 Hey, good afternoon everybody Tom Stewart here. I'm with Liz Trotter. This is smart business modes. Hey y'all I'm excited Tom. It has been a long time since we're on smart business modes Yeah, it has been Has it been it seems like longer yeah, it's been weeks Yeah, we were last done on the 13th April 13 We were working last week. We didn't have time for such such Firmless nonsense is smart business moves. We were actually working. We actually were working really really hard I did not see everything that you did but every time I saw you you were Busy and at your most focused like what are you doing? What are we doing? What's next? What's coming up? So how'd the event go? It went awesome. We did our Made central Academy live about last week We did it on Tuesday and Wednesday followed by another awesome bonus event led by Liz Trotter and cleaning profit builders And I mean we had like 40 people there. Yeah, like 40 people there, right? I think we ended up having 34 people. Okay, close. It was Cozy we had a full house We're doing it again. We're doing it again in May, right? Yep May But this time we're foot-flopped, right? I'm doing it Doing it like Monday Tuesday. We're doing it Wednesday Thursday And we're doing it. It's directly after Easter, which is weird. Hey Susan so much in your head. Hey Leslie long time no see That's good to see you Leslie Yeah, I love that picture of her Her that was her wedding picture. I guess who's here our guest and our special surprise guest today is I'm doing good. I'm just messing with my audio settings trying to figure out how the heck to get technology to work Because I'm just a nerdy bookkeeper. I don't know how to use all this stuff. You're Awesome with everything. That's right. That's right. I'm very not awesome at most things. So I'm right in line I'm getting older and older by the day and I'm like, I don't know if there's like an age where you start neglecting technology Intentionally and you're like, no, just not gonna learn that I refuse. I feel like I'm in that age Okay, Dan, you need to not be getting there this early No, I'm an old soul. I'm an old soul. No, you can't do it this early. All right Your volume is really loud though. I can I can I can be farther away I don't think that changed a thing Or just on my end You're overmodulating I turned it down a smidge is that better Are you out of windows or back? I'm on windows, but I'm Yeah, you're getting there. Yeah, that's a little bit. Yeah. Oh here. Oh, hold on Perfect. That was good. Yeah, you're probably on the wrong microphone. Weren't you? Yeah, I was on the wrong microphone Oh, now you sound really good. Okay. Yes. Yeah. Nice. I'm perfect. Yeah What I kept doing was turning it down when Dan talks turning it up for Tom down We got it figured out. See like I said, I don't know how all this stuff works. I just start clicking buttons See what happens. He'll let me know if it doesn't sound good. I think it's probably just because you're drunk I haven't had a beer yet. I don't I've been so I'm doing my 30 extra medium where I have to like work out to get beers Good reward system and I since I'm in Minnesota I put on, you know some insulation in the winter and then I got to shut it off in the spring So my my beer number is counted. It's like a pitch count for baseball player Yeah Baseball players think what they get like 80s or so pitches in a game. Maybe, you know, so I mean I Could I could earn like 20 beers in a week? Spread them out. I just got to it takes a lot of you know exercising, but I've got I've got my incentive plan built for myself Yeah, I don't I don't I just like they're binary to me. It's either a beer or not a beer Just make sure it's a big high-test beer. You make you get your money's worth. Okay, that's right Yeah, if you're not exercising a lot and you're only getting 10 beers you're gonna have to That's the problem in the winter is I don't exercise much at all because I like exercising outside and it's hard to exercise outside when it's like It was below zero every day of this winter here. Oh, wow And then and then I still drink beer because I'm out ice fishing. So it's hard to Hence why I need to get back back to it in the springtime. I'm like the I'm a it's like reverse hibernation, right? Like bears come out of hibernation and they just keep eating. I come out of hibernation and I need Yeah, I fish you know a little bit myself I've never iced fish before but I've talked to people have had my kind of looked at the whole dynamics of it and Be honest. Is it really about the fishing or is that just an excuse that you can go out and drink beer? Yeah, yeah, absolutely just an excuse to go hang out and like, you know, call it. It's like kind of networking, right? it's like yeah, we'll go up and In the picture you paint is like grumpy old men and you're in these little shanties, right? Or you're sitting out on five gallon buckets We're sitting inside of like a camper out on the ice. You're watching TV. You're making a pizza and oven You're and then every once in a while you pull a fish through the floor. It's not it's really not rough Playing this card game There's a fish biting over here like we got to stop what we're doing and go catch that fish It totally isn't I actually always thought ice fishing looked way more fun than regular fishing just because of that There's all of that other stuff to do play cards talk versus just it Yeah, yeah, you're out of the elements, you know when you're doing it that way so you can you can My like my wife and kids come and there's games and coloring books and it's like it's a whole activity set It's all kinds of silly stuff going on. Yeah When you're regular fishing though, I mean you're out communing with nature and like if you're in a boat You can like go see lots of really cool stuff and doesn't even really matter if you catch any fish or not It's just the whole experience of being out there and doing it. Do not push your boring fishing on us I like the boring fishing stuff Tom really he loves to fish too. I know yeah Charleston we'll You probably got better fishing down there than than I do in the Twin Cities here, but at least more fun fish to catch Got up we got a variety for sure Well when we were kind of starting before you got here Dan I'll just to kind of top put a bow on it was and I was sharing we did a lot of training last week in Charleston We did one of our may central Academy alive events last week we've been doing about one a month and Liz you want to just take a second and explain what your program was it was about Sure, you guys did. Yeah. Yeah, we did a program called the employee life cycle and basically what we did is took everybody through the entire life cycle Assuming that your employees after going through this program will be with you for at least three years How do you create value at every single step of the game for your employees so that they Feel like they can't leave they don't want to leave there is no desire for them to leave your companies So, yeah, it was really impactful. I've gotten the best feedback From this event, then I've gotten from any event that we've ever done. That's including foundations My people are just pumped So it's uh, I guess I think it's because it's short term too and they're coming off of me central So it's like, okay. I got all of this made central stuff now. I'm getting this employee stuff I feel like I can go home powerful and people are going home just like super excited and all the managers There were so many managers there that I think that made a big difference too. Did you find that for me central to Tom? Yeah, yeah, a lot of companies brought, you know, at least two people. Yeah I think that's helpful Yeah, the people that are actually using the programs That's the biggest epiphany. I've had in my businesses is that so many coaching things or leadership things are all geared towards me and like I don't matter Relevant right like I need my team to get trained and get leadership experience and understand how the softwares work It doesn't matter if I do it. Yeah, and they're more excited about it. It's so funny, right? The managers were just so excited about everything and sharing numbers and wanting to know how do you get this and how do you do that and Yeah, they were really excited. The questions the questions asked are a lot more relevant because they're actually doing the jobs, you know When when you know the owners are asking questions It's more conceptual a lot of times not to say that they're bad questions But it really just doesn't get to the heart of well, how am I going to do my job every day? I've got one thing that is really nice about having the managers there too is I mean, I could be wrong about this, but I saw this in my event that The people the managers aren't trying to just jack up your system They're just teach me how to work the system the correct way and they want to they want to do it the best possible way And it seems like the owners are always like Well, how can I how can I tweak it and do it my way and do this other thing where the managers are like Just tell me how to do it. There's one get done. I want to do it, right? Yeah Yeah, I like that so We'll be talking more about this. I guess in the the coming days We've got another series of these we're doing in may Uh, we're we're sold. We're sold out of the main central side. Do you have any openings in? We do we do have some openings. We actually have one vip opening left too. So No, that's it's fun You get the comfort you get the you get the nice the the panel conference room if you're the uh, VIP Any executive washroom with the shower and the jetty tub notice Yeah, tom, I saw you sneaking in there, but you're always vip in my book. So it's cool. Uh, How the heck are you man? What you been up to? I have been um, just traveling a little too much and working a little too hard so i'm like ready for a vacation, but it's the What that's always like baffles me a little bit and and i'm i obsess about our bookkeeping business I work work non-stop on that And I would I would always think like december and january would be like the busiest time right because that's when a lot of Home service businesses slow down But everybody kind of waits till now And and then they're like oh crap Like that's not like either they didn't have it last year and they're like, oh my god Like yeah, I did my taxes, but I don't have no idea what's going on in my business So then they sign up Or they're like, oh crap. I need to do my taxes and I have nothing and I sent my stuff to my cpa and they just went No Like I have a few of those right now It was just like nope And and I was like yeah and the cpa won't fix it right because they're like i'm not a bookkeeper like get your books And then we'll do your taxes. So I think last week I had 18 demos and this week I have 15 and it's like it's a gauntlet of as fast as we can possibly go We hired five more bookkeepers in the last two weeks. So it's uh, it's awesome. It's awesome stuff I'm excited for a couple fishing vacations I got like the last two weeks of may off one to go like boundary waters, which I don't I actually think it's still going to be frozen. It's supposed to be like a canoe fishing trip But I don't think we'll be able to get out I think we're gonna need ice skates and then I've got a lake eerie fishing trip with with shon with our boy shon day Go out while fishing with him for a week. So I got I got the vacation plan. So like now I'm just keeping my head down Just book book book book work sell sell sell Sign people up onboard them and then and turn it over to to our team of badass bookkeepers Nice Tax season is good for your business We don't do taxes for people at least not yet. We actually last night I had a call it. I'll explain a little bit of the rationale here, but I do have a cpa on our team She she did the cpa thing in the corporate world She she she did the stay at home mom thing for five six years and then kind of said, okay My kids are getting old. I'm gonna go back and just kind of just wanted to like work part time And then she was like, well, I love doing bookkeeping for like small businesses She didn't have that experience in the corporate world, right? It was like it was stuffy and not not not the way blue skies is And so she was like, I love this. I love working with us. I love working with our small business clients Should I go back and like get my cpa thing because I keep talking to our clients and they all need tax help And I was like if you love the tax side of it. Yes, but bookkeeping and taxes are two different things it's like It would be like your sales person being your customer service person or your cleaner being your your sales person Like they're two totally different skill sets every once in a while. You can find a cpa. That's a good bookkeeper a bookkeeper That's a cpa, but super rare because the point of both is super different Bookkeeping bookkeeping the client is the business owner. It's a decision-making tool. It's not that the client isn't the cpa Um, if a cpa is doing bookkeeping it oftentimes is that they're doing it for themselves They're not actually doing it for the business owner and and if you're like, oh my cpa does my bookkeeping Like think about how often they do it like are they doing it weekly for you because you need data weekly Or are they doing it monthly or quarterly or are they sending you a report? That's just uh, like here's the download from quickbooks Or are they actually like organizing it and sending you graphs and charts that's aligned to your business model Most of the time when an accountant that does taxes is doing bookkeeping They do it for themselves They organize it so they can put it into their tax software And then they just tell you that yeah, we did your books, but but they don't do it for you They just do it for themselves So so I think I mean we have so many bookkeeping clients and we we do the data side of performance We're like the cfo. We helped them make business decisions to grow their business and that's what the bookkeeping is about But they also all need a good cpa and good cpas are hard to find So I know we have a good one on our team It was just a matter of like whether or not she wanted to start a business because I told her I was like I think this has to be a separate entity. I don't think it's part of the same business as our bookkeeping business um, and uh Selfishly you need to own 51 of it because if you leave I don't want to be stuck with a bookkeeping a firm on my hands I'll be the business partner in it and I can help grow it like crazy and we have a few hundred bookkeeping clients And we'll have a few hundred more that'll be like the fuel for the cpa business But so we'll probably start it as a separate business and then kind of work them together so that we can help all of our Bookkeeping clients do stuff, too So that ever expansion of business and trying to figure out which shiny object to chase, you know Yeah, I wish I didn't know about that We all learned that lesson. Yeah But I would think that tax season is still good for bookkeeping because people recognize uh, oh You know what they're actually looking at their numbers. They're looking at their p&l and they're like Okay, I don't know what the heck i'm doing. They're looking at that shoe box full of receipts figuring out. What am I going to do with these? Do I need to and I can see them just Finally looking at their finances and thinking okay. I have to do something. This isn't working That's probably it because i'm i'm biased because I look at our numbers, you know I won't say daily. I look at our bank accounts daily, but I look at our p&l's every single week And so to me. I'm just like, of course everybody looks at their numbers every single week like you'd be crazy not to But yeah, I think there's there's a there's a lot of people out there that probably look at it when it's tax time And then they go like let's count the chips now Um, and that's probably why I get a few more more phone calls this time here I'll tell you in our circles one of the things that we make them do is look at their numbers every single week You have to And it takes some people I'm thinking one person in particular that it took her almost nine months To be able to get to a place where she could make herself look at her numbers every single week She's like she'll go like two or three weeks. She'd be like, yay. I've got it and then no Two more weeks just just to struggle for some people to even look at their numbers Yep Well, and I think if you're if you don't have a good bookkeeper or if your Axe person is doing your books or if you're doing them and you don't quite know accounting It's really easy to just be scared of it because it doesn't make sense If you open it up and it's not organized in a way that a cleaning company needs to see it It's it's just a it's like playing Tetris with your iSchools like there's just no way to make heads or tails of it um and so There's a huge value in having somebody like blue skies or any and there's other bookkeeping companies that do a great job to but Having somebody that can organize it in a way that a home cleaning company needs it to be organized, right? Like your cpa probably has manufacturing companies that they do taxes for and they probably have you know Construction companies that they do the different tax or accounting things for Like having an industry specific bookkeeper that actually like knows how you make money and how you make decisions super important right like so Yeah, uh, I doesn't surprise me that people are afraid to look at their numbers because if you if you if they're not organized in a way That you can use them. I'd be afraid of it too Yeah, and don't know what they're looking at. They're afraid. They're gonna see numbers. They don't like they don't know how to work with They don't understand so You know, I love the piece that you said about sorry tomm. Do you like the way I just keep not letting you talk tomm I'm good All right, this one thing I really want to say is I love what you said Dan about having an industry specific bookkeeper just because I don't know when it's industry. I really like Going outside of the industry absolutely for a lot of things But there are some things that being industry specific really is helpful for it can help you move forward too much faster I feel like And like made central, right? Yeah, like you could go get a crm that works for everybody But it's not going to be totally dialed in for your business the way that you need it to be So there's some things that just works really good to have something that's dialed in for exactly what you need Yeah, it is it's what we do in made central and what you do and the bookkeeping side There's a lot of similarities because you've got the numbers and the numbers are telling you something But that's just part of it You got to be able to go back a step and ask yourself well What do I do inside of my business to make these numbers go into the direction? I want them to go and that's where being industry specific helps You know A bookkeeper somebody who understands financial statements and how to put together a chart of accounts They can tell you what your numbers are but it's like, okay Well, what do I do in my business to get the results that I'm looking for? How do I improve this? And they can tell you generally but they really don't know what it's like to run a home service business So they're really going to be limited But you guys Are able to get down into the nuts and bolts of well here There's a long list of things that you can be doing. Let's break it down Yep. Yeah, and we when we report it back to our clients We show it in in five categories usually and it's all based on different types of decisions So first category is cost of goods sold, right? What does it cost you to go out and actually do the thing and get the result? And and when I do a demo with people I always like talk them through this just so They understand how to read the thing We don't send up a 50 line item p&l that crosses their eyes and they get lost Literally five Summary of these decisions. So the first one costs a good sold was it cost you to go Clean the thing right That leaves you with your gross margin. I tell all of our clients. That's your reinvestment number As a business owner the minute you go clean something, you know in home cleaning about 60 of our money is gone We have a we have about 40 left to reinvest in the business and to pay ourselves with so To help to help our audience to make sure we're on the same page when you say cost to get sold For the most part, that's the money you pay your cleaning technicians, right? Yep cleaning technicians and depending on how you You know if you have company cars or not or if you buy supplies for your cleaners Like those direct costs the fuel to get them out to the job Maybe the supplies for them to clean the job I put customer damages repairs in there because I cleaned some houses and I broke shit all over the place like I'm just not The largest part of that would be the salary the actual money to your ear cleaners Yep. Yep. By far the largest part would be the wages. Um, but it's not It's not where wages go some of the wages go in like an administrative section because they're not the ones out getting the result Right, so it's super important that we designate who's out cleaning stuff And who's in the office working behind the scenes and we and we measure that too Liz I cut you off there. What were you saying? Oh, yeah, no worries. I was trying to cut you off and you wouldn't let me I know you're used to you're used to Tom where he's quiet where he's like I just said your watch I'm usually really good at cutting people off. But man, you're good. All right. My question was Do you when you're setting yours up, um, do you include workers comp? Yeah, I put that in in the cost Yep, I feel like that's a lot. Uh, sometimes I see people in california not wanting to put their workers comp Yeah, so I can't say I blame them though No, and that like there's some gray area ones that there's always a judgment call, right? The we put workers comp there because we generally hold our production managers accountable for cost of goods sold Like it's all costs that happen in the field Safety is the thing that happens in the field and therefore we put workers comp Into cost of goods sold because we want our production manager to be thinking about safety and how much it costs them because they are Bonus based on cost of goods sold One one that's like even more trivial than that would be merchant processing So when you run a credit card, you have to pay like three percent, right? Since we view cost of goods sold is the cost to do a job And part of the cost of doing a job is getting paid for it We include that in cost of goods sold because it's a direct cost of going out and doing the job Now I've had I've had bookkeeping clients of ours move that to like admin because like I don't want to penalize My manager for making a call and in maid service I I think that would make sense to like debate whether it should be there or not But my thought is if I like in our pressure washing business if I send a guy out and he does a thousand dollar job I don't want him swiping a credit card. I don't feel like paying 30 bucks to visa to swipe that card Just get a check. I'll pay you 20 dollars to go run it to the bank Um, and so so we actually do have like a thousand dollar threshold If a job is over a thousand bucks, don't take a card make sure you get a check And and that's out in the field and that's a decision We need our technicians to enforce and so if merchant processing gets too high it's because they're usually Swiping cards for thousand dollar plus jobs and it's costing us a lot So they need to ding their costs to get sold and then their bonus goes down Um, so that's why we put merchant processing in there too again. It's just like it's part of the cost of doing a job We got to get paid for it. Um So that's cost of good sold that's the stuff where it's like we go out and do a job And we never is a business owner that money's already gone. It's already spent in a way. We never even get to see it So so tom you had pointed out like that's the majority of that's wages There's a few other things we put in there and that leads us like 40 percent to reinvest in our business And the reason that that that beat the drum on the wage is too much You know three percent on the credit cards material and that would include that workers comp is material I mean include everything you can but I've seen a lot of owners like spend a whole lot of time trying to find a better deal on window cleaner Where you know, that's like a fraction of one percent of their variable cost while completely ignoring You know the productivity. They're getting out of their cleaning technicians. And You're you're you're looking a lot of times we can Wow ourselves to look in the wrong places because it's easy unless let's push back to Trick yourself into thinking that you're managing those costs when you're just you're just playing the air guitar In one of the reasons why I like the the way we structure our p&l when we send it out is it It solves that problem of like it shows you right where the problem is against the business model so Instead of trying to solve an infrastructure decision with a wage thing or a wage issue with an infrastructure decision Right like you said tom people will like hide from the real problem and try to solve a different problem That doesn't move the needle When we're sending them a report It's like you're green yellow or red you you're green if you beat the target for that decision set You're yellow if you're close and you're red if you miss it Like there's no hiding from where the impact needs to be made Like you can see where you're off and you can see what the business model should be and then you can work on the decisions to Get you back in line. It's not just a here's the p&l report from quickbooks. It's a Here's a color-coded p&l against the percentages that you need to shoot for if you're running a maid service business So that you can spit out a 10 profit margin after you take a wage Not 10 including your wage like you need to make the business needs to make 10 while you're sitting on a beach So like you got to design it to to hit those profit margins When you're operating it Okay, so I do have one thing Real quick before we move on um, what I do tell a lot of people is That there is AC You need dan. Well, I'm sure he hears that a lot and we're gonna tell you how to get hold of him Good to see you salisha Uh, so one thing that I tell people a lot is whatever you have Well, however, you're doing it. There is no one exact right way There is a lot of stuff that is kind of kind of Soft and squishy in there, especially in cost of goods sold what you're gonna put up there The thing that you do that is not squishy and is not negotiable is Track it the same way all the time Just continue to keep all of those numbers in the same place so that you can track them You're over here. You can see what's growing. You can see what's shrinking. You can see You you can watch the movement because then you can actually take some action You can see what numbers like in tom in in main central We're able to see the green numbers those numbers need to go up and the red numbers those need numbers need to go down So this sounds very similar to what you have going on here dan. Yeah, you're in the red. You're not doing well You're in the green. Yeah, you're doing great so having those If you're not tracking the same way all the time, none of that has any meaning. That's hard hit hard hit moving targets Yeah, exactly. Yep. I like that. I like that by saying it All right, so go ahead Tom tom seemed like he had something to say but I feel like if you and I You're good. I just wanted to get like five metrics. So we we've got cost of goods sold and you were talking about grocery shopping, I believe Yep. Yeah, so so your cost of goods sold Like I said, that's money just out the door right off the bat as a business owner Like it's hardly even your money right the minute you get the revenue in note that 60 ish percent is already spent So you got 40 left. There's four different things we invest in to grow our business So we still have a bunch of expenses left the rest of the expenses aren't to do the work They're all to grow the business and it generally happens in this order The first thing that we do is go find our next client So we spend money on marketing the ads the person to run the ads the yard signs the flyers the the software to So like made central I wouldn't include it's like a marketing software, but something like response a bit That's like a a website tool to bid or a nice job or a broadly to get google reviews I'd call that marketing if it's like meant to get leads in the door and brand your business It's all client acquisition cost related decision. So that's usually the first investment we make After we get our gross margin. Okay, let's go find our next client You get a bunch of leads coming in And then somebody needs to answer the phone and give them an estimate and customer service them and probably somebody needs to Do the bookkeeping once you have so much of it that you can't tell what's going on in your business So now the the the second investment you make is in your people infrastructure It's in the people to run the business and oftentimes that's us early on and we like get out of the field And then we're the people infrastructure and eventually we hire a virtual assistant or an office manager or a couple of them To like really run the business behind the scenes. They don't go out and clean anything They take care of the customers and the process is behind the scenes I I view that investment super critical investment Um, it's that is the hardest investment to manage in our business Cost of good sold We know like managing that group of people can be really challenging But it's generally pretty easy to see if they're doing a good job People in the field if it's a three hour job and it takes them six hours It's like what the hell you guys doing out there or if it's a six hour job and it takes some three hours You're kind of like what were you doing out there? And and our clients give us pretty immediate feedback and we can tell really quickly If that if we're hitting numbers or not like like tom said earlier like we can tell if we're being productive or not Fixing it isn't always the easiest thing in the world, but we can tell It's way harder for us to tell if our administrative people are being productive because They're working at a computer and they're talking busy and they look busy And when you ask them how their day is going they're like, oh my god. I'm so busy But like are they busy working on the right things? Or are they just watching cat videos on youtube? I've been busy with a lot of stuff that wasn't productive before So are they doing the right things to grow the revenue or are they just doing work for the sake of work? Or maybe not even doing work So administrative overhead I think is a super important lied item to To carve out of your overhead costs and measure it In our business in in our minneapolis window cleaning business and pressure washing businesses last year We got up to like 1.1 million. We did about 750 the year before we grew to just under 1.1 million We had four people in the office. We had an office manager a scheduler dispatcher role A salesperson out in the field like bidding new jobs and we had my business partner doing general management And that was great in the busy season and then q3 hit when everybody in minnesota in july august september Is like up at their cabin and then school starting and they're just thinking about other things And we're looking at that administrative overhead line and we were in the red three months in a row And we just like it was like, all right Non-emotionally we love everybody but somebody's got to go like the business can't afford this We're outside the business model now the funny part about this was I was on a zoom like looking at our p&l With my business partner and i'm like, okay, we got lia in office. She's our office manager. She pretty much runs the show Um, she's a small little asian gal and all the guys think are really afraid of her. She's just super stern She's very like military like nothing gets past her. Uh, no drama. She she's freaking awesome at her job Okay, she's not going anywhere. Well, she's locked in right right person in the right seat on the bus Tracy is our scheduling dispatching person and she uh, she's in her 60 She retired from the corporate world but doesn't like to not work and so she was like Yeah, like 20 hours a week 60 hours a week. Just tell me what you need. I just like I just want to be busy I want to be doing something. I want to be adding value Nominal she can she can like sell anything over the phone. She can customer service it It's like, okay. Well, tracy's not going anywhere sin was a technician of ours that um She was out in the field like hauling the hauling the ladders around carrying all the stuff cleaning all the windows And she just said, you know, it's like it's just beaten. Yep. It's just a little too physical So she was actually gonna leave the business and go get a job working at the mall and like retail And we're like no way Like you're not leaving. Um, all the customers love you too much and you're the top upsell person we have So we moved her into the sales role And she's crushing it our average job size went up our clothes rate went up. It's like, okay. Well, those three are covered I'm looking at andy. I'm like, man. I feel like the week Like I don't know what to tell you He's like laughing that he's totally is and and uh, and he's like i'm general managing, right? We our business is 1.1 million A it's not big enough to have four people in the office at this rate Uh, and it can't pay somebody to not clean something or sell something Right if all he's doing is building processes There's no like great he built great processes our team is as aged as they've ever been doing a great job of general managing But it it causes us to not hit our p&l metrics So so we could have said, okay One of the other girls has to go out into the field or go sell some more stuff or something instead andy was like I'm gonna go hang christmas lights all fall because we have about 80 000 bucks worth of christmas lights to hang And so he was like I got to go back out in the field I got to go generate revenue and i'm going back into cost of goods sold I can't be in the admin line In which all of a sudden our admin cost fell right back in line So he was the weak link we he had to get back out in the field and go clean some stuff But it was like and and we're we're always Gun shy of going back out in the field, right? It's like no I finally worked so hard to get out of the field and But somebody had to go somebody had to go produce some revenue because we didn't need more people sitting in the office And it might not have had to be him But in this case it's just like we had there's four of us here Mathematically one of us has to go produce some revenue And i'm the best person to go produce the revenue and he wasn't shy about it He was like it'll be nice to go out and like do some hard working to my hands dirty for a few months So he loved it But but that's how we use the p&l. It's like it's just it's just math And it tells us exactly what we need to do and then we just got to reckon with the decision of like What's the best thing to do with with where we need to go with it? And if you didn't have your p&l on a regular basis I mean you need to be able to look at them on a weekly basis. You didn't have that You'd be burning cash week after week and you might not have even known it until one day Whoever's like doing payroll says hey, we need some money in a bank make payroll this way Yep, exactly and like we knew it was an administrative issue If we didn't have the p&l broken down the way that we do we would have been trying to solve any number of problems Right, we've been like oh where's our money going? You got to we're probably paying too much for supplies like tom said we got to stop We got to get the window cleaner. We got to find a cheaper window cleaner Yeah, yeah, it's got to be it but but the p&l tells us like well We know that the issue is administrative administrative is pretty much all wages for people in the office So let's solve that problem They either the four people we have need to grow need to get us 200,000 of revenue next month instead of 100,000 Or you know, somebody's got to go clean it so we can try to get towards doing We got to grow out of this or we got uh, we got to Clean up our p&l until then All right, we got three line items. We got three line. Um, so so we've got our our marketing is our first investment Our administrative people are our second investment the third investment We make after we have these administrative people's like oh gosh We need a new location to fit all these people or we need a new software to handle all this like made central Or we need you know more internet capacity to handle all the people that are showing up in the office and are on their phones And tapping into our wi-fi You need all this infrastructure is to grow it blows my mind how many softwares we added in the last year It was like we needed the gps tracking in the vehicles and we needed train fuel and we needed company cam and And uh, there was another one that we added it was like all of a sudden we're spending at least a thousand bucks a month on Software as we've never had before Um, but we have 14 dudes out driving these transit vans in minneapolis like We need that infrastructure so that we can keep tabs on everybody It's not just me and a few other dudes and I have their cell phone number and I can check in on them so From the from your rent bill to your liability insurance Your fixed overhead costs those investments are all like fixed right they're locked in they're proactive It's like i'm gonna sign up for this thing and i'm gonna pay the bill every month So it it just is that if you do twice as much revenue next month or half as much revenue next month These bills are all still the same So the only way to like fix your fixed cost is to cut some expenses or to grow your revenue There's really no other way around it. It's not a people thing It's just we signed up for too much stuff or this thing's not giving us a return on that investment Or whatever the case is but I I also find that bucket of expenses is nice to use proactively and like it's If we're looking at renting a new facility, we can look at our p&l and say Do what can I afford a new facility or maybe like if i'm spending a thousand bucks or two thousand bucks a month on rent Because I got to get out of running this business for my house. How much revenue do I need to be able to do to afford it? Right like I can't go rent a I can't I can't rent a facility and tell all my customers They owe me more money because I just dumped 20,000 a year Right your customer picture of the new building Employees good to come like it's good like we want our employees to have a place They can call home and probably increases retention and productivity We can't our clients won't pass anymore because of it So it's like when can I afford to rent a location? Well, if you have a good p&l that tells you how much you should spend on fixed overhead You'll know exactly when you can afford to rent a location and you'll know if you go spend this much You better grow your revenue by this much to be able to afford it Um, so it just helps, you know, even like I said proactively making those decisions So we got our our marketing investment to find more clients And then we have our people investment to have people in the office to run the business We have this infrastructure investment to give them a Cubicle to sit in and a phone to answer and a made central system to use And then the last one is variable investments. So Fixed costs are all like proactive. We sign up for something. We pay a bill every month variable costs are all reactive Hey, we had a record month. Let's throw a party. I'm sure Liz is all about that, right? Let's do something cool employee engagement related or I just had three employees quit in one day I have a bookkeeping client that that happened like the day we were doing our demo She probably spent some money on indeed recruiting ads that day, right? It's like a reactive I need to solve this problem and the way I'm going to solve it is with some money So, you know, vacuum is breaking repairs and maintenance expenses going there It's all one time frugality going going to a live event that you guys do the travel the meals and entertainment the the hotel All of that is a is a one time like hey, am I going to go do this or am I not going to go do this? And I got to get a return on this investment So it ebbs and flows any given month, but over time, you know, we should still keep it in line with our business model And still have some profit left at the end of the day. So again, like the investments end to happen in that order They don't have to but logically it makes a lot of sense We we spend the money on marketing then we need the people to handle all the leads Then we need the infrastructure handle and then we got to send them to a training event To they can like learn how to do their job better Um hopefully we make 10 in a maid service business when that I'll send done and and We're part of the admin team usually so we're part of that cost and that Infrastructure that people infrastructure. We're getting a wage too. I think that's super important So I think it's interesting that you have recruiting down there as a A variable expense, but you have your marketing up as a one of your top lines One of the first things that you do, especially I find it interesting because you have blue skies recruiting I had that I made that comment to somebody the other day. I was like, you know Marketing's like the first thing but in this labor market. I almost feel like we should break recruiting out as its own bucket Because it's more important than our marketing right now Yeah, it's like definitely like it's happening every single right month without I mean it's it's pretty much a best practice at least a lot of people would suggest I you know, I would suggest I think was Dan you probably agree as well that to some degree you always want to be recruiting even if you're fully staffed because If you fully staffed that's just a temporary condition So you you need to have people in the pipeline You know our tagline right time always be cruel The abc's are recruiting the abc's always be cruel was beaver. Okay. I I was thinking it I was like, I'm pretty sure that's their deadline. Yeah I I'm with you. I'm with you. I think I think we probably do need to move Recruiting to its own bucket and put it right above marketing because you can't market to clients if you don't have employees so I did I did notice in a couple of our businesses over the last few months We started spending more on recruiting than we do on marketing and that had never happened before but but like It's it's not a long shot, right? It totally makes more It makes total sense our employees are way more valuable than our customers are not that our customers aren't valuable but Right now if we don't have employees, it doesn't matter how many customers we have lined up at the door And I'm sure it's a couple of things happening too because the supply Is diminished across the board so more consumers are calling more companies trying to find someone You're probably spending less now to find a client than you did Say a couple years ago, right? Say that again. I was reading Angie's comment. I totally got distracted You're probably spending you're probably spending less now to find a client than you did a couple years ago It's cost like there's no supply Yep. Yep. And everybody like they're knocking down your door to find somebody that can even come and clean their house Right. They're just searching for somebody that has the capacity. We in one of our locations We had a waitlist go and we called some people back like three months later and like, oh my god, thank god you called Once you couldn't find anybody else like that's like man, like let's let's keep hiring. Let's keep hiring Uh, it's just crazy. It's crazy All right, so Angie, uh has a has a good question So this is a question that we run into all the time throughout all of the years decades now tom, right? we we've been dealing with um doing some training and we run into Both sides of this question Like I don't know when to hire like like we're doing this all the time We're hiring and then we're taking on jobs and then we're hiring and we're taking on jobs But you have to be both at the same time one pushes the other They keep each other in check if you continue to To hire or recruit in this case if you continue to recruit and you're getting people That forces you to generate sales And if you're generating sales that forces you to have more people to work. So One answer is do both at the same time. Don't let don't let this happen because this Uh, that is so hard to recover from right now. Let them going together at the same time. It's easier to move that's one thing and then the second thing is Part of this is a mindset When we're bringing people on we tend to think not everybody but maybe you and you maybe not You might have a tendency to think that every single person that works for your company needs 40 hours a week Or whatever your number is 35 hours a week and now more than ever before We're finding people that are really really happy not to work 40 hours a week So you can get a lot more flexibility And and Dan was talking earlier about all the different technologies that they're using in their business now that they haven't used in years past and You know, that's just the direction It's going and technology more and more is becoming a bigger bigger part of a strategic investment that successful Home service businesses cleaning businesses is going to make and you know, there's tools out there that make it easier to Find an extra job to fill in if you have the technician needs an extra job or to Do your production playing in a way where you can let somebody have a day off if you don't have work for them If you have the right technology in place that makes it a whole lot easier to react to those day-to-day Abundant flows and shifts and last minute things that happen where you know A technician calls out sick last minute or customer cancels last minute or you have More customers one week you have the next week you can manage that a whole lot better now than you could A few years ago with the technology that's on the market Yep We uh, so so liz you gotta you got to one thing that I think is the magic formula of running any home service business in like for sure made service but plumbers window cleaners lawn care people And any home service business the magic formula is capacity equals demand And the more that that formula is wrong the more your life sucks The more you have too much capacity too many cleaners and not enough customers Like you said liz all of a sudden you're like swinging on the pendulum one way And then the more customers you have and the less cleaners you have the worst it is And you it you're driving a vehicle with two gas pedals. There's no brake pedal You just have two gas pedals one is recruiting and one is marketing and you can't just push one without pushing the other You have to push both and there's nothing wrong with having a weightless We had 30 some people on a weight list in our Cleveland location So like Let's find a weightless client. We're trying to go find you a good cleaner We trained like four cleaners that all didn't work out one after the other It's like, oh, this is Jones. We never mind. She just wasn't a good fit for us And then we finally got him and we called him and they up the client signed up And and to the always be croutin there's nothing wrong with getting a whole bunch of applications and doing interviews Even when you don't need to hire somebody Go go the relationships Go know who your next hire is going to be even if they encourage them like, hey, I can't hire you right now I'm just still interviewing because I want to know who I'm going to call When I have my next 20 clients and I have a full-time job for you Or like Liz said, maybe it's even a part-time job because you only want 20 hours I'll go find you 10 clients real quick and fill up your part-time schedule But there's no there's no harm in going and building those relationships and having a list of 30 people that you've already talked to and Assessed and you're going to send them the email the minute you're like, hey, we need our next employee. Who's ready to go Even if they're at another job They might not like it They might come like they wanted to work for you. They already talked to you So don't stop don't stop recruiting and interviewing and don't stop marketing build build the hopper build the list on both sides Yeah Oh, that's that's yeah, both the answer to that is yes trisha. Yes I like it. It is the egg before the chicken and it is the chicken before the egg The other thing I was going to say back to that mindset issue that I was talking about There are just a lot of different ways to look at a problem. It's not just Okay, I have too many people. Maybe you bring people in as floaters Maybe you put them on a wait list intentionally so that they get that fomo feeling they start feeling like ah, it's a good job Dang and I didn't I didn't measure up. I can't wait until I do. You know, there are a lot of different ways to look at at Recruiting and people that you potentially have written into your company. Oh, and I see you have another one Didn't seem right. Uh, all right. I'm gonna prop this one up for you too, energy How do you know there'll be a good fit? I'm currently doing test days and see how they clean on the first day Didn't seem right So you have to let us know a little bit about how you're doing that if you're not paying them I could see that that could be a problem or if you're paying them too little Or if you're asking them to leave a job to come Test your job for a fit and then they don't have a job. I can see why that would be a problem but I know there are a lot of ways to do sort of Test days Are the real job to come do a test day You can come as a subcontractor and not if they If they make it and you've paid them under 600 dollars like you don't need to send them a 1099 So you basically bring them on as a subcontractor as a, you know, test And then if they make it then you do the w4 and bring them on as an employee after that so You can do that Tell us why I didn't see right Angie. We we could probably guess all day long But let us know about that. What what didn't seem right to you? I do so so as to like how to know if they're a good fit I think that's where like our recruiting service helps a ton because it's they it assesses them and well We don't have an assessment anymore. I don't know if shawn told you guys that uh, we now call it like a job success predictor It's still it's still an assessment, but people don't like to be assessed or examined, right? So it's like are you gonna love this job all the questions are geared towards are you gonna love it here? We don't want you here if you're not gonna love it So when we do recruiting They're filling out They're they're answering some questions and they're getting scored and that tells us are they gonna be a good fit now Like we're still gonna get plenty of people that know so we're still gonna get plenty of people that we hire And we're like, well, nope And there's nothing wrong like our mantra is hire fast and fire faster You'd be like hire slow fire fast. Oh just like hire them if they don't work out fire That's me. That's my motto too Yeah, it's a test day, but but like bring them on as employee and then fire them two days later. That's fine Um, have an automated way to do it so you're not like filling out paperwork with everybody because that is awful um for everybody but but Like just bring them on and if they don't work the sooner you can fire them the better and then but but just go Hire three people all at once instead of just one then you're like waiting to find the next one You know bell climbing wrote the book uh, what hire slow fire fast. Yeah And he's going to be a guest sometime in the next month or so, isn't he? I think I saw his name out there. Yeah So we'll have to ask him about your theory dan like in 2022. Do you just hire fast and fire fast or Everything's happening faster now, right? I like that It's gotta it's gotta and everything is different now, right? So that is another really really valid point that I was talking to somebody today and they said Well, they're having a lot of problems with hiring and they didn't have problems before And I said, well, you know, what's what's different now? And he said nothing. I'm doing everything exactly the same. I said, well, that's your problem Because two and a half years ago We lived in a different world than we live in today The people that are out there looking for jobs today are not the same people that were out there You know, two and a half years ago. So it's you got to be doing stuff differently than you were before So she's just got a question for you here dan Do you recommend hiring on the spot when you interview? I do because the the interview is useless. I I'm I am The number of people that I've interviewed that I thought would be a great fit and weren't Massive the number of people that I've interviewed and I and like I thought they'd be a terrible fit But I just needed somebody and I hired them. I was like, holy smokes They were like an interview is only what they want you to see and some people are really good at interviewing And some people suck and it has nothing to do with how good they're going to be at your job Which is why like the like having the database questions before we even interview them We stopped doing interviews Instead of doing an interview We do a sales pitch. We already scored them We already know whether they're going to be a good fit or not just based on the data and and again We're going to we're going to weed out people that would have been a great fit And we're going to bring in some people that aren't going to be a good fit And that's kind of the nature of the beast when you're trying to automate stuff But in our process now instead of instead of us interviewing them We we invite them to what they think is an interview But we invite 20 people to it and you know 5 to 10 show up and then we do a group sales presentation So we don't ask them any questions. We just talk about our culture our core values. We tell our origin story Here's how we got started. Here's what we're all about Um, we show them our crm. Here's what a day in the life of tyler looked like this week Here's what he did. Here's how much money he made. Here's how we got paid Um, here's the good parts of the job. Here's the not so good parts of the job We basically just do a sales pitch on why we think we'd be a great company to work for We already we already know that they like got uh, you know Examined in a way or assessed in a way that we know they're going to be a decent fit for this type of job Now we really actually just need to screen for Are they do they align with our core values and do they vote themselves in? Because if they love our culture and love our core values Then they're going to be so appreciative of the job that we have to offer But if if it's just us chasing them and trying to like say are you good enough to work here? Then then like the ball's in the wrong court So we do the sales pitch and then we just have them leave We're like, hey, uh, you know all about us if you think you're gonna absolutely love it here And this is something you could make a career out of when you get into your car shoot a text message And we'll figure out next steps Um, or if you don't think this is a place you're gonna love it. That's fine Not everybody's meant to clean house. Not everybody's meant to clean windows Thanks for coming in appreciate you letting us, you know teach you about our business And that has worked so much better to attract and retain awesome people So, you know the primary focus of today's discussion was on creating value, which was like in the bookkeeping side But really if you don't have enough technicians to do the job, you're not going to be creating the value either So we're covering from both angles damn. We've got like a minute or two left. Um, this is your website, isn't it? This is the one. This is what we call home You want to share a little bit about your business and how people can get a hold of you and the things that you can do to help them Yeah, absolutely. So, um, you probably already guessed it if you've been listening to the show But like we didn't we didn't start this administrative service company because we're like, how can we like take money from business owners? We run three made service businesses and two window cleaning companies And by accident we started helping other people like like lizard tom or any of us Hire more employees so they could get over those problems or because i'm a nerdy bookkeeper, which you can probably tell from here Me talk, uh, we started doing bookkeeping for people because they thought it was something their cpa should be doing And i was like no It's better to have somebody just like you doing it that just knows a little bit about accounting So we do recruiting for other small businesses to help them find employees And we do bookkeeping for other small businesses to help them make better decisions and make more money Um, so if you go to the website your blue skies dot com You can see the little get started button on tom's screen there and basically you hit that and it'll It'll bring you to a demo. I think right now if you hit it It goes to my calendar if you want more on the recruiting side Then you can go to Services and hit recruiting and then there'll be a spot to sign up for a recruiting demo with shawn And i'll also see you have some bad ass free resources. Yeah, I told our website guy I told our website guy. I want that tab to be called bad ass free resources Good job. I like it. It's making small. They're really bad All right, so angie. I do want to say that go check out those bad ass free resources It's probably going to help you with your questions and then also you might consider going to wwld dot live And join us on tuesday for what would list do dot live and we can answer all your questions live And I see that we dropped a link in chat as well to the blue guys website There's also a link there for smart business moves calendar. If you haven't downloaded that download it You can put it in your calendar so you can kind of keep up with When smart business moves is um, I don't know if uh, your tuesday shows in there. If not, it needs to be it will be Download the calendar it'll it'll be helpful um Okay, I think we're done. Are we done for that? He's gonna be talking with dan so enjoy We are looking forward to it I feel like we could have talked for at least another hour. We were all talking really fast. It'd be so dangerous It'd be so dangerous. We go hours and hours and hours You'll have to come back in june and tell us how your fishing trips work. Oh, I'm in time. Yeah, let's get it on the calendar Victoria you heard that Thanks again, we'll love you back next wednesday five o'clock eastern till then bye. Bye and the month will be over. Check your numbers