacity doesn't grow is because of pride.
540
00:32:43.107 --> 00:32:50.070
They're not willing to go in the right rooms or admit that they might need some help or get a coach or read a book or go into a podcast or watch a video.
541
00:32:51.251 --> 00:32:53.532
And so that's why I've always said like pride is the enemy.
542
00:32:54.012 --> 00:32:56.414
Like ego is the enemy comes from the stoic thing.
543
00:32:56.454 --> 00:33:01.036
But like pride is the enemy because ultimately you can increase your personal capacity.
544
00:33:01.972 --> 00:33:05.013
Yeah, which is my belief and kind of my want for people in general.
545
00:33:06.173 --> 00:33:06.753
That's very good.
546
00:33:06.853 --> 00:33:09.494
Is all of this covered in your copy and paste book?
547
00:33:09.674 --> 00:33:11.015
Generally, yeah.
548
00:33:11.175 --> 00:33:16.616
So when I saw the question on the docket, I was like, hey, well, it's one thing I've never talked about.
549
00:33:16.636 --> 00:33:24.938
And I was like, the reason for the book, it was all the mathematical reasons as to why a business should do it for most people.
550
00:33:25.018 --> 00:33:30.400
And I talk about how like, hey, I'm going to give you the roadmap to a big business, but most people should stop right here.
551
00:33:31.260 --> 00:33:32.582
And right here, like, what's that?
552
00:33:32.642 --> 00:33:33.482
Is that number a million?
553
00:33:33.562 --> 00:33:36.465
Six to eight technicians raise prices.
554
00:33:36.525 --> 00:33:39.648
And that's a better way to think about whatever the revenue sizes of a tech.
555
00:33:39.848 --> 00:33:42.931
Yeah, which you're saying six to eight is what a manager can easily manage.
556
00:33:42.971 --> 00:33:43.351
Without need.
557
00:33:43.371 --> 00:33:44.633
Seven people rule.
558
00:33:44.813 --> 00:33:49.097
Book yourself out, take a vacation, have a 20, 30% profit margin over the course of a few years.
559
00:33:49.397 --> 00:33:52.618
Yeah, like all of that, like I talk about the math of why it makes sense.
560
00:33:52.759 --> 00:34:02.623
But the part that I never shared before is the fact that that was a result of seeing time and time again, like one of the biggest reasons why Augusta Locations closed down is divorce.
561
00:34:05.320 --> 00:34:13.925
And when it came really close to my family and seeing someone's business go to nothing, and it was that going – trying to just press to that two million part.
562
00:34:14.445 --> 00:34:19.608
And I realized that me saying that or putting that in front of people was going to cause damage.
563
00:34:19.869 --> 00:34:23.751
And the part that I felt bad about and the reason why I felt I needed to write the book was –
564
00:34:25.452 --> 00:34:33.834
if I told people they should keep growing and I just told them how to keep growing instead of how to become profitable, is no one would come back to me when their family fell apart and blame me.
565
00:34:34.114 --> 00:34:39.796
Because what I was saying is true, but it was only true for the person that had the right level of capacity personally.
566
00:34:40.076 --> 00:34:41.537
And I just had to realize that most people don't.
567
00:34:42.177 --> 00:34:48.218
And I will do my best to try to increase their capacity or give them the skills, give them the knowledge, give them the education, put them in the right places.
568
00:34:48.679 --> 00:34:53.360
But yeah, I felt more responsible for the content I was putting out in terms of how I say it.
569
00:34:54.573 --> 00:34:54.933
I like it.
570
00:34:55.413 --> 00:35:00.916
If you were to, to our question here, how do I know what size business should I build?
571
00:35:01.336 --> 00:35:07.578
If you're trying to answer the question of, if I'm trying to answer for myself, what is my capacity?
572
00:35:07.779 --> 00:35:08.919
What's my capability?
573
00:35:08.979 --> 00:35:12.340
What, a capability is even limiting because it's a temporary thing.
574
00:35:12.761 --> 00:35:13.801
Our capability should grow.
575
00:35:14.181 --> 00:35:18.903
But is there, are you able to articulate how I would think about that for me?
576
00:35:18.963 --> 00:35:22.885
If I was asking the question in terms of what my capability is or capacity?
577
00:35:23.185 --> 00:35:24.787
I usually actually try to reverse engineer it.
578
00:35:24.847 --> 00:35:28.070
I say, what size of business do you need to satisfy the goal?
579
00:35:28.730 --> 00:35:38.079
And so if the goal is, hey, I just want to not work a nine to five, and I want to be able to have a couple weeks vacation with my family, and that phone over there doesn't ring from customers.
580
00:35:38.599 --> 00:35:40.441
Okay, well, what size of business do we need for that?
581
00:35:40.842 --> 00:35:45.606
If you're saying, hey, I want a private jet, we have a very different size of business we need to build.
582
00:35:46.207 --> 00:35:48.268
And so I like to think of it that way because –
583
00:35:49.358 --> 00:35:50.579
Otherwise, we just get on this treadmill.
584
00:35:51.300 --> 00:35:52.562
And it's like, well, I started a business.
585
00:35:52.662 --> 00:35:53.783
And I want to do a million.
586
00:35:53.803 --> 00:35:54.404
You hit a million.
587
00:35:54.604 --> 00:35:55.705
I remember when I hit a million.
588
00:35:56.106 --> 00:35:58.949
And I was like, when I hit a million, I will give all my money away.
589
00:35:59.670 --> 00:36:00.611
Everything over what I need.
590
00:36:00.651 --> 00:36:02.933
And I'll just be philanthropist.
591
00:36:02.953 --> 00:36:03.894
I'll just give all the money away.
592
00:36:04.034 --> 00:36:05.756
Because I thought a million dollars was everything.
593
00:36:06.017 --> 00:36:06.557
Then you hit a million.
594
00:36:06.637 --> 00:36:07.098
I get 10.
595
00:36:07.118 --> 00:36:07.919
Then you hit 10.
596
00:36:07.979 --> 00:36:08.499
I get 100.
597
00:36:08.519 --> 00:36:10.421
So the whole idea of like...
598
00:36:10.962 --> 00:36:12.004
getting off the treadmill.
599
00:36:12.144 --> 00:36:23.058
And I have seen, like I see so many P&Ls from small businesses and I consistently see people doing 900, a million, 1.1 that have built the business over five, six, seven years.
600
00:36:23.099 --> 00:36:23.699
It's in profit.
601
00:36:23.739 --> 00:36:26.263
It's making 20, 30, 30 plus percent profit.
602
00:36:26.543 --> 00:36:32.069
And then I'm looking at a two, $3 million business where the guy's saying, hey, I got two weeks or else my wife's going to leave me.
603
00:36:32.349 --> 00:36:34.011
And I got $500,000 worth of debt.
604
00:36:34.251 --> 00:36:36.814
And my office manager just walked out and I don't know what to do.
605
00:36:37.135 --> 00:36:38.756
I just started this new thing called the confession booth.
606
00:36:39.197 --> 00:36:42.561
And people call in anonymously and we garbled their voice with AI.
607
00:36:43.121 --> 00:36:48.327
And on the most recent one, on Monday, $1.5 million business, the guy's crying on the show.
608
00:36:49.898 --> 00:36:51.119
And he doesn't know what to do.
609
00:36:51.439 --> 00:36:52.299
His employees have left.
610
00:36:52.359 --> 00:36:53.260
He doesn't have any money.
611
00:36:53.540 --> 00:36:54.660
They're stressing the family.
612
00:36:54.881 --> 00:37:08.968
Like I have seen it so many times where I have to just like, okay, step back and realize that like sometimes speaking to how I think of the world or how I think about my business is actually my ego speaking down on other people that might not have it yet.
613
00:37:09.855 --> 00:37:15.738
And so, I don't know, it's strange because I also like to talk about big businesses and like multiple levels of management.
614
00:37:15.778 --> 00:37:18.259
And I've done like, that's my business.
615
00:37:18.440 --> 00:37:22.222
And so sometimes it's difficult to say, hey, I don't think you should do that.
616
00:37:22.442 --> 00:37:28.145
Not because you're any less than, but because your goals are a lot smaller and you'd be just fine with a smaller size business.
617
00:37:28.785 --> 00:37:31.807
So I usually like to work reverse back from what's the goal?
618
00:37:32.187 --> 00:37:33.908
Because I believe that the business should serve you.
619
00:37:34.228 --> 00:37:35.369
You should not serve the business.
620
00:37:35.829 --> 00:37:38.030
And a lot of times people flip that the other way around.
621
00:37:38.270 --> 00:37:40.311
Yeah, and the argument would be you can always change your mind.
622
00:37:40.872 --> 00:37:42.693
You can build to whatever you want.
623
00:37:42.753 --> 00:37:46.715
You could say, goal number one, we're going to build a $700,000 business.
624
00:37:46.775 --> 00:37:47.676
It's going to look like this.
625
00:37:47.776 --> 00:37:49.057
It's going to generate this income.
626
00:37:49.617 --> 00:37:50.518
That's going to be golden.
627
00:37:50.538 --> 00:37:53.479
But then you find you've become this different kind of person.
628
00:37:53.639 --> 00:37:54.480
Well, the kids move out.
629
00:37:54.700 --> 00:37:55.441
The kids move out.
630
00:37:55.581 --> 00:37:56.101
Yeah, whatever.
631
00:37:56.141 --> 00:37:56.881
Yeah, yeah.
632
00:37:56.981 --> 00:37:58.863
I think it's very smart.
633
00:37:59.223 --> 00:38:03.806
One time I did this session in Academy with Jason Kupp, and we had this debate.
634
00:38:06.527 --> 00:38:12.170
And it was a whole session and I was on the go bigger side and Jason cup was on the your side.
635
00:38:12.370 --> 00:38:12.610
Okay.
636
00:38:13.250 --> 00:38:16.792
And he is, I would, I would say he's probably pretty firmly on your side.
637
00:38:16.812 --> 00:38:18.413
I think I would be speaking correctly.
638
00:38:19.408 --> 00:38:23.251
But I mean, he's didn't, and I'm not actually, I would say I'm on your side too.
639
00:38:23.271 --> 00:38:24.732
I'm like, I think this is really well said.
640
00:38:25.133 --> 00:38:27.074
We have to create some debate here.
641
00:38:27.094 --> 00:38:28.535
I love the bigger conversation.
642
00:38:28.595 --> 00:38:30.997
Like I love the bigger business.
643
00:38:31.017 --> 00:38:33.959
I have a lot of my friends own big companies with significant wealth.
644
00:38:34.020 --> 00:38:35.000
I love that world.
645
00:38:35.601 --> 00:38:36.782
And I didn't live in that world forever.
646
00:38:36.802 --> 00:38:38.003
You know, I grew into that world.
647
00:38:38.043 --> 00:38:38.463
I love it.
648
00:38:38.843 --> 00:38:40.304
And it just stimulates my brain.
649
00:38:40.545 --> 00:38:44.348
And so where I'm going with this though, so I can talk both sides of this.
650
00:38:45.254 --> 00:38:46.514
but I gravitate towards the bigger.
651
00:38:46.935 --> 00:38:48.095
And so I took that position.
652
00:38:48.375 --> 00:38:51.116
We were saying, what would we personally build based on everything we know?
653
00:38:51.416 --> 00:38:53.797
And I, of course, went bigger, which is what I've always done.
654
00:38:54.277 --> 00:39:03.460
He took your side and he would have just built an incredibly well-run, under a million dollar business that just gives you an incredibly good life.
655
00:39:04.040 --> 00:39:06.441
And his arguments were all the same arguments as you have.
656
00:39:06.501 --> 00:39:08.521
That's what works for most people.
657
00:39:08.941 --> 00:39:09.942
He's got a lot of skills.
658
00:39:10.182 --> 00:39:11.282
He's seen a lot of things.
659
00:39:11.342 --> 00:39:13.903
He knows, he advises people running massive companies
660
00:39:14.763 --> 00:39:21.930
And yet he would have argued that that is the, I don't know why I brought him into this other than I've had this conversation before.
661
00:39:22.411 --> 00:39:29.038
And I think it's a really solid argument, which goes back to the question of what kind of business should I build?
662
00:39:29.098 --> 00:39:29.798
And so to me,
663
00:39:30.559 --> 00:39:34.721
The starting point, I did have this as I was thinking through this question is it starts with what do you want?
664
00:39:35.521 --> 00:39:40.144
Like what size business do you want that you believe you can build?
665
00:39:40.644 --> 00:39:45.086
I think there's this element initially if you've just got to believe something.
666
00:39:45.686 --> 00:39:50.949
Like if you tell yourself I'm going to build a $10 million company, but you don't believe any part of that.
667
00:39:52.322 --> 00:40:04.279
And you're going to make all kinds of decisions that are probably wrong for the business, swinging too big, spending too much money, trying too expensive of marketing techniques too early, buying maybe too big of equipment too early, too big of a job.
668
00:40:04.339 --> 00:40:04.779
I don't know.
669
00:40:04.879 --> 00:40:06.802
I don't know what decisions it leads to.
670
00:40:06.822 --> 00:40:07.703
But I do think...
671
00:40:08.184 --> 00:40:11.526
that the more realistic you can be about this, the better.
672
00:40:11.806 --> 00:40:13.848
I do think it's critical for us to believe.
673
00:40:14.568 --> 00:40:22.113
We hear people like Elon Musk and all these other extreme stretch goals that are almost unbelievable, and that works, I think, for a few people.
674
00:40:22.613 --> 00:40:27.637
But it does not work, in my opinion, for most people, nor does it work for the team inside their companies.
675
00:40:28.277 --> 00:40:29.318
They just don't believe it.
676
00:40:29.358 --> 00:40:31.219
They hear it as just a bunch of talk.
677
00:40:31.599 --> 00:40:33.381
And so I do think there's this...
678
00:40:34.361 --> 00:40:38.082
place where you've got to kind of set a goal that you can really see yourself getting to it.
679
00:40:38.422 --> 00:40:40.343
And then you set the next goal and the next goal.
680
00:40:40.923 --> 00:40:44.544
That is so where do you want to get to?
681
00:40:44.704 --> 00:40:47.345
What do you believe you have the tools to build right now?
682
00:40:47.725 --> 00:40:55.627
And then just keep, you know, keep the door open for going in a new direction should you find that you love this thing and you want to go bigger.
683
00:40:55.927 --> 00:40:57.648
Yeah, life changes, your goals change.
684
00:40:57.708 --> 00:41:03.870
And then assuming that you've run a profitable business and you've been investing in yourself, your personal capacity can be ready for that next step.
685
00:41:04.270 --> 00:41:12.653
And I think a lot of times what got someone to a million is the exact same thing they have to deconstruct to get to 3 million because now they have to learn the skill of leadership.
686
00:41:13.233 --> 00:41:17.776
And that's the part where I feel like as much as like some of those elements came natural to me.
687
00:41:18.977 --> 00:41:24.541
And I can sometimes discount just how difficult it is to get managers to work, mid-level people.
688
00:41:24.561 --> 00:41:25.702
People have lots of skills.
689
00:41:26.383 --> 00:41:32.307
And then I see people beating their head up against that and putting themselves in a really bad financial position.
690
00:41:32.367 --> 00:41:33.368
And honestly...
691
00:41:34.719 --> 00:41:36.620
like the mental health thing is so humbling.
692
00:41:37.400 --> 00:41:37.860
It just is.
693
00:41:38.040 --> 00:41:43.522
It just, it's, it brings you to this point where you're just like, man, like I'm a, I'm a chemical away in my brain from being like that.
694
00:41:43.982 --> 00:41:45.163
And just humbles you so much.
695
00:41:45.783 --> 00:41:48.844
And so I'm really like, it was a horrible experience those several years.
696
00:41:49.965 --> 00:41:52.806
But like, it was also, it didn't happen to me, but someone very close to me.
697
00:41:52.826 --> 00:41:55.947
And so it was very humbling to realize just how,
698
00:41:56.787 --> 00:42:22.841
fragile this brain is and i would never want to put someone in that place like i don't care who they are my worst enemy and so um that's really where the perspective came from when you're telling someone a million dollars might be the goal are they do they they probably just need an operational type person so that's your gm is your gm generally just an operational person
699
00:42:23.468 --> 00:42:34.032
Yeah, so we have what we call a working GM, which means the GM still is out in the field producing revenue, assuming your simple services, because we're trying to automate sales with instant quotes and over the phone.
700
00:42:34.052 --> 00:42:38.394
And the admin side, we're trying to keep, where we don't have to hire an office person.
701
00:42:38.934 --> 00:42:41.775
So that would be a VA or a call center, for example.
702
00:42:41.835 --> 00:42:44.796
We have command center at the Augusta, but like people can do this elsewhere.
703
00:42:45.876 --> 00:42:49.558
And the objective is that that GM is really focused on operations.
704
00:42:50.038 --> 00:42:51.439
And they are managing the team.
705
00:42:51.459 --> 00:42:52.579
They're the person that they call.
706
00:42:52.599 --> 00:42:57.281
If there's mistakes, if there's issues, like all doing of the work goes through them.
707
00:42:58.141 --> 00:43:01.863
And that's a role that I can usually get a technician that's been with me four or five years.
708
00:43:02.323 --> 00:43:04.484
I can teach them how to train someone up.
709
00:43:04.524 --> 00:43:10.026
I can give them systems that are simplified, give them recurring revenue so they don't have to sell big projects and they can run with it.
710
00:43:10.767 --> 00:43:13.148
But yeah, that's what we call our working GM.
711
00:43:13.877 --> 00:43:31.062
So I would have said, so somebody not living in the Augusta world, I would have normally said for most businesses to get to a million dollars, you're going to need somebody key in the office that's answering calls, scheduling, doing things like that, shared with the potentially the owner.
712
00:43:31.382 --> 00:43:35.903
And then you're going to need an operational assistant, manager of sorts.
713
00:43:37.344 --> 00:43:42.085
Would you agree or disagree with that basic structure to get you to close to a million dollars?
714
00:43:42.429 --> 00:43:44.372
I think it depends on how fast you want to get there.
715
00:43:44.852 --> 00:43:49.438
I would agree with the sentiment if it's more like, hey, I want to do this next three years, two years maybe.
716
00:43:50.820 --> 00:44:00.952
What we see as the most conservative route to get there is actually getting to more like $600,000 or $700,000 in annual revenue and then just raising prices whenever demand is higher than supply.
717
00:44:01.493 --> 00:44:04.155
Is this just an owner with X number of crews?
718
00:44:04.536 --> 00:44:04.856
Correct.
719
00:44:05.096 --> 00:44:06.237
So the owner's doing everything.
720
00:44:06.337 --> 00:44:06.658
Correct.
721
00:44:06.758 --> 00:44:13.524
And then once you've raised prices, like for example, on an $800,000 business, if we do one price increase, we only, we only raise prices by at least 15%.
722
00:44:13.784 --> 00:44:16.366
So that's about a, let's call it $120,000.
723
00:44:16.707 --> 00:44:17.287
That's enough.
724
00:44:17.327 --> 00:44:21.271
That one price increase at 800,000 is enough for me to go get a working GM.
725
00:44:21.751 --> 00:44:33.378
that can manage the business and I can either A, start another location, or I can do a different business or go on vacation for a couple weeks and give me a little more flexibility, assuming I have those 20 plus percent profit margins.
726
00:44:33.658 --> 00:44:34.939
That's a more conservative path.
727
00:44:35.359 --> 00:44:43.504
And I think to your point, most people to be able to scale in a matter of two or three years to a million, you do need someone full time in the office.
728
00:44:43.785 --> 00:44:48.808
You do need someone to be able to help you with operations, manage the crews, so you can focus on sales more.
729
00:44:49.626 --> 00:44:50.807
Tell me again, in how many years?
730
00:44:51.548 --> 00:45:01.719
I would say if you're trying to build a 2 million within two or three years and you're trying to go very quickly, that's when typically we see the owner needs to focus on sales exclusively.
731
00:45:01.759 --> 00:45:03.000
And we do have owners that do that.
732
00:45:03.200 --> 00:45:04.362
They're like, hey, I want to go there faster.
733
00:45:04.562 --> 00:45:04.802
Great.
734
00:45:05.162 --> 00:45:11.009
You're going to need someone kind of like, to your point, we call an operations assistant that manages the crew so you can go focus on sales.
735
00:45:11.569 --> 00:45:13.750
Because you got to just be in there just focusing.
736
00:45:13.870 --> 00:45:15.550
That's the engine of growth.
737
00:45:16.090 --> 00:45:21.792
And so traditionally, the percentage of someone's day spent on sales is very indicative of how fast they grow.
738
00:45:22.232 --> 00:45:26.153
And so the faster they get operations off their plate, the faster they can get to that million dollar marker.
739
00:45:26.853 --> 00:45:36.436
Yeah, so the way you describe this, it's a little different than what I've experienced in terms of who you need to get to a million dollars.
740
00:45:37.076 --> 00:45:37.956
But I think it's...
741
00:45:39.080 --> 00:45:39.920
Correct me if I'm wrong.
742
00:45:39.980 --> 00:45:47.143
I think where I would hold a different opinion is because what I tend to see is most people are complicated.
743
00:45:47.203 --> 00:45:48.423
They're doing too many services.
744
00:45:49.003 --> 00:45:51.104
So tell me if I'm correct here.
745
00:45:51.184 --> 00:45:58.726
I'm imagining that you're saying to pull that off, we're gonna keep this to probably just a couple services like mowing and something else.
746
00:45:58.806 --> 00:45:59.667
Is that what you're saying?
747
00:45:59.807 --> 00:46:02.528
Has to be sold over the phone or instant quotes on our website.
748
00:46:02.568 --> 00:46:06.229
So basically for us, it's like mowing treatments, property clinics, basic stuff.
749
00:46:06.750 --> 00:46:06.950
Okay.
750
00:46:07.350 --> 00:46:09.552
So this takes us back to last week.
751
00:46:09.572 --> 00:46:19.677
The guys that I see running the most successful contractor models, maybe one of the reasons why that works for them is not about the contractors.
752
00:46:19.857 --> 00:46:21.698
It's the forced simplicity.
753
00:46:22.079 --> 00:46:25.300
Like you don't normally hire a contractor that's doing 90 things.
754
00:46:25.421 --> 00:46:31.364
And I don't see a lot of contractor guys that are providing nine different services using nine different contractor types.
755
00:46:31.544 --> 00:46:36.147
But what's funny is that's what people think, I'll go get contractors because I have the nine services.
756
00:46:36.508 --> 00:46:38.909
So I should go get contractors for the most complex four.
757
00:46:38.949 --> 00:46:41.711
But what they do is they get contractors to do a thing.
758
00:46:41.791 --> 00:46:42.172
Yes, 100%.
759
00:46:42.192 --> 00:46:45.794
And so then the business becomes a thing, mowing, whatever.
760
00:46:46.555 --> 00:46:49.377
And then one guy can run the whole business.
761
00:46:49.397 --> 00:46:59.424
Because you see this, I've seen this now multiple times, where it's like one person and maybe an office person or one person, even one person is running...
762
00:47:00.405 --> 00:47:06.908
Frankly, I've seen contractor guys running multiple millions of revenue with just an owner and maybe one additional person.
763
00:47:07.128 --> 00:47:07.468
That's it.
764
00:47:08.328 --> 00:47:12.950
And so I'm glad we got here because this is a critical distinction.
765
00:47:13.010 --> 00:47:18.032
What you're describing is not the way I would normally describe what it's going to take to get to a million dollars.
766
00:47:18.072 --> 00:47:20.793
But the reason for that is I see near nobody.
767
00:47:21.473 --> 00:47:25.315
build a simplistic model of one or two services only.
768
00:47:25.475 --> 00:47:29.696
Everybody's doing four to eight service, four to seven services or something like that.
769
00:47:30.036 --> 00:47:33.878
And that creates so much complexity, then you need more team in the office.
770
00:47:33.998 --> 00:47:35.378
And it's very hard to say no.
771
00:47:35.398 --> 00:47:38.640
Like when you're at two, 300,000, for example, and like, I want to grow a bigger business.
772
00:47:38.960 --> 00:47:42.061
It's very hard to say no to a service when people are offering you money.
773
00:47:42.381 --> 00:47:42.581
Yep.
774
00:47:43.262 --> 00:47:47.465
And so it also takes longer to grow a million dollar business if you're just going to use one service.
775
00:47:47.825 --> 00:47:55.592
Like you can extrapolate the math pretty quickly if you just do mowing and treatments versus also doing a paving for patio and a hedge and installing seasonal color.
776
00:47:55.732 --> 00:47:58.614
Like very easily able to grow a faster business.
777
00:47:58.814 --> 00:48:00.396
It's just what's the quality of the revenue?
778
00:48:01.056 --> 00:48:04.357
And to your point, like you mentioned last time, you don't even get into anything that's not recurring.
779
00:48:04.897 --> 00:48:06.938
And that's kind of the line we've drawn the sand.
780
00:48:06.958 --> 00:48:11.120
And a lot of times what happens is people grow the million, $2 million business, even inside of Augusta.
781
00:48:11.460 --> 00:48:24.965
And then they actually take a year or two and they realize, oh, I've got to like rechange my percentage of, hey, it's 30% recurring to now I got to get this to 70, 80, 90% in order to make this something I can go to vacation for a few weeks.
782
00:48:25.285 --> 00:48:25.505
Yep.
783
00:48:26.005 --> 00:48:26.225
Yep.
784
00:48:27.205 --> 00:48:29.387
Let me say one more thing on this topic and then we'll move on.
785
00:48:29.487 --> 00:48:34.011
Well, actually, before I do that, is there anything else you want to add to this that you feel like would answer the question?
786
00:48:34.231 --> 00:48:37.874
No, I think this is probably one of the most anticipated questions from the owners at Augusta.
787
00:48:37.915 --> 00:48:39.196
We talked about it in the last time.
788
00:48:39.396 --> 00:48:39.896
Oh, really?
789
00:48:39.916 --> 00:48:40.397
Okay.
790
00:48:40.437 --> 00:48:42.158
Because this is always their debate.
791
00:48:42.178 --> 00:48:45.822
It's like, do we go to the $3 million or do I do the one location and copy it again?
792
00:48:46.102 --> 00:48:51.567
I think the copy part has a lot to do with your market and whether or not you want to start dealing with a lot of mid-level management.
793
00:48:52.127 --> 00:49:01.583
But I've been trying to be very honest, like from a profit perspective, the bigger business in one location, if you're marketing to sustain it, if you have the skills for leadership, it's usually the best thing to do.
794
00:49:01.944 --> 00:49:02.625
Yeah, actually-
795
00:49:04.677 --> 00:49:11.900
This became such an interesting conversation for me even just to kind of think through it because I really care about like sending people in the right direction.
796
00:49:12.260 --> 00:49:14.641
But I didn't really – I want to say two more things now instead of one.
797
00:49:14.941 --> 00:49:17.703
I didn't really answer it from my perspective in a sense.
798
00:49:18.243 --> 00:49:20.924
And in my perspective, I'm in the DFW market.
799
00:49:21.424 --> 00:49:22.985
And so I have this giant market.
800
00:49:23.005 --> 00:49:26.246
It's got 7 million people, at least 7 million people in the market.
801
00:49:26.506 --> 00:49:27.407
Now, I serve –
802
00:49:28.267 --> 00:49:37.949
five core cities and with a couple of little tiny cities, several tiny cities attached, but there there's five core cities that are North of Dallas.
803
00:49:37.969 --> 00:49:40.389
Like when I say I'm in Dallas, I'm don't picture Dallas.
804
00:49:40.409 --> 00:49:42.510
I'm in the suburbs serving that area.
805
00:49:42.990 --> 00:49:53.452
And in our case, and it, but it's a sizable market, frankly, even my five cities are a sizable market as compared to what's available to so many people in other places.
806
00:49:53.472 --> 00:49:53.632
And,
807
00:49:54.252 --> 00:49:58.434
And we have had this conversation internally multiple times over the years.
808
00:49:58.814 --> 00:50:04.076
Would it make sense for us to build a facility on the other side of our market or anything of that sort?
809
00:50:04.496 --> 00:50:10.338
And we've just never felt that we could control the quality in quite the same way.
810
00:50:10.358 --> 00:50:13.760
There are all these little training, there's all these little things we would give up.
811
00:50:14.900 --> 00:50:15.700
It's a market question.
812
00:50:15.740 --> 00:50:27.684
In our case, I would never copy paste in the market I serve, but my market probably would serve multiples of your, well, not probably, 100% would serve multiple Augusta locations.
813
00:50:27.784 --> 00:50:31.084
Just in my little market, you probably have a couple of them, I would think.
814
00:50:31.565 --> 00:50:38.006
And so I'm attracted to the one company serving a bigger market.
815
00:50:38.026 --> 00:50:43.608
But if I were in the markets of many of my friends throughout the United States, it would never in a million years work.
816
00:50:44.328 --> 00:50:47.030
So there's a few markets in the United States that support this.
817
00:50:47.090 --> 00:50:50.492
So I think the summary there is it just sort of depends.
818
00:50:51.233 --> 00:50:59.118
One thing to back up what you said there, one of our owners, he was in Rockport, Texas, built a business there for about 10 years, joined Augusta.
819
00:50:59.578 --> 00:51:02.160
And in 14 months, he started another location in Austin.
820
00:51:02.440 --> 00:51:06.603
He got it to exceed the recurring revenue of the business he'd been building for a decade.
821
00:51:07.223 --> 00:51:13.806
Because Austin, it's just, and so I asked him, I'm like, hey, well, how much, what percentage of this was the market versus your time and attention?
822
00:51:13.826 --> 00:51:14.786
Because he actually moved there.
823
00:51:15.326 --> 00:51:18.488
And I'm like, he's like, it's probably about 30% the fact that I am focused on it.
824
00:51:18.828 --> 00:51:20.488
But the 70% just, it's the market.
825
00:51:21.149 --> 00:51:25.450
And like the customer acquisition costs and the fact the market's just so much bigger, there's so much more demand.
826
00:51:25.931 --> 00:51:31.993
And so I think I always discounted the importance of a market, how fast and big you can grow.
827
00:51:32.033 --> 00:51:36.255
But it's one of the things that you've talked a lot about that's really opened my eyes to that.
828
00:51:37.207 --> 00:51:40.650
Yeah, so his second location was in a bigger market than the first.
829
00:51:40.730 --> 00:51:41.651
South of Austin, yeah.
830
00:51:41.952 --> 00:51:44.714
Yeah, I think market drives everything.
831
00:51:45.895 --> 00:51:55.705
The counterargument to a degree is that a bigger market also comes with way more competition and way more advanced competition.
832
00:51:56.205 --> 00:51:58.807
I've got friends, again, in smaller markets where
833
00:52:00.008 --> 00:52:03.851
if you're even slightly sophisticated, they can just run through those markets and they do.
834
00:52:04.271 --> 00:52:06.412
And that's kind of interesting to me as well.
835
00:52:06.933 --> 00:52:09.334
And so there's so much nuance to this.
836
00:52:09.715 --> 00:52:11.256
So we've spent a lot of time on it.
837
00:52:11.276 --> 00:52:14.918
I want to say one more thing, and maybe this is more applicable to the individual.
838
00:52:15.198 --> 00:52:18.641
This is more applicable to the individual building a bigger business who's decided...
839
00:52:19.401 --> 00:52:21.344
greater than 1 million is their thing.
840
00:52:21.384 --> 00:52:27.772
And I've talked about, so if anybody's followed me elsewhere, I just believe what I'm about to say to my core.
841
00:52:27.932 --> 00:52:30.315
It's like, so on one hand, you need to ask yourself,
842
00:52:31.487 --> 00:52:34.148
What do I want to build for all the reasons that we've talked about?
843
00:52:34.188 --> 00:52:37.209
And the other question is you've got to ask yourself, who am I?
844
00:52:37.489 --> 00:52:42.590
But who am I from a different standpoint than just pure capacity and capability?
845
00:52:42.930 --> 00:52:44.811
Like, who are you at your core?
846
00:52:44.851 --> 00:52:45.671
Who were you made to be?
847
00:52:45.711 --> 00:52:48.152
Are you more of a sales individual?
848
00:52:48.212 --> 00:52:50.112
Are you more of an operations individual?
849
00:52:50.172 --> 00:52:53.033
Are you more of a process-oriented individual?
850
00:52:53.453 --> 00:52:59.015
And the way I always love to describe this one is where do you get energy from
851
00:52:59.543 --> 00:53:04.085
And where does it just beat the life out of you doing whatever the thing is you got to do?
852
00:53:04.485 --> 00:53:08.527
Like for me, I get energy from having these kinds of conversations.
853
00:53:08.587 --> 00:53:13.370
I get energy from thinking about sales and marketing growing, which is why I like growth.
854
00:53:13.390 --> 00:53:15.191
You know, like that's where I get my energy from.
855
00:53:15.631 --> 00:53:16.231
I want to go.
856
00:53:16.291 --> 00:53:16.952
I want to improve.
857
00:53:16.992 --> 00:53:17.592
I want to learn.
858
00:53:17.612 --> 00:53:18.792
I want to go faster.
859
00:53:18.812 --> 00:53:21.334
I want people to come along with me and have bigger and better lives.
860
00:53:22.114 --> 00:53:23.175
That's where I get my energy.
861
00:53:24.035 --> 00:53:25.195
but we're all made differently.
862
00:53:25.676 --> 00:53:29.957
And so then there's other individuals, like I use my wife as an example.
863
00:53:29.977 --> 00:53:32.498
Everything I just described sucks all the life out of her.
864
00:53:33.058 --> 00:53:38.681
She just wants to execute a process over and over again, efficiency, predictability.
865
00:53:38.801 --> 00:53:41.582
And that's a different kind of person.
866
00:53:41.602 --> 00:53:52.466
And so the reason I described it is if you are more clear on who you are, what you're gravitated to, the blessing you got in life by being a founder is you get to build to that.
867
00:53:52.486 --> 00:53:53.026
Yeah.
868
00:53:53.246 --> 00:54:01.704
And so if your gift and your thing is that gives you energy and makes you happy and by energy, I mean, it doesn't mean every day is easy at all.
869
00:54:02.325 --> 00:54:03.167
It doesn't mean any of that.
870
00:54:03.187 --> 00:54:04.189
It just means that, um,
871
00:54:04.968 --> 00:54:07.650
you could keep showing up and doing this thing for the rest of your life.
872
00:54:07.971 --> 00:54:12.975
And yeah, some days are hard, but you still are happy that you're getting to do this thing in life.
873
00:54:13.255 --> 00:54:17.819
Whereas sucking all the energy out of you is I despise my job.
874
00:54:17.879 --> 00:54:18.800
I despise my business.
875
00:54:18.840 --> 00:54:19.560
I despise my life.
876
00:54:19.941 --> 00:54:24.665
So many people get stuck in small businesses doing the things they despise.
877
00:54:24.725 --> 00:54:33.592
And I advocate for building a little bigger so that you can hand off the stuff that's not your gift and ability, the things that take life and energy from you to another person who doesn't,
878
00:54:34.052 --> 00:54:35.013
loves doing those things.
879
00:54:35.394 --> 00:54:39.798
That's actually probably my single biggest argument to building bigger is that right there.
880
00:54:40.278 --> 00:54:41.719
We say we want freedom.
881
00:54:42.280 --> 00:54:43.681
We say we want a different life.
882
00:54:44.122 --> 00:54:46.184
But then we build businesses that trap us.
883
00:54:46.684 --> 00:54:50.187
We build businesses where we get stuck doing every single thing in the
884
00:54:54.128 --> 00:54:55.809
It's not a value add to our lives.
885
00:54:55.949 --> 00:55:02.794
And it doesn't send us home at night to our families in a joyful and happy and, you know, we're beat down.
886
00:55:03.135 --> 00:55:07.918
And so the point here is simply to also think about who are you?
887
00:55:07.978 --> 00:55:08.539
How are you made?
888
00:55:08.599 --> 00:55:09.459
How are you wired?
889
00:55:10.100 --> 00:55:12.462
What could you do for the rest of your life?
890
00:55:12.962 --> 00:55:14.743
And what parts of the business do you like?
891
00:55:14.783 --> 00:55:15.664
It's that simple.
892
00:55:16.044 --> 00:55:18.166
I despise this in the business, this, this, and this.
893
00:55:18.266 --> 00:55:19.307
I love this, this, and this.
894
00:55:19.947 --> 00:55:28.471
You are a business owner, build the thing so you can spend your time in the thing you love and then find people to do the stuff you don't love because I promise there's somebody that likes that stuff.
895
00:55:28.751 --> 00:55:33.113
And that is to me the other side of this that I just think is imperative.
896
00:55:33.414 --> 00:55:39.096
And if you wanna be in the game for the longterm and you wanna build something great, great doesn't mean it has to be big.
897
00:55:39.136 --> 00:55:45.339
It could be $800,000 top line producing 34% or whatever the number, 28%.
898
00:55:45.399 --> 00:55:48.181
I don't care what the profit number is, a strong profit margin,
899
00:55:48.981 --> 00:55:55.063
If you could be in the game and own that for a long time, the way I think you make that possible is by doing stuff that you like.
900
00:55:56.063 --> 00:55:56.463
100%.
901
00:55:56.543 --> 00:56:01.684
And then becoming the leader that the type of person that you need actually wants to follow.
902
00:56:01.704 --> 00:56:03.965
They come on board versus starting their own thing.
903
00:56:04.245 --> 00:56:04.925
I agree with that.
904
00:56:04.945 --> 00:56:05.685
100%.
905
00:56:07.046 --> 00:56:07.326
All right.
906
00:56:07.426 --> 00:56:15.168
So this one, I don't know if this was a question, but the topic was how do you...
907
00:56:16.016 --> 00:56:17.877
What I just said actually piggybacks perfectly.
908
00:56:18.617 --> 00:56:22.460
How do you hire key people for the skills you don't have?
909
00:56:22.780 --> 00:56:25.201
So what I just said was thinking about the skills you don't have.
910
00:56:25.221 --> 00:56:26.602
That couldn't have worked out better, actually.
911
00:56:27.602 --> 00:56:34.466
So as you think about this one and you're working with other individuals, how do you help them think about this?
912
00:56:35.126 --> 00:56:43.251
The challenging part, to your point about recruiting, is if you don't have the skills, it's sometimes hard to judge whether or not they actually have the skills.
913
00:56:43.860 --> 00:56:44.040
Yeah.
914
00:56:44.420 --> 00:56:59.108
And so I think this is the part where if you are, for example, this is a big conversation in August the other day, based on what you had said the other day, when you said, hey, we went into a new market or went to, I believe it was, and you hired someone that had been there, done that, a really solid operator.
915
00:56:59.729 --> 00:57:03.851
And someone asked the question and it's like, whoa, whoa, you're at half a million.
916
00:57:04.331 --> 00:57:06.572
Let's not go get, we're not ready for that hire.
917
00:57:06.592 --> 00:57:07.693
Right, too big of a hire.
918
00:57:07.833 --> 00:57:10.955
And you don't even have the skills to adequately, yeah.
919
00:57:12.172 --> 00:57:13.794
gauge whether or not this person has skills.
920
00:57:14.854 --> 00:57:16.616
And so it's actually really difficult.
921
00:57:16.636 --> 00:57:21.080
It was very humbling to me when we were going through all the problems back in 2023 with Copilot.
922
00:57:21.440 --> 00:57:24.483
And I had to realize I had to go hire people that had way more skill than me.
923
00:57:24.583 --> 00:57:26.205
And I did not know how to actually...
924
00:57:27.447 --> 00:57:30.009
accurately judge whether or not they could solve my problem.
925
00:57:30.570 --> 00:57:34.313
And so like when I talked to Dr. Cashy, he said, Hey, he, he talked about some Sam ovens.
926
00:57:34.333 --> 00:57:47.344
Who's the founder of school and said, Hey, how he found his, his technical founder or his CTO was at 400 interviews and just tried to learn about all the problems and fix them by asking them, what would you do in this situation?
927
00:57:47.364 --> 00:57:47.604
Yeah.
928
00:57:47.684 --> 00:57:50.205
When it comes to lawn care, I can ask you if you have the skills.
929
00:57:50.285 --> 00:57:55.167
You can tell me if you've been working, if you have a technical degree or a certificate.
930
00:57:55.468 --> 00:58:02.010
But then to hire someone for a role that you cannot do, it is definitely when you have to lean on your leadership.
931
00:58:02.711 --> 00:58:05.972
The ability to, does this person that has more skill than me want to work for me?
932
00:58:06.673 --> 00:58:11.795
And that's the part where I've just continually been humbled as a leader as I've gotten a little older.
933
00:58:12.977 --> 00:58:17.521
Boy, that's a good answer in the sense that I think it makes this point.
934
00:58:17.641 --> 00:58:22.005
I've got to tell a quick story, but it makes this point that there are no easy answers.
935
00:58:22.025 --> 00:58:23.366
Like we all want prescriptive.
936
00:58:24.026 --> 00:58:25.548
We all want like, just go do this.
937
00:58:25.688 --> 00:58:29.611
And it's never quite that easy because I've lived in both worlds on this answer.
938
00:58:30.212 --> 00:58:36.477
So when I was really young, like 17, 18, 19, there was this guy on the radio that I would listen to it.
939
00:58:36.577 --> 00:58:39.340
He had owned a bunch of businesses and he just answered business questions.
940
00:58:39.360 --> 00:58:39.820
Yeah.
941
00:58:40.390 --> 00:58:43.051
And I don't know why I remember this, because this was a long time ago.
942
00:58:43.071 --> 00:58:43.871
What's his name?
943
00:58:44.251 --> 00:58:44.411
Huh?
944
00:58:44.551 --> 00:58:45.051
What's his name?
945
00:58:45.431 --> 00:58:46.632
I think it was Bruce Williams.
946
00:58:46.672 --> 00:58:48.112
He's dad gone at this point.
947
00:58:48.152 --> 00:58:50.773
Like, no, he's like, he was just on AM radio.
948
00:58:50.813 --> 00:58:51.253
Could have been.
949
00:58:51.333 --> 00:58:52.753
I think it was more than in just Dallas.
950
00:58:52.833 --> 00:58:54.174
I just remember I listened to it all the time.
951
00:58:54.674 --> 00:58:56.494
I was going to say Clark Howard, but by that time.
952
00:58:56.534 --> 00:58:57.714
No, I knew Clark Howard back then too.
953
00:58:57.734 --> 00:58:59.275
That was in the same time frame.
954
00:58:59.375 --> 00:59:00.175
It's Clark Howard.
955
00:59:00.195 --> 00:59:00.535
Yeah, yeah.
956
00:59:00.695 --> 00:59:07.397
So this guy owned just a bunch of different, like a rose, retail rose shops, daycares, all kinds of businesses.
957
00:59:08.463 --> 00:59:09.924
And he was an older fella.
958
00:59:10.844 --> 00:59:11.344
Well, who knows?
959
00:59:11.364 --> 00:59:11.984
I was 17.
960
00:59:12.004 --> 00:59:13.445
He could have been 40 and I thought he was old.
961
00:59:13.485 --> 00:59:13.905
I don't know.
962
00:59:14.405 --> 00:59:17.126
I picture him as like this 60-year-old guy when I'm that age.
963
00:59:17.166 --> 00:59:26.689
But I remember him saying, you need to do the different jobs inside the organization so that you know how to hire those jobs.
964
00:59:27.389 --> 00:59:28.490
And I always believed that.
965
00:59:29.423 --> 00:59:36.341
And then as I grew in business, I thought, no, no, no, totally disagree with that advice.
966
00:59:36.561 --> 00:59:37.243
That's too slow.
967
00:59:37.905 --> 00:59:38.606
Back to my theme.
968
00:59:40.012 --> 00:59:42.393
But I'm not sure if I really disagree with that advice.
969
00:59:42.413 --> 00:59:49.315
Like I kind of, this is why I said, like you just want to give somebody an answer and everybody just wants an answer, but it's complicated.
970
00:59:49.915 --> 01:00:05.600
You know, so I think as I've evolved and grown, because I've done like you, I mean, I have spent so much of my life learning and being around people and asking questions and spending money to grow my skill sets that there probably comes a point where,
971
01:00:06.663 --> 01:00:14.769
without even realizing it, you've developed the skills to be able to hire people for roles that you've never done.
972
01:00:15.289 --> 01:00:21.534
But when you're younger in business and you just haven't had a depth of experiences and skills,
973
01:00:23.272 --> 01:00:28.256
I go back to what he said, that there's this element where you need to, like it's probably several things.
974
01:00:28.316 --> 01:00:31.278
Maybe you need to do, you're hiring an operations manager.
975
01:00:31.858 --> 01:00:34.260
Maybe you need to be the operations manager for a while.
976
01:00:34.300 --> 01:00:36.302
And you need to feel the pain in what we need to do.
977
01:00:36.642 --> 01:00:37.983
Maybe you need to buy a book or two.
978
01:00:38.363 --> 01:00:41.445
Maybe you need to interview a number of people and find out what they did at their job.
979
01:00:41.465 --> 01:00:42.886
Maybe you need to be in a coaching group.
980
01:00:42.906 --> 01:00:45.028
Maybe you need to ask questions in the comments on YouTube.
981
01:00:45.408 --> 01:00:49.892
It's probably that you need to do like 19 things to be able to put together
982
01:00:50.732 --> 01:00:58.816
a coherent plan or a document for they're going to do this, this, and this so that you can go look for that person.
983
01:00:59.436 --> 01:01:03.198
And so I think my answer to this one would be just that.
984
01:01:03.478 --> 01:01:04.599
It's like, you know what?
985
01:01:04.779 --> 01:01:08.520
For most people, it probably is doing a bit of this role and all those other things.
986
01:01:09.041 --> 01:01:15.824
And it probably is near impossible to just – like if most people are to say I'm going to hire a developer, I mean –
987
01:01:16.244 --> 01:01:17.344
That are in the trades.
988
01:01:17.364 --> 01:01:18.605
Like, okay.
989
01:01:18.705 --> 01:01:22.226
I learned this the hard way, man.
990
01:01:22.326 --> 01:01:25.087
That's like, I would just say that's utter nonsense.
991
01:01:25.107 --> 01:01:26.167
I thought I was so smart.
992
01:01:26.247 --> 01:01:30.489
I'm like, dude, these developers, I get them overseas for 80 or $90,000.
993
01:01:30.609 --> 01:01:31.689
Not a chance.
994
01:01:31.749 --> 01:01:32.910
It's just so stupid.
995
01:01:33.210 --> 01:01:33.530
Yeah.
996
01:01:33.550 --> 01:01:36.851
So if I think about it that way and you apply that to the platform,
997
01:01:36.991 --> 01:01:43.096
the levels that you haven't yet been at in business, operations manager, CFO, whatever you might grow your business, a salesperson.
998
01:01:43.136 --> 01:01:53.643
My gosh, nobody can get you more than a salesperson because they're so likable and they could sell you on hiring them and then they're a total utter disaster.
999
01:01:53.843 --> 01:01:57.326
So anyway, that's how I would probably think about this one.
1000
01:01:57.664 --> 01:02:06.191
Yeah, one thing I've recently kind of thought about as like there's three different levels you move through is like you do the work, then you teach the work and then you lead.
1001
01:02:06.772 --> 01:02:08.133
And it's like do teach lead.
1002
01:02:08.213 --> 01:02:13.377
So doing is like I go out and I do the work and then I learn how to do the door knock and do the work itself.
1003
01:02:13.417 --> 01:02:19.443
And then eventually as you get employees, like I got I actually have to change my whole role and my identity from being a teacher.
1004
01:02:20.083 --> 01:02:21.306
of other people how to do that job.
1005
01:02:21.646 --> 01:02:28.040
And then as time goes on, especially past like five, 10 million, it becomes, are you the leader that these people want to work for?
1006
01:02:28.761 --> 01:02:30.044
Because they have options.
1007
01:02:30.064 --> 01:02:30.685
Yeah.
1008
01:02:31.013 --> 01:02:42.356
And it always comes back to humility, like just you have to be humble enough to realize that you lack these skills because the person that has those skills, they're aware that you don't have the skills.
1009
01:02:42.696 --> 01:02:43.656
They know how to judge you.
1010
01:02:44.136 --> 01:02:50.938
And so realizing that like I have capabilities that they don't have, they have capabilities I don't have, and together it's one plus one equals three.
1011
01:02:51.938 --> 01:02:59.960
And then to your point, being young sometimes, the only challenge is you don't have the proof or the evidence that what you say, what comes out of your mouth happens.
1012
01:03:00.600 --> 01:03:05.963
And the thing that has really been so helpful, I'm so grateful for the past couple of years is like the people that have been around me.
1013
01:03:06.323 --> 01:03:07.203
They've seen, okay, he said it.
1014
01:03:07.703 --> 01:03:08.144
It took a while.
1015
01:03:08.264 --> 01:03:09.224
He got there finally.
1016
01:03:09.324 --> 01:03:10.305
Like eventually we got there.
1017
01:03:10.545 --> 01:03:14.727
And then that evidence is the thing that gives trust and that trust allows me to go faster.
1018
01:03:15.147 --> 01:03:15.967
And confidence too.
1019
01:03:15.987 --> 01:03:16.728
Yeah, totally.
1020
01:03:17.068 --> 01:03:17.628
So, yeah.
1021
01:03:18.833 --> 01:03:19.033
All right.
1022
01:03:19.634 --> 01:03:20.795
We kind of talked about this one.
1023
01:03:20.815 --> 01:03:25.942
And when I was putting together the question set, I was trying to logically group together common questions.
1024
01:03:25.982 --> 01:03:28.024
So we kind of touched on this one as well.
1025
01:03:28.725 --> 01:03:34.032
And I bet we've both had this as a general theme over time with our content.
1026
01:03:34.592 --> 01:03:37.275
So how does complexity impact growth?
1027
01:03:38.178 --> 01:03:41.363
And I'm just so, we really did touch on this.
1028
01:03:41.403 --> 01:03:51.837
Like we kind of pulled out of the conversation the reason why, like I approached the conversation saying, there's no way you're gonna get to a million dollars in revenue with just an owner.
1029
01:03:52.673 --> 01:03:54.635
And then you articulated how that would be.
1030
01:03:54.896 --> 01:03:59.561
And the reason for it was simple simplicity, whereas I don't see simplicity.
1031
01:03:59.601 --> 01:04:01.283
So I don't see people actually pull that off.
1032
01:04:01.563 --> 01:04:07.970
They need an office person and some version, not a full operations manager, but some version of an operations manager.
1033
01:04:08.211 --> 01:04:09.892
So this speaks to complexity.
1034
01:04:10.553 --> 01:04:15.177
It's an example of the simpler you keep the business, I tend to argue the faster it goes.
1035
01:04:15.718 --> 01:04:19.281
But also, in this example, the less it costs to build it.
1036
01:04:19.481 --> 01:04:23.085
Like you need less overhead or CapEx or whatever you want.
1037
01:04:23.145 --> 01:04:25.587
You need less people that are somewhat expensive.
1038
01:04:26.248 --> 01:04:30.852
So as you think, I mean, I kind of know where you're going, but let's talk through this for people because...
1039
01:04:34.368 --> 01:04:41.812
again, to the theme of the conversation, we're all watching YouTube and we're all seeing all these people that are doing these amazing things and have all this stuff.
1040
01:04:42.212 --> 01:04:43.673
We think we're under performing.
1041
01:04:43.733 --> 01:04:45.413
We think we're not going fast enough.
1042
01:04:45.433 --> 01:04:46.614
We think we should want more.
1043
01:04:46.994 --> 01:04:54.798
And the number one way I think most of us think about getting something bigger, faster is always by layering complexity.
1044
01:04:55.398 --> 01:04:58.620
So how do you convince somebody to fight that complexity?
1045
01:05:00.595 --> 01:05:16.267
I think it is a lot of times not knowing the end goal of why the business exists and how big of a business you need going back to what we talked about, because the fastest way to grow a business is almost always in home services is add service area and add more services.
1046
01:05:16.587 --> 01:05:17.628
It's the fastest way to grow.
1047
01:05:18.469 --> 01:05:24.534
It's so hard to fight that when someone says that because they will 100% be right that they will add more revenue next year.
1048
01:05:24.714 --> 01:05:25.394
It will 100% add revenue.
1049
01:05:26.815 --> 01:05:36.844
And it's so easy 2020 vision looking back or having gone through it and like, oh yeah, I took a two years to re go back and reorganize the business because I built it wrong.
1050
01:05:37.945 --> 01:05:42.969
But it is so hard to go against the logic of, well, I will make more revenue.
1051
01:05:42.989 --> 01:05:44.430
These people are asking for this service.
1052
01:05:44.851 --> 01:05:49.114
And so complexity is usually the fastest way to grow the business in terms of top line revenue.
1053
01:05:49.194 --> 01:05:51.396
It's also the worst business to, to own and operate.
1054
01:05:51.416 --> 01:05:52.157
And so complexity.
1055
01:05:52.537 --> 01:06:01.864
When we look at what we talked about last week, enterprise value, you look at the highest enterprise value businesses, it has sticky revenue, and it's not complicated to replicate it.
1056
01:06:02.564 --> 01:06:03.345
And it can scale.
1057
01:06:04.065 --> 01:06:06.747
And if it can't scale beyond you, we don't have a business.
1058
01:06:06.767 --> 01:06:10.349
We do have a really bad job, and you get beat up on social media for saying that.
1059
01:06:10.389 --> 01:06:12.351
But ultimately, you can't sell it.
1060
01:06:13.051 --> 01:06:13.251
And...
1061
01:06:14.132 --> 01:06:19.795
the impact, the growth impact becomes your ceiling, your personal ceiling becomes the ceiling of the business.
1062
01:06:20.395 --> 01:06:25.518
And for the vast majority of small business owners, we are the bottleneck, like we are the constraint, we are the ceiling.
1063
01:06:26.178 --> 01:06:29.940
And that is usually brought lower because of complexity.
1064
01:06:30.180 --> 01:06:35.843
If you think about your most complex jobs, it's the ones where you're on the job site, if something goes wrong, you're being brought into it.
1065
01:06:36.623 --> 01:06:42.006
And ultimately, that just will not scale, it will not allow you to get past your own personal capacity.
1066
01:06:42.186 --> 01:06:47.149
Well, again, we'll talk in the green industry since a lot of the audience might be coming from that space.
1067
01:06:49.011 --> 01:06:56.136
Let's say they're not in your world and they're just building a green industry business and they're like, I don't want to be predominantly in mowing.
1068
01:06:56.296 --> 01:06:57.677
That's not what I want to build.
1069
01:06:58.057 --> 01:07:09.765
How many services, how would you advise them on how to think about how many services are realistic and acceptable to have inside a business that's a million dollars or less?
1070
01:07:10.600 --> 01:07:17.564
Yeah, like whenever you say simple surfaces or not having complexity, everyone thinks you must have simple surfaces.
1071
01:07:17.604 --> 01:07:19.645
But I think of it as a system.
1072
01:07:20.085 --> 01:07:24.828
If you define a system, to me, it's like in which environments or conditions do systems exist?
1073
01:07:25.048 --> 01:07:27.009
Simple, but also standardized.
1074
01:07:27.509 --> 01:07:33.012
So simple being easy, easy to replicate, but standardized being it's the same way every single time.
1075
01:07:33.472 --> 01:07:34.113
So like D.R.
1076
01:07:34.153 --> 01:07:37.336
Horton, they have standardized building a whole house.
1077
01:07:37.736 --> 01:07:38.877
What they've done, they standardized it.
1078
01:07:39.018 --> 01:07:39.938
All the houses look the same.
1079
01:07:39.978 --> 01:07:41.480
It's like we're using the same carpet.
1080
01:07:41.660 --> 01:07:42.821
We're using the same cabinets.
1081
01:07:42.841 --> 01:07:44.062
We're using the same countertops.
1082
01:07:44.283 --> 01:07:45.444
We're not going to make it custom.
1083
01:07:46.024 --> 01:07:55.694
And so I think I believe that you can do very complex work, very, you know, whether it be walls or retaining walls or building a house like excavation, draining,
1084
01:07:57.055 --> 01:08:03.379
whatever it might be, but you'll have to standardize to some degree to be able to reduce the complexity of the business.
1085
01:08:04.840 --> 01:08:14.225
But back to you, like from your perspective, when it comes to adding complexity, what do you see as the main reason for complexity?
1086
01:08:14.265 --> 01:08:15.326
Is it adding services?
1087
01:08:15.846 --> 01:08:17.347
Is it the type of service?
1088
01:08:17.827 --> 01:08:22.510
What's the main, when we say the word complexity, what do you see that as being kind of kryptonite?
1089
01:08:23.132 --> 01:08:23.632
services.
1090
01:08:25.774 --> 01:08:38.403
Because services comes with... My perspective is, if you were to, again, stay in the green industry, mowing is one of the easiest services, but it's not easy.
1091
01:08:39.564 --> 01:08:40.665
It's got its own challenges.
1092
01:08:41.105 --> 01:08:44.448
But then when you add something like, say, fertilization and weed control,
1093
01:08:45.412 --> 01:08:49.195
Fertilization weed control is not just fertilization and weed control.
1094
01:08:49.395 --> 01:08:55.160
Fertilization and weed control also gets into a whole different variety of challenges that start to appear.
1095
01:08:56.561 --> 01:08:58.062
Are you being blamed for shade?
1096
01:08:58.582 --> 01:09:01.004
You took the property over five years ago.
1097
01:09:01.164 --> 01:09:01.665
It was great.
1098
01:09:01.905 --> 01:09:02.806
Trees have matured.
1099
01:09:03.086 --> 01:09:04.007
Now you've got shade.
1100
01:09:04.507 --> 01:09:08.210
So your techs are now not just diagnosing a lot.
1101
01:09:08.495 --> 01:09:10.797
a fertilization weed control issue or weed issue.
1102
01:09:10.817 --> 01:09:11.477
We'll put it that way.
1103
01:09:11.697 --> 01:09:13.819
They're diagnosing all these other things.
1104
01:09:14.279 --> 01:09:19.323
They could be insect issues, grub worms, shade issues, watering issues.
1105
01:09:19.963 --> 01:09:21.064
So it's okay.
1106
01:09:21.164 --> 01:09:23.886
We'll add an irrigation department and a tree department.
1107
01:09:24.206 --> 01:09:26.888
Yeah, so next thing you know, yeah, so that's the complexity.
1108
01:09:26.908 --> 01:09:29.390
It's like, oh, we're just adding fertilization weed control.
1109
01:09:29.430 --> 01:09:34.374
Well, not really because there's all these levels of experience that now need to be had.
1110
01:09:34.434 --> 01:09:35.635
And so that's one.
1111
01:09:36.015 --> 01:09:37.676
It's like, what service did you add?
1112
01:09:38.297 --> 01:09:40.519
And that type of service could create complexity.
1113
01:09:41.059 --> 01:09:43.881
Another would be like, we're a fertilization weed control company.
1114
01:09:44.562 --> 01:09:46.944
And so the natural progression is we're going to add pest control.
1115
01:09:47.564 --> 01:10:02.212
Okay, well, that's complexity two, not just because it's a completely different type of service that you're now entering the home, you're now, it's a completely different level of knowledge, completely different product material that's treating the problem.
1116
01:10:03.465 --> 01:10:06.066
it's a totally different mind space in the buyer's mind.
1117
01:10:06.767 --> 01:10:13.531
Like just because you take care of their yard, they don't naturally think, oh, this is a pest company.
1118
01:10:13.931 --> 01:10:15.712
And so that's another kind of complexity.
1119
01:10:15.732 --> 01:10:25.277
It's like, okay, how do we get traction in the mind of the buyer that we are also a pest control company and this yard company is also skilled in pest and being in the home.
1120
01:10:25.317 --> 01:10:31.221
So there's lots of ways like that that you add this complexity or those are both recurring.
1121
01:10:32.702 --> 01:10:34.103
and mowing would be recurring.
1122
01:10:34.123 --> 01:10:35.784
And so it's like, well, natural progression.
1123
01:10:36.205 --> 01:10:37.546
We're doing fertilization weed control.
1124
01:10:37.566 --> 01:10:38.327
We're doing mowing.
1125
01:10:38.487 --> 01:10:42.510
What's the biggest problem or one of the biggest problems why people aren't happy with our service?
1126
01:10:42.810 --> 01:10:43.671
They don't water enough.
1127
01:10:44.091 --> 01:10:44.672
It's irrigation.
1128
01:10:44.732 --> 01:10:45.793
Okay, we should be in irrigation.
1129
01:10:46.073 --> 01:10:47.955
Now we're in a break-fix business.
1130
01:10:49.316 --> 01:10:50.477
It breaks, we fix it.
1131
01:10:50.957 --> 01:10:54.318
Hard to plan around, hard to staff around, like there's seasonality.
1132
01:10:54.338 --> 01:10:57.020
And so like those are examples of complexity.
1133
01:10:57.040 --> 01:10:58.700
It's not just the adding of the service.
1134
01:10:58.760 --> 01:11:05.223
It's the adding of what service, how are we going to market the service, what training needs to happen around the service, how hard is it to find people.
1135
01:11:05.263 --> 01:11:09.005
So that's how I think about complexity and complexity.
1136
01:11:10.165 --> 01:11:16.870
You know, so there's a big movement to move, which I don't argue with, to move to higher margin services.
1137
01:11:17.350 --> 01:11:22.654
And so maybe you got into the industry as mowing lawns and trimming bushes, like, hey, these are higher margin services.
1138
01:11:23.534 --> 01:11:24.295
Maybe, maybe.
1139
01:11:24.495 --> 01:11:26.536
I mean, some people do really, really well mowing lawns.
1140
01:11:27.257 --> 01:11:30.099
And so we're going to move our business in that direction.
1141
01:11:30.459 --> 01:11:38.585
And what I observe most of the time is as they move into these other services that have a different kind of complexity, the businesses just kind of stall.
1142
01:11:38.825 --> 01:11:39.065
Mm-hmm.
1143
01:11:39.685 --> 01:11:40.587
It's not easier.
1144
01:11:40.967 --> 01:11:43.930
And what I find a lot of times they're chasing better cost of goods sold.
1145
01:11:44.631 --> 01:11:46.273
But what happens is their overhead gets bloated.
1146
01:11:46.834 --> 01:11:52.160
And it's hard because if you add, say, irrigation, all of a sudden I need to get a different type of truck.
1147
01:11:52.641 --> 01:11:56.305
And now I need to bifurcate what type of trucks are going out to the properties.
1148
01:11:56.325 --> 01:11:56.926
Yeah.
1149
01:11:57.186 --> 01:12:01.629
And then I have to train my sales staff very differently because they have to training is double it.
1150
01:12:01.969 --> 01:12:07.813
And then I think of it like if you add one service, okay, I doubled my training required for my admin person answering the phone.
1151
01:12:07.833 --> 01:12:09.695
I got double how much I got to train them on this whole other thing.
1152
01:12:10.195 --> 01:12:11.076
Then I add another one.
1153
01:12:11.156 --> 01:12:24.785
Actually, I, we look at as like it four X's the amount of time it takes to train them because now I've got to delineate when they use certain language, what flows they're using, what forms they're using, because simply by adding one more service, I double everything.
1154
01:12:24.965 --> 01:12:30.329
the amount of training required for an admin person, the required training for a salesperson, where I can park my trucks.
1155
01:12:30.349 --> 01:12:32.131
Because a lot of times, okay, I added chemicals.
1156
01:12:32.171 --> 01:12:32.731
It's really easy.
1157
01:12:33.312 --> 01:12:35.553
You can't be there anymore in your shop space.
1158
01:12:36.254 --> 01:12:39.396
And it's all the things around the actual work.
1159
01:12:39.616 --> 01:12:44.140
But a lot of times I see people, they hear better revenue and they think better service, ad service.
1160
01:12:44.640 --> 01:12:47.423
And usually it's in chase of a lower cost of goods sold.
1161
01:12:47.563 --> 01:12:50.265
But then their overhead gets bloated because of the complexity added.
1162
01:12:50.831 --> 01:12:53.272
Yeah, that's a great way to say it.
1163
01:12:53.292 --> 01:12:54.433
That's exactly what I believe.
1164
01:12:55.073 --> 01:12:58.534
And we could just keep layering on.
1165
01:12:58.874 --> 01:12:59.795
Marketing complexity.
1166
01:13:00.635 --> 01:13:04.157
How do you talk about nine different services?
1167
01:13:04.177 --> 01:13:05.637
CityTurf does quite a few.
1168
01:13:05.897 --> 01:13:07.618
I started the business doing all kinds of stuff.
1169
01:13:07.918 --> 01:13:10.799
Most of my knowledge comes from pain.
1170
01:13:11.180 --> 01:13:11.380
Yeah.
1171
01:13:12.420 --> 01:13:13.480
You're like, oh, I tried that.
1172
01:13:13.681 --> 01:13:14.161
Don't do that.
1173
01:13:14.601 --> 01:13:16.982
So we started, I started as commercial.
1174
01:13:17.002 --> 01:13:19.723
And so in commercial, I felt I had to do it all to win the contracts.
1175
01:13:20.403 --> 01:13:25.344
And so, and then I pivoted to residential and I got rid of a lot of the stuff.
1176
01:13:25.605 --> 01:13:29.666
And then I started, we have started adding things back in the city turf business.
1177
01:13:30.106 --> 01:13:31.046
Now it's a big business.
1178
01:13:31.086 --> 01:13:31.727
We can support it.
1179
01:13:31.747 --> 01:13:32.467
We got lots of money.
1180
01:13:32.487 --> 01:13:35.508
Like we can do this and we got lots of knowledge, but yeah.
1181
01:13:36.504 --> 01:13:38.205
It's become a more complex business.
1182
01:13:38.245 --> 01:13:40.525
There are a lot of moving parts in that business.
1183
01:13:40.786 --> 01:13:42.706
And there are a lot of, it's complicated.
1184
01:13:42.726 --> 01:13:46.668
If anybody tries to replicate that as a $2 million business, oh my gosh.
1185
01:13:46.708 --> 01:13:48.268
I mean, that's not a good business.
1186
01:13:48.848 --> 01:13:51.469
And so I think services.
1187
01:13:51.529 --> 01:13:54.470
Geography, you know, I think it's bad because it kills profits.
1188
01:13:54.650 --> 01:13:59.572
But that's mainly around killing of profits, killing of customer service, leading to bad reviews.
1189
01:13:59.952 --> 01:14:01.493
So services is where I put it.
1190
01:14:01.970 --> 01:14:02.130
Cool.
1191
01:14:02.430 --> 01:14:03.271
Let's go to the next one.
1192
01:14:03.311 --> 01:14:06.812
We're talking about growing past a million and protecting the profit margin.
1193
01:14:07.713 --> 01:14:16.717
The question specifically, I think you'd already alluded to it, was they're doing 700,000 revenue six and a half years in, and they're fighting to hold a 20% net margin.
1194
01:14:17.158 --> 01:14:21.780
They pay above market, gives them really good people, but it also squeezes their margin.
1195
01:14:22.080 --> 01:14:27.443
So as they push towards a million, how do you manage labor, cogs, and overhead without giving back all the growth?
1196
01:14:28.023 --> 01:14:32.704
So would love a deep dive on scaling to seven figures without watching your profit margins erode.
1197
01:14:34.125 --> 01:14:49.549
So when I saw this question, the first thing that came to mind for me is, and maybe I read into this, I was imagining this scenario where we're trying to still move fairly quickly and grow the business.
1198
01:14:49.709 --> 01:14:51.009
And we're, and so...
1199
01:14:52.483 --> 01:14:57.788
When I hear something like this, it's kind of back to you need to ask yourself, what do you want?
1200
01:14:58.929 --> 01:15:01.192
I believe you can't keep these.
1201
01:15:01.332 --> 01:15:07.658
If you're going to go super quick and you're going to, and again, I don't think we talked, I'm looking at the question here.
1202
01:15:07.678 --> 01:15:10.080
I don't see anything about what services were offered.
1203
01:15:10.421 --> 01:15:14.705
But if you're going to go pretty quick, I think margins get sacrificed.
1204
01:15:15.450 --> 01:15:17.111
And I don't think there's any way around it.
1205
01:15:17.171 --> 01:15:22.576
And I'm okay sacrificing the margins, which was back to my 10 questions for you.
1206
01:15:23.016 --> 01:15:28.681
Would you rather have a 7%, a business growing at 7% with 25% net or the opposite?
1207
01:15:28.801 --> 01:15:37.868
The reason why I'm willing to sacrifice, and I was okay with the growing at 25% with a 7% net, as I see it as a very temporary thing, then willing to sacrifice in the short term.
1208
01:15:38.228 --> 01:15:44.734
And the reason why I would sacrifice my profits down to 7% is I'm picturing if we're moving at that pace,
1209
01:15:45.294 --> 01:15:46.654
I'm pre-hiring people.
1210
01:15:47.334 --> 01:15:52.276
Because if you're going to go quickly, you have to be thinking about what's going to break.
1211
01:15:52.576 --> 01:15:54.196
What's coming that's going to break.
1212
01:15:54.296 --> 01:15:58.777
Okay, I've added, I'll just make up some scenarios to get quick growth.
1213
01:15:58.817 --> 01:16:00.358
Maybe we added another service line.
1214
01:16:00.438 --> 01:16:02.078
Okay, I need somebody to run that service line.
1215
01:16:02.338 --> 01:16:04.078
Now we need to be marketing that service line.
1216
01:16:04.438 --> 01:16:06.619
We're going to be inefficient with our ad spend at first.
1217
01:16:06.639 --> 01:16:07.779
We're trying to figure it out.
1218
01:16:08.259 --> 01:16:11.700
I need to hire technicians and that tech is not going to be fully booked.
1219
01:16:11.960 --> 01:16:14.401
That's the adding of a service line.
1220
01:16:16.202 --> 01:16:23.367
to be able to service the client and be able to protect the reputation of the business, I need to spend some money in that area.
1221
01:16:23.767 --> 01:16:25.388
Or maybe I'm not adding a service line.
1222
01:16:25.408 --> 01:16:27.890
We're just growing a part of the business really quick.
1223
01:16:27.950 --> 01:16:31.993
So I need to be buying trucks and equipment quicker than I can fully utilize them.
1224
01:16:32.474 --> 01:16:36.557
I need to be hiring people that are going to be running inefficient routes
1225
01:16:37.337 --> 01:16:41.881
So that can keep my quality and my reputation, my service level up.
1226
01:16:42.081 --> 01:16:43.483
Because I don't want to hurt my reviews.
1227
01:16:43.503 --> 01:16:44.764
I don't want to hurt my reputation.
1228
01:16:45.124 --> 01:16:51.049
So there's levels of inefficiency the faster I go because I need more people.
1229
01:16:51.349 --> 01:16:56.794
Then there's the training and all the other forms of overhead that come with it where you're kind of spending in advance.
1230
01:16:57.435 --> 01:16:59.116
So the faster you go...
1231
01:17:00.148 --> 01:17:02.309
It creates the faster you're demanding.
1232
01:17:02.449 --> 01:17:03.830
And maybe that's not what's being asked here.
1233
01:17:04.091 --> 01:17:12.576
But the faster you're trying to grow the business and the faster growth you're demanding of the business, the inefficiencies are inevitable.
1234
01:17:13.596 --> 01:17:15.698
And for all the reasons I described, but also this one.
1235
01:17:16.858 --> 01:17:27.300
you start to have to do more marketing that's less efficient, meaning it's costing more to acquire the client because you just need to get lots of marketing out into the marketplace.
1236
01:17:27.641 --> 01:17:36.002
Then you're trying to staff up sales, and you're going to have some salespeople that don't work out, and the salespeople that don't work out are going to hurt your closing ratios for a while.
1237
01:17:36.163 --> 01:17:42.024
There's all these things that are happening, and those create inefficiencies which are going to drive down the profits.
1238
01:17:42.464 --> 01:17:46.305
I'm okay with that if I'm demanding a faster pace of growth in my business.
1239
01:17:46.885 --> 01:17:48.546
Can you keep 20% and still grow?
1240
01:17:48.726 --> 01:17:52.507
Sure, but I don't think you can grow super fast.
1241
01:17:53.087 --> 01:17:54.948
That's the gist of where I stand on this.
1242
01:17:55.308 --> 01:18:00.590
Yeah, I always laugh when someone comes to me like, man, I have a million dollar business, but I'm not making a profit.
1243
01:18:00.610 --> 01:18:02.130
I'm like, what's been the last three years?
1244
01:18:02.190 --> 01:18:03.491
Well, I started at 200,000.
1245
01:18:03.771 --> 01:18:05.151
Then last year was 700,000.
1246
01:18:05.211 --> 01:18:06.232
And this year is gonna be on 1.2.
1247
01:18:06.372 --> 01:18:08.112
I'm like, yeah, you don't have any profit.
1248
01:18:08.252 --> 01:18:10.633
Like growth sucks cash.
1249
01:18:11.073 --> 01:18:15.255
And so what's interesting to me when I started getting in the software world,
1250
01:18:16.815 --> 01:18:19.778
really accepted frameworks around profitability.
1251
01:18:20.338 --> 01:18:22.681
And I'll, I'll, I'll say this and then I'll explain it for the audience.
1252
01:18:22.941 --> 01:18:23.802
The 40% rule.
1253
01:18:24.122 --> 01:18:26.885
So in software, it's a function of you add a rule of 40.
1254
01:18:27.025 --> 01:18:27.225
Yeah.
1255
01:18:27.285 --> 01:18:27.686
Yeah.
1256
01:18:27.866 --> 01:18:32.550
So you add in, Hey, what's my, my gross profit or my, uh, net profit.
1257
01:18:32.931 --> 01:18:36.394
And then I, my growth percentage, and that should be over 40%.
1258
01:18:36.434 --> 01:18:41.619
So if I'm 20% profitable, or if, if those are the best companies, 40% or greater are the best companies.
1259
01:18:41.679 --> 01:18:43.120
Correct, that's kind of like the goal, right?
1260
01:18:43.140 --> 01:18:48.482
And so if I can grow by 20% and have at least 20% profit margins, we're in the clear.
1261
01:18:48.742 --> 01:18:53.044
But if I'm only growing by 10% and I have a 10% margin, not good, 20.
1262
01:18:53.505 --> 01:18:55.766
So I kind of like that analogy.
1263
01:18:55.826 --> 01:19:01.628
It's tough in smaller businesses when you're dealing with 100,000, but like, or just smaller, under a million even.
1264
01:19:02.009 --> 01:19:08.812
But I think that I wish I had a nice clean framework like that for people to keep their head in the game when they are growing fast.
1265
01:19:09.172 --> 01:19:10.713
Because like, look, you're building this asset.
1266
01:19:10.753 --> 01:19:12.134
And yes, you're in growth mode.
1267
01:19:12.214 --> 01:19:12.915
It sucks cash.
1268
01:19:13.175 --> 01:19:15.376
But you just grew by $500,000.
1269
01:19:15.777 --> 01:19:16.938
And last you did $200,000.
1270
01:19:16.958 --> 01:19:18.399
You're at $700,000.
1271
01:19:19.159 --> 01:19:22.602
And I think a framework like that almost would be helpful to be okay.
1272
01:19:23.162 --> 01:19:25.664
Yes, growth comes at the cost of profit.
1273
01:19:25.884 --> 01:19:28.786
And this is why I like to have like, you're either in growth mode or you're in profit mode.
1274
01:19:29.006 --> 01:19:30.407
And they have to kind of choose one or the other.
1275
01:19:30.807 --> 01:19:32.809
Because it's just this mentality.
1276
01:19:32.849 --> 01:19:33.850
Oh, I got to do both.
1277
01:19:33.890 --> 01:19:35.251
I got to double the business this year.
1278
01:19:35.411 --> 01:19:35.791
Not realistic.
1279
01:19:35.971 --> 01:19:37.972
And I'm going to make 25, 30% profit margins.
1280
01:19:38.532 --> 01:19:44.194
And it's tough to, man, I don't want to sound like I'm saying anything negative about him.
1281
01:19:44.414 --> 01:19:47.935
But Alex talks about having 80% margins, anything less than that.
1282
01:19:48.115 --> 01:19:48.315
All right.
1283
01:19:48.515 --> 01:19:51.816
So let's use the 80% example, which, by the way, is my rule of thumb.
1284
01:19:52.276 --> 01:19:55.137
This is the number that I get any service-based business over.
1285
01:19:55.157 --> 01:19:55.778
All right.
1286
01:19:55.838 --> 01:19:56.998
It doesn't matter what you're selling.
1287
01:19:57.318 --> 01:19:58.439
This is what you have to get over.
1288
01:19:58.679 --> 01:19:58.899
All right.
1289
01:19:59.159 --> 01:20:01.980
Now, I'll show you the difference between 80, 90, 95, 100 in a second.
1290
01:20:02.020 --> 01:20:02.860
But this is important.
1291
01:20:03.098 --> 01:20:05.319
Like they hear that and then they're like, why am I not doing that?
1292
01:20:05.339 --> 01:20:08.419
It's like, well, you've been in business for three years and you're growing.
1293
01:20:09.000 --> 01:20:15.221
And when it comes to home services, you have to buy trucks and equipment to be able to go suffice the demand.
1294
01:20:15.641 --> 01:20:23.803
And you might get there if you stop growing and you raise prices and you're just upselling and you have a huge brand awareness over the course of five, 10, 20 years in a market.
1295
01:20:24.163 --> 01:20:29.845
But there's just no way you're going to be able to have 80% gross margins in your third year of business.
1296
01:20:30.425 --> 01:20:34.471
Have you ever met a home services company with 80% gross margins in their 20th year of business?
1297
01:20:35.151 --> 01:20:35.912
Gross margin.
1298
01:20:36.173 --> 01:20:36.674
Yeah, no.
1299
01:20:37.114 --> 01:20:40.819
I mean, pest control companies are some of the most profitable businesses that exist.
1300
01:20:40.859 --> 01:20:41.079
Yeah.
1301
01:20:41.500 --> 01:20:43.302
They're not doing 20% cogs.
1302
01:20:43.523 --> 01:20:44.704
Yeah.
1303
01:20:44.865 --> 01:20:47.007
Like, my target for them is like...
1304
01:20:47.428 --> 01:20:51.133
Because we will start, let's call it 35% of direct labor.
1305
01:20:51.413 --> 01:20:53.255
But direct labor is not all of your cogs.
1306
01:20:53.295 --> 01:20:54.537
You still have materials.
1307
01:20:54.577 --> 01:20:56.099
You still have subcontractors in there.
1308
01:20:56.499 --> 01:20:59.223
And so if you can get that to 20, I'd be happy.
1309
01:20:59.243 --> 01:21:01.666
Like if you can get under 20% direct labor, we're good.
1310
01:21:02.186 --> 01:21:02.387
But-
1311
01:21:03.530 --> 01:21:03.730
Yeah.
1312
01:21:04.471 --> 01:21:10.636
I mean, if anybody's doing 20% cogs in home services and you want an investor, message me.
1313
01:21:10.916 --> 01:21:11.537
I have money.
1314
01:21:11.837 --> 01:21:12.478
Okay.
1315
01:21:12.678 --> 01:21:13.318
I want to meet you.
1316
01:21:13.378 --> 01:21:14.679
I don't want to ruin your video.
1317
01:21:14.799 --> 01:21:15.780
I don't want to ruin your video.
1318
01:21:15.800 --> 01:21:18.943
But what's your response to that mentality or that ideology?
1319
01:21:19.243 --> 01:21:21.085
Well, you should leave the industry if that's what you're going for.
1320
01:21:22.326 --> 01:21:25.668
I mean, I've never met anybody.
1321
01:21:26.308 --> 01:21:30.431
I don't know anybody that's doing cogs of 20 or gross margin of 80.
1322
01:21:30.911 --> 01:21:34.633
Okay, so let's, you know, this is the part that people want, right?
1323
01:21:34.833 --> 01:21:36.935
We'll bury the lead an hour and 20 minutes into this.
1324
01:21:36.955 --> 01:21:38.896
But, like, why does Alex say that then?
1325
01:21:39.876 --> 01:21:42.078
Well, because Alex isn't building these kinds of businesses.
1326
01:21:42.118 --> 01:21:43.599
He's building information businesses.
1327
01:21:44.337 --> 01:21:47.958
And so that's his frame, much like my frame.
1328
01:21:47.998 --> 01:21:49.618
And I haven't thought through all my points on this.
1329
01:21:49.638 --> 01:21:53.959
This one just, I haven't thought through like what am I gonna even say in the video?
1330
01:21:54.059 --> 01:21:56.219
I literally dropped this in Trello last week.
1331
01:21:56.259 --> 01:22:00.900
And I remember that this is like, I think this is one of the earliest pieces of content I ever saw from him.
1332
01:22:01.180 --> 01:22:02.360
And I've never forgotten it.
1333
01:22:03.600 --> 01:22:06.681
Cause I don't, I do watch, I don't watch a ton of his videos.
1334
01:22:06.701 --> 01:22:08.661
So I haven't seen real, so this must go back a bit.
1335
01:22:09.181 --> 01:22:10.802
And it came to mind again the other day.
1336
01:22:10.822 --> 01:22:12.082
I was like, this is a good video.
1337
01:22:12.102 --> 01:22:12.722
I don't know why.
1338
01:22:12.762 --> 01:22:13.262
So anyway.
1339
01:22:13.622 --> 01:22:19.227
So I haven't thought through all my points, but my, the gist of it, I think we all come from a place of what have we built?
1340
01:22:19.267 --> 01:22:20.568
Like that's our level of knowledge.
1341
01:22:20.628 --> 01:22:23.370
And so we had tried to apply that to other industries.
1342
01:22:24.031 --> 01:22:29.415
I'm very fortunate that I've been in coaching and cleaning and lawn care and software.
1343
01:22:29.495 --> 01:22:34.099
And I, I've, that was in logistics in the very beginning and technology and logistics.
1344
01:22:34.259 --> 01:22:37.581
The first company John and I built, I've been in healthcare with the software thing.
1345
01:22:37.602 --> 01:22:38.482
I've done all these things.
1346
01:22:38.802 --> 01:22:41.825
So I've seen all these different businesses and business models that,
1347
01:22:42.025 --> 01:22:50.530
And so if you think about where Alex came from, he literally came from pretty close to one of the single most profitable businesses that exist, period.
1348
01:22:51.491 --> 01:22:51.891
Period.
1349
01:22:52.652 --> 01:22:54.573
And those are the information businesses.
1350
01:22:54.613 --> 01:22:56.434
He was essentially in an information business.
1351
01:22:56.454 --> 01:22:57.975
They're ridiculously profitable.
1352
01:22:58.295 --> 01:23:02.298
Most guys build their information coaching type businesses to...
1353
01:23:03.771 --> 01:23:06.472
a million bucks, 500,000, 2 million.
1354
01:23:06.652 --> 01:23:08.953
He built this to like, I don't even remember what the revenue was.
1355
01:23:09.113 --> 01:23:11.074
Didn't he make like 17 million a year or something?
1356
01:23:11.094 --> 01:23:12.155
Like nobody does that.
1357
01:23:12.375 --> 01:23:17.877
Like it's a total anomaly, but that is, and he did that on not that much more gross revenue.
1358
01:23:18.277 --> 01:23:18.958
And so you just,
1359
01:23:19.778 --> 01:23:23.380
you have a very low headcount inside those organizations.
1360
01:23:23.761 --> 01:23:25.081
They're very, very scalable.
1361
01:23:25.502 --> 01:23:29.744
Software even makes the promise of these incredibly high gross margins.
1362
01:23:30.204 --> 01:23:34.927
The funny thing is, if you look at most software companies, that's the promise, but that's not the reality.
1363
01:23:34.947 --> 01:23:37.809
Like almost none of these software companies actually do that.
1364
01:23:38.129 --> 01:23:41.872
It's like, hey, in 12 years, if we spend $100 million on...
1365
01:23:43.092 --> 01:23:45.295
And we lose money for 12 years.
1366
01:23:45.335 --> 01:23:46.836
We're going to achieve these gross margins.
1367
01:23:46.876 --> 01:23:47.958
But even then, it's not real.
1368
01:23:48.438 --> 01:23:49.960
And this is like inside baseball here.
1369
01:23:50.300 --> 01:23:54.925
And then one of the ways you get to those numbers is because of the way you classify your R&D.
1370
01:23:55.105 --> 01:23:55.586
Right.
1371
01:23:55.606 --> 01:23:58.228
So when you're developing your software, there's building software.
1372
01:23:59.029 --> 01:24:01.691
And then there's the maintenance of the software.
1373
01:24:01.891 --> 01:24:04.633
Like, okay, I'm writing this new feature, and then I got to keep that feature working.
1374
01:24:05.293 --> 01:24:09.916
And there's these ways with, like, games that you're not going to probably play or I'm not going to play.
1375
01:24:09.936 --> 01:24:16.901
Like, who cares where you could classify your building of the software completely different and doesn't go against your gross margin?
1376
01:24:17.301 --> 01:24:18.402
Like, but that's still money.
1377
01:24:18.462 --> 01:24:22.385
It's like to the average guy, it's like, you know, that's still money I had to spend.
1378
01:24:22.705 --> 01:24:23.706
It came out of my pocket.
1379
01:24:24.086 --> 01:24:25.187
And so there's games –
1380
01:24:25.987 --> 01:24:27.749
I got a little off in the weeds there.
1381
01:24:28.489 --> 01:24:35.736
I just don't know many businesses that are producing this kind of gross margin, and I do not know any of them in home services.
1382
01:24:36.036 --> 01:24:38.218
I'm sure they exist, but I can't.
1383
01:24:39.419 --> 01:24:42.602
In Service Hall Pipe, we had so many different types of businesses that
1384
01:24:43.678 --> 01:24:47.281
that were our clients, I have crossed different industries.
1385
01:24:47.421 --> 01:24:51.464
I just, I can't ever remember anybody that achieved such a thing.
1386
01:24:51.864 --> 01:24:58.469
Or somebody might say, well, I have those types of gross margin and they have a smaller business, but they're not including them in a realistic salary.
1387
01:24:58.809 --> 01:25:11.118
So that, again, I'll eventually, maybe I won't record the video now that we've had this conversation, but I never fully thought through the points other than to say, if anybody's going for this and this is their expectation, okay.
1388
01:25:11.278 --> 01:25:12.806
they're going to think they're a complete loser.
1389
01:25:13.027 --> 01:25:13.710
Yeah.
1390
01:25:13.851 --> 01:25:14.454
And they're not.
1391
01:25:14.494 --> 01:25:15.479
It's just not reality.
1392
01:25:15.680 --> 01:25:15.881
Mm-hmm.
1393
01:25:16.602 --> 01:25:17.763
Yeah, that's the part.
1394
01:25:18.083 --> 01:25:19.384
That's my only qualm with it.
1395
01:25:19.404 --> 01:25:25.229
Because I'm all for like, let's optimize this thing, make it better, go for a number that may be unachievable.
1396
01:25:25.549 --> 01:25:28.772
But it's the fact that people then think they're the problem.
1397
01:25:29.412 --> 01:25:32.154
That's what got me going on the whole thing, why I wanted to do it.
1398
01:25:32.174 --> 01:25:34.316
Or they think that there's something wrong with this industry.
1399
01:25:34.436 --> 01:25:36.698
And so they should go do the coaching thing.
1400
01:25:37.178 --> 01:25:37.619
Yeah, yeah, yeah.
1401
01:25:37.679 --> 01:25:41.362
And I always say like, hey, have you ever tried to get a sponsor for $5,000?
1402
01:25:41.722 --> 01:25:44.784
You go out tomorrow and get a job for $5,000 and make a lot of money.
1403
01:25:45.725 --> 01:26:13.814
you it's not easy like the whole coaching thing and information thing sounds great until you go try to make videos or get people to sign up for your coaching thing and all of a sudden it's not so easy so anyway it's not and not like last thing i'll say on that too is you have to be a marketing machine in an engine with most of those businesses because the typical i don't know if it's changed but the data used to be on the typical mastermind coaching business if there wasn't a contract involved was about five month retention mm-hmm
1404
01:26:14.574 --> 01:26:16.535
People, it's a revolving door.
1405
01:26:16.555 --> 01:26:22.278
And so, you know, some of the stuff that Alex pulled off, that is his frame of reference that he talks about.
1406
01:26:22.858 --> 01:26:23.919
It's kind of back to what he said.
1407
01:26:23.939 --> 01:26:30.322
It's like around the million dollar business versus going to be like, I know almost nobody that could pull that off.
1408
01:26:30.762 --> 01:26:32.143
And it might be hard.
1409
01:26:32.784 --> 01:26:34.505
I think he's kind of pulling it off again, frankly.
1410
01:26:35.246 --> 01:26:37.028
But like almost nobody pulls this off.
1411
01:26:37.088 --> 01:26:38.409
He is a marketing machine.
1412
01:26:38.609 --> 01:26:40.150
And he's proven he's better than everybody else.
1413
01:26:40.430 --> 01:26:42.773
And he's in a very, very specific kind of business.
1414
01:26:43.173 --> 01:26:44.514
He's now a private equity guy.
1415
01:26:44.594 --> 01:26:46.175
I mean, his business is private equity.
1416
01:26:47.116 --> 01:26:51.340
Again, one of the single most profitable businesses that exists the way he's approaching it.
1417
01:26:51.400 --> 01:26:55.984
Like he's very good at picking the most profitable things to go into.
1418
01:26:57.318 --> 01:26:58.679
It's just not going to be the case for us.
1419
01:26:58.779 --> 01:27:03.161
And to think that we should choose that industry because of that is where I think the flaw is.
1420
01:27:03.321 --> 01:27:04.462
Well, I should get into private equity.
1421
01:27:04.482 --> 01:27:07.023
Like, have you ever gone into these rooms with these guys?
1422
01:27:07.043 --> 01:27:07.664
They're smart.
1423
01:27:08.044 --> 01:27:08.984
They're very smart.
1424
01:27:09.605 --> 01:27:10.465
They're very smart.
1425
01:27:10.846 --> 01:27:15.668
And if you, I will also tell you, because I've been around a lot of these guys, you may not want their life.
1426
01:27:15.728 --> 01:27:18.950
Yeah, they make a lot of money, but you get to live on airplanes your whole life.
1427
01:27:19.050 --> 01:27:24.153
It's like, there's, it's not, and you are answering to people constantly about investments and
1428
01:27:24.573 --> 01:27:26.854
the money of their money that you're managing.
1429
01:27:26.914 --> 01:27:29.115
It's a different world.
1430
01:27:29.175 --> 01:27:33.238
Tell me why you didn't go to private equity once you had the exit.
1431
01:27:33.438 --> 01:27:36.519
And why did you not decide to go that route?
1432
01:27:36.579 --> 01:27:37.320
Me get into it?
1433
01:27:37.440 --> 01:27:39.061
Yeah.
1434
01:27:39.161 --> 01:27:42.462
If I was trying to just purely make money, that's 100% what I would do.
1435
01:27:42.922 --> 01:27:43.663
I thought about it.
1436
01:27:46.844 --> 01:27:50.787
And I would really enjoy it and like it.
1437
01:27:50.807 --> 01:27:51.107
But...
1438
01:27:55.247 --> 01:27:55.628
I don't know.
1439
01:27:57.291 --> 01:27:57.892
I question...
1440
01:27:58.714 --> 01:28:02.983
I think I'm certain I'm doing the right thing, but I still...
1441
01:28:03.950 --> 01:28:04.750
I would love to do it.
1442
01:28:04.770 --> 01:28:05.511
It would be fun.
1443
01:28:06.311 --> 01:28:09.092
The problem is parts of everything are fun.
1444
01:28:09.412 --> 01:28:11.592
And then there's always a sacrifice.
1445
01:28:11.933 --> 01:28:13.113
There's always something you give.
1446
01:28:13.693 --> 01:28:15.434
And there's this big thing for me.
1447
01:28:15.474 --> 01:28:21.596
It's like, okay, what's the most ideal life to live and not think about just purely the economics?
1448
01:28:22.996 --> 01:28:25.317
And so for me, that was, I still would love to do it.
1449
01:28:25.337 --> 01:28:25.757
It'd be fun.
1450
01:28:25.897 --> 01:28:29.438
I just don't, I feel like I need to be single and not have anything else.
1451
01:28:29.518 --> 01:28:31.379
It'd just be like, if I could just...
1452
01:28:31.979 --> 01:28:36.143
not be married, not have kids, not have hobbies, and not have friends.
1453
01:28:36.604 --> 01:28:40.268
That would be the perfect thing to go do because I could go all in on that.
1454
01:28:40.588 --> 01:28:45.393
But I don't want to look back when I'm 90 and say, great, I made more money I'm never going to spend.
1455
01:28:46.174 --> 01:28:48.776
And two things I've always respected.
1456
01:28:48.816 --> 01:28:49.697
I'll say this.
1457
01:28:50.078 --> 01:28:52.961
When I was young, I didn't know many people that had money.
1458
01:28:53.481 --> 01:28:57.805
But I knew a few people I knew, I figured out they had money and they never talk.
1459
01:28:57.865 --> 01:29:02.389
They, I already feel like I have to talk way too much about money because of this stuff.
1460
01:29:02.429 --> 01:29:02.630
Yeah.
1461
01:29:03.323 --> 01:29:09.867
And the people I always respected, you knew they were doing really well and they never said a word and they didn't show it off.
1462
01:29:10.568 --> 01:29:12.309
And so I've always liked that.
1463
01:29:13.149 --> 01:29:17.412
The second one of people that I respect, they do one of two things when they have crazy money.
1464
01:29:17.993 --> 01:29:23.036
They either do something totally different in life and go a totally different direction, which is what got me excited.
1465
01:29:23.056 --> 01:29:24.877
I was like, I want to do something totally different.
1466
01:29:24.937 --> 01:29:25.758
I've done these things.
1467
01:29:26.078 --> 01:29:28.419
Can I do another thing completely different?
1468
01:29:29.560 --> 01:29:30.821
Or they...
1469
01:29:32.629 --> 01:29:33.910
They just say good is good enough.
1470
01:29:34.070 --> 01:29:37.313
Like, to me, it's kind of this power move of say, I'm good.
1471
01:29:37.433 --> 01:29:38.614
I'm not playing the game anymore.
1472
01:29:38.694 --> 01:29:39.675
Yeah.
1473
01:29:39.735 --> 01:29:41.016
And that's what I've always respected.
1474
01:29:41.036 --> 01:29:46.840
So there's a little bit of that where it's like the game I'm playing now is only because this is what I want to be doing.
1475
01:29:47.541 --> 01:29:49.142
And so that's where I'm spending my time.
1476
01:29:49.202 --> 01:29:49.382
Sorry.
1477
01:29:49.642 --> 01:29:50.323
I hope that made sense.
1478
01:29:50.343 --> 01:29:51.544
That was another long answer.
1479
01:29:51.564 --> 01:29:54.566
But I'm spending my time on what I wake up and get excited about.
1480
01:29:54.586 --> 01:29:58.890
It's like when I was saying that the other day, I was building an estimating system just for the fun of it to see if I could do it.
1481
01:29:58.910 --> 01:29:59.090
Yeah.
1482
01:29:59.170 --> 01:29:59.970
That's just what I want to do.
1483
01:30:00.371 --> 01:30:05.874
If I get to help Riley with every chat, if I get to have these conversations, if I get to help other people build their things, that's what I want to do.
1484
01:30:05.914 --> 01:30:09.716
I feel like when I look back, I will say, you know, I did what I wanted to do.
1485
01:30:09.876 --> 01:30:10.497
It was fun.
1486
01:30:10.537 --> 01:30:11.157
It was a good life.
1487
01:30:11.197 --> 01:30:11.897
It helped other people.
1488
01:30:11.998 --> 01:30:12.538
That's a value.
1489
01:30:12.558 --> 01:30:13.659
If I look back and say...
1490
01:30:14.679 --> 01:30:37.870
10 of my hours every week were tons of fun in private equity and 60 of them were paying and I wasn't any more present anywhere else in my life what did I achieve like what was the point so that's kind of how I'm thinking about it yeah but man I would love to play that game I just like I like it yeah like the raising the fun the money that that would be the part that like I would have a hard time with because taking other people's money has been like a
1491
01:30:38.130 --> 01:30:42.511
I was going to use my own money, but there comes a point where you can only use your own money so far.
1492
01:30:42.531 --> 01:30:42.931
Right.
1493
01:30:43.091 --> 01:30:43.532
Like, cause.
1494
01:30:43.932 --> 01:30:45.932
The real returns are happening if you could leverage, like.
1495
01:30:45.972 --> 01:30:46.912
It's the two and 20.
1496
01:30:46.992 --> 01:30:47.753
Yeah.
1497
01:30:48.093 --> 01:30:50.713
That's where the money, I mean, that's the, that's part of the thing.
1498
01:30:50.733 --> 01:30:55.615
And so the, you know, you really do want to raise some money, but that would just so complicate things.
1499
01:30:55.675 --> 01:30:59.496
And I thought I would do, I really was attracted to this idea of like, I have.
1500
01:30:59.936 --> 01:31:04.400
The financial, the metrics, the people, the technology, I have all this experience.
1501
01:31:04.760 --> 01:31:09.104
I would love to roll up a bunch of companies in home services and build something really, really big.
1502
01:31:09.925 --> 01:31:11.647
And I still think that's super fascinating.
1503
01:31:11.667 --> 01:31:13.909
And I think I can put it together because I know so many people.
1504
01:31:14.149 --> 01:31:18.393
And I have a bunch of people have said, hey, if you do this, I would like my business to be in the mix.
1505
01:31:18.413 --> 01:31:20.455
So I could immediately have a bunch of companies come in.
1506
01:31:21.175 --> 01:31:23.217
I just don't know if I want to do everything it takes.
1507
01:31:23.557 --> 01:31:25.980
And then as big as I think I could make it, I would probably...
1508
01:31:26.899 --> 01:31:29.541
not want to put all my money on the line, put it that way.
1509
01:31:29.841 --> 01:31:30.001
Yeah.
1510
01:31:30.721 --> 01:31:35.905
I want to ask, go back to one thing you said, just out of curiosity, because it's, it's a challenging thing for me too.
1511
01:31:35.925 --> 01:31:36.085
So.
1512
01:31:37.338 --> 01:31:39.959
talking about your money, talking about the businesses.
1513
01:31:40.499 --> 01:31:45.021
And it's tough because like when it comes to social media, the first question I always ask is like, well, are they credible?
1514
01:31:45.361 --> 01:31:49.603
And if they have built a big business, if they have money, I will listen a little longer if they're brand new.
1515
01:31:50.583 --> 01:31:52.564
And so how have you like weighed this out?
1516
01:31:52.584 --> 01:31:55.025
Because this is like the hardest thing still for me.
1517
01:31:55.685 --> 01:31:57.346
And I also know you hedge massively.
1518
01:31:57.526 --> 01:31:59.007
You don't share certain numbers, et cetera.
1519
01:32:00.127 --> 01:32:03.969
But like for me, it's so difficult like to say revenue numbers or like, but it's like,
1520
01:32:04.469 --> 01:32:07.331
That's also the thing that if I watch a video, that's the first thing I'm looking for.
1521
01:32:07.371 --> 01:32:09.772
Like the founder of Bloom, he started a YouTube channel.
1522
01:32:09.792 --> 01:32:11.353
Like because he owns Bloom.
1523
01:32:11.373 --> 01:32:11.933
Bloom Energy Guy?
1524
01:32:12.193 --> 01:32:12.893
Yeah, Bloom, yeah.
1525
01:32:12.994 --> 01:32:13.334
Really?
1526
01:32:13.354 --> 01:32:14.534
Greg, Greg.
1527
01:32:15.175 --> 01:32:16.495
And he started a YouTube channel.
1528
01:32:16.535 --> 01:32:21.238
And it's like, okay, immediately credibility because I know the brand and they're doing $500 million in revenue.
1529
01:32:21.398 --> 01:32:22.799
I will listen, even though you...
1530
01:32:23.619 --> 01:32:27.324
There's some things I just do not agree with how you're acting right now and you act like a child sometimes.
1531
01:32:27.624 --> 01:32:32.430
But I will put up with that because of the co-signature of the credibility.
1532
01:32:32.831 --> 01:32:36.035
So how have you kind of balanced it out coming back into the content world?
1533
01:32:36.718 --> 01:32:42.959
I'm kind of dipping my toe into what I've said already, like, in the last year more than I've ever said in my life.
1534
01:32:43.900 --> 01:32:45.520
And it's still a struggle.
1535
01:32:45.540 --> 01:32:48.361
Like, some days I'm just like, I'll just start saying more.
1536
01:32:48.381 --> 01:32:50.101
And then our day's like, nope, this is who I am.
1537
01:32:50.501 --> 01:32:52.542
So I'm just, I'm still going back and forth.
1538
01:32:52.562 --> 01:32:56.223
But I am certain that you need to...
1539
01:32:58.483 --> 01:33:01.347
You need to tell people why they should listen to you.
1540
01:33:01.367 --> 01:33:04.450
I just, there's so much, I think people feel it.
1541
01:33:04.470 --> 01:33:06.152
Like we don't trust anybody anymore.
1542
01:33:06.253 --> 01:33:07.374
We don't believe anybody anymore.
1543
01:33:07.394 --> 01:33:10.418
It's half the problem in our country, in my opinion, is we don't believe anything.
1544
01:33:10.718 --> 01:33:12.340
And so we're in a really bad place.
1545
01:33:12.820 --> 01:33:14.783
And so people are not trusting people.
1546
01:33:15.283 --> 01:33:19.346
And I think people talk these big games like I got whatever.
1547
01:33:19.707 --> 01:33:22.689
They'll say stats that aren't even totally legit.
1548
01:33:22.709 --> 01:33:24.330
They'll make stuff up.
1549
01:33:24.350 --> 01:33:28.614
So I think it's important to say what you've got and then back it up.
1550
01:33:29.134 --> 01:33:29.935
So I believe that.
1551
01:33:29.975 --> 01:33:30.935
I think that is key.
1552
01:33:31.376 --> 01:33:33.297
And the guys that are really successful, they all do it.
1553
01:33:34.718 --> 01:33:35.279
They all do it.
1554
01:33:36.019 --> 01:33:40.683
And so I think where I'm arriving at is I'm slowly saying a little bit more.
1555
01:33:40.703 --> 01:33:42.785
I'll probably never say it all, but I'm saying more.
1556
01:33:43.678 --> 01:33:48.203
But the line I've decided I will not cross is I'm not going to start showing off all my cars and all my stuff.
1557
01:33:48.603 --> 01:33:52.187
I just, when I see that, and I've got friends that are playing, like,
1558
01:33:53.314 --> 01:33:54.294
friends are playing that game.
1559
01:33:54.334 --> 01:33:57.936
It's like, and they make arguments to me, like why that makes sense.
1560
01:33:58.016 --> 01:33:58.776
And they're right.
1561
01:33:58.997 --> 01:33:59.837
I mean, it works.
1562
01:34:00.397 --> 01:34:01.298
I just can't do it.
1563
01:34:01.338 --> 01:34:05.059
That's when I feel like, that's when I feel like I won't be sincerity.
1564
01:34:05.119 --> 01:34:05.480
I don't know.
1565
01:34:05.580 --> 01:34:05.900
I don't know.
1566
01:34:05.960 --> 01:34:07.360
I still struggle with it is the answer.
1567
01:34:07.520 --> 01:34:09.321
I haven't arrived at my conclusion.
1568
01:34:09.721 --> 01:34:10.022
Okay.
1569
01:34:10.102 --> 01:34:10.322
All right.
1570
01:34:10.342 --> 01:34:11.582
Well, let's pivot to the last question.
1571
01:34:11.602 --> 01:34:12.563
We're talking about debt.
1572
01:34:12.903 --> 01:34:14.444
Should you use it to grow faster?
1573
01:34:14.864 --> 01:34:15.864
I'll tee this one up.
1574
01:34:16.184 --> 01:34:16.385
Okay.
1575
01:34:16.565 --> 01:34:16.785
Um,
1576
01:34:17.732 --> 01:34:22.897
We've talked a lot about growth, increasing your risk appetite, obviously, when we add debt into the equation.
1577
01:34:24.598 --> 01:34:25.979
Is this a yes, no answer for you?
1578
01:34:26.120 --> 01:34:27.141
I know you're more conservative.
1579
01:34:27.561 --> 01:34:31.705
Or is it more a matter of how fast are you growing and what size of business are you at?
1580
01:34:32.265 --> 01:34:33.406
Used to be a yes, no.
1581
01:34:33.466 --> 01:34:38.551
And I've evolved my opinion with a lot of warnings.
1582
01:34:40.294 --> 01:34:41.094
You want me to expand on that?
1583
01:34:41.114 --> 01:34:41.355
Yeah.
1584
01:34:41.555 --> 01:34:42.375
Give me the words.
1585
01:34:42.635 --> 01:34:45.637
Sometimes I feel like I get going off on these tangents and I talk too much.
1586
01:34:45.677 --> 01:34:51.079
So, so I have always been, I am conservative.
1587
01:34:51.259 --> 01:34:57.563
I grew up very conservative and it's just bled into my, my life in general.
1588
01:34:57.583 --> 01:35:03.265
And I think on the whole it's cost me a ton of money, but it's also given me a lot of peace in life.
1589
01:35:03.946 --> 01:35:06.147
And, and so yeah,
1590
01:35:07.222 --> 01:35:19.385
service autopilot and doing Academy confirmed my belief that for 99% of people, they should not be using any debt because it's just so unbelievably destructive.
1591
01:35:19.706 --> 01:35:21.206
I'm not a Dave Ramsey guy at all.
1592
01:35:21.306 --> 01:35:21.846
I don't live in that.
1593
01:35:21.886 --> 01:35:24.427
I'm not, I mean, I have no issue with Dave, but I don't agree.
1594
01:35:24.447 --> 01:35:26.087
I think that's okay.
1595
01:35:26.787 --> 01:35:27.808
I did finance a house.
1596
01:35:27.948 --> 01:35:34.290
I've, I haven't financed my last two homes, but I, you know, I'm not, I, that was just because I was in a good enough place.
1597
01:35:35.150 --> 01:35:35.310
Um, um,
1598
01:35:36.069 --> 01:35:40.051
I'm not opposed to debt.
1599
01:35:40.191 --> 01:35:41.932
And so I don't take, and I use credit cards.
1600
01:35:41.972 --> 01:35:43.273
I believe in using credit cards.
1601
01:35:43.813 --> 01:35:44.974
So I don't take the Dave Ramsey thing.
1602
01:35:44.994 --> 01:35:46.134
That's where I wanted to go with this.
1603
01:35:46.535 --> 01:35:47.255
So it's not that.
1604
01:35:47.435 --> 01:35:50.717
It's just simply that people get themselves into so much trouble.
1605
01:35:51.437 --> 01:35:55.139
And I've seen it too many times that my general advice is you should not use it.
1606
01:35:55.560 --> 01:35:58.261
Now, how do I think it might be?
1607
01:35:58.481 --> 01:36:00.822
Okay, if you're buying a building, okay.
1608
01:36:01.123 --> 01:36:03.844
But I've got arguments against most people buying a building for their business.
1609
01:36:03.944 --> 01:36:05.145
Down payment, kill you.
1610
01:36:05.785 --> 01:36:07.646
Down payment, it's massively destructive.
1611
01:36:07.867 --> 01:36:09.488
I mean, it's not destructive, distracting.
1612
01:36:09.628 --> 01:36:09.788
Yeah.
1613
01:36:10.128 --> 01:36:12.970
Just massively distracting from the business for a period of time.
1614
01:36:13.290 --> 01:36:17.633
And then this wouldn't matter if the person's going to keep their business small.
1615
01:36:17.673 --> 01:36:24.838
But again, because I like growth and I want bigger, what I see is it becomes the bottleneck where somebody, I got off topic like normal.
1616
01:36:25.118 --> 01:36:29.461
So it's like they built a business that could support 15 trucks or bought a shop.
1617
01:36:29.562 --> 01:36:34.505
And now that becomes the constraint in their business that keeps them from going to 30 when they're very capable of it.
1618
01:36:34.705 --> 01:36:38.746
So there's a few things like that, which is why I don't love buildings for some people.
1619
01:36:39.206 --> 01:36:41.927
I've now built one, but it took us a long time to get there.
1620
01:36:43.867 --> 01:36:44.448
Different topic.
1621
01:36:44.508 --> 01:36:46.308
So dead on that, okay.
1622
01:36:46.408 --> 01:36:47.228
Dead on the trucks.
1623
01:36:47.728 --> 01:36:53.550
And then after that is where I start to be a little, dead on equipment probably is the next most logical.
1624
01:36:53.870 --> 01:36:56.211
And after that, I get really nervous with lines of credits.
1625
01:36:56.271 --> 01:36:58.531
I don't even really, frankly, love the dead on equipment.
1626
01:36:58.751 --> 01:36:59.912
That's sort of where I stand.
1627
01:37:00.592 --> 01:37:00.832
Now,
1628
01:37:03.201 --> 01:37:08.748
Where I think that debt makes a ton of sense is to the person that really understands their financials.
1629
01:37:09.069 --> 01:37:10.470
They understand their gross margin.
1630
01:37:10.751 --> 01:37:13.734
They understand their COGS, just a different version of gross margin.
1631
01:37:13.995 --> 01:37:15.397
They understand their labor ratios.
1632
01:37:15.417 --> 01:37:17.079
They understand all the metrics of their business.
1633
01:37:17.099 --> 01:37:19.081
They understand their cash flows, the ins and outs.
1634
01:37:19.442 --> 01:37:21.865
When the ins and outs of the money come in throughout the month.
1635
01:37:22.245 --> 01:37:24.166
They've got a pretty predictable business.
1636
01:37:24.206 --> 01:37:25.106
It's more recurring.
1637
01:37:26.407 --> 01:37:45.656
When you really, really understand the business and you have tried and true marketing methods that have been tested that you can predict, this is going to return, like if I put out this many pieces or if I spend this much money on ads, I'm going to get back this amount of revenue or I'm going to get this many leads and we're going to close this percentages.
1638
01:37:45.896 --> 01:37:48.958
When you get to that place, this is a totally different conversation.
1639
01:37:49.438 --> 01:37:52.479
But tell me how many people are to any of those places.
1640
01:37:53.019 --> 01:38:00.642
Like, I've met so many people running $10 million, well, not so many, but many people running $10 million businesses, they cannot give you all that data.
1641
01:38:01.083 --> 01:38:03.424
Like, there are some that can, but a lot of them cannot.
1642
01:38:04.124 --> 01:38:06.505
And so if you can't give me that data, you're at risk.
1643
01:38:06.705 --> 01:38:09.686
And so that's the summary of how I see debt.
1644
01:38:09.986 --> 01:38:14.668
When you really understand what's happening financially in your business, not just money,
1645
01:38:14.788 --> 01:38:22.193
at an accounting level, but at a attribution level of the sales and marketing side of the business, then there's predictability.
1646
01:38:22.273 --> 01:38:27.076
And with predictability, we can make decisions about the future and taking on debt.
1647
01:38:27.837 --> 01:38:33.100
Otherwise, you're just guessing and you're just hoping and you're hoping everything keeps going good.
1648
01:38:33.140 --> 01:38:38.064
And we just never know when something will go wrong and people get wiped out because of debt.
1649
01:38:38.284 --> 01:38:40.265
It's probably one of the that and divorce.
1650
01:38:40.285 --> 01:38:40.645
Yeah.
1651
01:38:41.146 --> 01:38:41.446
So, yeah.
1652
01:38:41.886 --> 01:38:48.967
Yeah, like when I go on the turnaround show, it's like that's always the first thing I look at because that's the dark cloud over whatever I'm about to tell them.
1653
01:38:49.588 --> 01:39:03.150
Because if you tell someone, hey, go raise prices or hey, sell some equipment off or whatever, if there's debt, it just immediately escalates all risk and timelines so fast and so hard to sometimes operate because they have to pay the debt.
1654
01:39:03.410 --> 01:39:05.831
And so one thing I've always thought about is like,
1655
01:39:06.651 --> 01:39:13.593
What is either the useful life of the thing that I'm purchasing or the amortization schedule?
1656
01:39:13.973 --> 01:39:16.814
So, for example, a house, it's 30 years, right?
1657
01:39:17.214 --> 01:39:20.555
Or a commercial building, it's 39 years or whatever it is.
1658
01:39:21.115 --> 01:39:22.535
I'm more inclined to get in debt on that.
1659
01:39:22.595 --> 01:39:31.138
But if I'm going to use a mower for two years, probably not a great idea to take the huge depreciation hit the minute I buy that thing.
1660
01:39:31.818 --> 01:39:32.959
And so that's kind of in my lens.
1661
01:39:33.059 --> 01:39:35.239
And so like, well, I don't think I've ever said this anywhere.
1662
01:39:35.439 --> 01:39:43.362
The only debt I have outside of the real estate stuff is when the EIDL came along, it was just too cheap.
1663
01:39:43.923 --> 01:39:46.764
It was like this money is so cheap.
1664
01:39:46.944 --> 01:39:49.365
It's a 30-year term on...
1665
01:39:50.606 --> 01:39:53.330
3.2%, whatever it is.
1666
01:39:53.630 --> 01:39:55.714
That was the EIDL?
1667
01:39:55.954 --> 01:39:57.056
Yeah, EIDL.
1668
01:39:57.076 --> 01:39:58.418
Yeah, yeah, yeah.
1669
01:39:58.438 --> 01:39:59.479
That was the COVID time, yeah.
1670
01:39:59.499 --> 01:40:04.687
Yeah, and that was actually a big reason why we were able to scale the franchise.
1671
01:40:05.328 --> 01:40:06.969
And I was living in the closet at the time.
1672
01:40:07.390 --> 01:40:09.111
And when all that went down, we didn't need the money.
1673
01:40:09.371 --> 01:40:11.854
We were just about to start making it.
1674
01:40:12.054 --> 01:40:14.135
And I was like, oh, it really brought down my expenses.
1675
01:40:14.456 --> 01:40:17.618
But I got that because it was just so good.
1676
01:40:17.698 --> 01:40:18.619
I'm like, 30 years?
1677
01:40:18.819 --> 01:40:21.081
I couldn't get a mortgage for 30 years at this rate.
1678
01:40:21.281 --> 01:40:21.662
And it's like...
1679
01:40:22.382 --> 01:40:41.688
Basically secured by the real estate, but they don't track it like literally I've sold the real estate since then and so all of that to say I'm generally in their same camp, especially the smaller size of business And I think the one part so hard is if you if you know your expected return That's when I give more credence to it.
1680
01:40:41.708 --> 01:40:44.329
Like if you know if I have ten thousand dollars of I
1681
01:40:45.049 --> 01:40:47.332
of investment into this business, I get extra yield.
1682
01:40:47.613 --> 01:40:49.495
Whether that be, okay, I know my customer acquisition cost.
1683
01:40:49.535 --> 01:40:50.457
I know my lifetime value.
1684
01:40:50.677 --> 01:40:51.598
I know my profit margin.
1685
01:40:51.678 --> 01:40:53.881
Okay, now we can start to work with something here.
1686
01:40:54.082 --> 01:40:57.526
But if you can't chart that out, you're just adding risk.
1687
01:40:58.773 --> 01:40:58.953
Yeah.
1688
01:40:59.273 --> 01:41:03.315
And a lot of times it is because we're on the growth treadmill of just like, I just got to grow in the business.
1689
01:41:03.615 --> 01:41:10.037
I've seen a lot of people get in trouble because they've borrowed money to buy businesses and they've massively overpaid for the accounts and the businesses.
1690
01:41:10.417 --> 01:41:11.718
So it's the beginning.
1691
01:41:12.138 --> 01:41:16.179
And then that just leads to more and more debt, like borrowing of money.
1692
01:41:16.239 --> 01:41:17.260
So yeah.
1693
01:41:18.040 --> 01:41:20.242
I've really, I used to be a hard no.
1694
01:41:20.502 --> 01:41:23.104
And then I got softer on this and I still am kind of in that place.
1695
01:41:23.144 --> 01:41:29.529
And I've often looked back and said to myself, for me personally, because I've never had investors and I've never even had a line of credit.
1696
01:41:30.110 --> 01:41:31.751
And so I've looked back.
1697
01:41:31.971 --> 01:41:33.453
I mean, I wasn't opposed to a line of credit.
1698
01:41:33.813 --> 01:41:35.374
We just never did it.
1699
01:41:36.275 --> 01:41:38.577
I mean, I think I might have had a line of credit actually.
1700
01:41:39.570 --> 01:41:40.231
But never used it.
1701
01:41:40.311 --> 01:41:41.472
So, you know, it doesn't matter.
1702
01:41:42.553 --> 01:41:45.396
Where I'm going with this is I look back and say, man, that was stupid.
1703
01:41:45.736 --> 01:41:51.181
If I had only used some debt in my businesses, how much faster would they have gone?
1704
01:41:54.684 --> 01:41:56.086
But that's hindsight.
1705
01:41:56.106 --> 01:41:57.427
I mean, we all do this.
1706
01:41:57.467 --> 01:41:58.688
I just catch myself doing this.
1707
01:41:58.708 --> 01:42:00.890
It's like, you know, it all worked out.
1708
01:42:01.844 --> 01:42:03.685
I might have made, it might not have worked out.
1709
01:42:03.785 --> 01:42:05.927
I might not have been capable of doing all these things.
1710
01:42:06.107 --> 01:42:10.030
I might not have, like something disastrous might have happened in the economy.
1711
01:42:10.070 --> 01:42:13.792
Like there's all kinds of things that could happen that didn't happen.
1712
01:42:14.433 --> 01:42:15.513
And that's why it worked out.
1713
01:42:15.553 --> 01:42:16.874
We don't know what's coming in the future.
1714
01:42:16.894 --> 01:42:17.935
You just never know.
1715
01:42:18.135 --> 01:42:23.439
And so for that reason, I think you play a more conservative game, but you don't have to necessarily be 100% debt free.
1716
01:42:24.262 --> 01:42:29.064
My other litmus test is if you're jumping through hoops to try to get the debt, that's a problem.
1717
01:42:29.805 --> 01:42:30.205
Red flag.
1718
01:42:30.225 --> 01:42:30.845
It's a bad sign.
1719
01:42:31.025 --> 01:42:35.928
If you're like, hey, okay, so I'm going to borrow from this bank account and I'm going to use that for the down payment.
1720
01:42:36.248 --> 01:42:40.550
If the bank just doesn't just give you the money, then you're probably not ready for the debt.
1721
01:42:40.570 --> 01:42:41.691
Like, it's just a good litmus test.
1722
01:42:42.091 --> 01:42:49.035
I've seen so many people like, okay, well, my parents are giving me 20 grand and then that's the down payment and then I'm going to get 80 grand of debt.
1723
01:42:49.055 --> 01:42:49.895
It's like, whoa, whoa, whoa.
1724
01:42:49.915 --> 01:42:53.037
If you don't have the down payment, that might be a good inclination to...
1725
01:42:53.777 --> 01:42:54.738
You shouldn't be getting the debt.
1726
01:42:55.338 --> 01:43:00.462
So I see people jumping through hoops or like using credit cards in a fancy way to try to like pay off things.
1727
01:43:00.482 --> 01:43:02.083
It's like, that's where I get scared.
1728
01:43:02.643 --> 01:43:04.804
Yeah, I'll say one more thing.
1729
01:43:06.185 --> 01:43:12.489
The beauty of getting to be an entrepreneur and getting to build a business is you get to build, kind of summing up what we talked about today.
1730
01:43:12.770 --> 01:43:14.791
You get to build the business structure
1731
01:43:15.143 --> 01:43:17.765
that you want to build to the size that you want to build.
1732
01:43:18.385 --> 01:43:29.392
You get a, hopefully do inside the business, the things that give you energy and make you happy and you enjoy, and you're going to get better and better at them and let hire other people to do the things that you don't want to be doing.
1733
01:43:30.352 --> 01:43:32.293
And if that, all of that is wonderful.
1734
01:43:32.313 --> 01:43:42.920
You got to be your own person, but then if you layer in never ending stress, because you're making decisions that keep you up at night, that make you live in a state of fear, you're,
1735
01:43:43.804 --> 01:43:44.884
then what have you accomplished?
1736
01:43:45.184 --> 01:44:02.550
And so there's this element where I would argue, and I think it was a little bit of my story, by not taking some of the risks, yes, I went slower and it could have been bigger and better, but I think there's this element that you consider, how can you optimize your life for peace?
1737
01:44:03.510 --> 01:44:10.317
How can you, like you got all these other gifts, you're in business, you get to build the business the way you want, you get to do the things you want to do.
1738
01:44:10.918 --> 01:44:15.903
The other leg is now let's build it in such a way where yeah, maybe it'll be a little bit slower.
1739
01:44:15.943 --> 01:44:19.266
But every night, you sleep pretty good, and you're not stressed out.
1740
01:44:19.366 --> 01:44:20.408
And you're not always angry.
1741
01:44:20.488 --> 01:44:21.629
And you're not always unhappy.
1742
01:44:22.329 --> 01:44:23.971
And, you know, that's a better way to go.
1743
01:44:24.011 --> 01:44:26.694
And so for many, the debt makes that impossible.
1744
01:44:28.212 --> 01:44:28.573
Absolutely.
1745
01:44:28.853 --> 01:44:31.036
So that's everything I had on the docket for us today.
1746
01:44:31.356 --> 01:44:31.537
Awesome.
1747
01:44:31.557 --> 01:44:32.939
You have anything else that you think we should?
1748
01:44:33.159 --> 01:44:33.980
That's all we got.
1749
01:44:34.180 --> 01:44:35.923
The Sultan of service is.
1750
01:44:36.223 --> 01:44:36.884
Sultan of service.
1751
01:44:37.064 --> 01:44:37.986
That's where we're at right now.
1752
01:44:38.006 --> 01:44:38.586
That's all right now.
1753
01:44:38.606 --> 01:44:39.708
We haven't gotten any of the better.
1754
01:44:40.068 --> 01:44:40.329
Okay.
1755
01:44:40.469 --> 01:44:43.513
Until we hear from a better idea.
1756
01:44:43.533 --> 01:44:44.675
That's what we're sticking with.
1757
01:44:44.695 --> 01:44:44.855
Okay.
1758
01:44:44.875 --> 01:44:45.336
All right, cool.
1759
01:44:45.376 --> 01:44:46.657
And I'm, I'm curious.
1760
01:44:46.938 --> 01:44:48.660
I'm watching the comments from the videos.
1761
01:44:48.680 --> 01:44:50.783
So if somebody has something different, I want to hear.
1762
01:44:50.843 --> 01:44:51.664
So cool.
1763
01:44:51.764 --> 01:44:52.706
We'll see what you guys say.
1764
01:44:52.786 --> 01:44:53.747
So thanks for watching.
1765
01:44:53.867 --> 01:44:54.628
Thanks for tuning in.
1766
01:44:54.789 --> 01:44:55.129
That's a wrap.
1767
01:44:55.149 --> 01:44:55.610
We'll see you guys.