 Hey, good afternoon everybody Tom Stewart here. I'm with Liz Trotter. This is Smart Business Mose Wednesday February 10th Yes, February 10th. So I just noticed that Tom whenever anybody comes on here, I just have to say for anybody that gets on here early and You see our really cheesy smiles like this When we first start go ahead Tom do your cheesy smile We sit like that for like three minutes before it feels like three minutes before we actually go live like Because it takes a while to actually go live so if you're early you've got to hear the inside scoop on how crazy On our cheesiness yeah This thing I've got four days until Valentine's Day. Oh Gosh Tom Order a card on Amazon. I need to get on my horse and do it now do it. Yeah. Oh, that's right. You don't leave your house anymore. Do you? Well, I mean I do but you're shut Are you gonna be going and getting any food or anything just stop and get a card at at the local I Want to say Piggly Wiggly, but I know that's not it. What's the name of that store? Here's Teter. Yeah, here's Teter. Yeah I did I did find that I get more and more food product from From Amazon though, I mean you can live I mean you can live you can survive With nothing but a Amazon Prime account. It is very very true. Yeah, it's kind of sad for all the small businesses though Yeah, no It is it is I can't feel bad My 14 pound port but locally though. I didn't have that delivered. There you go. Good job Tom I still go to Costco. That's helpful So at least they kind of take it seriously. Oh, no everybody in Costco everybody here where I live wears a mask when they're outside That's it's not a thing to not wear a mask Here everybody wears a mask everywhere. I'm in South Carolina. Things are a little bit different here. Yeah, I keep hearing that from other people and other places just so hard for me to envision because I Can't remember seeing anybody without a mask even in my car I feel like I need to wear a mask. Well, the lady at the bank I think everybody remember the drive-thru you saw my post right show up with a clown mask I think she really is used to having people at the drive-thru with a mask on because why was she so afraid? Heavy like bulletproof glass You were the ones where you had the tube that kind of goes back and forth. So she thought you were like You pick up the tube and start huffing in it She had her mask on but she's in the bank of course, you know But yeah, here everybody you rarely see someone without a mask I kind of forgot what people's mouths look like except for online. Yeah, hey Linda Don't breathe in don't breathe into the tube So I Know we are Looking at getting Past price Increases in adjustments, right? Oh, you're gonna tell me how many inches of snow you're gonna be getting tomorrow We're supposed to be getting 12. I think no way. I swear. I'm pretty sure that's why I said Often as that happened you're part of the country so seldom Once every, you know, I don't know very very few years. Let me see. This is what it says Um Over a foot of snow with higher totals possible Thirstying County, that's where I live appears to be right in the bullseye for major impactful snow Please take precautions and know that doesn't mean go by all the freakin toilet paper That's coming from Thirstying County Have some humor, don't they? I know don't and that's exactly what they wrote and no that doesn't mean go by all the freakin toilet paper It's supposed to be the biggest snowstorm in decades cool So if I'm not here tomorrow y'all I'll be under snow You'll be in the bottom of an avalanche, you know, which is kind of funny because other places deal with snow on a regular basis That's not a big deal to have 12 inches of snow, but Here it it really does shut everything down So are the schools open are they doing the remote learning? I Am not sure because I have kids in school. Oh Nope, um, they're still doing remote learning. Oh, like if it snows a foot, do they still have to go to remote learning? We're not only Sark You do have to go to remote learning. Oh, what are you talking about? Of course they do. I don't know you're thinking that you might not be able to go because you won't what you won't have any electricity or I mean, it could be technology, but I guess sure There's remote learning snow day is there. No, I don't think so. I think that the kids probably wish there was Mental health in me. It's like the kids are you know kind of losing their minds anyway down I'll let them go play in the snow. My god It happens like once in a this is a once-in-a-lifetime snow, right? It's not well sounds like decades. They're saying so we'll see I I do have some pictures of us having like 10 inches Here maybe five years ago So, I don't know It's just we don't we have many years where we just don't get any snow. Oh, so Linda I know I mean, you know when you're typing things it sounds worse that lady she wasn't Like it sounded rude when I more rude when I typed it out and in person So she had a mask on before she's in the bank, but I could see that she's like she's like whoa You know like one of those scary calm faces But she was saying it like in a fun kind of way so it was I wasn't offended I thought it was funny. I was just like, oh So Can I still give you money? How's that work? Yeah, so it was funny, but she didn't she didn't really strike me as rude then when people were saying how rude she was I was like, oh, no, I didn't explain that well because she she wasn't she was nice She was funny Just didn't appreciate all of this It's not the first time you do remember when David told me It's funny and actually he didn't wasn't pointing at my face he was pointing at like all of all of that So I was good try to be helpful I guess yeah, so I Guess I just invite I mean you are very open and I guess that kind of gives people license to reciprocate And I'm fine with that. I'm I'm not at all offended. I actually like it enough so that I don't post it on Facebook. It's like I really do and you know Tom I really like hard-hitting Feedback, I might not like it in the moment, but I'm much appreciate it I think that's almost English right there. There are times when I do I think I do although, you know, it's I guess I guess it's situational isn't it? I would say so. Yeah, I think for everybody All right We were talking about charging more per hour because again, we're talking about we're still just to We don't forget what the whole point here is We are Over here on the red numbers and the green numbers and the red numbers go up in the green No red numbers go down green numbers go up. I knew that I was testing you very good we In doing that you're gonna be more profitable and the loaded direct payroll to revenue There's a wealth of opportunity here And I think that we've been demonstrating that over the last few weeks And if you want to make that number go down You can do it by making the top number go down with bottom number go off and we're back to the bottom number and I'm going to ask that you could go back real quick Tom, you know the The little net profit chart that you got from the MMA workbook And I'm talking about I do I'm there It's way back my fingers getting tired All right, right there. Okay, so I had a conversation with somebody today and They were wondering where they're Where does their money they own the company? Where does their money come from? Does it come from total operating expense or for net profit and how did they make that decision? How would they decide where that money comes from? So I thought that that's something she's on here every day and she she didn't know the answer It was really a good good question Hopefully both or maybe both Definitely from net profit it must you must be getting something from net profit some of it could be coming from total operating expense to Depending upon if you actively work in the business If you have a job working in your business like if you're the CEO or If you do the books if you do whatever you do in the business that you do you work if you work in the business Technically the internal revenue service would expect that you would be getting a paycheck from that business If you're getting and this is there's some even some nuances to that depending upon the structure of the business if it's a If it's a corporation or you know sole proprietorship something like that Then you should be getting a paycheck if it's an LLC There's some rules that say that you can't really get a paycheck per se if you're a member of an LLC it's called a Planned or kind of a structured distribution, but something that looks kind of like a paycheck But you're paying all of the other taxes on it You'd be paying yourself a salary commensurate with what somebody would you be paying somebody on the outside to do that job Strategically you don't want to pay yourself salary more than you absolutely have to as a rule Because you find yourself having to pay social security and you know the the other payroll taxes on that that you wouldn't pay If it were considered a dividend But there could be some nuances of that too depending upon your personal situation if you're trying to build up Personal credit and do some things to make yourself look better in the eyes of the bank Maybe you would pay yourself more so that situation will too But you need to be getting a premium from the profit part of it just for the risk of Voting the business if you're making no more than what you would be making if you had a comparable job working for somebody else You probably should be working for somebody else For profit company if there's no profits in the business that doesn't look good to anyone That doesn't look good to the IRS. That doesn't look good to the bank. That doesn't look good to anyone and There's there's there's hidden costs risks Associated with owning a business that you do not see in this P&L You know, there's always a chance that you know, somebody's gonna get hurt There's a chance that somebody's gonna get sued. There's a chance you're gonna break stuff and Allegations of theft and car wrecks and just all kinds of crazy stuff happens that you know, you're taking a lot of risk and some of that regardless of all the insurance in the world, you know There's some of that's like like at a personal level. So you got to make something above and beyond what? You would be getting if you you know had a comparable job working for somebody else just just for that risk Or at least be on a pathway where you're heading towards that Because you're building value league in your business, too It's not all about the money you take out of it. Your business of them itself should have inherent value You know a ka Somebody would be willing to buy it from you for some multiple of recast earnings And that's a whole nother discussion that we can have a little, you know further down the road But that doesn't really happen until you start making profit So, you know when you're a startup, maybe not making profit but you need to be able to have a Road map if you will where you can say well, this is where I'm going to be making the profit And my salary is going to be you know this much and the profits going to continue to increase as I Not only increase my revenue up here But I manage my business more effectively to keep the cost of good sold down to get more percent gross profit We control my expenses, so I'm getting as much that profit out of it as I should Great Tom that's super helpful Also, the I want to hit on this just one more time if you're working in your business One of the reasons why you really want your pay to come out a total operating expense Is because if you ever want to replace yourself, it's going to have to come out of total operating expense So you want that that amount of money built in as an expense that will need to be paid to run the business Also, when you go to sell your business, that's helpful If you go to sell your business So because they get to back that money out and they get to choose to either work in the business and get paid Additionally on top of the net profit or they have the money there that's built into the expense to hire somebody to do your job so either way you really want to be Not either way if you're working in the business ideally Some some money should be coming out a total operating expense to cover Whatever like you said Tom, whatever it would cost to have someone else to do that job Yeah All right, so hopefully that explained it to the I know there's a lot of people on the back end that we don't actually see them I'm hoping that the person I was talking to today Feels like that was a better answer a little bit bigger answer Okay An hour back to green numbers more green I like that I like the green bars showing that these are green numbers that are and when we're talking about these numbers green Numbers is we're trying to drive these numbers up. We want them to go up We want them to be getting higher and higher and higher because that's where the green is is up there so we were talking yesterday about the idea of Charging more per hour or excuse me just Proving your productivity as a way of charging more per hour and it's really easy to see that if you are Billing based on a fixed rate versus You know billing on an hourly basis Not to say that billing on an hourly basis is is always bad There are times when you might want to do that if you have no idea what the labor content is going to be But if you have an ongoing recurring customer You want to peg or at least make would be our recommendation to peg your Bill rate on a scope of work as opposed to amount of time and if you can become more productive by You know getting better cleaning products better equipment having better training, you know better methods so on and so forth that that's to your benefit and As long as your customer is still getting the same deliverable So the question would be you know sometimes You know a customer might say well, hey, you didn't spend as much time in my home as you used to the answer would be Well, let's pull up your scope of work and let's kind of go through it Is there anything that we didn't do that we're supposed to do in our agreement? If not, you know, we'll come back and make it right And say well, no everything looks pretty good, but you just weren't here as long Then you can kind of explain about well, you know, we got you know, we upgraded our microfiber towels We got a better, you know vacuum cleaner. We got this, you know training and kind of explained that that we want to do that So we can be more productive and it's really to your benefit because you know we're not in your way as much and it's to our Cleaning technicians benefit our cleaning professionals because they're able to actually make more money, you know During a day during the week and or definitely make more per hour So it's really a win-win for all of us when we learn to Clean clean better faster Well, I want to hear more about what Lester has to say Another thing that when people say you weren't at my house as long as you normally are People don't necessarily want to know how you run your business, right? They just want to get their house clean. That's what they want and they sometimes We read too much into what people say So if they say you you weren't here as long as you normally were or your people weren't here as long as they normally were Did they get everything done? Yes. Oh, well yay. Good job. I'm glad. I bet you love that I bet you love not having them in your space for as long. Great. Thanks for letting us know I like it be presumptive that they were, you know, coming from a positive place. Yeah, though. We appreciate that. Yeah, thank you so much that So Because we're on the other side of it and we're worried about this so much a lot of times We assume that people are not happy or that there's a problem with it Whatever they're telling us, but that's not what they're trying to say at all All right, let's see my competitor in town is switching to commission. I'm getting calls every day from her clients They don't like it and I switching services It's interesting. How do her clients know how she pays? That's an interesting thing. Maybe they're having a Diminition and quality I'm just I'm guessing and that makes Leslie has the inside scope as to why yeah And if you don't manage it, it's an absolute risk for sure if you basically let your Technicians just you know abuse the system and You know clocking in out of jobs with no regard for you know, meeting the scope of work then yeah, you can have some some some major quality issues paying, you know commission Absolutely Tell people it's both both have their problems if you're gonna pay hourly you need to be able to manage Time very well and if you're going to pay commission then you need to be able to manage quality very well So there is something that you're going to have to do. They know that the cleaners aren't staying as long But what makes them assume that it's because they're getting paid commission I mean I have that problem with people when they're getting paid hourly. They're like Which is always crazy ask anybody that pays hourly and they'll tell you the same thing is Sometimes the people are just not in there the house is clean. They didn't need anything Really then why did she call and leave us a list of three things that weren't done Because they they can get into patterns. So it's it's somehow Some things going on there more than just that they're paying commission Um, well, I mean People can go crazy, you know, if you're measuring the start and the stop time and comparing, you know, the the actual time to the allowed time and If everybody's productivity goes from what was close to 100 to like 200 you know, you can't Clean the home twice as fast as you used to and expect to get away with that You know expect not to get the complaint expect not to lose customers So, you know, that's where where your scorecards come in and certainly, you know, if you're losing customers That's really easy to you know, go to to a technician or team and say, you know, you've lost two customers this way If you guys don't slow down and start getting it right, you know, you guys are gonna have to Yeah This is a job threatening situation. Yeah I robin brings up a good point. The techs can be telling the customers how they could get they're getting paid, but They are not communicating how they get paid well or the customers would be happy They must be if they are telling them how they're getting paid That information wasn't communicated to them well enough because they're not feeling like it was fair and they're not feeling like Like they're being forced to clean really fast and not be able to be able to make any money That's the only way that the client can feel like they are being taken advantage of is if the employees are somebody's given them the idea that They're not getting what they paid for so And part of this if if you know, I'm doing this or if I'm coaching somebody that's making this transition It's always a good idea When you're making a significant change I'm an advocate of making a whole bunch of changes at the same time. I'll meet you and You know, let's go ahead and look for You know other ways that you can increase productivity You know, we're going to go ahead and we're going to start doing a revenue share We're going to put you on commission But we're also going to give you Additional training and some some upgrading tools and products to Help you be be more productive Um emphasizing that quality is still going to be important So we're going to have to maintain that and then communicate to the customers not necessarily people are going to be paid getting paid differently They don't need to know that But to emphasize to them that you know, we're making all these upgrades and we you know We expect it's going to allow us to get to better outcomes and in a shorter amount of time For you know, our mutual benefit So If the teams are getting done a little bit sooner You kind of told them that that you would expect that to happen but not because of the pay but because of You know the additional training and the new no cleaning products and equipment and so forth I think robin's probably making a pretty good point here The the techs aren't spending the appropriate time to get the job done correctly or the scope Other because there are some people that are called clock watchers, right? We call them clock watchers here that that's what they have it in their minds that they're paying for but it's That's such a small percentage of the people that are actually getting their homes clean that It's not a big concern if Les is getting and she's getting calls every single day From people it's not because they are the the clock watcher type It's because something's wrong There's a problem that they're not getting what they think they deserve What they think they paint they're paying for so well And there is a technique and i'm going to say this with the caveat that i'm not a legal attorney And I don't know what the rules are across all the 50 states in the us or other parts of the world for that matter but You can put a cap Technically or at least from a from a technology standpoint You can put a cap on the rev share where you can say i'm going to guarantee you that regardless of what happened You're going to make at least you know minimum wage or some number higher than that if you want to want to do that But at the same time You're never going to be able to make more than say 25 you know bucks an hour So if you think that you're going to get out of that house in half the time and wind up You know pocketing, you know 40 bucks an hour. That's not going to happen We're not going to allow that to happen because there's something moving that fast you're cheating And that's kind of a way of governing it on that side. It's like I'm I'm actually making less money than I would if I stayed a more appropriate amount of time I think there are other ways to manage that as well So if people are getting out of the homes and the the clients are happy and they're there half the amount of time That most likely you should be adjusting that that pricing Right because that's going to come come back to bite you at some point so Now I think the the big point here is Being productive and being efficient Doesn't mean not doing your job not getting the job done correctly not not Following the scope of work. That's not what it means And it doesn't really matter how you pay You will have to manage something and you'll have to manage it for different reasons But if you want to be profitable, you're going to have to manage One or the other you're going to be managing time. You're going to be managing quality I I've I've paid both ways And I know that they both have their challenges. You just have to sort of pick your poison What are you better at handling? That's what we've always thought in foundations as well as well. What are you better at managing if you can manage time Better than you can manage quality Absolutely. Consider paying hourly. You're going to do a lot a lot better If you can manage quality better than you can manage time absolutely consider Paying commission because you have that additional potential there. There's more opportunity to be there But if you get really good at managing both You're going to be more profitable Absolutely the same as with anything The more things you manage well in your business the more profitable you'll be I don't care what it is the better you handle your supplies or anything Regardless of which one you're better at you want to always improve strive to improve In both areas they both have Pretty significant impact On your profit So I started building this yesterday and I guess we ran out of time didn't we? We really wanted to just shove it in there for a minute. I was like, yeah, that's not going to happen Let's look at a scenario where Say you quote by the hour And you say that you can clean 700 square foot per hour for whatever particular Scope of work that that that that you do And you got a home that's 3000 square feet So if I take the 3000 square feet and divide it by the 700 That would give me a number saying that I'm Going to be Getting 4.29 hours for that home and at 200 dollars. That's 46 dollars an hour And change 4667 if I am able to become more productive Bring bang Let's do this right now. Tom. What was that that you were doing? How are you doing that? Oh, this sorry that that yeah What were you just changing? What are you doing? I've got this these numbers here You can't or they're just white. I got you. Okay Like what's he doing? I I get it now See what you're doing. Oh, yeah but If you can become more productive You can actually say get your your your your cleaners up to 1000 square feet per hour because of training equipment and Some commission pay system still you got to get your scope or you know meet your scope of work You got to you know say what you do and do what you're saying keep your customers happy But you can clean that same home in three hours and you're making 66 dollars in change per hour and You know, obviously your payroll to revenue is going to be better at this level than it would be at this level Regardless of how you pay if you were selling hours if you were selling by the hour Then all you're doing is charging less for being faster You're not going to you're going to charge $200 in both scenarios if you're charging by the job because the presumption would be That's the market rate and your competitors are charging, you know, $200 an hour as well Or maybe they're not they may think they can be charging Less but the service might not be as good or they may be charging more because they do a lot of things that you don't do Wherever you fall on the scale $200 the presumption would be that would be the appropriate market value for the scope of work that you're delivering in that geographic location Whereas if you were billing hourly, you're basically just shooting yourself in the foot for being more productive Does that make sense Yeah, so for example on this what what you're showing right here, tom is if you normally are charging by the hour And you have people that are taking 4.29 hours to clean that house Then and if you charge $45 an hour, then you would be charging a little over $200 right no you'd be charging 200 where if you charge $45 an hour you'd be charging just a little bit less than that Maybe 100 and whatever some dollars Uh, how much what what would that be tom? Under this scenario say if you you try to charge $26 27 excuse me $47 an hour You'd be charging $200 for this house, but if you were just charging by the hour in You wind up improving your productivity where you can clean out home in three hours You'd only be charging $140 so basically you're losing $60 in revenue that you could be making so It's just more money coming into your company your company fewer jobs Doing more hours is less profitable. Am I saying that right? Oh Yeah, more hours if you're if you only have 10 jobs You want to be doing them in the least amount of time not the most amount of time because you want to have more room to bring on more jobs So Let's let's let's break this down a little bit further You got different types of of of pay if you're paying people hourly Let's uh pretend you're you're you're you're doing $15 an hour For pay So this scenario You'd be paying $64 and an hourly pay And in this scenario My mouse doesn't Cooperate not sure where you're going here. So my mouse is Being fluky But that little dollar sign there that means I can drag it down into 15 still stays where I want it to I do this We're not careful. We'll make learn a couple things about how to build spreadsheets by watching. That's why I pay is only $45 an hour, which means my gross profit But Truly my gross profit because I don't have my labor load in there But at least my you know what I got left over after I pay my Your people. Yeah, I got I got some pretty good That's that's awesome, isn't it Okay, but people that pay hourly would make this argument I know because I paid hourly for years and years and years is that I don't want people spending three hours and I think this is kind of alluding to what leslie is saying The customers think that they're getting a better job If my people spend four 4.29 hours in the house, then if they spend three hours, so I'm I'm willing to I know that I will keep that customer longer because she thinks she's getting more value because the person's in the house longer So so that is That is one argument Have we talked about serve qual and the five gaps in quality and gap number four is your external communication Not being congruent with your customer's expectations Your newsletter what your website says all of that stuff needs to be congruent with what it is that you do So so part of that is what is your message? What is what is the what is your your your your your your brand value proposition in the eyes of The customer. Yeah, they think you're selling hours and absolutely they're going to feel like it's your ripped off but if you're building An expectation in their mind that you know you You you you you focus on productivity and engineering methods and science-based cleaning and you're always You know looking for innovations to help your teams be more effective and be more productive for Everyone's mutual benefit Then you can kind of train customers In you know incumbent customers if they're used to something else, maybe that's more difficult But certainly the new customers that you attract in your business are going to be down with that because that's one of the reasons That they hired you to begin with And they're not going to be beating you up as much or if any over time They're going to be looking at you know, did you are you doing what it is that you said you would do? Well, and that is what leslie said too. It's different if you start out that way, but switching Is is much harder right because you're right tom. You do have to give Anytime you change anything with regards to people You need to communicate that change very well and very intentionally people don't like change I know we work with a company tom that went to foundations and He increased his wage increased y'all increased his wage and I think he lost half his employees. You remember that Remember that I'm having a hard time connecting it with the scenario. Okay. Well, anyway Uh Does it rhyme with crickets? I knew that but is there Well, if I told you I'm not sure he wants to share this information Yeah, um But why did the why did the employees leave? Because they were angry, you know, um messing Messing with their pay. They were they had before Then making um, so they were making hourly And I can't remember what their hourly wage was was like 13 and it was switching them to commission But they also had a base pay of $13. So on commission You can make more money, but you'll never make less than what you were already being paid So right now you're getting paid 13 now. I'm going to move you to commission You're you have an opportunity to make more But if you don't don't worry, you'll never make more less than 13 And nope, they quit Uh, I'm pretty sure he lost like half of his people just like bam within like a three-day period Yeah, they were like nope screwing with my pay. You're trying to trick us You think you're being all sneaky. This is not a sneaky man Like this is not a sneaky person at all Communicated is very important Here you go That's good. That's good. David. Yeah um How that communicated is important, you know, it sounds Um, it sounds like it there was a a failure to communicate effectively. Yeah Yeah, and that is that is what happens And and that's where making a bunch of changes at once Is helpful, you know, we're gonna start having free ice cream on fridays and We're gonna change the pay plan from this to that and we're adding another benefit And you know, we're gonna have you know, dressed down Thursday, you know, you make a dozen different changes and by the time It's all good. There's gonna be something in there that somebody's gonna like and at the end of the day They don't know net net, you know, if they should be happy or sad or um And because people resist change better to do it all at one time instead of just like torturing them Like every week. Okay, here's the change this week rip a bandaid. Okay next week rip a bandaid next Rip a bandaid people can't handle that for very long. Oh, what's this question? Leslie has How do you prevent your client from not picking up or leaving the toddler birthday party for you to clean When you charge by the job I understand I feel like paying by the hour really encourages clients to be responsible For the sake of time She's talking about customers doing things that would prevent you from meeting the scope of work because the customer didn't do their parts kind of like the Sink full of dishes type thing I I thought she meant picking up the toddler and leaving the birthday party. She means how do you prevent where I That's why I was like, I don't understand. I get it. How do you prevent your client from not picking up their surroundings their environment, right or Leaving the top. Oh leaving the toddler birthday party mess Yeah, clean up. I got you. Wow. I'm sorry. I made that really hard there. Leslie. I have no idea what this says Um, okay, let's see. How do you prevent your client from not picking up or leaving not picking up? um So Say I feel like we do it the same way. Yeah, I mean, you know With him it depends, you know, if it's if it it's a material burden is going to have a material amount of time you have a discussion with the customer and say that, you know, we You know Have a lot of stuff going on here that, you know, we're going to make a decision We might not be able to clean certain parts of your home today because You know David's client training program So, um, so what we did when we were hourly Leslie is um the same So without really what we would say is, you know, if we get your home and we find something that's extremely out of the ordinary When we sign them up, would you like us to just continue to clean it and then bill you for any extra time? Or would you like to call? How would you like that managed? And so we we would we would charge them for it We have a little form that we would leave back in the day when it was everything was on paper, right that said, um Or they would leave us a note saying hey, why are you here today? Could you do blah blah blah? Sure We happily happily do that. It'll be such and such amount of money Or Deleting is like adding rooms, right? Yeah same. So it's kind of the same um, I'm not I don't think that's any different. Well, how do you do it? Leslie? Maybe maybe that's I'm curious about that. How what do you do? Do you just? She charges always so she doesn't care. She just spends an hour cleaning the house and bills them for it. Yeah. Yeah. Yeah So why are you charging me more? It was because you trashed your house with a kid's birthday party Yeah There are a lot of people that that do that. Um, there are some companies that charge hourly But they kind of set the price So we're gonna charge you hourly and we're gonna kind of cap it. You want what do you want to pay? You want to pay 150 dollars? Great. We'll clean for 150 dollars worth of time Right, that's gonna be three hours 50 dollars an hour. We'll clean for three hours. We'll get as much done as we can So there are lots of different ways to So we're we're just talking about some basic ways, but even within those ways There are a lot of different ways lots of different ways to charge hourly Lots of different ways to charge Percentage commission one thing that we used to do we haven't done this in a long time But we used to have like Like a kind of a menu option for people that didn't live in their whole house And they would have like these little menu cards that have the whole house listed out and how much each room costs And they would leave that little slip saying what what rooms they wanted cleaned that time and we would just And they knew how much it was they would add up the total because we had how much the room cost They'd add up the total and that's how much they'd take there was a they had to have a window there Or they had to call us if there was going to be very much less or very much more So they didn't mess with the schedule, but So my clients pick up because they know we charge by the hour and they don't want us to waste their time picking up I would argue that there are a lot of companies that pay incentive pay and There's two. I mean their customers either do you know pick up because if they don't they know it's not going to get cleaned or They're going to get a call and they're going to negotiate a higher rate. I mean it can be done It is done. We do it, you know, it's like Yeah, we don't we don't do dishes but if we show up and there's a ton of dishes in the sink and You know that the schedule allows it well ask the customers like In this realism part of the scope of work, but for an extra, you know, 60 bucks Well, you know empty the sink and clean the rest of your kitchen. You want us to do that? Yes or no Then if they say no, then we just leave it and they say yeah, we do it and bill them for it And so we always um when we were hourly we built the pickup into the price So if we saw that their house was Messy and not getting picked up Then we would talk to them about hey, it's we would do that's where a price adjustment might come in So the house is taking us a little bit longer We like love to do the because we like to get paid to do that pick up stuff I prefer to get extra money and do more work when I'm in the house so lately we've been doing a lot of things like moving laundry to the laundry to the utility room Putting away Dishes cleaning up toys. Would you like us to continue doing that? Or would you prefer that we? Not do that stuff and and just stick to the cleaning So we used to do that as well I don't always have time scheduled to just add time. Well that that definitely is Consideration when you pay hourly you do run into that struggle. Absolutely You you don't run into that That problem is much when you're paying commission because the people are moving a little bit quicker And so they have a little bit more time. There's more flex in the time But again, it really doesn't matter how you pay you will have some problems so there I have never seen a a A way of paying that is Worry-free and Doesn't take any additional effort. I haven't found anything like that yet Even the people that pay for just flat hour, right? I charge $15 an hour and you buy the number of hours you want you want three hours great It's going to cost you 45 dollars for me to clean your house. I know these numbers are crazy But 45 dollars to clean your house. I'm going to clean for three hours and I'm going to go those people also have challenges That we could talk about for the next 15 minutes, but every style has has a challenge Every kind of pay it's just again in my mind. It's which one you manage best That is the one that you should be doing and yes You want to improve on both you want to keep your quality up You want to keep your scope of work up you want to keep your productivity up you want to keep your efficiency up Yes, yes, yes, you want to manage your company well Um, but which one's easier for you do that Don't pick the one that's really hard for you that makes your life miserable Uh rosemary stator is a really good example. She doesn't mind sharing at all She used to have teams run teams of two and teams of three and I believe she paid hourly and she switched to solos and Pays commission and She's like what the heck was I thinking or doing she was miserable going to work every day She hated the chaos of paying hourly and just the different things and teams that that chaos she hated it And she's just in love with this new model because it works for her. Does she have challenges? Heck yeah, but the challenges are our challenges that don't drive her insane like the other ones did All right, what's Peggy got? I switched from hourly to flat rate, but I often under bid I try to get $40 an hour But since my production rate is slower because I do very thorough work My bid sound high and I'm not sure how to fix this since I don't want to say I'm $40 an hour, but I'm afraid that to Is that this is too high? Okay So there are lots of ways to manage that again Peggy so That's that's probably a good five-minute conversation right there too. Um So I would suggest differentiating your You know, you've got a very thorough very detailed scope of work that Requires more labor. So you have to charge more for it. You don't need to explain all that to your customers, but Maybe give them a couple of options because some customers maybe can't afford that or I think they can't afford it Or maybe they just need a comparison and say I can do a general claim for This lower amount or I can give you the deluxe for what it is that that you like to do for your total scope of work and The deluxe doesn't seem to be as expensive because they think that they're getting they understand that they're getting more than what the competitors are charging for their General level service. Liz you do this you offer Like three different a good better best type approach. Yeah. Yeah, we have three levels And we recommend that most people go for that middle level Because our our goal is not to do this really high detail on the majority of our cleans Ours is to do a more You know a more routine clean a general cleaning for the majority of our people But some people want that detail and the people that want that are willing to pay for it And so those people pay for a deeper level of service now some companies Which is a little i'm not sure about with you peggy if your company only does This more detail cleaning then you are going to have to give them some way to be able to see That what they're getting is more than What the other people are are charging for That that's why your price is more you're going to have to feel confident in your ability to Point out your unique selling proposition If you're not comfortable with that Then you're going to struggle. It's your struggle right here is no different Then the customers that are the companies that are charging $40 an hour That are upset about what we call the derogatory Term trunk slammers that come into their area and charge $15 an hour That's it's the same It's the same dilemma You just have to be able to communicate to the customer that your what you're doing Is better than what they're doing and that's why they charge less you charge more because you're giving them more there is There is this awesome book. It's called Nine Lies that are holding your business back and it has just I don't know if you guys can see all these tabs that I have in here So many tabs It has a ton of great things But where is the What does every page have a tab? No, but there are a lot of tabs. This is good stuff in this book But one of the things that they write in here Is at the at the bottom of everybody's thinking some place in their mind. Everybody's heard it too many times You get what you pay for so People are pre-programmed to believe that on some level And so if you are going to be charging more you just have to be able to communicate to people That they're getting what they pay for They're paying more because they're getting more So that's that's the job there Maybe i'm too perfectionist. No, so peggy if that's what you're known for and that's what you're good at you'll probably have a The pool of people that want your service is smaller So you might not you'll have to work a little bit harder to get customers, but they're going to pay you more As long as you're not charging hourly Well, 40 dollars I'll give them a quote That is substantially higher than the marketplace and leave them to believe that your service is the same as your competitors That's where it's going to hurt you right you can charge more you can quote more But you have to be able to explain that they're getting more in a way that's understandable and believable to them And pegging i'm guessing that you're not the most expensive person or company in your market Maybe you are But that 40 dollars is not typically what I would expect to see as the most expensive service So it sounds like you other people are getting more money than you're getting maybe not Maybe you are the most expensive especially if you're in a little tiny town or something But if you're not Then you have a lot of you have a lot of ways to be able to communicate What a great deal you're getting for this great service too if you wanted to go that route But somebody has to be the most expensive company somebody So and if you're the most detailed, maybe it could be you All right, what you got for us now, okay back to this before we completely run out of time remember we're talking about How can we Lower our loaded direct payroll to revenue and one of the things that we can do is to charge more per hour And we've demonstrated it's pretty straightforward to see if i'm we're paying hourly how that can make us more profitable That's what we're showing up here because you're generating more gross profit But if we're paying commission How does that help us? Because say we're paying 35 out as commission and using the same numbers that we had out there Then the pay is the same because it's 35 percent of the 200 dollars for what we're billing, right? so In this scenario the cleaning tech is you know took 4.29 hours, so they're making 1633 an hour Down here. They're making 23 33 an hour, but the dollar amount is the same so Have we really done anything here that's going to Lower our loaded direct payroll to revenue We're working faster Our technician is making more But our cost is the same our loaded direct payroll is the same, right? Yeah, those scenarios But this isn't Where you stop this is just kind of where you start because once you get to that point you have an opportunity to In time I did that wrong in time Adjust what your commissions are the next person you hire You don't have to start them out at 35 percent. You may be able to start them out at at 33 percent say if you're if your target rate is this you know 16 dollars an hour, let's say You may even be able to get this down to Yeah, I thought you're gonna have to go the other way. You're gonna have to go to 34 percent 34 Getting closer. You're not going to be able to get less than 35. What I'm looking to do is to get this down So I'm I'm not even looking at the right place Gotcha because this is how fast that we're cleaning now because we've learned how to do that You could even you know, you can take it to 30 and say great. I'll give you a premium. I don't like you get plenty So you're better off here than you are here I'm not going to give you 23 But we're going to knock it down to 30. It's hard to do that for your incumbents that they're used to making 35 you're going to have to probably leave it at that But for the next person you hire you can knock it down to that and if you do this Then You know the difference. That's an extra 10 bucks that you're making I do want to point out one more thing here that especially to people that Have have traditionally paid hourly That one of the sticking points is but I know that that's how long it takes to clean that area To clean, you know, it takes 50 minutes to clean a kitchen. It takes 40 minutes to clean a master or a primary bath or whatever You sort of have that in your head learning how to clean things more productively is It usually means that your training program is going to have to change In some ways because people don't just speed up their bodies, right? They don't just start cleaning the exact same way but faster. They have to they have to create some Productivity hats if you will not that they don't clean it But they find other ways to maybe clean it which you need to learn if you're going to have that be part of your training Otherwise you do end up in a situation where people are are short-cutting instead, right? Productivity hats versus short-cutting Yeah, I mean there's a difference. You still have to meet the scope of work. You still have to do what you say You're going to do. You still have to maintain your quality but by measuring productivity and quality And providing feedback setting the expectation coaching Training providing the the the tools and equipment and cleaning products all necessary to contribute to that. I mean You know, it means changing at a lot of levels and and not only saying it but demonstrating it You know, I would have to say it would be a rare exception where companies don't you know There's a company out there that doesn't have an opportunity to be more profitable by focusing on productivity Yeah, absolutely Hourly as well focusing on productivity helps the hourly company as well because you can get more jobs done Right, you can bring in It doesn't matter what your pay type is you can be more profitable a few more productive because If you're more productive you can make tweaks to your pay plan. Whatever your your your your pay plan is and um Your your your technicians can make more and you can make more as well You just be more efficient. You're getting better return off the human capital that whole thing That you're creating better jobs and you're building a better business at the same time At a time tom. Thank you robin. I'm glad that this discussion was helpful for you So many different ways to look at this, right? We can talk literally for another hour on this and come up with fresh Fresh stuff to talk about Tomorrow we will no we won't no we won't Well, I you know, we'll see you tomorrow. I hope to see you tomorrow is yeah I hope well, hopefully I can at least get on on my phone I can't imagine I can't get on my phone for for the rest of you will be here tomorrow five o'clock eastern. Take care. Bye. Bye