Show notes from Podcast episode 69.
Hi this is Drew from Brisbane – one of my business ideas is around beer line tap cleaning. There is a franchise in my area that I could buy into for a reasonable price. With the fees you pay they provide support and training however I have a technology background and I feel like I could do a lot of the things myself. What are your thoughts on franchises?
First of all you have a lot of questions you should ask and research you should do before you make the jump and purchase a franchise. A lot of them are great but others are designed for the franchisors to make money and the franchisees are left to figure out how to pay the fees.
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There are two main pieces of the puzzle here to consider. The first is how your business looks and feels from the outside from the perspective of a customer. The second is how your business operates and looks and feels from the inside from the perspective of an employee.
Franchises hand you that structure out of the box. They hand out an appearance of professionalism to instantly put in front of customers. They also hand you a guidebook and a set of operational procedures on how the company should work from the inside. If this happens then that happens. If that happens then this happens. For any possible situation.
Lets start with #1 – the customer side of things. While the company can give you a legitimate website and software to manage your customers, getting customers is not a gift franchises can give you. They don’t just automatically get 300 calls a month heading for your phones. If you want to open up a franchise because you think its a sure fire way to get customers walking in the door you’ll be sadly mistaken. You’ll still need to do a lot of marketing and have your own sales strategy. They can likely do some of it for you but they’ll charge you a premium for that and you’ll still need to pay for the clicks or commercials or whatever you implement.
Then #2 – they hand you systems to manage your team. They have a customer relationship management system for collecting payment and sending bids. They have an organizational chart with positions and job titles. They have training materials to get employees up to speed on completing the job. They might have a call center for you to help with customer service in a centralized location. This is all important to consider and really try to figure out the value of this to you in your current situation.
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The negatives:
The tools they give are often outdated and expensive. Before CRMs like Jobber were available for $100 per month companies were forced to spend hundreds of thousands to design their own software solutions that are now outdated and don’t do things like GPS tracking, text message customer notifications and other things.
The fees are brutal. In most cases you’re paying branding fees, equipment markups, marketing fees and franchise fees that can total 10-15% of gross sales + an upfront buy in. That sounds reasonable until you think about the bite out of your profit margin that comes out to be! 15% of gross revenue on a business that has a 30% profit margin (standard in most service businesses) would be 50% of your profits! These fees are forever as well. Operate a successful branch for 10 years and you’ll have spent millions in fees that would have otherwise went directly into your pocket or reinvested in the business.
You have very little control. There are often terms in the agreement that make you a drag along partner who is forced to follow along for any rebranding or corporate decisions that are made. Want website upgrades? Too bad. Want new updated tools? Not your call. Want to stop paying for a billboard or radio advertisements? Hush up already.
The investment and the risk are higher. If you aren’t a semi-experienced manager with capital and a plan there is some risk involved in buying a franchise. You’ll have immediate bills to pay. Fees to the franchise. Mandatory equipment purchases. Insurance. Etc. There is no taking your time and easing into it here in a low risk way.
Getting customers is the hardest part of running a business in the early days and while you might get some help here it will largely be up to you. You’ll need to execute and fund your own marketing.
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Things to find out:
What kind of content marketing and SEO strategy are they implementing? Some franchises do a notoriously weak job of ranking for organic search results. I recommend hiring a freelancer to actually do an SEO audit on the company’s website before you buy a franchise. They’ll be able to tell you how good or how bad of a job they’re doing getting ranked in local search engines.
What kind of software are they using? Get a demo of Jobber and then also get a demo of whatever software your franchise provides? Does Jobber do the same things? Is it up to date?
What is the fee structure?
How much control will I have – if any?
You’ll want to see profit and loss statements from current franchisees. How are those branches performing?
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There is generally no obligation to look into a franchise and begin speaking with the company about this and you can learn a lot. You’ll find out really quickly if they are working hard to sell franchises or working hard to support the franchisees and build a system that can be a win win for everyone. Unfortunately there are a lot out there that have the #1 goal of selling franchises and everything else comes second.
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So the questions you should consider:
How hard would it be for you to build a website and some systems to manage your customers?
How hard would it be for you to acquire the equipment and develop simple systems to get started?
How hard would it be for you to implement a great content marketing and SEO strategy to get your business ranking in your local area?
How hard would it be for you to implement your own marketing strategies to drum up some early business?
What are the advantages of being backed by a major brand in your potential space? Do people prefer a national brand or are they happy to shop local and is it a level playing field?
How profitable are the branches that are currently operating in cities with similar demographics? What are the worst performing branches? Why are they doing poorly?
If this happens then what? If that happens then what? What if I want to sell? What if I start losing money? What if I want to purchase and embroider my own employee uniforms? All of those unique situations should be discussed with the franchise. I also recommend an attorney to take you through the process if you’re interested in finalizing something after your initial audit and research.
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As time goes on and technology gets better it gets easier and easier to get the tools set up to appear professional in the eyes of customers AND set up systems inside your business to organize and manage your team. The value proposition of a franchise in a local service business (being a business in a box) is shrinking every day.
Out of the box software as a service is getting incredibly powerful and incredibly cheap. It’s easier than ever to operate a business from anywhere with location services and blazing fast internet anywhere.
It used to be really hard to find specialized work to help you with the day to day tasks of running a business. Content marketers, web developers, accountants, bookkeepers, graphic designers are all available in the form of freelancers at very reasonable rates to help you where your skillset lacks. Gone are the days of needing to hire all of these people in your office in your local town or depend on your franchise offices to take care fo this for you.
We live in a time where everyone wants to spend massive amounts of money on digital marketing and social media campaigns. While it can be effective and generate a positive ROI its competitive and also simpler than ever to outsource to a digital marketing freelancer**. I personally believe the marketing opportunities right now are in the local grassroots guerrilla marketing and sales approach.** There aren’t many advantages to be part of the franchise when it comes to marketing and sales unless they have a specific strategy you like.
I personally would not buy a service franchise unless there was a special opportunity to do so or a unique circumstance where you had the opportunity to take over a currently thriving business or one you could turn around.
Cleaning windows sounds silly but its a great low cost business with the potential to help you buck the rat race and can be a great first business to build.
Before you do anything make a list of competitors in your area. Call them all and ask 100 questions. Ask how they price. Ask how many crews they have. Pretend to be a concerned customer. When can they come out and give you a quote?
If the calls go unanswered or they are too busy to clean your windows in a timely manner that is a good sign. If the main companies don’t have websites that is a good sign. If they don’t have videos on youtube that is a good sign. If they don’t take credit card and don’t have a payment portal online that is a good sign.
Proceed onward if the competition is weak and you think you can carve out a piece of the pie. Remember you don’t have to be the only show in town. There are a lot of customers. You just need a few of them. Don’t let one or two decent companies scare you off. Competition is a good thing. That means there is a market here that is thriving.
Buy a domain name and hosting for $1.99 per month. Build a website on WordPress. Make a logo and some other materials on Canva. Order 2,500 business cards and 2,500 door hangers. You’re going to need all of them.
Send a Google My Business (GMB) postcard to your home and build your profile. Upload photos. Create posts weekly. Get a Google Voice number to communicate with customers and get your domain email address forwarded to GMail so you can use the tools there. Check out this list of tools to use in the early days.
Not sure what to charge? No problem. You already called your competitors and did a the best market research you could ever do. Note all of the companies and make an excel spreadsheet of how they charge both businesses and residential jobs. Do they charge more for 2nd story windows? What about screens? Record it all.
Decide where you are going to price. Don’t be the cheapest. If you want to get early customers by dropping your price thats fine but long term you don’t want to be the cheapest. More on that later.
Time to go find customers.
Wake up at 7am on Saturday and put the 2500 door hangers in a backpack. Go to the nicest neighborhood in town and put a hanger on every door. Then the second nicest neighborhood. Then the third. Then the houses that are all pretty close together downtown. Spend the entire day hanging these things on doors. You’re going to be WORN OUT by the end of the day.
On Sunday wake up and get in the car with the 2500 business cards. The retail stores are open. Walk in every single one in town and ask for the manager. Introduce yourself and tell them you’d love to clean all of their windows for free to show them what you could do and work to earn the contract to clean them on a contractual basis. Give them your business card but more importantly TAKE THEIR CARD. When you have their card you can follow up with them and send them an email once a month. Don’t stop sending them emails.
If you can get a little time off during the week go see the non retail businesses. Do the same thing as above to the dentist offices and the service companies and anyone else with a store front. The realtors are the target here because they could possibly recommend you business. When someone is trying to sell a home or commercial property it shows much better with clean windows. Walk in and introduce yourself. Give them a card. Take their card and add them to your lead book and follow up with them often.
The people you meet and have good conversations with consider sending them a hand written thank you note. Put a rating system on the back of the cards so you can remember who you had good conversations with. The note will blow them away.
If you feel like getting extra gritty let’s do some sidewalk chalk marketing. Next time there is an event in your town like a fair or a parade wake up at 6am and head downtown with a box of chalk. Write on the ground (
Notice anything about finding customers? It’s HARD WORK. It’s uncomfortable. You have to SELL your services. Introverted? Too bad. Take an acting class. Turn it on. You HAVE to do it.
Let’s talk about online presence. Ignore social media. If you have the budget for Google Adwords that is a great option but if you have no budget no problem. Let’s focus on small business content marketing. The goal here is to get a ton of valuable content on your website, YouTube and your Google My Business listing.
Remember that this stuff takes TIME to come together. You can’t just build a website and the next day show up on the first page of Google. This will take 6 months minimum. If you can do this online stuff 6 months prior to launching your marketing efforts thats a good idea.
Build a nice looking WordPress website with some cool features like this. Write an article on your website titled the ultimate guide to window cleaning in [your city]. Make it 2,000 words or longer with photos and a video as well. Make it extremely useful showing people how to clean windows, what soap to use, what equipment to use, how to clean windows from the inside and more.
Make YouTube videos with [your town] Window Cleaning in the title. It can be a 2 minute video of just yourself introducing your company and talking about what you do. Make a lot of videos with different little clips about your company and with keywords in the title. Put the videos on your website and link to your website and GMB from the videos.
Nurture your GMB listing. Get reviews from happy customers. Ask them to upload photos on the reviews. Complete the listing 100% with videos, pictures, specials, hours, website links and more. Post on it DAILY early on.
Customers will start to call you. If you can’t answer the call because you are at work thats no problem. Set up a VERY professional voicemail greeting telling them you’d LOVE to earn their business. Call them back at your earliest convenience.
Book all of your early jobs on weekends.
Friday after work walk in Lowe’s and buy some dawn dish soap and some vinegar. Also pick up a 5 gal bucket, an 8 ft pole, scrubber, squeegee, scraper and sponge. Thats it. $50 worth of supplies. With the hosting and business cards you’re still probably less than $200 in.
Start to get out and work in your free time. Get a feel for it. Take care of customers. Learn as you go.
Buy some yard signs and ask customers if you can put them in their lawn for a week after the service. That will help spread the word.
Exude eager professionalism when you communicate and service customers. Genuine excitement for the opportunity to help them. Smiles. Firm handshakes. Laughter. Put on a show of how passionate you are about cleaning windows. This isn’t your style? Figure out how to make it your style.
Write handwritten THANK YOU letters to anyone who uses your service. Word of mouth will be your best marketing. If you blow your customers away and are a like-able person you will get referrals and they will come over time. Business is about momentum. It takes consistent hard work over time.
When you start to get some momentum get a CRM like Jobber. Do your billing online. Set up notifications and invoices to be auto delivered when you complete a service. Set up an awesome quote request form on your website. Your competitors aren’t doing this.
Soon you will be busy and it will be time to hire some help. Recruiting employees is much like earning business. You need to go find people who would make good employees and convince them to work for you. Taking applications on Indeed or Craigslist isn’t going to cut it. Keep business cards in your pocket at all times and introduce yourself to anyone who is clean cut and looks like they would make a decent employee. The trick is to not ask them if they want a job but if they know anyone who wants a job.
To grow and scale the business you must charge more than your competitors. If customers want rock bottom prices and flakey companies they can go elsewhere. If they are willing to pay for a reliable company who does quality work and they can trust in their homes they call you.
Don’t get emotional about getting every customer. It’s a numbers game. The ones who beat you up on price aren’t the ones for you.
If you charge a higher price you can afford to pay better employees. You can get nicer equipment. You can invest in the company. You can scale it easier and work less if you have more money to delegate things.
And thats all I got. Does it get any lower risk than that? Get out there and give it a shot!
Show notes from podcast episode 67.
The first one started out by opening a single pizza restaurant with two friends in a small town in Ohio. 4 years later he sold 30 pizza restaurants. Then he built and sold the next business and the next one after that. Now he is a wealth manager and makes a living investing for and advising mega wealthy families and buying and selling real estate and businesses.
Another started making caricature t shirts of NBA players and selling them out of the trunk of his car. Ended up getting the contract to provide the NBA champions with custom T Shirts (and selling them to all the fans) when they won the title. Sold the clothing brand a few years later and was one of the first investors in the planet fitness franchise and made boat loads of money at their IPO and now buys shopping centers in major metro cities.
Another started by remodeling his friends house for him in a super small southern indiana country town. Then he built a house for himself. Then his neighbor. Then another neighbor. Then a restaurant. Then a local doctors office. Now he builds, owns and leases hospitals and nursing homes to nationwide operators for $150k a month and has a portfolio of 30 of them.
What I learned from them…
Start really really small. Don’t try to change the world on day 1. Business is like a snowball effect and it grows with time. The first step should be doing something simple and risk free with the goal of quitting your job and getting your time back.
Then you move on to the next thing and the money grows and the opportunities grow. We read biographies of Steve Jobs and Elon Musk and watch shark tank and everyone thinks they need a new revolutionary world changing idea to be an entrepreneur.
All of these people started out super super small and LOCAL doing things that other people were already doing.
It’s all about not being afraid to work hard on something others would think is boring and “unscalable”. Get your feet wet. Learn entrepreneurship. Make some money. Learn to sell and interact with people and manage expectations and deal with money.
Then keep your eyes and ears to the ground and make really good logical (not emotional) decisions on what opportunities you should say NO to and what opportunities you should say YES to.
Show notes from Podcast Episode 66.
Hey Nick it John from Vancouver. What are your thoughts on taking over a family business?
I think if you analyze it right and take the right steps its an amazing opportunity to own a business that is years ahead of one you might otherwise start. You can also likely get it at a fair price, have an idea of the inner workings, trust the parties involved and make a deal with low risk and a lot of upside.
It can also be hell. Personal relationships can deteriorate if expectations aren’t aligned with reality or you don’t communicate properly with the necessary parties before jumping in.
The opportunity to take over is a semi-successful family small business that has a lot of room for improvement is a very common situation. There is a LOT to unpack here. Lets dive in.
First you must keep in mind that there is a massive human element to this. In stressful life-changing situations people are not always logical beings – they are emotional. Family and business intermingling creates a very emotional situation. Your family member has likely built this business from scratch and it has been their entire life for a long time. It is their identity and their legacy. Their customers and employees are like family. Their retirement is likely tied up in the corporate bank account. You are taking a chance and changing your entire life and career path to take this over. Two very emotional parties right?
Remember something very important. Most forms of conflict and resentment stem from expectations that are not met. Somebody has expectations of someone else that likely aren’t properly communicated (most often they are assumed). People may have totally different ideas of how something should work. People may have different goals. People may have not clearly outlined day to day responsibilities.
The main theme of this post is that it’s all about effective communication and managing expectations. You have to figure out what everyone in your family EXPECTS to happen. Not only your family member that owns the business but also your siblings.
If you properly communicate and lay out everyones expectations on paper, manage those expectations and make decisions based on this information you will be much more likely to succeed. It’s a lot more likely to shake out without anger or resentment or a family feud when money is involved. You’d be amazed at how many families end up resenting each other and going to court over things just like this. Don’t let it happen to you.
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You first need to do some introspection and figure out exactly what you want out of this deal by asking yourself a series of questions.
Does it align with your career and professional goals? Does it have growth potential? What would need to happen to make it worth it to you?
What is your relationship like with your family who owns the business? What are your personality types? Would you get along in co-management roles?
Do you have the skills and ability to take over? Will you need your parent on board for a while to keep it above water?
Many times the business is a job for the owner. It isn’t set up to run without them if they quit? What are your thoughts on this matter from the outside looking in?
What is the future of the business if you don’t take over? Is it large enough to run itself? Would your family member be able to sell it on the open market?
What improvements would you make the the business? Digital marketing and web presence are likely some improvements you can make but keep something in mind. There is a good chance the business doesn’t have a customer problem. They probably bring in plenty of revenue and have their hands full keeping up as it is.
Building a nice website, running online ads and getting on the first page of Google sounds great and all but thats not the hard part of running a service business.
Every business has either a customer problem (not enough sales) or an employee problem (not able to deliver solid service to the customers you have). Which problem does this business have? Which one of these factors is limiting the growth?
The employees and the internal systems are the hard part. What would you do to improve the business in this regard? How would you organize the company structure? How would you recruit and train employees? How would the pricing the business charges the customers need to change to make this happen? The Sweaty Startup is dedicated to helping solve these problems but they are complicated and they take a certain level of management know-how to do.
The point I’m trying to make here is that you aren’t going to just put together a website and some digital presence and all of the sudden add a ton of value to the business. The real value is being able to deliver and build an organization with systems and processes to solve the employee problems and be able to deliver these services. So make a plan for that and get serious about this part of it because its the key.
Before you do anything else put pen to paper and organize your own wants, desires, goals and plans. Going into this without a plan is not a good idea. Saying to yourself “oh I’ll just get started working and we’ll figure out the details later” is not a good idea. Figure out what you want before moving on to the next step.
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Think of this as an investor presentation. You are going to walk into a meeting with the person who owns this family business and tell them exactly what you’d like to happen for it to be worth it to you to get involved.
Some considerations to make while making your plan and building your presentation:
It’s not all about the money but it’s an important part of the equation that is often ignored. Don’t name a price off the bat but realize that it needs to be agreed upon before you start working in the business. Think of it as an option. If I start working now I have the option to buy the business for this price 6 months from now or a year from now. The last thing you want is to start adding a ton of value and make the business way more valuable and then end up having to pay a higher price or disagreeing on the price when it comes time to ink the transaction.
Consider doing a trial period. Have all the hard conversations with the necessary parties and then come on board either part time or full time with a trial period and the option to leave. Begin to work alongside your family member. Get a feel for the business. Dive in and start analyzing the books. Get feedback from customers and employees. Get to know the inner workings of it all.
When you uncover information that changes the initial discussion or the agreed upon price or the future of the company have scheduled times to discuss them.
COMMUNICATION IS THE KEY.
A quick note – if the business is very small or you aren’t taking it over this may not make sense. There is a difference between going back to work for the family business and going back to take it over. Sometimes you should just jump in. Maybe you’re just out of college or not even going to college. Maybe you don’t have a lot to bring to the table. Maybe you’re unable to make a plan because there is so much unknown. Look at it as any other opportunity in this case.
But if you’re leaving your job and relocating your family and beginning to take risks and invest capital its worth making a plan right off the bat. This is what I’d do:
Go meet with your parents first. Tell them your plan. Tell them you’d like to take over the business on these terms starting with a 6 month trial period. Tell them exactly what you expect. Tell them or ask them exactly what they can or do expect from you. Discuss your job description and responsibilities. Tell them your goals. Tell them or ask them exactly how the hierarchy will work and what you want input on and what is non-negotiable.
Play the what-if game. What if the business fails? What if we miss our revenue targets? What if Dad and I disagree on a big decision? Who gets the final say? What if the family member wants to stay involved and still needs income? What will the salary be? When will they retire? Are they living on the business? What if one of us gets sick? What if the other siblings also want to come get involved? What if somebody goes bankrupt? What if somebody stops working and gets lazy? What if the business needs to borrow money? What if I do a trial period and decide I don’t want to move forward with the purchase? What if the terms would need to change if something is uncovered during the trial period?
Lay it all out there. Have the hard conversations. Discuss all the difficult situations BEFORE they happen so you are in agreement and can get on the same page with each other’s expectations.
Then it’s time to talk about money. How much is the business worth and what will be the payment terms? Will your family member finance it or will you need to get outside financing? Will it be a gift? Are the terms favorable because you are a family member?
I’m not going to go into the rabbit hole of trying to tell you how to value a business. It depends on so many factors. Many times you can come to a fair figure by having a discussion. Sometimes you should get some consulting and pay for it.
If you are going to take over the business and you want to control it its often best to purchase it outright. Feel free to get creative with your financing and terms. Maybe put an option in place to purchase the business one year from now for an agreed upon price and on agreed upon terms and then do a one year trial period to get in and feel it all out. If you like what you see maybe you execute the option and go forward or maybe you walk away.
Talk to your siblings. Don’t make the same mistake that so many others make. It happens all the time – somebody is given a business or they purchase it at a heavy discount with favorable terms without even cluing the siblings into what is going on. They find out later and they are rightfully upset because it wasn’t fair. Getting a major financial gift from a parent, especially an aging parent without an equal gift going to your other living siblings is a great way to make everyone upset and even bring upon legal action.
When you discuss and organize how everything will look with your family member who will be selling or giving you the business the next step is to have a conversation with any living siblings and their spouses. Tell them what you’re doing. Tell them how much you’ll pay. Tell them how you came to the number. Tell them what type of financing you’ll use.
If the thought of sitting down with your siblings and explaining this makes you uncomfortable its not a good sign. You’re likely getting favorable terms that aren’t fair to the other siblings. Ignoring this and proceeding onward is a horrible idea.
Get them in the loop with the entire family involved so people can voice approval or disapproval of any part of the deal.
If there is no record of a conversation it didn’t happen. I always advise spending the money on an attorney to help you put together a purchase and operating agreement. It’s worth the heartache and stress that could be caused down the road if people flip sides or everything wasn’t exactly clear. While good communication helps it means nothing for the future if you don’t have any record of it.
Any two parties, family or not, can totally disagree on how and when certain things were discussed if there is no record of it. People forget things. People reconsider things when more money is involved. People change their mind and go back on their word if its convenient to do so.
In the very least draft out the notes discussed with all family members, siblings included, and distribute by email. Ask them to read the email and send a confirmation email back to you. Thats a good way to have record of what was discussed as a worst case fall back. They’ll voice miscommunications right then and you can iron out any kinks before things get big and emotions get involved. An email is not something that can hold up in court but it’s a lot better than nothing.
Don’t hesitate to get some outside consulting when going through a process like this.Maybe an appraisal for the business valuation. Maybe a consultant who will charge by the hour to come in and help both parties sort through the details of how it will all work.
In closing… you might think after saying all of this I’d say it’s a bad idea to take over a family business. That couldn’t be further from the truth. I think it could be an excellent opportunity and you should definitely consider doing it.
Just make sure to communicate effectively and consider these factors and you’ll set yourself up to have a great experience and a successful business for many years to come!
Show notes from Podcast Episode 65.
“Hey Nick this is Andy from Louisville KY and I’m a wedding videographer. I’m looking to expand into the corporate market making videos for small businesses, real estate developments and similar things. How can I break into this market?”
Get lots of advice from people in the industry but I’ll give you a perspective you probably won’t get anywhere else on this. I’m assuming you already know how to make great video, edit it, put it online and show it off with a flashy website.
Videography is competitive because it’s a passion project. A lot of people love doing video and the equipment needed to record and produce quality content is getting cheaper and cheaper. I almost put this business on my “Businesses I hate list” but then thought better of it. Why?
This business is about sales and marketing. It’s not about the quality of the work. Any college student with a G7 and a hobby can shoot and edit above average video. Don’t get me wrong its important to do quality work. But many are racing to the bottom on price and going hungry because they can’t find work.
Ask anyone who has built a large video production agency what their key to success was. They’ll try to say we just did quality work. Wrong. Somebody was a good salesman. Somebody could lead others on a shoot and walk into a room and convince business owners they NEEDED what they were selling.
SALES AND MARKETING AND NETWORKING. If you can do this stuff and master it you’ll be different. You are generally competing against artists with visions. You aren’t competing against salesmen. That needs to be your play. Focus on sales and getting uncomfortable and building relationships and ASKING for business and you will thrive.
You need to get out and get face to face with potential clients. Thats the only way. Cold emailing won’t work. Cold calling wont work. Making great video and uploading it to instagram and youtube won’t work.
This is very low risk. Put up a bare bones website. Get some business cards. We’re talking $500 or less to get it going and less if you want to put some time into it. Don’t register your business yet. Don’t incorporate yet. Don’t worry about insurance yet. Do all that after you get some business.
As soon as you get that done get out and find people who you know could benefit from your work. Nearly every small business in America needs a nice 1 minute promo video on the front page of their website to gain trust with customers. They need it for the YouTube search results. They need it to help their business grow.
Start local. In your town only. You have to be able to reach out and get face to face with these people to increase your odds of getting some momentum. Analyze local businesses. Find an amazing website like this and then use that to sell other local businesses like this. Strike fear in the business owner that they are falling behind and they’re missing the future of media and online sales because they really are and we all know it.
Find those businesses and walk in the door. Get on the phone. Get a meeting. Get out of your comfort zone. You’ll get rejected. Its a numbers game. On to the next one. Do whatever ritual you need to do in between meetings to keep moving. Take business cards from all of them and follow up relentlessly. Sell sell sell.
Remember that there are two types of businesses. Business that don’t want to pay very much for a video and businesses that do. Don’t waste your time with the low margin businesses or the owners that don’t value your work. The ones that want a video that requires 40 hours of work for $500. Ignore them. They’ll nickel and dime you and it will be tempting to take the work. Especially in the early days. Thats fine for a while to build your portfolio but its critical that you start telling them no and walking away when you spot them.
An introvert? I don’t care. Take an acting class. Find a way to be personable and talk to people about their business and their life. Smile and exaggerate your facial expressions and your body language. SHOW GENUINE EXCITEMENT about what you are doing and the kind of difference it can make. Make it clear you are EAGER to help and you really know your stuff.
Read Never Split the Difference by Chris Voss. Sounds stupid because its coined a negotiation book but its Sales 101. Mirroring and keeping them talking about them. Every sales situation is a very emotional negotiation. Master the EMOTION of it.
This is what 99% of videographers aren’t doing. They suck at sales. They have anxiety making cold calls. They hate talking to strangers and especially hate selling to strangers. They’ll never walk into a business and try to get a sale. They want to do the art and be the artist. But remember this business isn’t about the art. Its about sales and marketing.
You aren’t selling video. You are selling trust. You are selling a first impression on a customer.
Get out and sell the crap out of it and you will be successful.
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Show notes from Podcast Episode 64 where Nick mentors a mobile car mechanic who just quit his job to start growing his young company on a full time basis. The main theme here is an in person sales approach to gaining early clients.
Targeting a service technician like a plumber or lawn care guy with 8 vehicles in the back. His vehicles make him money every day so he can’t sideline them to take them in somewhere. If you gain trust with a company like that he’ll do $10k every year in maintenance with you and maybe more.
You can get scheduled and recurring business. Easier to plan staffing around. Easier to bulk purchase equipment and make money there as well.
Take the Max Maher approach and make a list of 500 local businesses that could possibly use your service.
Walk in to each business and introduce yourself and what you do. Tell them you do reliable mobile work at really great prices. Try to have a meaningful conversation with them. Ask them about business. Leave your card and more importantly TAKE THEIR CARD. Follow up with them. Find out the owner and send him emails or maybe even a little gift. Keep following up just letting him know you are there next time he has a problem and needs help with.
Strategic partnerships – mobile car detailers. While you’re doing the brake job he is cleaning out the interior of the car and waxing it. You can help him get in with the fleets and he can in turn drop off your card in the cup holder of every car he cleans. You both have the same market.
Get connected with dealers or scrap yards. A lot of people end up abandoning cars when the repairs are too high or the vehicle is otherwise totaled. Be able to recommend someone to help them out there and in turn have the guy at the junkyard handing out your card. Junkyards have a lot of DIY guys coming in which isn’t necessarily your target market (especially if they want to source parts and think they know everything).
So what do you do? Add value first. Offer discounts on routine maintenance at first so you can gain trust.
Nurture the Google My Business location and write some really good content. Keep your iphone on you while you’re doing jobs and record little videos around the keywords in your town – the content is a lot less important than the volume and keywords. Brake job. Suspension job.
Work hard to get a good part supplier. If you specialize in brakes and know you’re going to do a lot of certain kinds see if you can negotiate better prices on parts.
I’m usually against a physical shop but in this case it might be a worthwhile goal to build into. Consider a 5 year plan of having a physical shop and work towards that. There are a number of advantages here – real estate tax advantages if you buy the property as well.
You can depreciate your building and write off your mortgage interest. Appreciation. Your building will become more valuable over time.
You can borrow against it because it’s a physical asset.
Lean out your life for now while you build the business.
If your end goal is global domination and scaling this business. People pay for speed and convenience. There is no time that you need someone like you more than if you’re stranded on the side of the road.
I know you said you don’t do roadside work because its not safe. Is there any way you could make it safer?
Long term you need to be doing this work because if you can build up volume and have enough coming in to keep someone busy your margins here would be MUCH better. People will pay $700 for a brake job if you do it at their house but they’ll pay $1200 if you do it for them on the side of the road. Contractors want this too. Their time is money.
Maybe a modified tow rig that can simply pull them to a safe location? I think long term you might want to have a tow rig that is also outfitted with the tools so you can tow the vehicle to a safe spot and get to work or tow it back to your shop for major work.
First hire should be an admin. Someone who knows enough to answer questions but focuses on billing and compliance and helping you from a computer.
But I have a warning. You need to start thinking about how you’d get a second mechanic on and how much money you’ll need to be bringing in to make that happen. Budget it and run cashflows of the true costs to have a second vehicle that you own with a full time employee in it.
It can start part time. You can walk into shops and hand out your card asking if guys are looking for weekend work. You should make your hiring at current shops.
Keep focusing on bringing in business. It will be really easy for you to get up to where you’re making $100k a year on your own labor. Itll be really really hard to make a hire and take your life back.
Do what you do best. Say no to a lot of work that you can’t train someone how to do. Focus on only brakes, oil change, and other quick turnaround simple to diagnose items for your first crew to take on.
Don’t be afraid to raise prices.
As soon as you have a full schedule of appointments and its reliable hire someone to take care of that while you shift to the on-demand roadside assistance and drumming up new business.
Mobile car detailing is a great business to bootstrap and can often be started with the equipment you already have in your garage.
Buy a web domain and get hosting for $1.99 per month. Upload WordPress to your web hosting platform. Either build it yourself with a premium theme for around $50 or pay someone on a freelancing site a few hundred dollars to build a website similar to one that you like. Get someone to design a simple logo and some basic marketing material.
Send a Google My Business (GMB) postcard to your home and build your profile. Upload photos. Create posts weekly. Get a Google Voice number to communicate with customers and get your domain email address forwarded to GMail so you can use the tools there. Check out this list of tools to use in the early days.
Do some reading on content marketing and basic SEO principles so you can structure your site correctly. Use a tool like ahrefs or hire an SEO/content marketing specialist to help you design your site structure and content strategy and also analyze your top ranking competitors with the goal of out ranking them over time.
In your free time read, watch and learn everything there is to learn about car detailing. Write a lot of great content for your website aimed to help people who are trying to detail their own cars or wanting to learn more about the process. Make videos and take before and after pictures of the vehicles you work on and post them on your website, GMB and your social channels.
Consider hiring a mobile detailing outfit (your competitor) to do one of your vehicles. Watch them and look at and note the equipment they use. Maybe even get a part time job at your local car wash so you can get some experience and learn their process. Detail your own vehicles. Detail vehicles for friends (and make sure they leave you a review with photo). Take before and after photos and make videos for your website and other channels.
Taking into consideration your startup budget decide what equipment you want to purchase. You’ll need a nice mobile vacuum as well as a portable generator with enough wattage to meet your power needs on the road. If you aren’t ready to invest in a generator you can ask early customers to use power at their location. I recommend getting some momentum and making some money before making any significant investments.
Early on if you don’t want to invest in all the equipment you could simply do a full interior shop vac and vinyl/leather wipe down. Once you get some momentum and are ready to make additional investments consider offering a number of packages at different price points like shampooing, exterior washing, leather & vinyl conditioning, waxing & polishing and supplies like new wiper blades and air fresheners.
It’s time to get some early customers.
Get about a thousand flyers made with your number, web address and a nice bit of copy. Make sure its legal in your area to put flyers under car windshield wipers.
Go downtown with a backpack and some comfortable shoes. Maybe some headphones and a podcast. Time to do some walking. Put a flyer under the wiper of any moderately nice looking car. Avoid the 1990 beaters with bumpers falling off. At the next local football game or event go through the parking lot and hit a lot more cars in a lot shorter period of time.
Get business cards made. Its time to find people who we know could benefit from your services. Who is your ideal customer?
Realtors need clean cars because they often drive around clients. Walk in your local realtors office. Smile and make conversation. Give them your card but more importantly take their business card. Follow up with them by email reminding them you’d love to offer your services to them. Even send them a gift like an air freshener if the initial conversation was good.
Local businesses might use your service as a way to spoil their employees around Christmas time or during a particularly busy period. My friend who is a loan officer just did this for all his employees as a token of appreciation after they had a good month. This is a great opportunity to show up to one location and detail multiple vehicles. Efficiency = profit.
Add value first. Building relationships with potential repeat customers is more important than making a profit on day 1. Email the realtors and offer them a free detailing so they can see your work. They’ll love it and they might just pay you to do it once a month for the rest of eternity.
Have all of your early customers write you a review on your GMB location and upload a photo. Photos are huge and really help your ranking as well as the trustworthiness of your business.
Don’t compete on price. Make turnaround time your competitive advantage. You will charge a higher price for your service but you’ll be able to fit customers in right away and your service will be superior. You will be professionally dressed and greet them with a smile. Just answering the phone every time and having an attitude of excitement will get you in the top 10% of businesses around.
When you get more momentum invest in some equipment. Buy a used cargo van and get a vinyl decal on it. Get a water tank for it and a power washer so you can do exterior washes without using a customer’s water. Slowly upgrade your equipment over time.
Differentiate yourself from your competitors by getting some out of the box software that allows you to communicate with your customers very effectively. When you’re on your way to their home or business they should get a text message or an email. In that should be a link and a photo of the technician thats on the way and a description of how the service will go and what to expect along with frequent questions answered.
When you leave they should get a receipt emailed to them instantly with a report. You can charge their card on file instantly. Jobber can do all of this.
Now you have a choice. On one hand you can do this yourself and continue to make a really good hourly wage as a side hustle. If you go this route continue to do a really good job and raise your prices until you have just the right amount of work. Your hourly wage will go up. When you get too busy and your lead time starts to slip raise your prices again.
Or make a hire. If you do this simplify the job and take customer service and payment processing off of their plate. Don’t take cash and only take payments online. Have your employees install a time tracking app on their phone that tracks their location and their hours for your review. Use a digital on-boarding and payroll company like Gusto or Paychex. Stay very organized using quickbooks online. Hire an accountant and bookkeeper for $500 per month or less.
A few notes: Make sure to register your business and get insurance before you start. A market study is always a good idea as well to get a feel for the competitive landscape. My favorite way to do this is call around to all the competitors acting as a customer and asking 100 questions. You’ll be surprised what you learn.
Want more? Subscribe here to get short, concise emails from me once a week to help you build a better business. I also share a business idea like this each week to get you fired up and get your gears turning.
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.
Notes:
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.
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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.
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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.
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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!
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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!
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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!
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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.
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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!
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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.
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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!
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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.
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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.
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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.
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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.
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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?
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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.
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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.
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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?
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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.
Ignore social media. Don’t make a yelp account. It’s not worth your time or money. Focus elsewhere.
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.
So we decided to go buy a few $4 boxes of sidewalk chalk and put some billboards all over campus. Like this. And this. And might as well advertise for employees while we’re at it.
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.
It worked amazingly. We got 1000 customers the first year in Boston and overflowed our warehouse and had to get more space at the last second. We filled that one up too. My wife even had to help.
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.
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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.
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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.
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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.
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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.
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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.
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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.
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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:
Source: Hootsuite
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.
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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?
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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.
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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.
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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.
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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:
Option #1.
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.
Option #2.
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.
An example:
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.
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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.
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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!
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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?
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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!