Show notes from Sweaty Startup Podcast episode 63.
An interview with Max Maher! The first episode with Max (ep 44) was a huge success and has been the most popular episode so far on the show. He has hired hundreds of labor employees in the past so on this episode we talk about how to find good people to do really hard work.
Its a numbers game. He needs hundreds of applicants to hire a handful of quality people.
He utilizes Indeed, Craigslist and in-person recruiting to get these applicants. The quality is generally low on Indeed and Craigslist but that doesn’t mean it can’t work you just have to look hard for the good candidates.
In person recruiting has been huge for Max. His strategy is to either stand in high traffic areas like outside of gyms or to hand out business cards while going about his every day life. Restaurants, grocery stores, gas stations etc.
The great thing about this is that the first meeting is sort of like an undercover interview because you can get a good feel for their personality and attitude.
Hire for personality and train for skill. Hiring people with only experience in your industry really limits your candidate pool and you end up having to hire subpar people. And personality and their people skills is the important part of what makes a good employee.
Max prefers to hire inexperienced people and groom them with tight training procedures vs hiring only experienced people. You can’t teach someone to be a nice person.
Approaching someone in person can be awkward. You just have to do whatever it takes and make it happen. The easiest way to do it is not put the pressure on them. Instead of asking them if they are looking for a job say “Do you know anyone looking for a job?” That takes the pressure off and strikes their interest if they are indeed looking for a new opportunity. They’ll sometimes even begin to sell themselves on the job.
Don’t be afraid to ask someone who already has a job. They may be comfortable where they’re at but if a new opportunity arises they might just jump at that.
Max has 30 movers at his largest location. He has 9 crews. The best guys tend to stick around. The lower level guys end up turning over quickly.
He recently documented an effort he did to hire 6 movers. He got 140 applicants. 40 showed up for interviews. Made 6 hires. Its a numbers game!
He was able to choose the stand outs! The cost per hire was north of $100 before training.
Getting people to show up to interviews is tough. Sometimes 80% wouldn’t show up. He found that having them call and schedule a time increased people showing up by 2x. The first time he ever did interviews he had 13 scheduled and only 2 showed up. It blew his mind! Office positions 70% of people show up.
How do you organize the interview?
He goes off of general guidelines and it is not structured. He tries to have a general conversation. At the end of the interview he asks himself the following question on each candidate:
Those questions automatically weed out anyone who isn’t excellent. The ones that are on the fence hardly ever work out and they become problems and headaches.
What traits do you look for?
People who have hobbies are generally more passionate and interesting and they make good employees. Generally being outgoing and friendly is helpful but sometimes people who are shy can be good too!
What advice would you give on training?
Sit down and write out a step by step process as if you were trying to get a 7 year old to do it. Max has a 2 hour training video system that his employees watch. From there they do a few hours of hands on training on wrapping furniture. Then he’d put them on an experienced crew for 2 weeks getting feedback all the time.
Explaining WHY is important when telling someone to do something. They retain it better and it clicks better with them.
He constantly evaluates the employees. Getting feedback from crew leaders and also calling customers directly to get reports on how things went can teach you a lot!
How can you trust your quality control?
Keep an eye on it from the beginning and stop letting things slip. On the job checkups. Surprise checks on crews. Balance it in the right way and give a lot of compliments as well!
How do you retain employees? Is it about compensation?
He thinks it starts with hiring. Only hiring “non-ass holes” makes a big difference. It makes everyone have more fun and they enjoy each other’s company. Respect your employees! If you can do this pay doesn’t matter as much but Max still tries to pay above the average wage to get top applicants.
Max agrees with Nick’s point that you should train employees to answer their own questions but also thinks having an open line of communication is critical. Not necessarily telling them what to do but why to do it!
When an employee doesn’t show what do you do?
He had a no call no show this morning. His first step is always why did it happen? Don’t make any conclusions until you know the reasoning and have spoken to the employee.
Nick remembers texting employees the night before work and it was a miserable work environment for employees and management not scheduling out far enough. The better you can communicate the easier it is for everyone!
How do you deal with inconsistent schedules and unreliable work in the early days?
It’s all about convincing them to join your mission and get behind growing the company. You have to sell them and keep them excited in the early days so it’s a lot about the relationship you build with those employees.
Any parting thoughts?
It’s all about hiring great people. It’s not about the skills. Its about the personality and the quality of the individual! Its a level playing field and your competitors are up against the same thing. Nick adds that a sales and marketing approach to attracting great people to work for your company is a must. Doing the things that are hard to scale and your competitors aren’t doing to find quality people!
You can find Max on his YouTube Channel!
Show notes from podcast episode 62.
Maybe you’re in high school or younger. Maybe your child is in high school or younger.
What steps can I take right now to prepare myself for entrepreneurship and what businesses could I possibly explore starting as a youngster?
I’ve told the story of how I became an entrepreneur in 7th grade. I was 13 years old.
My father’s company owned a few shopping centers in town and the old guy who mowed the grass for them had a minor heart attack and his doctor told him he couldn’t mow anymore. So my dad volunteered his 13 year old son to pick up about 8 hours a week of mowing. 4 commercial properties and 2 apartment complexes.
I was WAY too young to be in charge of something like that so it became my parent’s headache in a way. My mom drove me to the jobs and charged me $10 per hour for her time. It was 95 and sunny the first day and I chopped up a bunch of trash because I didn’t know to pick it up before I started. I cried and complained and told my dad I hated the job and wanted to quit. He didn’t let me quit.
I got the hang of it a few weeks later. I hired a high school student to drive me to the jobs the next summer. The rest is history. Is this what I recommend you do? Probably not. A 7th grader shouldn’t be put through that kind of treatment.
But hey. I learned invoicing. I learned a profit and loss statement. I learned how to deal with problems and complaints and I learned to talk to and sell to other customers as I picked up jobs and grew the business. I learned how to work with my hands and fix my mowers and have the confidence to do those things. I went to college with $40k in my bank account. I started a business in college. I’m not super rich and I’m not anything special but my life is way better now than it would have been if my dad wouldn’t have volunteered me for that job as a 13 year old.
I’m 100% certain that an entrepreneurial spirit begins in the household and at a young age. Just like the families that talk about money and have a conversation around money raise kids that are financially responsible the same is true in business. Learning to be curious about businesses and their profits and how they work as you walk around life doesn’t happen automatically. It takes influence.
While I think starting a small business would be great experience there are two things that I think you should really try to master whether that is through entrepreneurship or not:
Learn to sell. Learn how to communicate with people. Learn how to get out of your comfort zone. Learn how to break through barriers and create a connection with people no matter the circumstance. So many of your peers are afraid to talk on the phone let alone try to sell something. Work on your communication and your persuasion skills.
Become “handy”. Work on stuff mechanically. Learn to change oil. Learn to tune up a lawn mower. Learn to cut and build with wood. Learn to look at a malfunctioning machine of any kind and diagnose it and repair it. Power wash the deck. Fix the leaky faucet. Clean the gutters. Shampoo the carpet. Clean the filters in the HVAC unit.
If you can do these things you’ll have a huge leg up when you get your drivers license and can start a local small business.
Taking it one step further in high school consider getting a summer job or internship with a tradesmen. Electrician, carpenter, HVAC technician, plumber, welder. Learning skills like this will be an insurance policy for the rest of your life as you could go get a job for $30/hr anytime you wanted.
Starting a business with just a little bit of skill involved is a great way to earn really good money if you wanted just a one man shop and really limit competition if you do decide to grow and build a business. Niche carpentry like trim carpentry, closet building, bar building, cabinetry installation, deck building etc.
Here is a list of businesses that I think are appropriate for high school aged kids:
If you yourself are in high school or younger learn how to sell and learn how to work with your hands. Experiment with business if your parents are okay with that and talk to them about it.
Starting a business while you’re a student affords you a number of advantages. The main advantage is that you’re still on your parents payroll. The pressure to earn hasn’t hit you yet. The skills you’ll learn are valuable in the workforce. You aren’t wasting your time when it comes to making yourself more valuable. I learned more about life, relationships and money in 5 years running that lawn care business than I did getting an Ivy League degree. As a youngster you’ve got nothing to lose. You don’t have a family to feed. You don’t have a mortgage to pay. You don’t have a nest egg to protect.
Business is a snowball. It takes years to get momentum but once you get it it can take off at an exponential rate. Just like saving for retirement the earlier you can start the better off you’ll be.
If you are a parent who wants to encourage entrepreneurship it starts in the household. Talk to your kids about business. Have that conversation. Teach your kids to sell and get comfortable where most kids are uncomfortable. Don’t raise antisocial kids buried behind computer screens. Raise kids that can look you in the eye and get excited during a conversation. Raise kids that aren’t afraid and can figure out how to fix a flat tire on the side of the road instead of calling triple A.
I don’t recommend being as forceful as my dad was but get their minds working and see if a curiosity develops and then nurture that and engage it if you believe its important.
All the best!
Show notes for podcast episode 61.
Question courtesy of Brandon in San Diego:
My main concern is you mention the main benefit of service based businesses over product based is the fact it’s much easier to compete. You mention that trying to create digital products or sell on Amazon, Ebay etc means you’re competing with the smartest people in tech or even worse, competing on price. With these new apps such as Thumbtack, Taskrabbit, or Amazon home services, it seems the “big guys” are now infiltrating the service sector. What is your opinion on how this technology will threaten the service sector. Are we still just competing with the mom and pops or is there a new sheriff in town?
Let me make an important clarification on the first part of your question – the fact it’s much easier to compete.
All services in all cities are not prime opportunities where it is easier to compete. All markets aren’t the same. You can’t just open up any random service in any random city and take the easy street to the top of Google’s rankings and have customers rushing in the door. If you enter the wrong market in the wrong city it can be cutthroat and virtually impossible to get momentum.
We have to be wise where we chose to compete. We have to analyze our markets, call our competitors and make sure there is room to carve out our piece of the pie. There are ultra efficient wonderfully ran businesses in every industry out there. But they’re not all in the same city. We have to find a market in our city that is dominated by a mom and pop business ran like its 1985. Thats what makes it easier to compete.
Its easier to compete because its on a local level. We aren’t competing with web developers from Pakistan or remote services that can service anyone from anywhere. There is a geography aspect to service businesses. We can analyze the market and study it and make a decision on what business we’re going to undertake and who we are going to compete with.
Now lets get to the meat of the question here and address the topic of freelancers and the gig economy.
As service providers we can’t ignore this new wave of on-demand companies and gig platforms linking providers to customers in a seamless way. Before we talk about how to prepare for it lets dig a little deeper and pinpoint exactly what these companies do.
There is an important distinction here. Are they really competitors or are they middle men? Are they lead generators or are they actually providing the service itself? They are middle men. Customers are going to rely on them to find providers and providers are going to rely on them to get business.
The risk isn’t that they are going to launch a lawn care business in our market. That they are going to make the hires, build the company, manage the schedules and actually provide an ultra efficient and affordable superior service.
Are they going to disrupt the way people find these companies and interact with these companies? They’re trying to do to home services what Fiverr and Upwork did to web development and logo creation.
Thats their pitch when they go to raise another round of venture capital. We’re going to be the Upwork of physical services. We’re going to be the Uber of home services. We’re going to revolutionize the way customers find and buy these services.
Lets start with the digital gig economy because its the model companies like Taskrabbit are following.
What happened to established web development and SEO firms when Fiverr got big?
Did they shrink up and go away? Did the people who were buying from them all the sudden go away and start buying elsewhere? Did they stop getting new clients because all the new clients went to the gig economy sites instead?
To scale a business you have to charge higher prices. You have to go after high end clientele willing to pay more for speed and reliability.
Are high end clients getting web work, SEO and logo creation done on Fiverr?
Nope. High end clients are looking for service, quality and speed and they’re willing to pay for it.
So nothing happened to the established firms when Fiverr and Upwork got big. Business as usual. They made the choice early on to compete on quality and focus on generating their own sales.
What happened to the freelancers trading their time for money competing on price? The ones that didn’t know how to sell and relied on lead generation services or third parties to bring them business?
Their world turned upside down. Upwork became their employer. Fiverr became their employer. They raced to the bottom and started competing with developers from Pakistan and India. It got hard and their world turned upside down.
These freelancers are not entrepreneurs. They don’t bring in their own business. They don’t employ others and make money on other people’s time. These freelancers are simply workers working normal jobs disguised as entrepreneurs.
This all happened because they had a choice and while the reputable firms decided to get their own clients and compete on quality they made the choice to rely on a third party to get them business and compete on price.
Add all of this to the fact that its a lot easier to farm out web development and logo creation to freelancers overseas than it is to farm out someone showing up to my house with a background check and an insurance policy and getting up on my roof to clean out my gutters or coming into my home to clean my floors.
Certain types of customers are going to rely on them to find providers and certain types of providers are going to rely on them to get business. You don’t need those customers and don’t be one of those providers.
Something to think about that I’ve written on Yelp and Homeadvisor before. Its dangerous to rely on a third party to build and grow your business.
Google rules the world and Google has nothing to gain from rewarding and ranking services like Home Advisor, Yelp, TaskRabbit, Thumbtack and the countless other lead generating middle men out there.
Google is selling advertisements to service providers. Google is the middle man right now who links customers with service providers. Why would they cut themselves out and let these other companies sell leads and ads instead?
Another thing to think about.
Ikea bought TaskRabbit. That should tell us something. What can we learn from that?
Ikea has a problem that is limiting their growth. A lot of people aren’t buying Ikea furniture because its a royal pain in the butt to put it together. I ordered a little side desk drawer and it was a pain to put together. I actually let it sit on the floor of my office and procrastinated for a week and even considered taking it back to Ikea once I looked at the directions.
So they bought TaskRabbit to solve that problem. They want more people to buy Ikea furniture and getting linked with people who can put it together quickly is a big value add.
But I don’t think its going to take over home services. People might find gutter cleaners or loaders or haulers on TaskRabbit but they aren’t going to find pest control specialists. They aren’t going to find lawn care companies.
The uber of lawn mowing is a big concept lately. I’ve read about a few different startups trying to create the next Uber of lawn care. Need your lawn cut? Push a button and someone will come do it.
This business model is going to struggle. Lawn care isn’t one of those things like an Uber where you decide one day you need a cut and want to order a lawn mower at the spur of the moment. It something as predictable as it gets. If it rains a lot I’ll need a cut every 7 days and if it doesn’t rain much I’ll need one every 10 or so. The grass isn’t gonna stop growing or become wildly unpredictable like my Uber ride demands on a drunken weekend night.
The good lawn care providers don’t want to go through a third party. The high paying customers don’t want to push a button to get their lawn cut. They want to hire a company that takes care of their lawn every week for 5 years.
I can guarantee you something. I’m never going to hire an earthwork professional on Taskrabbit. I’m never going to hire an electrician to do $100,000 worth of work on Taskrabbit. The commercial B2B stuff will be the last to be influenced by this new wave.
There will always be middle men. Most of the people who reach out to me by email just want to be a middle man. They want to help small businesses get more leads. They want to help small businesses by providing some software. They just want to take a bite out of the profit without doing any of the work.
Its a risk. Don’t get me wrong. Amazon getting in the home service game is scary. So how can we protect ourselves when the change does come?
It goes back to being dependent on someone else’s platform. Are you generating your own leads or are you paying or depending on someone else to bring you leads?
Develop your own sales channels. Get your own customers. Perfect your own marketing and customer acquisition strategies. Develop personal relationships with your clients. Get face to face with them. Do the stuff that is hard work and hard to scale but is super effective. Differentiate yourself by embracing technology and efficiency. Adopting an attitude and culture within your company of eager professionalism.
Thats the best way to protect yourself as these big players try to step in and take a bite out of our earnings.
Show notes from episode 60 of the podcast.
The previous post about starting a business 100% remotely got me thinking about a common question I get all the time.
What if you want to move to a new city to build a better life? What if you are about to graduate in a city and you don’t see yourself sticking around? People reach out to me all the time saying they want to be an entrepreneur but a move is in their future. Maybe 6 months out. Maybe 2 years out after graduate school ends.
Basically all of these questions boil down to at least taking some steps to set up a business in a place where you are not currently living.
Let’s run a hypothetical situation. Let’s say you are slogging away at a corporate job in NYC making good money and banking some of it every month. You know NYC isn’t a long term play for you and you’d love to someday move to Asheville NC and raise a family. Or Austin TX. Or Charleston SC. You get the point – anywhere with lower costs of living or a better quality of life based on your interests.
There is an answer here and I’ve actually done it. Set up a shell company in your dream city.
What is a shell company? Its a website that appears very professional and operation advertising a particular service even though you aren’t yet set up to actually provide the service yet.
Not just any website though. A spectacular website with amazing content perfectly designed to help your target customers. A website with a perfect SEO structure around the target local keywords. You can take this on yourself with tools like ahrefs.com or you can hire a content marketer for a few thousand dollars to help you really set yourself up to succeed in the long run.
If you want to get serious build a complementary youtube channel with even more amazing content so you can rank on the second largest search engine in the world. Get a local friend or pay a stranger to let you post a Google My Business location at their address and start nurturing and growing that. Find a way to get some reviews from people who might not be local but can vouch for your ability to provide the said service.
Starting any service business requires 6 months of preparation before you get any significant organic online leads. The beautiful thing about this is that you can do it for a relatively small investment sometimes as low as the cost of a web domain.
I did this back in 2012. My partner and I were building Storage Squad and we weren’t sure what the future had in store for us. I thought back to my lawn care days in high school and realized running a business like that could be a fall back plan if I ever needed cash to hold me over.
So I thought about cities and where I would want to live if I needed to start from scratch and build another business. Bloomington Indiana is an awesome college town with a lot going on and a reasonable cost of living. I had a lot of friends nearby and my family is only about an hour away.
I bought thelawnsquad.com web domain and built a pretty crappy website myself with wordpress in about 5 hours. I had a good friend there attending graduate school so I sent a Google My Business listing to his house. I got a few of my long time customers from high school to leave reviews on that Google listing.
Then I just went about my life and worked on my business. I didn’t do any marketing and I never went to Bloomington.
The first year I got a call or two a week from potential customers. They left messages and I never returned them but I used Google Voice to track the incoming leads. The next year I got more calls. 3 or 4 calls a week. Then the next even more. By 2015 I was getting calls daily. Still not answering any.
By 2015 our business was big and I knew lawn care in Bloomington Indiana wasn’t really in my future. But that year my brother ended up enrolling at Indiana University and moving to Bloomington. I asked him if he was interested in mowing lawns but being an 18 year old freshman navigating his first year in the real world he declined.
After his first internship pushing paper around for a summer he decided he’d rather give entrepreneurship a shot.
In February of 2018 he started answering the phone and mowing lawns on the side. Being a junior in college (he did a 3/2 MBA program) he quickly got overwhelmed and by May he turned off the phones and didn’t accept any new clients. That year he booked about 30 weekly customers and made $30k or so in annual revenue.
His senior year he got more serious. We built a nicer website this winter and he set up Jobber. He still didn’t answer most of the calls because he was in class and on the mower but he followed up and ended up booking a lot of them. He graduated in May and now he runs the business full time. He has expanded to pest control and weed control/fertilization. He’s got over 50 customers and is on pace to earn $50k+ in profit this year with a lot more in the future.
Pretty awesome huh?
Do your idea generation research and your market analysis ahead of time. Do all the work you need to do to decide what business you’d want to launch. A lot of this depends on your skillset, experiences and capital you have. The more specialized and niche you can go the better but its okay to cast a wide net initially and see what sticks.
Get to work now. It’s a super low upfront investment. You don’t even have to ever use it but it will be there if you ever want to make it happen. You’re just putting an iron in the fire. You’re just testing the market and seeing if it has legs. You’re just creating a potential future opportunity for yourself.
Show notes from podcast episode 59.
I received a recent question via email
I want to set up and run a service business from outside of the USA. I have some capital and some experience. What service would be best? What should I consider? What steps should I take to build a business from scratch 100% remotely?
Is geography really a limiting factor here when we talk about these local service businesses? Is it absolutely required for the founder to be on site?
On one hand yes. We talk a lot here about the main advantage to starting a local service business being the fact that you can control your risk. If you can properly execute there is a very high probability of success. Competing and operating in a low risk way requires a presence. You have to build something yourself. You have to learn the ins and outs of the service and the city and the population and their needs. In the early days you have to do a lot of the work yourself to keep overhead low.
On the other hand no. If you have experience, capital and you do things right it can absolutely be done. My partner and I have branches of our business that have been profitable for years that we haven’t actually visited in years. I have never been to many of the cities we operate in. My partner went a hand full of times in the early days and that was all it took to set it up so we could manage it remotely from then on.
Today we manage the company remotely 75% of the time. Dan goes to Boston to meet with our main manager every other month and hits the road during busy season.
Let’s discuss the possibilities and start with the most extreme example of starting and building a business 100% remotely.
The entire country is your oyster. You can launch anywhere. So instead of doing a market study where you begin with a city and try to find a business that works there lets start by choosing a business and then choose a city where it would thrive.
What type of business should you consider targeting?
Let’s start a business with recurring revenue, scheduled services and repeat customers. Those are all really good. The businesses are more valuable if you ever wanted to sell, your income is more predictable and you can schedule out your work in advance. All making your logistics and growth a little easier.
Since you aren’t going to be there we also want to reduce the “emergency factor”. The emergency factor means damaged things, equipment malfunctions, employee error, anything that creates a fire that the owner typically has to put out in person. Think about a lawn care company with a lot of moving parts and a high probability of damaged items, missed spots, equipment malfunctions, getting stuck in a yard after a rainstorm, you get the point. You mess something up its very noticeable.
Needing the customer to be present to interact with your crew also adds another variable that can easily be messed up. You have to be on schedule and on time all the time in that case. So let’s find a business that doesn’t require the customer to be present.
You need something relatively low skilled. Remodeling basements or niche carpentry won’t work here.
Let’s go with something with just enough barriers to enter to keep the fly by nights out and the craigslisters away from the space. Some minor certifications would be great. Just enough of a barrier to give you some insulation from low cost providers entering the market like crazy.
So what is an example of a service that fits this bill?
Pest control is one that comes to mind.
Customers sign up for monthly services so your revenue is predictable and your customers can stay with you for a long time. There is a low emergency factor because your employees are less likely to chop off a sprinkler head or spill paint on someone’s carpet. You won’t be getting “missed a spot” calls. There isn’t a huge risk for equipment breakdowns. You can do the perimeter treatments for the customers when they are not home on your schedule. There is some certification to complete so you won’t have craigslisters willing to do your work for half the price.
90% of the time you show up to the house, spray the same chemical in the same spots in about 20 minutes and leave. Done. No hassle. No razzle dazzle.
I watch all of my neighbors pay for this stuff. A guy shows up in a small truck or a car. He gets out in his blue polo and puts on a breathing mask. Sprays the house for 10 minutes around the soffit and foundation. Gets back in his car and leaves. Then they hit the credit card for $50.
This is something that can be managed from afar.
Obviously it has its challenges that you shouldn’t overlook. You need to be able to treat indoor on 24 hours notice if there is a pest issue. You need to learn how to do it in a safe way around families and pets. You’ll need different chemicals in your arsenal for different situations and different pests. You’ll need to take an online course and pay fees to get registered. You’ll need a nice insurance policy.
Ok so you’ve decided you are going to launch a business like pest control. Now you need to find a city where the competition is backed up with customer demand and has a weak online presence that you believe you can outrank.
Here is a link to the full on market analysis but I’ll touch on the basics.
You need to CALL THE COMPETITORS AND PLAY A CUSTOMER. Ask 50 questions. How busy are you? How does your service work? How many crews do you have? How long have you been in business? How long would it take you to come out and treat my home? How much would you charge me? This is the best market research you can do and you’ll learn quickly wether this company is starving more more business or has it running out their ears.
Find out how hard it would be to outrank the competitor on Google. You can do this yourself by watching a few online tutorials and getting an ahrefs.com subscription. I recommend this when you are early on. When you have it narrowed down you should consider hiring an SEO specialist to analyze this for you.
Don’t fall into analysis paralysis. Remember that you don’t need every customer. A single strong competitor is okay. You’ll never find the perfect opportunity. You just want to analyze it and be sure that you can carve out a piece fo the pie.
Ok so you’ve found a city that is ripe for your new business and you believe you can get some customers. What now?
You don’t need to register your LLC, get certified, get insurance and hire someone on the ground right away. You have a lot of work to do from the comfort of your own computer screen.
Start working and doing these things at least 6 months or more before launch. The earlier you can start the better.
Build your website. Write a bunch of great content targeting the local keywords. Record videos for youtube. Your website and your content needs to be 10x as helpful as your competitors websites. Design it as a resource meant to help people learn first and sell second. Consider working with a content marketer or SEO specialist to really set up your site structure the right way so you can rank well as early as possible. Work on building backlinks. Work on creating new content consistently.
What content do I create for a pest control company?
Answer any question anyone who is interested in your service might ask. Then answer any question a DIY pest control person might ask. Be very open book about how it all works. Aim to help them learn. While it is a risk they’ll take what they learn from you and do it themselves its much more likely they’ll start to trust you and be more likely to hire you. The DIYers likely aren’t your potential customers anyway. Add value first!
Creating this content will not only help your customers it will also really help you. You will do a ton of research and you’ll become an expert on pest control. Which is good because you are running a pest control company after all.
Get a Google My Business location in the heart of the town you are targeting.
You’ll need to get creative here. Convince a friend to let you send a postcard to their home. Send a postcard to the home of your first hire. Pay someone to let you park your Google Location on your home. Constantly add photos and post on this platform.
Run through the rest of the items on this list to get your entire business appearing totally 100% operational and professional from the outside.
Don’t incorporate yet. Don’t offer your service yet. Don’t get insurance yet. Just develop your web presence and build it and work on it. Set up your google voice number and answer the phone when customers call and track the calls but let them know you aren’t launching yet.
You aren’t very deep money wise. You’ve got some time sunk in but you haven’t started to take on significant overhead yet. Its low risk so far. The longer you can let this grow and nurture it the better.
The pre-launch planning phase.
The leads are starting to arrive and you are on the first page of Google. Your Google My Business location is ranking for customers in certain areas and you are generating some traffic to your website. The phone is ringing. When do you make a hire, hit the ground and start spending some money?
It depends on your bankroll and your risk tolerance. You can start right away if you are confident in the market and willing to take the risk.
What do you put in place first?
You need to get registered with the local government. Get insurance. Get everything in place to run payroll. Get your certifications to legally offer your service.
Here comes the risky part.
You need to make a part time hire or a full time hire on the ground. Part time can be a great option to save money but they are often unreliable because they desire something consistent and will leave if you can’t provide that.
I recommend spending at least a little bit of time on the ground. The more the better.
Leading up to this time on the ground you should create your job descriptions and really think through the tasks that you will need your on the ground person to take care of for you. Once you have the descriptions you should make your job postings, advertise them if necessary, recruit some applicants, do your first round interviews on the phone or Skype. When you show up on site you need to be fully prepared to do your final round interviews, make your hire and get started working together.
If you do go the pest control route make sure you research your local regulations about employees using your license. They may need to become certified themselves. In this case you can either invest the money to certify them or you can recruit and pay a certified tech with experience.
Once on the ground spend some time with your employee. Go out and service some customers if you are able to do so. Spend time with your hire and make sure you are confident in the organization and setup before you head back out of town. Get organized with your supplies and equipment.
Management and operations…
From your remote location I recommend doing all of your own customer service at first. All of your own billing. Scheduling. Don’t take any cash so you can manager your money all online and control all of that.
From here on its about management and operations. Everything else on the block and podcast can be applicable here just as if you were running a business in person.
Make sure you organize a guerrilla marketing campaign with your first hire.
Being incredibly lean in the early days will be an advantage. Buy equipment used. Save money wherever possible.
Standardize your processes. This chemical for that situation. This flow of actions should be taken place upon each service. Everything action should have a standardized reaction. Build out a training video library. Take out the guesswork and simplify the job of your employees.
Embrace technology because it allows you to really control everything. A great CRM like GetJobber would be a good option. Take as much off your employee’s plate as possible. The more you can do from your remote location the better. Make sure they have a time tracking app on their phone that also tracks their location so you can analyze their efficiency, manage time theft, and also get data on how long each service is taking and how you can charge for that.
Grow from there at whatever pace you feel comfortable with!
A few additional options to explore:
A local partner. Find someone on the ground who wants to found the business for you. Handle the web build, customer service, billing, quoting, sales etc and have them carry out the service and manage the equipment. This is less risky from a financial perspective but also less rewarding. Partnerships can also turn south quickly when fairness and contributions are in question and there is big money involved. If you go this route make sure you lay out how everything will work and have all the hard conversations off the bat. If this happens then what? If that happens then what? If you go get a job then what? If we don’t make any money then what? If I need to come to town then what?
Subcontracting out the work is an option. You could explore hiring a company already operational and certified in the town to do your jobs and take a cut. This should be temporary if you decide to go this route at all.
Don’t forget this is risky business but it can be managed and I’m 100% certain it can be done with the right plan and the right execution.
Marketing our business in the early days came with a significant set of challenges.
We didn’t have any money and what little we did have we spent on a beat up cargo van (yeah really bad but thats me and I was proud) on craigslist for $1500 so we could haul the stuff to and from the farmer’s pole barn we rented in exchange for farm labor a few weeks later.
So how did we reach our customers?
We had a major advantage in that we knew exactly where our customers were. We knew where they lived. We knew where they hung out. We knew where they walked to class.
We thought about standing there and handing out flyers as they walked to class but that would be too time consuming and we couldn’t possibly reach enough people.
Instead of drawing a big elaborate drawing in one high traffic area we took the simple volume approach. About 75 text ads all around campus could be put down in about 2 hours.
So my partner and I did this ourselves. I literally wore out two pairs of jeans the first season doing this because each time I knelt down to write one my knee would rub the concrete. April and May is the rainy season so each time it would rain we would go out and do it again.
When we launched in Boston in 2013 we bought this beautiful truck on the south side of Chicago for $2200. Two days later I filled it with supplies and drove it to Boston and lived there on my girlfriend’s (now wife) couch for two months. I covered that entire city with chalk ads. Tufts. Harvard (they kicked me off in 2 seconds). Northeastern. Emerson. MIT. BU. Brandeis. I was everywhere with boxes of chalk on boxes of chalk. 4 weeks straight of chalking 8 hours a day.
The next year we went to a few more locations and chalked the heck out of them too. Then a few more.
People laugh when I include chalk in my little startup inspiration stories. But honestly I credit that tactic to really allowing us to grow and build up a fairly large customer base quickly.
I hope this inspires you to get out and do some guerrilla marketing that your competitors aren’t doing. It works.
Show notes from Episode 55.
You have three choices in life. You can make things happen, watch things happen or you can wonder what happened.
Most people either watch or wonder what happened.
They react. Life happens and they try their best to survive. They get done with work for the day, go home, flip on the TV and then go to bed. They wake up and do it again. Until one day something changes and maybe they lose their job. Then they react and find another job and do it all over again.
This is called playing defense. Someone else has the ball. Maybe its just random chance. Maybe it’s your boss. But something outside of your control calls the plays. You simply react as the plays happen and do your best to limit the losses.
If we aren’t a small business owner we know this all too well. We live in this city because this is where we got a job offer or this is where we grew up. We work a lot because someone gives us a lot of work to do and we have to do it to feed our family. We aren’t able to make new friends or try new hobbies because all of our time is spoken for.
If we are a small business owner we can fall into this trap and be totally out of control as well. We wait for the next fire and as soon as it happens it takes our attention and dictates our life. We run around solving problems. We take care of the urgent stuff but more and more stuff becomes urgent. More stuff than we could ever take care of. We’re on defense. Our business is on offense and totally controls us and dictates our every move.
They say the definition of insanity is doing the same things over and over again and expecting different results.
People on defense complain about the same things over and over again without ever taking control and making changes.
I get it. A lot of things in life are uncontrollable. You can’t control other people’s actions. You can’t control the weather. If you are in a situation where you have a lot of external factors that you can’t control ruling your life its a bad situation to be in. I call these risk factors. Your spouse leaving you is a risk. Your friend letting you down is a risk. Your health is a risk. Getting fired is a risk.
Here’s the secret:
A lot of these risk factors can be influenced by your actions. People on defense don’t understand this.
You can reduce the chances of illness by treating your body the right way. You can reduce the risk of a friend letting you down by putting yourself around better people with better values. You can even control the weather. WHAT?? That doesn’t make any sense. I totally stopped the snow from falling by moving from Boston to Athens Georgia!
You can change the people you interact with. You can change the city you live in. You can change the job you go to every day.
Instead of continuing to wake up every day doing the same thing over and over again and wondering why nothing is getting better for you start to look at the things you can change.
5% of people are making things happen. They are on offense.
They live where they want to live. They do the things that they want to be doing. They go get a new job if they don’t like their current job. They go get new friends if they keep getting let down by their old friends. They control their income stream and make decisions that directly affect it. They get their situation under control by limiting the risk factors.
Some business owners play offense as well. They call the shots. They decide how they spend their time. They work on what they want to be working on. They stop fires before they start.
So let’s all agree it’s better to make things happen than to react to things that happen. It’s better to control as much of our life as we can. It’s better to play offense.
So how do we switch sides and play offense?
You start spending your time on things that are important but not urgent. People on defense deal with things as they come and don’t do anything to stop negative things from coming. They don’t work on their health. They don’t learn and build their experiences to make themselves more valuable in the workforce. They don’t go to networking events. They don’t make an effort to make new friends.
None of this stuff is fun in the moment. It’s work. Not only is it work but its work that doesn’t HAVE to be done right now. It can be put off easily until tomorrow or next week or next year.
Its work that won’t pay you back right now either. It will pay you back 6 months from now. Maybe a year from now. Maybe even 5 years from now. People on offense understand this and they know it’s worth it.
If you aren’t where you want to be in life and you still have some goals that you want to achieve its time to free up some time and lean out your life.
Remember that it takes courage. It’s scary to make changes and to take chances in the hope that things get better. It’s scary to leave even the most unhealthy relationships. It’s scary to move across the country. It’s scary to start that business. It’s scary to go ask someone for a job or an opportunity. Overcoming the insecurity and fear of failure isn’t easy and it takes guts. Anything in life worth doing takes guts.
Start by setting your goals.
What 20% of your activities bring you 80% of your enjoyment?
How much of your time do you spend doing those things? Maybe its spending time with your child?? Maybe its fishing or cycling? Maybe its traveling? Maybe it’s building something and learning something and you want to do it every day at work?
Then make a plan. Start doing the stuff that is uncomfortable. Start delaying your gratification. Start working hard in your free time to make it happen. Lean out your life. Spend less money so you have more freedom. Guard your time and put it to use.
Get out there and make it happen!
This is a real risk of doing business and there is no magic strategy to totally avoid the repercussions if the economy tightens and a recession hits. The only thing we can do is prepare for it and make sure that if it happens we won’t lose everything we’ve worked so hard to build.
What type of business are you in and how will a recession effect the number of customers out there? Is your business a “nice to have” or a “have to have”?
Grass isn’t going to stop growing. Pipes aren’t going to stop getting clogged. Heaters aren’t going to stop needing maintenance. Things are never going to stop getting dirty. Students will still keep going to college out of state.
When a recession happens two things happen, people cut out the “nice to haves” and real estate and construction related activities slow way down.
If you are a realtor you are at risk because less homes get bought and sold. If you are a construction contractor you are at risk because less construction projects get approved and get started. If you remodel basements you are at risk because people aren’t going to put $50k into their basements when times get tough. If you are a moving company you are at risks because less people move. If you are digital marketer you are at risk because less people are going to spend money on marketing when they are struggling to make payroll. You get the point.
Are these businesses bad because they are more of a risk? Absolutely not! Should you avoid these businesses because they are cyclical? Absolutely not. You should chase opportunities that present themselves. You just need to be smart and be aware that the good times don’t always roll. The people who think they do end up losing it all. We’ll talk about how to be careful in a minute.
Should you grow as fast as possible now so you can absorb the loss later?
I read an article that made the argument that a larger company can absorb a pullback easier than a smaller company. Lets frame a hypothetical situation:
Lawn care companies A and B.
Company A has 50 customers and he’s the owner operator. His costs are low because he doesn’t have any employees and no office.
Company B has 500 customers. 4 crews. An office. The whole 9 yards.
Recession hits and each loses 25% of their customers. For company A thats 12 customers. For B thats 120 customers.
Who will survive?
The article argues that the larger company has more expenses to cut, can lay off some employees, and absorb the loss and is thus more likely to survive. Company B however has nobody to let go and no way to cut expenses and is more likely to die.
I disagree with this logic. I don’t think it has anything to do with size. Yes its hard on the small guy because he can’t cut expenses. But it’s also hard on the big guys because as you grow the amount of variable costs decreases. The only thing you can cut is the labor. The rest is not variable at all. The truck payment. The mower payment. The insurance. The trailer payment. The warehouse space. The office lease. The debt service on the line of credit you used to finance the growth.
It’s not as simple as losing a big chunk of your business and just cutting down on some labor to ride it out. They might not be able to pay the rent in the office. They can’t pay the office admin staff. They can’t make the truck payments. The overhead might cripple them.
If the sole proprietor is living above his means and has an expensive house and a shinny thing habit he’ll fail just as easily.
It’s not about size at all. Everyone is at risk. It’s about healthy growth. We’ll talk more about that in a minute.
Should you diversify?
Many people say the best way to prepare is to diversify. Offer a few services to a wide range of people so if something changes you won’t be hit hard.
That goes against a lot of what I know about business. You build a great business by getting really good at targeting a single type of customer and designing a service for that specific type of customer.
If you are in a high risk niche like construction or another “nice to have” businesses that slows down when the economy pulls back you just have to prepare and be careful. Don’t branch out for the sake of branching out or you won’t be good at anything. You can lose focus and open yourself up to an entirely different range of risks.
If you are at risk you just have to recognize that and be ready. Instead of diversifying you need to prepare. Lets get into that.
Everyone will lose some customers from time to time.
How do we help offset the risk?
Don’t compete on price in the first place. Target customers who are willing to pay extra for a higher quality service. Don’t scrape the bottom of the barrel and compete with the Craigslisters and fly by nights. The people who hire those types of services won’t have the money to keep paying for the services when the going gets tough.
The high end clients who are paying for your service won’t be buying a lawn mower or doing things themselves when the going gets tough. They’ll keep on as usual and you’ll keep the clients. Higher end clients are more likely to stick with you even if the economy gets rocky.
Think about who your clients are. Are they likely to start doing the cleaning themselves and no longer pay for it to get done?
If you go after the right clientele the answer is no. They’ll still pay the cleaner. If you go after the price shoppers and the bottom feeders then yes. They’ll stop paying the cleaner and start doing it themselves.
The customers who are paying extra for the great service will stick around and you’ll be able to weather the storm a lot easier.
Another way we can make sure the damage is controlled and we keep more customers is by really bringing the value. If you treat your customers right and they are loyal fans of what you do they’ll be a lot less likely to jump ship when the competitors start lowering prices and competing hard to take your business. Develop a personal relationship with them. Make sure your crew leaders are friendly and exude eager professionalism.
Remember that business is emotional and you aren’t just selling a manicured lawn. You are selling a feeling. You are selling an experience. If you work with my company this is the feeling we will give you when you pull up to your house. We’ll cater to your needs. We are trustworthy. You can feel at ease. You are safe with us.
There is a saying people never buy a drill bit because they need a drill bit. They buy a drill bit because they need hole in the wall. Figure out what that deeper need is and push those buttons.
If they like you and your people as people they are less likely to leave you. They need to enjoy doing business with you on an emotional level.
Keep your expenses as variable as possible.
If things slow down you want to be able to cut your costs drastically on your command. That means keeping costs variable and reducing overhead. You can’t change your mind and stop paying on a 5 year office lease. You can’t change your mind and turn in your leased vehicle. You can’t change your mind and recoup your costs on the brand new equipment you financed.
There are two people you can’t get out of paying every single month: the bank and your landlord. In the early days don’t deal with either if you can help it.
When you hire employees be upfront that if things get slow hours will be cut back.
Avoid recurring costs that aren’t flexible. Don’t make long term commitments or sign long contracts. When Richard Branson started Virgin he bought his airplanes from Boeing with a clause that said he could return them if his business struck hard times.
Ask the million dollar question for each significant investment.
Is there a way for me to spend less money on this purchase and still get the same return?
Will a $5k cargo van accomplish the same thing as $25k cargo van?
Will a used pressure washer for $2500 accomplish the job the same way as a $5000 new one? Great, now you have $2500 to put towards marketing.
Will a new lawn mower for $12,000 make me $6,000 more dollars than the $6,000 used mower? It sure won’t. It will only increase my overhead and I’ll have to eat more depreciation if I’m forced to sell.
The math almost always points to buying equipment used.
Don’t buy into the image fallacy
You don’t need a nice car to get clients. You don’t need a $2k suit to get respect. You don’t need a shiny new mercedes sprinter van to gain trust from customers. You don’t need an office with high ceilings and a kegerator next to the ping pong table. You don’t need to entertain and spend money on fancy restaurants for your employees to be committed.
Customers are after value. They are after speed. They are after professionalism and fairness. They don’t care what your monthly payment is on the truck that shows up.
Employees are after a voice and respect. They want to make a difference. They want you to care about them and how they feel at the end of the day. They want you to listen to their opinions. They want you to set them up for success. They don’t care how swanky the office is or about the meals and entertainment you splurge on.
Outsource your weaknesses
If it isn’t in your wheelhouse then don’t take on overhead to get it done.
Get really really good at what you do best as a business and focus your energy there. Outsource the marketing (sometimes). Outsource the billing. Outsource the payroll services. Outsource the admin work. Outsource the compliance. Outsource as many non essential business tasks as possible!
Don’t hire a full time employee to do something a freelancer can do on a month-to-month contract.
Month to month contracts are flexible. You can terminate them and take it on yourself if things get slow. If you hire an employee on the other hand that is payroll that you will need to cover on a monthly basis no matter how things are going.
Market like a guerrilla
Get creative and get in front of your customers physically. Flyers, yard signs, sidewalk chalk and even door to door marketing can work great. Network with individuals who often recommend your services (realtors for home services for example).
Lean out your life
Yes I know I know life is meant to be enjoyed. I’m not asking you to live with a painstakingly frugal mentality forever. I love a nice restaurant just as much as the next person.
There is no ROI on lifestyle expenses. There is no future profit on the nice car. There is no future profit on the expensive house (besides a little bit of appreciation to offset massive amounts of debt service). There is no return you get on the expensive dinner. Its all overhead. Its all money that is gone that you will never see again.
So if you are working on growing your business don’t fall victim to lifestyle creep. As your income rises keep your expenses steady so you have more funds to invest when opportunities present themselves. Don’t finance the new Audi after a few profitable months. Don’t buy the house with the extra bedroom you don’t need.
When things get hard during a recession it will put a ton of pressure on your business when the money is flying out the window in your personal life.
That is how you recession proof your business and your life.
If you do it you’ll be the one with money when the recession happens. You’ll be able to make investments. You’ll get real estate cheap. You’ll get great talent cheap. Marketing won’t be as competitive. You’ll be ready to double down and grow like crazy on the way out of the recession.
Get after it.
Show notes from episode 53 of the podcast.
“Don’t fall in love with the medium – fall in love with the mission.” – Seth Godin on a recent episode of Akimbo (recommended listening).
Our mission as business owners is to reach customers and exploit profitable marketing channels. The mediums and the ways to do that are always changing.
Its about being supple and embracing change. As a small business owner we have the ability to shift gears and change a lot quicker than our bigger counterparts so we need to use that to our advantage.
People often ask me how I can get away with totally ignoring social media in today’s business environment. The answer is simple. It doesn’t make me money and I don’t rely on it to make money. Its hyper competitive and the ROI for me isn’t there.
Social media is an opportunity and not everyone should ignore it – don’t get me wrong. But here is an argument…
As a business owner you only have the mental and physical capacity to focus on so many things. You can only do 1 thing at a time. There are only 5 hours a day to build your side hustle while working full time. You have to pick and chose the opportunities you go after because you can’t go after them all.
Followers are getting harder and harder to reach and you have zero control. Starbucks spent millions of dollars building a massive facebook following and now they have to pay for advertising to reach them. Starbucks has no control over this following. Facebook can change anything anytime and they have zero say in the matter. And guess what? These platforms like to SELL ads.
Likes and follows don’t equal sales. You should be measuring your success in sales and value. Many times the ROI on acquiring followers and getting likes does not pay off in the long run.
It’s getting more and more competitive to advertise on social media platforms. Ad spend is blowing up. Global social media advertising spending increased 32% in 2018.
Total ad spend on social platforms is increasing fast:
Does this sound like there are a lot of untapped opportunity for advertising? Not to me it doesn’t.
So what should you consider doing for advertising? Get creative. Find out who can refer you business and go see them. Traditional sales strategies can be implemented and you’ll have a huge advantage if you get face to face with a potential customer.
We grew our business mainly by affordable guerrilla marketing like door hanging flyers, sidewalk chalk, lawn signs and shaking hands. It is tough but it works and nobody is focusing on it anymore!
Content marketing and local search optimization is also a big factor. Google rewards companies that produce great content and have good interaction statistics. Lucky for us most service based businesses are dominated by mom and pop companies that don’t know anything about keywords or content. Learn it and implement it and you’ll dominate.
Your Google My Business page should be your #1 focus. You need quality reviews with photos, interactions and posts. This should be your version of social media!
YouTube video content on your niche should be a focus as well. Its the 2nd largest search engine in the world and is part of the Google family so when linked with your website and Google My Business location its a winning combination!
A note if you do decide that social media is worth pursuing:
Understand the difference between vanity metrics and conversion metrics.
Likes and follows are vanity metrics and don’t mean much.
Conversion metrics tell the story. You use them to calculate your ROI and to analyze how much money in sales and profit the ads or posts are generating for you.
Overall social media doesn’t make my 20% of activities that generate 80% of my results so I ignore it. That is not to say it won’t work for you! Everyone is in a different situation obviously so you should get more advice and give it a test run to see for yourself what works and what doesn’t!
Show notes from Podcast Episode 52.
I’m sure you’ve heard of the “blue ocean strategy”. It was coined by W. Chan Kim in his book of the same name and expanded in the more recent book “blue ocean shift”.
The concept makes a lot of sense on the surface. A red ocean is an overcrowded market with cutthroat competition.
The books main premise is that there is a third area to compete beyond price and value – finding a new untapped market through innovation.
The blue ocean is a market without competition. Instead of competing head to head with other companies you find a new untapped market and take it all for yourself. You innovate and add value in a totally new way to create a league of your own. You create a new market through creative disruption. Overcome old technology to gain a huge competitive advantage.
Like so many of the big business books of today there is a big selection bias in this book.
Cirque du Soleil is the main case study. They got away from the ultra competitive red ocean circus industry and invented an entirely new type of entertainment. It moved from a red ocean to a blue ocean. It had no competition and the market all to itself.
It also uses Pfizer’s Viagra. A totally new market right? They also spent and gambled billions. Who the heck has that kind of power?
It also uses Apple. Yet another Apple case study! The iPod was genius. The iPhone was genius. Pure innovation and they had a market cornered. How the hell am I supposed to do this as a inexperienced entrepreneur without world class talents?
What about the millions of other new inventions that didn’t prove to fill a real need?
What is the better approach? Inventing a new type of circus or a staying away from the circus business all together if its oversaturated and a race to the bottom?
This strategy might work great for fortune 500 companies with massive capital and influence. They can afford to bring new products to market. They can afford to spend millions a year in R&D. They can take risks funded by the core business operations.
Blue oceans are incredibly expensive to develop. The customers don’t know you exist. You have to educate a market. The marketing spend can be massive. All in the “hopes” that there is actually a need.
There aren’t enough of them to go around. If you spend your time and energy trying to find a blue ocean you’ll likely end up spending years sitting on your hands or failing over and over again.
Books like this propagate this “idea fallacy” that is the foundation of modern entrepreneurship culture. What is your business idea? Whats your differentiator? Have you found your blue ocean?
I personally believe this is the wrong way to look at entrepreneurship if you want to have a shot to actually get something going and start the ball rolling.
Entrepreneurship is about momentum. Its about starting really small and getting your feet wet. Something simple. Something local. Something other companies are already doing and customers are already on the market.
The successful entrepreneurs aren’t great at spotting ideas – they are great at spotting opportunities and they have the decision making skills to figure out which ones to chase.
The same people looking for ideas are the ones that are trying to figure out how to find their blue ocean. They believe competition is bad. They are looking for a market or a niche or a product they can enter and have all to themselves. Thats the essence of an idea and thats not how most successful entrepreneurs operate.
This type of mindset is what leads people to never taking a leap. Always sitting on their hands waiting for the next big blue ocean idea. Failing over and over again because the odds are against them and never actually becoming an entrepreneur.
I like thinking about every market as a pie. Can I get a piece of the pie and how big would that piece be?
I laugh when people ask me what my original business idea was. It wasn’t an idea. It was a current market with businesses and customers all already out there doing their thing. I looked at it and studied it and thought hey this is an opportunity. I could carve out some of this pie because I can do it a little bit better than the businesses out here doing it. I could probably replace a salary with it and maybe more.
There is a framework for building a decent business. How to market. How to manage. How to organize it all. If you can do these things well you can win in almost any market. Targeting a market thats growing and has weak competition is just icing on the cake.
You’ll never agree with 100% of what you read in any book. You have to look at them with an open mind and take bits and pieces and apply them the right way. This book has some gems.
What did I take from the book?
Find the balance between a red ocean and a blue ocean.
Avoid the ultra competitive markets that aren’t growing. Avoid competing on a global scale. Avoid selling or depending on someone esle’s platform (Amazon).
Differentiate yourself so you do not need to compete on price. If you try to do the exact same thing in the exact same way as all of your competitors you are in a red ocean. You are competing on price and there will always be somebody willing to work a crap load of hours and be super stressed out all the time for $50k a year.
Any market can be a red ocean if you choose to let it be.
Find a pink ocean.
A market that exists. A problem that is already being solved by a handful of companies. A market that is growing every day. A market with weak competition. A market that you can study. A local market that doesn’t compete on a global scale. A market where you can carve out a piece of the pie and build a great business.
Blue Ocean also uses Group Seb’s ActiFry as a big case study of brilliant innovation. A fryer that only uses a tablespoon of oil to make french fries. Instead of risking millions trying to do what nobody has ever done why not just start selling french friers when fries are getting popular and the market is exploding?
Forget blue ocean. Spot opportunities where you can carve out your piece of the pie. Start small. Get momentum and enjoy the larger and larger opportunities that come your way.
SHOW NOTES FROM PODCAST EPISODE 51
You will get a lot of questions from your employees in the early days. You have two choices each time this happens:
Answering the question and moving on is the easy way at first but it makes this employee dependent on you. Instead of thinking for themselves they simply call you. They rely on you more and more. Each time they have a problem they call you and turn it into YOUR PROBLEM.
This turns you into the bottleneck. All important decisions come through you. All fires go straight to you. Nobody in the company is capable of solving problems without your input. If you go on vacation everything stops. If you don’t answer the phone everything stops. If you are busy a line of problems backs up behind you. Customer service suffers. Employees suffer. Everyone gets frustrated.
Don’t let every problem in your company become your problem.
Invest the time it takes to turn your employees into extensions of you that know how to use your logic and the company’s goals to frame decisions and solve problems. This is the important but not urgent stuff that helps you build a strong company. It takes some extra time now but it’s an example of how 2 hours of work now can prevent 1 hour of work a week for the next year.
A side benefit is you’ll learn how employees think and a lot about their competence level. Each one of these interactions is like an interview case study. You’ll learn who you can trust to solve problems and who you can’t. Get rid of the employee you can’t or move them to a position with less decisions to make. You’ll learn who you can promote to oversee other employees. You’ll learn who has the soft skills we talked about: communication, positive & logical thinking and emotional maturity.
Another side benefit is that you will learn from your employees and this environment encourages creative problem solving. Your employees will have a voice. They will be a part of finding the solution. Go into the process with an open mind and you’ll be surprised at what you are able to learn.
Your customer service rep calls you. He has a customer on the line. The customer has a question that he has never heard before and isn’t sure of the correct answer.
Let’s say a customer wants to set up an appointment at an off-time and we don’t have any employees scheduled to do the service during that time.
What do I do? He asks.
It would be easy as a boss to do option #1. Call the customer. Ask them about their order. Find out how large and profitable the work would be. Make the decision if its worth servicing the customer. Then call main employee at that location yourself and see if he can do the job. Schedule him to work. Make a special appointment for the customer. Organize the logistics. Thats faster and easier in the moment. You can just do the work yourself and it gets done right and its faster.
Why is this a problem?
It turns you as the owner or manager into the bottle neck. Next time the rep has a question he’ll call you again. And the next time. And the next one. All of his problems will continue to become your problems.
Here is the better solution:
Ask the employee what the goals of the company are? To get customers and achieve profit without distracting from the main operation.
What information do you need to find out if this aligns with our goals? I need to ask the customer about their order and find out how much revenue it would generate.
How would you make the decision? I’d assumer our labor costs us $20 per hour and the truck rental will cost $100. I’d think about how long the job would take. I’d do some math and find out if there is money to be made.
If there is money to be made how would you make it happen? I’d call the employee at the location and see if they are available to work that day. If they are I’d schedule them and set up the appointment with the customer and organize everything.
There. Boom. Now the employee knows how to approach the problem and think about solving it.
Now you as a business owner need to set up a system. If someone has a special request the first thing we do is find out more about the service and find out if it will be profitable and worth our effort. This is how we calculate it. This is our baseline for it to be worth our time. If it’s worth our time we should set up a special appointment, rent the truck, schedule the workers and make it happen. Here is the contact list so you can contact each employee at each location. Here is how we schedule the customers.
Next time they do all this without your input. No stress for you. It happens automatically.
This is an over-simplified version. There will be more coaching. Some employees aren’t capable of reasoning like this. Others do it very well. Some can’t give you answers that you like. Require those employees to hand off this problem to a manager under you that you trust to make these decisions.
There is a balance here. Not every problem requires a process. Some problems are unique and some are repetitive. Being totally hands off is not the answer and its not what I’m suggesting. There is a balance between being helpful and enabling your employees to continue passing every problem directly to you. Empower your employees to take action and give them the tools to do so while also making time to help with the problems.
Warning – this can backfire if you don’t give your employees the tools to solve or prevent the problems. If you expect them to read your mind it can create a horrible working environment and can crush employee morale. It can also lead to major problems when employees start guessing what to do.
Don’t get upset when they call. Don’t make them feel guilty for calling. Don’t condescendingly go through this process with a bad attitude. Be open minded and encourage them to call and get answers if they are unsure. That is how you make them feel valued and supported while also giving them the power to make future decisions. Be happy. Smile. Be eager to help.
Not all questions are around process and frameworks. Sometimes the problems could have been prevented. Sometimes the problems are unnecessary stress. Sometimes the problems are not really questions and don’t have a straightforward solution.
When this happens don’t blame the employee, blame yourself. It’s easy to begin to think your employees are incompetent or that they don’t care. While this is sometimes the case and you should adjust your staffing or let those employees go – if it happens over and over again it points to a flaw in your system. If questions come in all the time it means you need to adjust the training or the structure to give your employees more tools. Don’t hate the players when you are in control of the game.
If you keep using this framework to treat these types of problems you will create a horrible work environment and your entire business will suffer. It’s your job to spot these problems in the structure and fix them so next time that problem is prevented. Don’t turn your problems into your employee’s problems. Too many owners blame employees for failing when they never gave them the tools to succeed in the first place.
The great thing about going into every interaction and approaching it as an opportunity to get into the mind of your employees is that you start to learn a lot about them. You learn about the emotional maturity because you have witnessed them deal with stressful situations. You learn about the communication skills because you have communicated with them and they have communicated with your customers. You learn about their logical decision making because you have been on the other end of the phone listening as they think through a decision.
These are all of the most important skills and they are also the hardest to pick out during an interview.
You’re able to create a company culture. You are able to spread the framework and values throughout your company.
You find the problem solvers. You find the management potential. You find the people who understand the business and think like you do.
So what do you do when your business grows need another manager?
You promote from within. When you need a new manager you don’t go try to hire someone off the street. Thats risky because you are unsure of the emotional maturity, the decision making and the positive attitude. You hire someone who you have worked with and who you understand. You hire someone who thinks like you do and understand the values of the company.
The highest paid management at my company all started as $15/hr laborers. They stood out from the rest. They grew with us and they will continue to be promoted as long as they continue to add value. It’s a win win for everyone.
SHOW NOTES FROM PODCAST EPISODE 50.
These are the skills that are immensely valuable and very hard to teach. They’re the intangibles.
Communication – do they speak clearly and look you in the eye when they talk? Do they get their point across in an efficient, succinct and logical way? Miscommunications cost big money so this is critical.
Positive attitude – enthusiasm and an eagerness to be alive is impossible to teach but its contagious. You want people like this around your customers and your other employees. It makes everyone more productive. Having a grumpy front line is devastating for team morale and also the customer experience. Don’t put up with it.
Logical thinking – some people make bonehead decisions. Give them a pass the first time but you’ll notice really quickly when someone just can’t hack it on this front. Run some mock situations in the interview and see how they would solve problems. Make them think on their feet a bit and see what happens.
Emotional maturity – being able to keep a level head and make good decisions under pressure is always a huge bonus. Things get stressful on the job and you can’t have employees getting emotional and letting anger or stress influence their actions.
Quick learning – things are changing faster than ever. Tech is revolutionizing a lot of ways business is done. Your business is supple and ready to chang strategies at a moments notice. As a small business being able to change quickly is your main advantage. You need employees that fit with this core value.
It is really hard to tell if an employee has these things during an interview. You’ll learn a lot once they are working alongside you. And that brings me to my next observation.
Inexperienced employees can make great assets:
Okay so you have a simplified job description, more cushion on the profit and loss statement and applicants beginning to apply for your job. It’s time to make a hire.
I suggest that you think long and hard about whether an experience is REALLY required to do the job well.
I’m going to make some generalizations here. There are exceptions to this and every situation is different. But here are some things to consider and some of the reasons that I love hiring inexperienced people.
Inexperienced employees often COST LESS.
You can get a recent college graduate for $45k a year that is pumped up and eager to learn and make a name for him or herself. Compare that to the high skilled person with 20 years experience that might need $100k a year to even entertain the thought.
That is a BIG difference on the bottom line and leaves more money to hire more employees, invest in more marketing or buy more equipment that can help your business grow.
There will be a lot MORE qualified applicants if you don’t require experience.
If you accept inexperienced employees during the recruiting process you will have MORE APPLICANTS
If you limit your position to only those with experience you will have less applicants who apply and less applicants to choose from. If you can train people quickly you have the luxury of hiring based on soft skills and hiring the TYPE of person you want on your team.
Inexperienced employees are OPEN MINDED and happy to follow your lead.
Remember the systems you worked tirelessly to create? Remember how your employees are supposed to direct customer service to the customer service staff and do what you want them to do?
Experienced employees often already know the best way to operate. They already know how to talk to customers. They already know how to do the job.
A silly but great example is child care. My mother-in-law turned out to be the worst babysitter in the world and my business partner who had never previously held a baby turned out to be the best. How could that be?
My mother-in-law already knows everything about childcare. She raised 3 children in the 80s and they all turned out fine.
A lot has changed since the 80s. They found out a baby sleeping on its belly is dangerous. They found out water before the age of 4 months isn’t good. They found out blankets are dangerous in cribs. The list goes on and on. Modern research has proven a lot of things wrong that were common practice in the 80s.
My mother-in-law refused to listen to anything we said. She refused to respect our feeding schedule. She refused to avoid feeding water to the baby. She refused to be careful for allergies when introducing new foods because “I did all of this stuff when you were a baby and you turned out fine”.
Well things are different now and we have found a proven better way of doing things.
On the other hand my business partner took notes and did everything exactly as we requested down to the T. He implemented our system and did exactly what we asked him to do without question. It was a dream!
Inexperienced employees are ready and willing to listen and follow your lead. They don’t have habits that are either good or bad. You can mold and form the habits however you like and in the most efficient way possible.
Similar to the last point but slightly different. A fresh, unfiltered outlook is often great. The new biased perspective can often bring up new ways of thinking and shed new light on problems or inefficiencies. Encourage employees to present new solutions to you in an organized way (before implementation). Make it clear that freelancing on the job isn’t okay but recommendations are encouraged!
Remember there are some areas where experience really matters. In a software development position I need experience. In an executive role I need experience. In in any role that I’m unfamiliar with myself I need experience. If I need someone to come in with the goal of implementing changes or solving problems that I can’t solve I need experience.
Let’s touch on compensation.
One of the advantages of charging more for your services is that you can pay your employees well and attract great talent in most positions. Paying your laborers $3 per hour above market rate does a lot for attracting reliable and clean cut folks for example.
You will find that a lot of your employees (especially the laborers) are happy to just show up to work with the goal of getting through the day and doing as little work as possible. That is fine. These employees should be paid based on the value they bring. They might leave when they don’t get raises but they are easily replaceable.
But a select few individuals will start to shine. They’ll get good at solving problems. They’ll be an extension of you. You’ll be able to trust them to lead others and you’ll be able to give them more autonomy. They’ll help you grow and innovate. They’ll help you make the company and its systems better. They’ll challenge you as an owner and you will be able to learn from them. They’ll teach and solve problems for other employees and take stress away from you.
When someone adds serious value be ready to pay them serious money. You’ll lose these type of employees quickly if you are stingy with your compensation structure. Be ready to get out of your comfort zone here. Consider tying their pay to performance to limit your risk and increase the upside for them if they succeed.
Sometimes great employees will outgrow your company. At the end of the day it is your job as a boss to make your employees better. When they are ready to add even more value to an even larger company with higher margin products it might be time to send them off to do bigger and better things. Sending an employee off to take a bigger and better role somewhere is a very rewarding experience as a business owner.
A lot of people really push back on the thought of hiring inexperienced employees in their organization. First of all this isn’t a steadfast rule. Just something I think you should consider doing and something that can give you an advantage if you do it well.
Just a clarification – this system works best when you are hiring early employees and building your team. This would be very different if you trying to tell someone how to hire their next branch manager or someone to help you grow and overcome challenges.
Hiring your first employee is very uncomfortable. It’s scary. The anxiety in fact can be so crippling that many many people can’t take the leap from freelancer to entrepreneur because they just can’t do it.
So what is the goal of hiring your first employee? TO MINIMIZE RISK.
When you are hiring your first employee you need someone willing to follow your lead and follow your process. You need someone who will listen to you and will do as you tell them to do at least initially.
It is VERY RISKY to hire someone and let them do their own thing with little structure. You do not know the person. It’s as simple as that. You are trusting your business in the hands of someone that you do not know. You are trusting them to take care of your customers. To operate your equipment. This is a big deal.
This is why so many people gravitate towards hiring and partnering with their friends. To try to mitigate risk of the unknown. I have done this and it can be great but more often than not it causes problems. Thats why you need a system and a stranger willing to follow that system.
When you are hiring your first handful of employees your goal shouldn’t be to hire another entrepreneur or top level manager.
You might also be thinking that you would be really upset to be hired by a boss who has this mentality. Of course you would. You are an entrepreneur. You don’t want to be told what to do. I get that.
You, as the business owner, are the manager. You don’t need more managers! You need people to follow your lead!
There are a select few people in my company that have earned the right of not being told what to do. They don’t get that right when they first get hired. When they first get hired they are expected to follow the process that I’ve worked so hard to build. Its the only way to keep things organized and deliver a consistent product to my customers.
That isn’t to say I don’t listen to my employees and verbally encourage them to bring ideas to me on how to improve. When they call me with questions I challenge them and encourage them to think through it and solve the problem. I don’t just tell them what to do and expect them to be quite.
The people who earn the trust and prove they can MAKE GOOD DECISIONS get the trust and get the autonomy.
Interviewing well is a skill and I’ve found that its not directly correlated with drive.
Just like you can’t learn much about someone on a first date its really hard to learn a lot of valuable information in a job interview. Especially your first few early interviews when you aren’t sure what you are doing. You really get to know someone when something stressful happens on the job. When you watch them solve real problems. Don’t get me wrong you can weed out 90% of the people during the interview but it isn’t as simple as saying “if you do a better job hiring you can find all these traits in experienced people”.
In my experience, not always of course, unmotivated people get really really good at telling people what they want to hear all the time to make people think they are excited, driven and getting things done. They put a lot of energy into this. They calculate what they are going to say when you call. What they are going to say at the next team meeting.
It’s a sad truth but most employees have 1 main goal – to do as little work as humanly possible and still get paid on Friday. In my time as an owner/operator I’ve had only a handful of employees come to me eager and willing to take stress and work away from me and put it on themselves.
Finding motivated and driven employees isn’t impossible but its hard to hire and interview for it. You have to see it for yourself. This is the main reason why I love hiring inexperienced people and developing and promoting my own talent.
You might say “how am I going to challenge and empower great people with this kind of rigid structure? I would argue all day that challenging and empowering and your employees can be done with structure and processes. Your company has to have structure to succeed. You will have an absolute mess on your hands if everyone is out there doing what they want to be doing in the way they want to be doing it.
Employees want structure. Even high level employees want structure and a way of doing things. You need to develop a framework and set of rules employees can use to solve problems. If you don’t build the framework and set the rules every problem will become your problem and will require a quick decision and work on your part.
Motivating and making your employees feel valued is about how you treat them on a day to day basis. Do you listen to them? Do you treat them with respect? Do you encourage them to speak up when they hear something or see something they think they can improve upon?
That is the environment that employees love at any company. It’s not about the kegerator and ping pong tables.
Another concern you might have: Yes, but smart inexperienced people figure out real fast what they’re worth and jump ship faster than you can spin your head. What about that?
All employees, experienced or not, jump ship if you pay them less than the value they bring.Employees just just ship often in general. That is part of running a business. Processes and structure allow you to deal with this and build a company that can survive it.
You have to be willing to pay good people more than you are comfortable doing. I pay employees based on the value they bring my business. If they kick ass and add a lot of value I pay them a lot of money.
Hire fast and fire fast.
We’ve all heard the saying “Hire slow and fire fast”. I like that reasoning for high level employees making $50k+ per year. I also like that reasoning for high skilled employees that require extensive training or investment. There are a lot of costs associated with hiring a full time employee at that level. Turnover is more expensive.
But for $15 per hour help in your service business the best way to figure out how much value they can bring to the table is to give them a shot and watch them work. In many cases you’re investing the cost of a background check and a few hours of training. Don’t waste your time meticulously interviewing and testing personality traits, emotional maturity and decision making skills.
This does not mean you should skip the interview or do a shoddy job at it. Do a phone interview first to weed out 3/4 the candidates. Bring the rest in for an in-person interview. Do a structured interview and ask them some questions that require them to think on their feet and give you a good feel for their soft skills. You want people who can exude eager professionalism and be genuinely excited to help deliver a quality service to your customers.
Make it clear during the interview process that there will be an early probationary period where employment is not secure. They can leave at any time and they can be let go at any time. Tell them what you are looking for in an employee.
Minimize the risk by having them work alongside you or your best crew leader. This way the service quality won’t suffer. Keep them from handling cash so they can’t steal from you. Make their first few weeks very structured so you don’t have to worry about them slacking off.
Fire quickly. As soon as it’s clear someone is unmotivated, untrustworthy or a poor communicator let them go. As soon as they stand you up for a work shift let them go. As soon as someone fudges hours let them go.
Overall hiring employees is complex. There is no single guiding rulebook to doing this stuff right. It’s a lot of making the best hypothesis you can with the information you have available. Don’t get emotional about it. It’s about logic and doing whats best for the future of your business. Take the things in this article into consideration and don’t be afraid to attract and hire inexperienced employees but keep an open mind. Do what works for you.
This isn’t easy stuff. It takes setting aside time (that you likely don’t have) to recruit, interview, hire and train. There will be turnover. There will be headaches. There will be questions. There will be mistakes. But it’s the only way to build a business thats primed for growth in a stress free free way.
Show notes from episode 49.
Many industries have the luxury of having an abundance of talent applying for every position. Marketing agencies, big banks, private equity firms and the like. In the service sector we don’t have that luxury. There is a major shortage of people out there willing to do manual labor for $15 an hour.
It’s no secret it’s the number one challenge in our industry. Don’t believe me? Ask any small business owner what the hardest part of his job is. The answer is always the same – finding employees.
It’s a level playing field. All companies struggle. Turnover is high for everyone. Our competitors deal with the same problems. We just have to do it better than our competitors at building systems and finding the right people who can do it.
Put in the same effort marketing your business to potential employees as you do marketing your business to potential customers.
Just as you compete on price and quality with your competitors in respects to your service you must compete in these areas when appealing to potential employees.
We can compete on price by paying more. We can compete on quality by making our company a better place to work. If you do the 5 things from the previous post before you hire you’ll be leaps and bounds ahead of your competitors off the bat. Your company will be a better place to work. You’ll be able to pay them more money.
You’ll win on price and quality.
But it’s not that simple. While we have simplified our system to the point where we don’t NEED unicorns and spectacularly competent people to work for us we do have a lot higher standards. We aren’t willing to hire chainsmokers with poor hygiene. We aren’t willing to hire grumpy gossipers. We aren’t willing to hire scruffy and unkept people. We aren’t willing to hire those who can’t pass a drug test and a background check.
To justify the higher price we charge we have to show up with clean cut employees who exude eager professionalism when they interact with our clients.
There are still reliable and competent employees out there ready and willing to work. Now let’s talk about how to find them and how to convince them to work for us. Paying them more and treating them better is not enough to really dominate your competitors in this area.
Don’t limit your efforts to the job boards.
Monster, Craigslist and Indeed should be utilized. Its a great way to get a steady flow of 20 applications per week. You should post and you should interview the candidates. Be selective on who you hire. You’ll find good talent here but it isn’t enough to staff an organization with the turnover and growth of a service business.
But you have to get creative with your recruiting so you have a larger pool of candidates to choose from. Recruiting follows many of the exact same principles as marketing. Just as we find your ideal customer and get creative in how you reach them we can do the same for our ideal employee.
Who is our ideal employee?
As a first hire for the typical service business we are looking for a clean cut reliable person who is a good communicator and can follow directions.
Some examples of people that might make a great fit for your business:
College students have a lot of free time and they often work at the campus bookstore for $9 per hour. Major companies don’t like to hire them because they invest resources teaching and training them just to lose them when they go back to school or graduate. They’ll be entering the job market next year for $50k a year but they’ll work right now for $12/hr. They’re often clean cut, reliable, great communicators and fast learners. They are hungry for experience and a resume boost. You can find great talent here if you are okay with turnover when they go back to school or graduate.
Hospitality and retail workers can make great employees during their off-peak times. They work evenings and weekends. You need employees who can commit to business hours when the sun is shining. This can be a great way for them to earn extra money and for you to get competent help.
Offer flexible hours to work around full time commitments that are always changing. The local prison here has guards that work 4 days on and 6 days off. Sometimes they work nights. Sometimes they work days. Sometimes it’s weekends. Some of them would love to have a flexible part time job during those long stretches of time off.
Find people with seasonal jobs or commitments.
Workers on oil rigs or fishing crews work 7-30 days on and then have several weeks or even months off. Many nurses and other fields work 3 12 hour days a week. That leaves 4 days off if they want to earn extra money. Teachers have summers off. Coaches have off-seasons off. Professional athletes in non-flashy sports often work side jobs. Hire them in the off season.
Uber drivers get busy on weekends and in the evening. Maybe they want to pick up more hours on a consistent basis on weekdays when things are slow for driving.
Turnover can be minimized by paying well and creating a great work environment but it is unavoidable. You have to keep a new supply of applicants applying for your jobs, going through training and joining your team.
Consider sharing employees with another company.
Seasonality should be considered. Find companies that you can collaborate with that have a different peak season. Security companies often have a ton of part time flexible staff that they put to work on evenings and weekends. Same with catering companies. Event co-ordination companies.
If you are a snow plowing company consider sharing employees with a lawn care company. If you are a lawn care company consider recruiting at your local ski resort that closes down all summer.
Find ways you can recruit employees from a more diverse pool.
Consider learning Spanish so you can open up your applicant pool to more people. Maybe you need a crew leader that is fluent in English but the crew members aren’t required to interact with customers.
Go after people with full time jobs that aren’t actively looking but have interest in making a change.
All this sounds great and easy right – but how do we reach them?
Go after off-market talent.
There are a lot of people out there who would love to work for you but aren’t actively seeking you out. They’ll never apply to your job on Indeed. They’ll never knock on your door. How can we find them?
I’m a big proponent of guerrilla recruiting and doing things that don’t scale. My competitors aren’t doing these things because they are hard to do. They are sweaty. They are gritty. They are sometimes risky or laughable. They’re almost always uncomfortable.
Get in front of people physically.
Take a pocket full of business cards or flyers to the gym at 6pm. Stand out on the sidewalk downtown. Go to the local basketball courts. Walk up to anyone who looks like a possible candidate and say:
“Hey – do you know anyone looking for work? We are hiring a lot of positions with flexible hours this summer and we pay $15 per hour. Here is my card. Have anyone you know reach out!”
This is a lot less awkward and a lot less pushy than asking the person directly if THEY are the ones looking for work. You’ll end up sparking conversation with people and they’ll have questions. They’ll consider applying themselves. They’ll tell a friend that they know.
This sound silly but it works VERY well. I’ve spent many hours on the street corners of college campuses doing this type of recruiting. We’ve found some great employees this way.
Write chalk advertisements on the ground. I’ve written the following in sidewalk chalk in high traffic areas thousands of times:
“$15/hr + tips. Flexible Hours. StorageSquad.com/Employment“
Put small lawn signs out that say the same thing. Put flyers in local Gyms and fast food restaurants. Get creative here and get sweaty! This stuff works and it will likely turn into your #1 recruiting method.
Consider setting up a formal internship program for college students. College students really struggle to get real world experience. Companies would rather have them push paper around than invest the time and energy in teaching them how to add value within the company.
You can delegate real tasks and get real value out of college students. My company is ran by student managers at each of our universities. They work part time during the school year and then during our busy season play key roles.
Find people in leadership positions that could refer people to your company.
The principle of an elementary school. The head football coach. A trainer who works with a lot of semi pro athletes. The internship director at your local college. Your local chamber of commerce.
Make a landing page and put an application on your website. This page should make it easy to learn more. This page should get people excited to work for you.
Consider making a recruiting video (warning cringeworthy content I made in 2014 that needs updated) for the webpage. Record yourself talking about the job and why it’s different and why your company is such a fun place to work. Interview your current employees. Ask them what they love about the job. Ask them how it has helped their careers. Ask them about helping customers. Record their responses and put together a video that your potential employees can watch to get excited.
Lean on your personal network of family and friends. I know this might not be vast in your city but it can be very effective. Facebook has been a great way to find employees for us. We post about the great wages and flexible hours and we get 10 or 20 good applications.
Offer a referral bonus for current employees if they help you recruit a new employee. $50 or $100 will go a long way to encourage your current workers to reach out to their personal networks to convince friends and family members to apply to the job.
If you have multiple locations consider bringing in employees from other cities and covering housing expenses. Have a college aged cousin in another city that wants to bust it all summer and earn some money? Have him come live in your basement for the summer. We travel our employees often. We put them up in hotels or let them sleep in our guest bedrooms if they come in and work hard for a week or so during our busy season. This adds to the cost but it can be an effective way of doing it in some cases.
In my experience the best hires rarely come from paid job boards. You’ll find good talent, don’t get me wrong, but it isn’t plentiful. Our hire rate is low. Give some of these other methods a shot and track what works and then double down!
Max Maher released another video of a challenge where he worked 10 hours a day for 50 days straight.
For reference Max is 23 years old and runs Skinny Wimp moving company in Phoenix AZ. I interviewedhim to discuss the founding of the business along with his 500 business connections experiment where he drummed up $30k a month in recurring business by going out and getting face to face with a bunch of people.
I personally believe balance is critical once you have your business off the ground but this just shows you what you can really accomplish in the early days if you are trying to make a change in your life and buck the 9/5 and get something off the ground!
I’m sure Max will check in on the comment section here periodically if you have any questions for him.
Episode notes from Max’s original post:
At the beginning of the new year I started an experiment. I was going to work 50 days straight with at least 10 productive hours every single day. My goal is complete. From January 1st to February 19 I worked at least 10 hours every single day, with some days as much as 15 hours of productive time. This is my experience.
For those who are more visual I will link to my video in the below that goes over all this information with some cool visuals
I’m going to first go over my schedule, touch on productivity, followed by my mentality throughout, and lastly the effects and concerns I noticed. I would to preface this by saying this is not me condoning lack of sleep, I don’t function well on lack of sleep. The goal was productivity not how long I could stay up. while doing this challenge I slept 7-8 hrs every single night.
I set a very consistent schedule of waking up between 4:45 and 5am everyday then I would eat breakfast and be at the gym by 6am except for Monday’s I’d skip the gym. Then I’d be at work by 7:45am to greet employees coming in at 8am. My work after that Mon-Fri would be a mix of in office work or out of the office marketing until 7pm when I would come home eat, play piano and go to sleep. On weekends I would stay at the office only until noon so I could then spend the rest of the day working on videos, cooking, doing laundry, and prepping for the upcoming week. Whenever I was driving I would listen to audiobooks.
The time I consider work is time spent running my companies or time working on these videos. Total productive time is categorized as any time doing productive non-leisure activities. Things like work, exercise, piano, and reading.
The first week or so it was hard to wake up that early but after the first week it was a breeze.
I timed my daily activities before and during this challenge with an app called aTimelogger. Before this challenge I woke up around 6am worked 45-60 hours a week on my companies and 80ish total hours of productive time. During the last 6 weeks I have upped my normal amount by as much as 70% even clocking in a few perfect weeks which is what I define as a week I literally couldn’t have spent anymore productive time without foregoing sleep.
The amount I was able to complete any given week was without a doubt at least double the amount normal despite only spending 70% more time working. I noticed that by simply being aware that no matter what all I would be doing is working the entire day and not expecting rest made me search out more and more things things to do. I was completing all of the “it would be nice to try” things instead of just thinking about them and how I’ll get to them someday. I got a massive marketing accomplishment completed on top of my normal workload which I documented the entire process and dubbed “500 Connections” which is returning me me 10s of thousands a month (I will link below). I found that the more I did the more I wanted to do more like a ball rolling down a hill gaining momentum and I found myself wanting to see what my absolute limits were.
As far as workouts go I didn’t have much of an issue making it to the gym although I did notice having slightly less energy and excitement to get a workout in.
Getting this much done was as much an exercise in not doing things as it was in doing them. I didn’t turn on the TV once, I didn’t sit around on social media when I should have been working, I didn’t lay in bed for an hour before getting up because I simply framed it in my mind that that wasn’t an option to do those things. And the craziest thing was I didn’t even have desire to do those things.
During this period I couldn’t have been more pleased with the productivity however it probably wasn’t 100% sustainable
Despite some drawbacks later on I felt extremely satisfied and happy with myself day after day. I am someone who prides himself in being a hard worker and it was an amazing feeling to look back week after week and know that I couldn’t have given anymore effort and was surprised in how much I could actually handle.
If you’re like me and like to be identified as a hard worker I will tell you right now if you’re really putting in the hours people will notice and they will comment much quicker than you think. Within 3 weeks of consistent work I received almost daily comments from employees about how many hours i’ve been putting in or being crazy for how late I was there the night before. I sat on the sofa one day after work and my brother said to someone “this is the longest you’ll ever see him sitting down”
I am a calm person by default but during this marathon I was even more calm, had lower stress and had zero anxious moments, most likely due to a combination of being exhausted and not having any time to sit and worry about anything. It actually increased my confidence.
However the mind-shift that I could do nothing but productive things negatively impacted my social life. The thought of going on a date or out to the bar sounded like the furthest thing from enjoyable. I found myself not texting people back and turning down every social event. I knew If I went out I would be wishing I was back in the office getting my work done. This is obviously not a sustainable lifestyle but I was afraid to stop my momentum.
The worst side effects were mentally after about day 30 I noticed myself becoming increasingly forgetful and my mind slipping. I lost my car keys more than once, locked keys inside a crate at work, and had to start writing down nearly every task I had to do as soon as I thought of it, I even shut the garage door on my car once. After around day 35 my ability to play piano regressed massively in the evening felt like I went back a year and was re-learning to play again.
Obviously there was something negative happening in my brain on the last stretch but several times I tried to research if it is actually harmful to work all day for extended periods without mental breaks and the only studies I could find had to do with lack of sleep so if anyone can find a study on this please send it to me. The entire time I slept enough and ate enough so I am unsure what was happening internally, I was only the guinea pig in this experiment.
Overall I am glad I did this and my biggest takeaway is we are all capable of much more than we think we are. I think it is sometimes necessary to find our limits in order to be able to grasp how much we can actually handle. And my recommendation to anyone trying to be more productive is to set highly specific goals and track your progress, maybe make a project out of it like this. I wouldn’t have thought I was capable of doing this until I did and although I probably won’t do a stretch this long again I feel that now that I’ve done it regular 20-25 day stretches seems much more doable with an entirely new frame of reference.
Show notes from episode 48.
First a little bit of background on me and my experience with this stuff. We have hired 13 different full time employees and 1000+ part time employees over the past 9 years since we started. We are a pickup and delivery storage company. We aren’t a tech company. We aren’t scientists. Is our company simple? Far from it. Our logistics are crazy. But it’s not rocket science.
Of the full timers most of them we placed in bigger and better jobs for bigger and better companies. A few were let go. One of them quit. I challenged and empowered them and they learned alongside me. We run a small niche company. I would estimate the entire USA market is $10MM in my industry. So its natural that some of them ended up outgrowing our company.
Soon the value they could add for someone else with a larger higher profit margin business was larger than they could add for me so the balance was off and it made sense for them to move on to bigger and better things and get paid more money.
Let’s start with a hypothetical you are probably all too familiar with. It happens to every entrepreneur when they finally get some momentum.
The phone keeps ringing but you can’t answer it. You are busy and can’t focus on the important stuff that isn’t urgent. You are running around putting out fires. Your lead time is increasing and speed is no longer your competitive advantage. You need some help.
This is good news. It means the business is growing. Your concept has been proven. There is room for you in the market. You have an opportunity here. Making a hire is the next step.
But hiring is the hard part and it’s the part that many many businesses can never get right. It’s what keeps small stressful businesses from becoming organized profitable businesses ready to grow. This is exactly where most small businesses get stuck and why it’s hard to find a local small business that answers the phone and can meet you tomorrow to help you solve your problems.
Hiring is hard because nobody else will work as fast as you do. Nobody else will care as much as you do. They’ll make more mistakes. They’ll ask a lot of questions. We hear it all the time and could go on and on and on with the reasons this isn’t an easy step.
The first step is understanding that a switch in perspective needs to take place and your role in the company will totally change.
You have to make the switch from laborer to manager. From doer to delegator. Just because you know how to do the job perfectly does not mean that you know how to train and manage others on delivering a consistent service to your customers.
The job requires skills. The job requires experience. It’s complicated to do. Okay I get that. Before you make a hire you need to do three things:
1. Get comfortable charging more for your services
Far too many business owners and operators undervalue their service and choose to compete on price because they feel like they have to get every customer that walks in the door.
Let’s make an assumption here and say that 50% of the customers in the market care only about the price and they are okay accepting a slow turnaround and/or shoddy service. You need to ignore these customers all together and feel perfectly fine turning them away and losing out on their business. Your service isn’t designed for them.
You can’t get emotionally attached to a lead. You will lose leads. You will get turned down. You will have people try to haggle with you and stomp off in a fit of rage when you refuse to play the game. That is perfectly OK. You have to make the choice NOT to compete on price. Podcast episode 13 talks more about this.
Your service is designed for people who are looking for quality service on a quick timeline and are willing to pay a premium for those things. So what does this mean?
Its a numbers game. Converting 30% of your leads charging 50% higher is a lot better than converting 75% of your leads 10% above your costs. Play the game and stand by your guns. You will lose some customers. Thats expected. This is the hard work of building a scalable and healthy business.
Charging more does a number of great things for your business. It allows you to pay your employees better and invest more in a more selective hiring process with background checks and more thorough interviews. It allows you to invest resources in managing them and making sure they have the tools they need to succeed. It puts some padding in there so you can step back and work on the stuff that is important but not urgent and delegate things that aren’t in your wheelhouse. It allows you to focus on what you are best at and turn down business. It allows you to fire customers that are causing most of your problems.
2. Simplify the job by breaking it down to its simplest form and removing non-essential tasks
Even an amazing employee can’t thrive in an environment where they are asked to do 30 things well. Take as much off of their plate as possible so they can focus on doing their main objective well and aren’t spread thin among a bunch of different tasks.
We learned this lesson the hard way at Storage Squad. We used to have a 30 item checklist on the back of the clipboard each of our employees carried with all of the jobs they needed to remember to do when servicing a customer. It ranged from customer service to box labeling to billing to loading to scheduling.
They sucked at everything. Ivy league kids were failing miserably at delivering a consistent service to our customers. Our training was complicated and took a lot of time and energy. When we finally got an employee trained up and doing a decent job turnover would cripple us.
We figured out we needed to simplify their tasks and take as much off their plate as possible. Instead of training them to be proficient (at best) at customer service we directed all of the customer service to a specialist who focused on doing only that job really well. We had employees focus on driving and loading the truck and instead of also having them unload and organize the warehouse we had a totally separate team do that. We had specialist employees handle the billing. We had someone off-site handle the scheduling and communication with customers. And on and on.
When we simplified it they did much better. Training was much simpler. Turnover was easier to deal with. Average employees begin to thrive and we didn’t need to find spectacular people to implement our system.
3. Start by delegating the low-skilled aspects of the job
Looking at the big picture it’s easy to think there is no way someone who isn’t you could do the required task. But when you start to break it down and think about all the actual tasks you will be asking them to complete it often paints a different picture.
I have a friend who is a loan officer and business is booming for him. He is extremely busy and works at least 70 hours a week but he is doing great and makes really good money. He is starting to bump up against the wall of what he can personally get done in the business. His lead time is starting to slip. He isn’t able to devote the necessary energy to new leads to tie them down, etc.
He runs his own branch and has a lot of autonomy and he has the freedom to staff his office based on his needs. We began chatting about this and he mentioned to me “I have to hire someone experienced in the home mortgage industry but that is expensive as the average loan officer in town makes about $70k a year.”
I asked him why he needed experience and he told me that the job is complicated and an inexperienced person wouldn’t understand how it all works and that he doesn’t have the time or energy available to train a new person.
So I had him track his time at work for one day. He used the app aTimeLogger and we set up the categories. The top task for the day, which he spent roughly 3 of his 9 working hours doing, was “Compiling and completing loan applications to send to underwriting”. This involves a lot of phone calls, emails and dealing with customers to get all the required tax returns and bank statements and the like ready to send off.
So I asked him more about the process and we came to the conclusion that most of it is busy work. I asked him how long he would need to spend with me personally to make it so that I could help him and do 90% of the required stuff for that task without asking questions.
He said if we went through 2 loan applications together in about 3 hours I could probably do enough to be a really big help and after about a week of experience and questions I’d probably have 100% of it down for 95% of his applicants.
He makes $250k a year. The hardest part of what he does is make the sale. He is on the phone and in meetings with people earning their trust and convincing them to trust him with the huge life event that is financing a home.
But he only spends about 25% of his time on the phone with leads and drumming up new business. The rest of it is busywork that he could delegate if he only simplified the ask and had the employee who makes $40k a year do a lot of it. It doesn’t make sense for him to hire a high powered loan officer because he doesn’t need help drumming up business. That is his strength. He needs help with the busywork and an inexperienced person would prove very valuable to him!
4. Build out systems and a structure for your employees to follow
Hiring your first employee is very uncomfortable. It’s scary. The anxiety in fact can be so crippling that many many people can’t take the leap from freelancer to entrepreneur because they just can’t deal with the risk.
So what is the goal of hiring your first employee? TO MINIMIZE RISK.
When you are hiring your first employee you need someone willing to follow your lead and follow your process. You need someone who will listen to you and will do as you tell them to do.
It is VERY RISKY to hire someone and let them do their own thing with little structure. You do not know the person. It’s as simple as that. You are trusting your business in the hands of someone that you do not know. You are trusting them to take care of your customers. To operate your equipment. This is a big deal.
This is why so many people gravitate towards hiring and partnering with their friends. To try to mitigate risk of the unknown. I have done this and it can be great but more often than not it causes problems. That’s why you need a system and a stranger willing to follow that system.
Employees want structure and processes. You want structure and processes. At this point in the early days you know the best way to do things because you have been out doing it. You want someone who is willing to do it your way.
Now that you have a simplified job description its time to build the guide. If this happens, do this. If that happens, do that. There will always be surprises and later we’ll deal with how to help employees get better at making their own decisions but for now you want to remove all doubt and make that person an extension of you.
5. Get your compliance in place before an employee starts the work and be aware of the extra cost.
Hiring employees is expensive and requires a good deal of administrative work.
While paying an employee under the table is tempting it is illegal and risky. You need to get insurance and register with the required local, state and federal agencies for tax purposes.
You need workers compensation insurance in place to cover you and your workers in the event that an employee gets injured on the job. This is often paid as a minimum at first but as you grow it is directly correlated with total payroll as a percentage. This is handled by a state agency so it varies by state. Sometimes you are required to purchase this insurance through the state. In other states you have the option to go private or purchase through the state. If you are a young company in a high risk industry you are often left with only the state option.
The more risky the job the higher the percentage. Roofing has the highest in most cases. Nearly 40% of the wage can be paid in the form of workers compensation insurance. More often this is more like 15% for most labor jobs and 5% for most clerical office/computer jobs.
Each employee in your company will have a different “class code’ based on the work they do. The code determines the cost of the workers compensation. Make sure you differentiate between your customer service reps and your laborers so you don’t have to pay for high risk workers compensation on your clerical staff or management.
You will have a payroll audit and they will determine your final liability based on your class codes and your records. Keep good records – more on that soon.
Unemployment insurance (FUTA) is next and its taxed at both the federal and state level. This is a complicated system and your rates go up or go down based on employees claiming unemployment after they leave your company. It is usually about 1% of wages up to a certain amount but can be 6%. Here is some more information. Expect this to be no more than $500 per employee per year and often much less.
Disability insurance is another one related to payroll as a percentage. In some instances an employee is required to opt in and get money withheld for short term disability. Long term disability is covered by the employer as a percentage depending on the state it is between 1-3%.
Liability, property, auto and umbrella insurance. You need these things to protect your business and personal assets in the event of an accident. Generally 3 different policies. More here.
Payroll taxes next.
FICA (Federal Insurance Contributions Act) taxes are taxes based on payroll that fund social security and medicare. The total liability that you need to submit to the government is 15.5% of wages. You as employer pay ½ and the employee pays ½ and their half is withheld from their payroll. You need to register with the IRS so you can pay and withhold FICA taxes.
You are required to pay 7.75% of the employees wages on top of their standard earnings in the form of FICA.
How much will this cost? It depends on the industry but I’ll give you an idea based on my own experience in the moving and storage business.
We pay our laborers $15 per hour in most cases. We’re in a 33% workers compensation bracket in one of our states. We pay 7.75% FICA. 2% disability and 2% unemployment (after a few claims per year).
That is an extra 44.75% on top of the hourly wage for a total of $6.71 extra per hour per employee. That turns the $15 wage into a $21.71 liability. And whats more the employee’s $15 per hour turns into only $13.84 after FICA and about $10.50 after taxes are withheld.
It’s tempting to pay your employees cash or treat them as independent contractors and just send them a 1099. This isn’t the right way to do business. These taxes go back to the workforce over time and provide valuable safety nets for everyone involved. Look at it as the cost of doing business and operating in such a stable political and economic environment. Price it into your services and follow the rules so you can grow a healthy scalable company.
I recommend an online payroll service. Not only do you need to have all of your ducks in a row on insurance and taxes but you also must have an I-9 form and a W2 filled out for each employee or you are at risk. I use Gusto and they let me manage it all from my computer. They do the withholding. They do the reporting. They help me efficiently file all the necessary forms. They even let my employees fill out their forms from their phones so I can remain paperless.
So on a $15 per hour wage our cost is $21.71 per hour and the employee only sees $10.50 in his bank account.
Don’t forget the background checks and drug tests as well that run a few hundred dollars to onboard a new employee. Plus the 10 hours paid training time for each employee. Plus the time we spend interviewing 10 employees for every 1 we hire. Plus the time and money we spend recruiting employees. Plus the time and money we spend building training systems and videos to teach them the work.
Add that to the fact turnover is common in hard labor intensive work and the average employee will only last 4 weeks and the total cost per hour rises to about $30. Thats 2x the offering wage and nearly 3x the take home pay.
So what does this mean?
See step 1.
Get comfortable charging more for your services. Ever wonder why a moving company bills you $50 per man hour but only pays their employees $15? It’s because they have to do it to make any money.
Do things right so you can deliver a consistent service and then get comfortable charging more for your services so you can build a healthy company ready for growth.
A listener reached out with a question. They’re saving some money each month and want to set up a passive income stream through local rental properties.
Real estate is a tough market to get into right now. Not saying impossible just a fair warning:
It’s competitive. The economy has been booming for a long time. Everyone and their brother has a little bit of extra cash sitting on the side and is asking themselves the exact same question you are asking right now. This is the first passive income stream most people with some savings explore. Its really easy to borrow $ right now and the rates are low. This makes it even more competitive. Put simply – its harder than ever to find good deals. Not impossible. But harder.
Some cities are way overpriced because of weird market factors – mostly large cities. Boston, DC, NYC, San Fran has experienced a massive influx of foreign money that simply purchases and sits on this real estate. That drives the prices up a lot faster than rents go up. The cap rates (return multiples) goes down. People are buying real estate in Manhattan at a 2 CAP. That means they are excepting a 2% return on their cash in the form of profit. INSANE.
There are a lot of risk factors. What if you are in a college town and the college decides they want more money so they build a bunch more housing and require students to live in it? They do that all the time. What if a large employer closes up shop or moves? What if a huge development gets approved and the market floods with new supply?
I always say don’t start playing in real estate unless you can handle the worst case scenario and get through it.
What I would recommend:
#1 Start a service business that has the potential to lead into real estate down the road. Do it while you have a job. Consider starting a rental property management company that focuses on short term rentals. Learn the market that way. Collect data. Use the data to convince partners to invest with you.
#2 Find a real estate niche so you can compete against fewer buyers.
If a property is on Zillow it’s often too late. Thousands of people shop on Zillow for turnkey investments. That makes them overpriced and it reduces upside and potential. Find a way to buy off-market property. Cleaning up tax liens would be a good way to take others out of the market (as the other commenter mentioned). Getting an investor partner and buying with all-cash allows you to get foreclosures and buy from people who need a quick simple close (like those “we buy houses” signs you see). Learn a trade and fix the homes yourself. These are just a few of many.
#3. Create and study a cashflow projection spreadsheet.
Estimate your revenue and expenses on a monthly basis. All of your expenses. All of your interest. All of your maintenance. Taxes. Everything. Make sure it works out. Run them a few different ways. What if the tenant stops paying? What if taxes go up? They won’t go down that’s for sure.
Starbucks spent 10 years spending big money each year, I’m guessing 10s of millions of dollars, getting followers on Facebook. The plan was simple. The goal was to get followers and then reach them organically and drive value over time.
Right now they have 36 million followers on Facebook.
Well it turns out Facebook likes making ad revenue. It turns out Facebook owns the platform and has all the control. Slowly over time Starbucks started noticing their Facebook posts were only reaching 1% of their following. How could this be? We spent all this money to get these followers and now we can’t reach them. Facebook’s response?
You can reach the last 99% if you boost your posts and continue to pay for ads. Facebook has every right to do this. Its their platform. Its their algorithm. They have the users and they call the shots.
Starbucks spent millions getting the followers on someone else’s platform with no control and now they are paying again to reach them.
This concept expanded to YouTube, Google, Yelp and Amazon here.
This is another reason why I love service based businesses.
Businesses with sales that are driven by actual interaction that goes beyond a click or an online ad are most insulated from the above risks. If you can speak to your customers on the phone or by email it’s a lot easier to control that and nurture that on your own terms.
Taking that one step further if your business reaches customers on a local level and those customers can interact with each other in the form of word of mouth marketing you are further protected. Your customers are not only face to face with you but they rely on each other for recommendations and there are synergies with all the different marketing drivers.
From 2013-2017 my partner and I rented a small apartment in Boston as our company “office” and went there very day with our employees. We were still very hands on and we were most productive together. It was a scrappy time where we really accomplished a lot to set us up for the success we enjoy now.
I switched over to full time self storage development / management in 2017 and have been doing that ever since.
My businesses are now largely location independent. I manage the self storage facility completely remotely and do the majority of my construction related tasks off site and visit each project monthly or bi-monthly.
So when I had my first child and my wife and I got tired of living in a crappy 2 bedroom upstairs apartment with slanted floors and broken down appliances littering the property for $2,000 a month + utilities we started shopping for homes in the Boston area.
Extremely pricey. Not enough homes. Foreign money coming in and buying property to sit empty. We’re talking 50 year old homes 45 minutes from downtown Boston without a garage for $750k + $10k a year in property taxes. Crazy stuff and a horrible shopping experience that lasted all of about 2 days before we had an all hands meeting and my partner and I decided to take the company remote.
He wanted to head to Chicago. A lot going on there for a single guy in his 20s and a lot of hometown connections for him.
So where did we want to move? We had no idea. My wife and I were both from small towns (Watkins Glen NY and Leopold IN) so we didn’t want to go back home.
The only thing really limiting us was that I needed to be on central or eastern time and near a major airport.
So we approached the decision analytically. Here was the criteria:
My wife loves food, live music, hiking, yoga and she wanted to be able to meet some other couples with young kids. I love craft breweries, college athletics, cycling, fishing, outdoor activities and nightlife when my friends visit.
So there were a lot of cities that fit the bill for the first 4 criteria. It was the last one that took basically all but one out of the equation. We went on a winter tour in January of 2018 and visited Raleigh NC and Athens GA.
Raleigh was too pricey. A home in a decent neighborhood 15 minutes from downtown was going to run $450k+.
So Athens it was. We didn’t know anyone within 5 hours and we were going to be 8 hours from my hometown and 14 hours from my wife’s.
We bought a 4 bedroom brand new house for $289k 12 minutes from the vibrant downtown area. The taxes are low. The people are super nice. We already have some GREAT friends with a 2 year old as well that we get together with spontaneously all the time.
We’re an hour and twenty minutes from the largest airport in the world with round trip straight flights to my work destinations for cheap cheap.
My son’s first words were “Go Dawgs”. We had a raging company retreat when Auburn played UGA in Athens. Basketball games are electric. The baseball team is #2 in the country right now.
There are 5 craft breweries in town making delicious beer. There are 3 local coffee roasters. 90 bars and restaurants downtown with things going on every night of the week. A great music scene.
Its a pro cycling hub and a lot of amateurs also race so I quickly fit in well and actually founded a cycling team with a friend sponsored by Storage Squad of course.
Our friends and family have been visiting us a ton. My wife’s uncle ended up loving athens and actually moved here and her parents are currently shopping for a retirement home here before baby #2 comes in August.
We’re 10 minutes from a great bass fishing lake where I take my Hobie Kayak once every few weeks. We’re 40 minutes from Lake Hartwell.
Almost a year later my wife and I both love it here and we’re very happy with our decision!
If you are ever in the neighborhood give me a shout and we’ll meet up for a beer if its after 10am or a coffee if its before!
Show notes from podcast episode 46.
The great thing about entering an existing market is that the moving parts are already out there ready for us to study. The customers are there. The competitors are one click and one phone call away.
There are three factors in business on which we can choose to compete. The first is speed and responsiveness – getting the service to the customer faster. The second is quality – offering a superior service. And the third is price – offering the service at a lower price.
Generally we don’t want to be the cheapest option on the market. We want to be the fastest and the highest quality so customers are happy to pay us 2x more than our competitors because the value is there.
So for now let’s think about price in terms of efficiency and cost. If you spend unlimited money within your business it’s easy to offer a service both fast and the best. But that’s not an option. So let’s think of competing on price as being able to offer a very low cost service because our costs are relatively low.
So if we improve our speed and quality we increase value and can charge more for our services and if we improve efficiency and reduce costs we generate more profit.
So if we can improve any of the three factors over our local competitors we will have a competitive advantage.
Now let’s talk about how we can do that by being a copycat.
Remember the market study?
We can use this same strategy to learn our competitors and use that information to design our website, pricing structure, marketing strategy, customer service approach and more.
What we are going to do is build a franken-business. Take what we love about several different businesses and build the ultimate beast of a business that can thrive on a local level by doing all three competitive factors well.
Emulating success is the best way to succeed.
In school we are taught that copying is bad. Looking up answers online is bad. But in every other area of life that is the best way to get ahead.
Want to get better at sports? Emulate the superstar in your field. Want to get better at guitar? Emulate the best guitar player you know. Want to get better at business? Emulate the businesses that are successful.
The place to start is by studying big franchised companies that offer services in several cities. None of them compete on price. They all charge more and (sometimes) offer faster and better service.
These companies thrive with their online presence, branding and sales oriented customer service. They answer the phone every time with a smile and follow up 30 minutes after you reach out and keep following up every day.
They have hiring and training systems in place. They simplify the job so average employees can deliver a consistent service to the customer.
The big players have a proven scalable model.
So get on the horn and find the largest looking and most highest volume company in the entire country and call them up. Devour their website content. Write down their sales lines on the phone. Ask them about their volume. Ask them about the way it all works from the viewpoint of the customer.
We ask them about the quality. We ask them about the speed and responsiveness (turn around time). We ask them about the price. We ask about volume. We ask about experience. We ask about crew size.
This is a really uncomfortable thing to do at first for a lot of people. It feels almost as if you are spying or stealing from your competitors and in a way you are. But rest assured that you likely aren’t going to take much business if any.
Knowing this information we can easily get a feeling for how hard it will be to compete. We’ll likely find a lot of things we don’t like about the competitors. A bad website. A rude customer service rep. Several weeks before we can get an appointment.
Get a quote from each of the top competitors. Its free to do this and gives you a look directly inside the competitor’s business. It can often get you an in person visit to really dive in and ask a bunch of questions and learn a lot.
Make a list of key questions beforehand. Feel out how the conversation with the reps are going and don’t be afraid to ask direct questions about volume and size of the company. How many crews do you have? How many customers do you service each year? Are you generally busy in the winter as well?
As a business owner I get similar questions from legitimate customers all the time – they genuinely want to know about volume because they want a company that has experience and runs a legitimate operation. If other customers trust this company I can trust them too!
Ask the rep if they like their job. You will be very surprised at the doors this will open up in the conversation. Max Maher did exactly this when he did his 500 business connection experiment. Employees really start to open up and vent about what they like and dislike about the company and its inner workings!
Use ahrefs.com to study their local keywords and content marketing strategy. Find out how they title their articles, pages and videos. Digest this information and mimic it!
Look at and call a lot of different companies. Take what you like about each one. Ignore what you don’t like. Before you know it you’ll have a system for customer service, billing, quoting and a website just like the big profitable players. You know there system is working and you now have the same system.
The big kicker is you can do this now at a fraction of the cost.
The one thing we don’t want to copy from the big dogs is the cost/efficiency side of things. You can offer your service much more efficiently and at much lower costs than they can. You don’t need a full time office staff. You don’t even need an office. You don’t need a full time accountant. You don’t need to spend $50k on a website. You get the point.
This is where tech comes into play. 10 years ago we had to have an office. We had to pay big bucks to get custom software built. We had to hire full time employees to take care of a lot of things that we can now outsource. Nowadays we can get software out of the box for $100 per month that is twice as good as what the big franchises spent $500k to have built back in the day.
As a franchise owner of a service business you likely pay 20-30% of your overall revenue in the form of branding and franchise fees. This all goes to the franchise to support the company overhead and generate shareholder earnings.
In some situations you can offer a service right on par with the big dogs without all the overhead and have a much better profit margin.
Even as you grow and years after launching make a habit to study your competitors on a consistent basis. Always keep an open mind about making changes even when things are working. Be the first person to adopt new ideas that other competitors are implementing to offer better and faster services or more efficient, lower cost operations.
I’ve implemented these strategies myself multiple times and it has been incredibly valuable. When we first got into the student storage space there were several competitors already operational. We studied all of them from the mom and pops to the national players and took bits and pieces from each. We found one company that offered free boxes and loved that idea and started doing that. We found another that had pickup stations to make pickups more efficient so we implemented that and so on.
We did the same thing with our self storage model. We loved the rate management, branding and digital marketing strategies of the big players. We loved how a few small operators managed the facilities 100% remotely with no on-site manager. We combined both of these to build our own hybrid strategy to cut costs over the big players but drive revenue faster than the small players.
Overall – this is a step many entrepreneurs skip because they already think they know the best practices and aren’t willing to have an open mind and study what actually works and implement changes based on those findings. Make it happen and you’ll have a huge advantage!
Show notes from Episode 44.
A lesson in the power of getting face to face with people in this interview with entrepreneur Max Maher. He owns a company in Phoenix called Skinny Wimp Moving. Hes 23 years old and brings in over a million a year in sales with a 30% profit margin.
He did an experiment where he went out and got face to face with 500 people and businesses who could potentially refer him residential moving customers. Self storage facilities, apartment complexes, realtor offices, furniture stores, and more. He tried to be likable, carry on a great conversation and get a business card from them so he could send a thank you email and continue to follow up. He rated every connection on a 1-3 scale and sent a gift to the 40 that he felt he had the best connection with.
Max employs the “knock twice” sales method where you follow up and continue to visit leads even if they act uninterested initially. Visiting 3 times finally won him over a high end furniture store that now sends him thousands of dollars a month in moves.
In 142 hours of work he generated an extra $30k per month in sales for his moving company.
He got his start by building a pool service company and doing a lot of similar face-to-face marketing. In the podcast interview we discuss how he finds great employees by walking up to people in public and some of the lessons Max has learned while building several businesses from the ground up and BUYING a failing moving company at the age of 19 and turning it around.
In the age of a competitive digital marketing landscape people often forget about the value in face to face personal interactions. This is a prime example of what you can do without any money and just a little sweat and determination.