A Resource for Entrepreneurs

15 (not so common) principles of entrepreneurial success

1. Add value first

Gain trust by providing something of value first without expectation. This gets you very far with customers and personal relationships. Don’t squeeze your customers for every penny, especially early. Too many people are tight lipped with helpful advice. Share it. Gain trust and thus loyalty and profit later.

2. 80 percent of your results will come from 20 percent of your effort

Same with profit and customers. Don’t get lost in the weeds. Work in your wheelhouse and continue to double down on what is generating the highest ROI for you and your business.

3. Say NO more often

Early on saying yes is what leads to small wins and momentum. Casting a wide net early on can be a great strategy. As you get more successful guard your time and stay focused. Scope creep is a real thing with all business. Don’t be afraid to turn away customers to stay focused. There will be many many customers who reach out to you that aren’t in your wheelhouse and your service isn’t for them. Tell them so and focus on the people who you built it for.

4. Outsource your weaknesses

Don’t try to be a jack of all trades – you’ll end up being a master of none. Get really really good at what you do best and outsource everything else.

5. Start small and start local

You don’t need to touch millions to make millions. Start with 10 true customers. Then 20. Some great businesses can be build with 100 true fans. Don’t try to build your product/service for everyone or it will end up not working for anyone. Customers want you to specialize.

6. Passion doesn’t move product

Too many people start businesses based on their own selfish desires. If you are passionate about it chances are so are thousands of other people. The market doesn’t care what you want to spend your time doing. Build a business based on a gap and a need. Don’t try to turn your passions into business. Be passionate about building something and entrepreneurship. Think with your head – not your heart. These businesses are targets for passionate illogical people so be careful.

7. Ego is the enemy

A lot of business is being in the right place at the right time. An early win can lead to an amplified failure. Your ego can lead to filtering the incoming information based only on what you want to hear. It can cloud your judgement. Being right is more important than finding the BEST solution. Stay humble. Encourage those around you to challenge you. Change your mind quickly and often if the data points to it.

8. Work on the stuff that is important but not urgent

Everybody works hard. You can’t succeed by out working the next guy. You have to work on the things that are important but not urgent. Make the decision that removes a thousand future decisions. Think ahead. Do the uncommon work.

9. Its not about finding great people. Its about simplifying the job

I know there are exceptions to this. But to do anything at scale you need to simplify what you are asking out of your employees. They need to specialize. Ask them to be very good at one or two things and ignore everything else. Set up your systems so NORMAL people can do very well at your company.

10. Keep your emotions out of your decisions

Be a stoic. Think logically and calmly in the face of stress, uncertainty, anger and fear. This is the skill that will get you very very far and save you tons in damage control. Read Ryan Holiday’s The Daily Stoic and The Obstacle is the Way.

11. Don’t sleep on service businesses

Choose your competition wisely. Its a lot easier to compete on a local level with the mom and pop down the street than on a global level with venture capital and big money. Here is a list of service businesses I love.

12. Control your own platform

Don’t rely on other platforms to bring you customers. Starbucks spent hundreds of millions getting facebook followers. Then facebook changed the algorithm and now Starbucks still has to pay to reach them. Amazon Basics comes out with new products daily that completely crush businesses who previously dominated. YouTube is changing the way it interacts with its content producers daily. When you are dependent on a third party you are at risk.

13. Gossip is contagious cancer

Keep it out of your company and do not let it into your life.

14. You don’t build a network – you earn a network

Networking is important – don’t get me wrong. Your network will become valuable only after you bring something to the table. Build your first company. Get really good at something. Then your network will be fruitful.

15. Frugality wins.

Start a lean business that can survive change. Keep your expenses variable. Buy things used. The longer you can operate without taking a profit the better off you will be.

Its never a double blind test

Wine sommeliers often can’t tell the difference between a $20 bottle and a $2,000 bottle in a double blind test. The food at the $20/person restaurant and the food at the $200/person restaurant. The beer at the top rated brewery or the guy brewing in his basement.

In a double blind test – who has the better service?

It doesn’t matter. It’s never a double blind test. There are always so many more factors at play. Remember the following:

People aren’t just buying a service – they are buying a feeling.

Some people are willing to pay for status and often get more intrinsic value by paying more money for similar services.

There is a lot of perceived value that comes along with a higher price. Its a placebo effect that makes people FEEL like they are getting more for their dollar.

I’m not suggesting you price gauge people and try to rip them off around every bend. Just realize you can choose to compete in many many ways. Don’t make the choice to compete on price.

This week on the podcast

On Monday’s podcast episode I tell the story of graduation weekend in 2012 when I made $10k brokering rooms. On Wednesday I talk about craft beer in New England!

Ego is the Enemy

Ego is good early on. The confidence. The drive for status and image.

It gets us far. It gives us the courage to disregard the anxiety and fear of failure. The lizard brain that tells us to run for cover when things get scary.

We all agree that you don’t need to be a superhuman or brilliant person to build a successful business. Listen to one episode of the podcast “How I Built This” with Guy Raz and one thing will become strikingly clear. These people are normal. The founders of these unicorn companies, often billionaires, are completely normal people.

Ego drives us to take the most important step. That first step. To just do something. To get out and try something that might not work. To get out of the comfort zone and just try something and begin working towards it.

Thats half the battle, especially with these service businesses. Just put yourself out there and start doing the work.

On one end of the spectrum is anxiety, insecurity and fear. The prevalence of these emotions cripples a lot of people and is the main reason why people play the safe route. Work at the job they hate without making any changes, etc. Its crippling.

On the other end of the spectrum we have ego. Everybody has an ego – its perfectly normal. For the sake of this article I’m referring to ego as the overconfidence. The big head. The belief in oneself that is not healthy or rational or logical.

One business works. A lot of hypothesis turned out to be correct. Money was made.

This is when the ego becomes the enemy and can be a very dangerous thing. Its an emotion that can lead to very poor decision making.

Here is what happens when the ego takes the reins:

You surround yourself with yes-people and attack people who disagree with you
You sort incoming information based on your bias and only accept the stuff that supports your goal and your hypothesis
You make very poor decisions and money is lost

How do you combat this?

You keep in mind that every hypothesis is just that. An educated guess.

Encourage those around you to challenge you and question you. Start every meeting with an encouragement to your trusted advisors to make you change your mind.

Treat all incoming data the same – whether it supports your hypothesis or not.

Change your mind often and quickly when logic and data point to it.

Understand that ego is an emotion. Its a desire and will to be correct in the presence of your peers. You have to recognize the emotion, feel it and then choose to act logically and ignore it when necessary.

Continue to have confidence. Trust your decisions. Its very important. But be grounded and be prepared for it not to work.

Remember – one cannot learn what they think they already know.

The Lawn Squad Case Study

Back in 2012, when I was unsure of the success of my storage venture, I casted a few other nets. One of them was a Lawn Care google place and wordpress website with a few pages. As you know I had mowed a few lawns in high school so I got a few of those old customers to leave me Google Reviews.

I then forgot about the site. Each week during the spring I would ignore a few calls coming to my cell phone from that Google Place.

My brother decided to take over the website and give it a shot. The site was actually lost when I forget to pay for hosting so he started over and built this. An even crappier website.

In May of 2017 he started answering the calls and started slowly adding clients. He bought a mower. He bought a nice 2009 Ford F150 with 50k miles on it for $7900 in the spring of 2018 using this guide. He bought a used mower for $5k that a guy had bought for $12k two years (and only 60 hours) prior.

In 2017 he did about $10k in revenue and had 15 solid clients on a bi-weekly schedule by the end of the year.

In 2018 that turned into $30k in revenue (about 20k profit) and 32 solid clients. This is with no adwords. No advertising. He was a full time student and and athlete at Indiana University in Bloomington.

December of 2018 I got him a little excited and he decided to get his herbicide / pesticide applicators license. Studied a few hours each week, took the two day course and three weeks later he passed both tests in the 90th percentile.

Yesterday we bought the X Theme on wordpress and built this site using Cornerstone (a free page builder that comes with the theme) and some stock images we found for free online. We got the logo done in 2 days on Fiverr for $49. He got a student version of Adobe Illustrator and put together all the graphics.

Follow along here as he works through this checklist and lets see how far he gets this year.

Think LOCAL and start SMALL

Don’t forget to think LOCAL and don’t be afraid to start VERY SMALL.

Even if you plan to start an internet company. Start LOCAL. Start a business where you can interact with your customers face to face. Even Zuck founded facebook only at Harvard. Roll out a city at a time. Sell something local at first to gather data and get in front of your customers.And more importantly you can target them with direct advertising on a local level.

Business is a long game and takes years to build success.

There is no get rich quick method. And I know people might be tired of preaching this but if you are willing to sweat and provide an actual physical service that is required in person you can really find massive holes in the market.

If you pick up your phone every time with eager professionalism and have a google my business location you are ahead of 90% of the competition out there making great money.

How to start a pest control company

On Friday after work instead of meeting friends for drinks go home and get to work. Buy a domain and get hosting for $1.99 per month. Set up a website on WordPress. Pay someone on a freelancing site to create a simple logo for you and some marketing material.

Decide what type of pest control or extermination you want to focus on initially. Most states have different certification, licensing and exams for different types. Termites, rodents, insects, commercial, residential, agriculture etc. Use your state related resources to decide. Termite treatment is huge where I am (south eastern USA).

Consider differentiating yourself by doing natural no-kill pest control.

Read, study, and complete your training requirements to sit for your exam and get certified. In my state to become a technician you need 10 hours of classroom training, 70 hours of on-the job experience, and a score of 70% or higher on the exam. You are also on the hook for some minor licensing fees. You’re now ready to work for a company offering pest control. This is a great way to learn the business and get experience so you should consider doing this.

There are likely additional training, exam, and certification requirements to start your own business. You will also need liability, errors and omissions, property, auto and workers compensation insurance. There are companies that specialize in providing this industry with the necessary insurance.

Now that you are covered and have the required knowledge its time to get the equipment you need. Consider buying a 5 year old Ford E-series cargo van. They are a great value and here’s a decent guide. Dont be afraid to use your personal vehicle at first.

Get the equipment needed to apply your type of chemicals and to protect your body while doing the application. For termites this involves digging and putting bait stations in the ground. For rodents you will need the bait stations. For cock roaches you will need sprayers.

Buy your chemicals off doyourownpestcontrol at first. When you get some momentum and start doing more you can get a supplier and negotiate better terms.

Crush you competitors with amazing customer service.

Any service business is all about eager professionalism. If you answer the phone every time with a great attitude and a genuine feeling of excitement to help people solve their problems you will be ahead of 95% of the businesses in this field. Show up with a clean cut technician wearing a polo and khakis and you’re golden. Put shoe covers on before walking in someones home. The little things matter.

Lets talk marketing. What type of person is likely in the market for pest control services? Who is your most likely customer?

Like most home services we’re going to target people who recently moved into a new home. They are the most likely to buy what you are selling. Follow the “recently sold” listings on realtor, redfin, and zillow. Go knock on the door or hang a flyer on the door knob. Consider sending a hand written note by mail. Get creative on how to reach these people.

This is an old school industry so a lot of businesses are operated like its 1985. No website. No digital marketing. No sales tracking systems. You may also be able to get very cheap clicks on Google Adwords. Make sure to set up conversion tracking so you can measure your spend and calculate your ROI.

The thing about this business is that new customers are very valuable because its a subscription based business model. Customers are going to pay you $40 a month or more for this service and if you treat them well they’ll be on board for years and years to come.

Knowing this consider doing what nobody in this space does and offer the termite installation free. Or the bait station installation free. Or the first month of cockroach treatments free. Add value first and profit later. Its about gaining trust and brand awareness in the early days. The leaner you can operate and the longer you can go without pulling profit out of the business the better. Look at these free services as marketing spend. Track your time and your material against your conversions and the value of those customers and get to your ROI.

When a customer calls analyze the home on zillow. Look at the square footage. They likely just bought the house so it likely has a lot of photos online for you to view. Does it have a basement? How old is it? Provide a quote instantly. The quicker you can provide a quote the higher your conversion rate will be. Soon you’ll be able to quote 25%-50% higher than you competitors but since you turn around a quote in 10 minutes and they take 48 hours you’ll get the work.

Get your early customers to leave reviews on your google location. That will be huge for you and when it kicks in you will feel the instant turbo boost. Make videos and target keywords in your area on Youtube, the second largest search engine in the world.

Give a customer a few bucks off a service to leave a yard sign in their yard for 10 days.

Target your facebook advertising to customers who recently changed their city location and are now in your area. They just moved here and you can target your ideal customer.

Make friends with realtors in town and service their homes at a discount to get them to hand your brochure to a new homeowner when they move in. Remember that people do business with people they like. Be likable and spend time on developing personal relationships with your clients.

Watch the local planning board schedule for new apartment developments. Go to the meeting and talk to the owners and get your card in their hand so you are the first call when it comes time to sign on a pest control contract. Watch for new restaurants opening up and do the same.

Lets talk operations.

Get very good at selling customers on additional pest control subscriptions while walking around their home with them. Give away a lot of knowledge for free to gain trust.

Your customer base will start to grow and you will be ready to quit your job. Continue to offer the service yourself until you have a full schedule and then make a hire.

Simplify the job for your employees so normal people can do it really well. You don’t want to have to have great employees to succeed. You want to set up average joes to thrive at your company. Take as much off their plate as possible. They don’t quote services. They don’t take payment. They are paperless. They show up looking professional and do their job and leave.

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.

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.

Outsource what you aren’t good at so you can focus on sales, training and managing your employees.

Make speed your competitive advantage. Don’t compete on price. Be able to get a quote to a customer within 30 minutes and meet the customer to walk around their home and answer questions the same day. Be extremely likable and professional. Focus less on selling and more on educating and helping. This is something your highest trained employees (and you initially) should be doing. You can charge double what your competitors charge by offering this type of service.

This is a beautiful business because the revenue comes in on a subscription basis. Its reliable. You can build processes around it and automate it a lot easier than high skilled labor jobs. Your business is also more valuable because you have a bunch of recurring business so you can sell it to a competitor if you want to go that route.

A few notes before you start:

Don’t forget your market research. My favorite way to do this is to call around the top 5 google ranked pest control companies in your city. Ask them a ton of questions. Find out how busy they are. How long does it take them to put together a quote?

Run your cashflow projections on a month to month basis. Buy your equipment used so you can operate as lean as possible and sell it if you decide to close up shop. Budget all of the expenses you will have and then add 10%. Make sure you still have the cash to operate for several months with no sales.

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.

Read this before you bring on a partner

Show notes from podcast episode 28

First of all there are a lot of different types of partnerships. In this article we discuss the co-founder. Someone who you bring on initially and they get ownership no matter what. No vesting schedule. No cliff. No way out if things go wrong.

This article is the cautious approach. Partnerships can be wonderful. Many of the most successful companies out there were founded by more than one person. I founded my own company with a 50/50 partner and I’m much better off because of it. Don’t be afraid to bring on a partner. Just make sure to think things over and consider the following first.

Partnering with someone 50/50 is just as important as getting married. Your financial life will be tied together forever. You’ll spend every day from 8am-5pm and possibly a lot more working with each other. You’ll be trusting the other person with your present and your future. Its a huge deal.

People date and court each other for years now and still the majority of marriages fail. Business partnerships fail even more often. It kills businesses. It ruins potential. It kills friendships. It costs a lot of money.

Why is this? Its because partnerships are very very hard. Every problem with relationships in general, and especially partnerships, boils down to two main factors:

The first is character. Does this other person genuinely have my best interest in mind or are they acting selfishly?

The second is value. Are we bringing equal value to the table and are we both able to see that the value is fair?

Partnerships are so hard and fail so often because many people are naturally selfish and greedy. These traits get highlighted when large amounts of money come into the equation. These traits get highlighted when tough times come and people get desperate.

On the value side of the equation everyone is so different and their skills are so different. Its rare that two humans can add the same exact amount of value to a businesses overall success. Its also natural that people overvalue their own work and undervalue everyone else’s.

We’re talking about several years in the trenches and then possibly decades running and living off of this business. We’re talking about managing each other’s money. Partnerships are a big deal and shouldn’t be taken lightly.

So lets start with a few questions we can ask right off the bat to try to help us figure out the character and the value.

What is the moral compass of the person? Do they cheat on their wife? They’ll cheat on you.

Do they steal from the gas station when they were kids? How are you going to trust them with access to your bank account?

What is their work ethic like? Are they willing to really put their nose down and grind?

How is their time management? Do they overthink and waste time on non essential tasks?

Are they driven? Would they rather watch reality TV, play video games, and watch football all weekend or do they spend time making themselves better and growing as a person?

Are they a grump all the time? They’ll drag you down and give up when the going gets hard. Now I’m not talking about unwarranted delusional positivity. I’m just pointing out that negativity is contagious and rubs off on everyone around you.

When something unexpected happens do they get emotional and irrational? Can they think with a level head when something stressful happens or do they have a mental breakdown?

Do they spend a lot of time yelling or arguing with their spouse or girlfriend? This is often a tell tale sign of manipulation, selfishness or insecurity.

Do they feed off drama and gossip? Remember that gossip is cancer. If they talk bad about their friends to you they will talk bad about you to their friends.

Do they have an addictive personality? When they play a new video game do they binge and play it for 20 hours a day for a few days? When you go out drinking do you constantly have to take care of them, keep them out of fights and carry them home?

Do they procrastinate and put off the stuff that is important but not fun? Are they constantly cramming to get things done at the last possible moment?

Do they shy away from difficult conversations and uncomfortable situations? Business is uncomfortable a lot. The people who can get comfortable in these situations are the ones that can add the most value.

What drives them? Do they talk about the riches and the boat they’ll buy with the riches? Or do they talk about the process and the excitement and how big the business can become?

What are their career goals? Do they have other plans and opportunities? Did they already take a full time job after graduation? Do they have other projects taking their attention?

Does their personality and skill set align directly with yours? Does the business really need two of the exact same people?

Do they constantly over promise and under deliver? Are they generally late or early for things? Do they think they can be ready to meet you at 8pm but end up rushing around and not being ready until 8:15?

Finding the answer to these questions doesn’t happen right away. It takes years. It takes working with someone in a professional setting for a long time.

That’s why this whole thing is so tricky. Figuring out the answers to these questions isnt easy. It takes a working professional relationship. It takes a friendship that goes beyond the surface level. It takes truly knowing someone.

So say you are considering partnering with someone and you are unsure how it all should look. Lets talk about a few basics.

The person investing the money should get the ownership. They take the risk therefore they should get the reward. Sweat equity is cheap and cash is king.

The spouse of your partner is critical. They are your 25% partner and will be entitled to 25% of the value of your business in the event of a divorce. They’ll also be the person your partner lives with and deals with when work is over for the day. Are they supportive? Are they trustworthy? Do they have healthy spending habits? Do they have a solid moral compass? Are they grumpy and miserable for your partner to be around? A partner with an unsupportive or miserable spouse will not be worth a darn on a day to day basis and is destined for failure.

The delegators and communicators and smart workers are more valuable than the hard workers.

Don’t partner with someone in a tree trimming business just because they are good at trimming trees. There is a big difference between trimming trees and managing a bunch of people trimming trees. You can get a good tree trimmer for $30 per hour. A few years from now you’ll each be earning $100 per hour. You’re losing $70 for every hour your partner spends out trimming trees. The value equation will be thrown off really quickly if this is your criteria for partnership. Putting your head down and working hard is easy. Making the decisions that can cut a hundred decisions and building processes so the work gets easier is the hard part and the valuable part.

Don’t partner with someone who is broke. Broke people make bad partners. If they don’t know how to manage their own money what makes you think they can manage your money? What are their spending habits? Do they have a nice new financed car while living paycheck to paycheck? Do they order a soft drink and a side of guac and turn a $7 lunch into a $14 lunch? Did they work for money as a kid or did their parents hand them money as needed?

In the early days of the business there will be no money to spit off. The longer you can go without needing to pull money out of the business the more long term value you can build and the more momentum you’ll gain. If your partner needs cash to pay off a credit card and you are ready and willing to keep adding value with the goal of profiting later things aren’t going to work out.

Think about the future prospects of your business. How many mouths do you want to feed? You’ll need double the business and double the profit to feed two owners vs feeding only yourself. Does a lawn care company have enough potential to feed two people? Does the business really need two founders? If you are starting small and simple in one town the answer to that is likely no.

So many people rush right into bringing on a partner. Its the natural thing to do. You get excited about something and you run right to a friend and talk to them about it. They get excited too. Next thing you know you have a partner and you haven’t considered any of the questions we just spoke about. You haven’t considered the key traits that make a partner valuable. You haven’t considered the skill sets. You haven’t considered the complexities down the road.

Like anything in life the key here is to stop and think. Don’t let your emotions affect your decision making. Ask yourself if you really need a partner or you are just latching on to a friend to subdue your own anxiety and share everything with someone else?

Alright so let’s say you analyzed everything and asked all the right questions and you have someone in mind that you want to partner with. What now?

Sit down and have the really hard talks early on. What if this happens? What if that happens? What if we disagree? What if we want out? What if we get a divorce? What do you think are wise investments? What type of lifestyle do you want to have? How much money do you need to pull from the business and when? What are your 5 year goals? What are the things that you value most? What do you want your life to be like 5 years from now? How do you see your roles changing and evolving? What are your strengths? What if you or I can’t perform as we initially thought?

As part of the operating agreement put a buy sell agreement in place that explains how shares can be bought or sold and make sure it includes a schedule of the payment. Make sure the partners can’t demand payment for their ownership in a manner that will cripple the business. Put financing terms in the buy sell agreement.

Put a valuation method in place as part of the buy sell. It can be different depending on the situation. Agree upon metrics you will use to value the business in case one of you wants out. This might be a multiple of earnings. Something that will keep you from arguing in the event of ownership changes. If someone requests to be bought out it can be an agreed upon multiple. If someone is forced out it can be different multiple. If someone fails to perform the key duties of the business, etc.

Consider getting life insurance and key man insurance on one another as partners. My partner and I have this in place because if I pass away my partner would be required to pay out my estate according to the overall value of the business. That is what the life insurance policy is for. We have key man insurance to help us pay for a new employee to come in and fill the roles each of us have within the business. This way if one of us passes away the business can survive and it won’t miss a beat.

If you are considering bringing on a partner after the business is already up and running consider sharing the profits at first and make the ownership vest over time so you have a trial period to make sure it is working out.

Partnerships are much more likely to work out when the two people have had a previous working relationship with one another. They know how they operate. They know their strengths. They know each other’s’ weaknesses. Basically they have the answers to the questions above.

Put simple and easy systems in place to check each other. Make rules like no outside expenses on the company credit card. No meals and entertainment. No expenses over $100 without notifying each other. Credit card statement audits done on each other quarterly. Bank Safepass codes sent to both partners anytime an auto payment is set up. No cash transactions between customers and employees.

Very simple things that can keep people honest and close any doors to small infractions that can grow later.

Before we wrap up on this topic lets talk a little about my personal experiences.

I got very lucky with my partner who is still my partner today. We knew each other as friends for three years prior to starting the business but there were still a lot of critical questions I didn’t even think to ask. I just got excited, ran to a friend and agreed to partner.

He just happened to be a great communicator, extremely frugal like me, great in uncomfortable situations and incredibly level headed when the going gets tough. Our personalities mesh perfectly as I’m more dominate and he is more agreeable. He has an amazing ability to think extremely logically and make great decisions when others would get all emotional and worked up. He does not have a temper. He wants what is best for both of us, not just him. He’s not greedy or selfish. And he adds a ton of value. Hes an excellent communicator and delegator. He always has a positive attitude and treats others with respect. We accomplish more together than we ever could have alone. Finding this partner was a huge stroke of luck.

We brought on three other partners over the years that are no longer with us. The first we foolishly gave 20% ownership of the company right off the bat before we even had a real company. Luckily he got discouraged and had other career goals and walked away without asking for any money. We hadn’t really made any yet and it was a long road ahead.

The second partner, who happened to be one of my best friends at the time, got 20% ownership in return for sweat equity when our business was about 2 years old. We thought this person would be able to help us grow the business a lot faster and help us expand to a lot more locations.

About 6 months in we realized the value equation was way off. The partner just wasn’t hacking it on a level that we needed or thought to be fair. Quickly the environment became cancerous and was about to explode. Luckily we all had the courage to sit down around a table and have a very difficult conversation several days in a row. It was clear that the person was getting pushed out. He was heartbroken. So were we. We didn’t try to screw anyone. He didn’t try to screw us. We wrote him a check and sent him on his way. It set us back a good ways financially and we learned never to give away ownership unless you are absolutely positive the value is there.

The last partner didn’t have actual ownership in the company but helped us open up a few new branches in exchange for a profit sharing plan. It worked well initially but then we all realized the business simply didn’t have the potential to support us all and couldn’t really grow to the level that we had initially hoped. The partner wasn’t exploring new avenues to add value and wasn’t willing to relocate to give us 100% of his energy so it also got very testy very quickly. Luckily we all saw this and parted ways in a very agreeable manner and are still great friends to this day. We’re glad we didn’t make the same ownership mistake again because it would have made it much more complicated.

Remember every problem with relationships in general, and especially partnerships, boils down to two main factors: Character and value.

Luckily all three of these were around value. Value issues are much more straightforward to solve. Character problems are much different. Its impossible to deal with a selfish or greedy person who does not have your best interest in mind. Those types of problems kill businesses all together. If that would have happened to us we would have likely not survived it.

When a partnership is deteriorating you can FEEL it. You know something is up. You know there is animosity. You know there is resentment. You know there is something off with the character or the value add equilibriums.

Talk about it and address it right away. Don’t get emotional. Listen more than you talk. Realize its a process and takes a little bit of time. Don’t make a person feel as if you are going to try to rip them off or they will get defensive and it will be a battle. Find a fair solution and try to pick up the pieces afterwards.

Keep in mind that these problems are a lot easier to solve before they happen.

Like anything else you should apply these principles to your situation but you must realize every situation is so different its not a one size fits all approach. Make the best decision that you can and try keep your emotions out of it. Partnerships can be great if you go about them the right way.

If you have a particular situation that you want my thoughts on send me an email to nick@sweatystartup.com and I’ll be happy to shed some light. As always – thanks for reading.

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 thiseach week to get you fired up and get your gears turning.

An interesting reflection on the podcast so far

An interesting thing is happening with the podcast. I’m getting a lot of emails from people who have found holes in markets. But their solution is to help the businesses get more customers. Lead generation, website consulting, SEO work, etc for child care centers, HVAC contractors, doctors and all the other 1985 businesses.

They don’t understand that getting customers isn’t something the companies need help with. There is an oversupply of customers and not enough companies. They are trying to sell customers to the businesses and its not working. They want to sit behind a computer and consult and type and not do any work. The people willing to get out and do it and actually compete with these businesses will be the winners.

That has been my point from day 1. There isn’t a shortage in websites and software and programs and SEO. There is a shortage in companies offering services.

I used to think I wanted to teach my kids to code and write software and code. Too many people are doing that. Coding is getting cheaper and cheaper and cheaper and I think it will get automated over the years in ways like WordPress automated web development.

The average age of a small business owner in America is 50 years old. What will happen when they want to retire in 10 or 15 years?

I’m going to teach my kids to work and grind and sweat.

What we can all learn from Chick-fil-A

Simplicity

A small menu done really really well. Three types of sandwiches (fried, spicy fried, and grilled). Nuggets. Fries and shakes. Boom. Thats it. They take most of their orders with the walk up servers and 90% of customers don’t even need to look at a menu because after you’ve visited once you know it by heart.

Speed

The simplicity allows them to crank out the food. They know they’ll serve 300 chicken sandwiches per hour so the kitchen doesn’t wait for orders. They crank out the food baby.

The drive through moves 3x as fast as any other fast food restaurant I’ve ever seen. They’ve identified the bottleneck (the order board with speaker where McDonalds customers are overwhelmed, take forever, and change their minds) and gotten rid of it. Instead they have walking order takers that can take payment on the spot.

Nothing slows down the process. If it ever slowed it down they have already changed it. Their process is a well oiled machine that is predictable and blazing fast.

Eager professionalism

They are all super clean cut, take orders with a smile and have a genuine sense of excitement. I don’t know if they love their job but they are sure made to act like they do. I don’t know if they make more than the workers at taco bell but they sure act like they do. They are eager and professional. Its amazing how far that combination will get you in business.

Consistency

The culmination of all this is that it tastes exactly the same every time. Its never slow. Its never grumpy. Its always a great experience.

Pressure washing concept

Get on your computer and buy a web domain for $1.99 per month. Get a freelancer (upwork or fiverr) to make you a logo/flyer and get $45 worth of flyers printed at your local print shop. Buy a box of sidewalk chalk if you really want to grind and get gritty.

Go downtown with the sidewalk chalk and write “pressure washing and home cleaning 888-555-1234” as many times as you can in high traffic areas.

Go to a middle class or high end neighborhood and hand out flyers on porches and wherever else. Get creative. You might get ran off but its low risk. Target those with dirty payment.

Your cell phone will start ringing. Book all of the jobs for Saturday.

Rent a power washer saturday morning with the other $50 and go make $300 in one day.

Definitely don’t spray the house or the windows with the washer. Use it on the concrete and use a brush or sponge on the house. Get insurance first if you think you might damage something. Use common sense here folks.

Do the same thing the next weekend and then buy a power washer. Then put $200 into a website and a google place. Get a few people to review your google place. Make a youtube video introducing yourself and put your town and power washing in the title.

Within a few weeks of this you will start making $1000+ in profit per week.

“On demand” is going to be your competitive advantage so you can charge a higher price. Make sure you can offer next day service or same day service. As soon as you get too busy to do that hire your first employee.

Make sure that person is presentable and clean cut. Get a business polo shirt made at your local embroider. Target students because they work hard and are reliable. They have summers off which is your busiest time.

Simplify the job so your employees can thrive. Train them to do their core task really well. Don’t forget workers comp.

Now spend all of your time answering the phone, dealing with clients, and quoting jobs and doing marketing. When you get too busy buy another power washer and hire another employee.

Provide super amazing customer service. Answer the phone every time and be in a super eager positive mood. This along with the “on demand” nature will put you ahead of 99% of your competitors.

Get creative with your marketing. Put something awesome like this on your website. Maybe partner with a few realty shops in town or watch the MLS and visit homeowners the week before an open house. A home looks a lot newer with a clean driveway.

Use google maps to measure concrete area and provide instant phone quotes. Provide a 5% off discount if they let you out a yard sign up for a week.

Eventually buy a cargo van and have your own generator and water tank inside so you can be mobile and do more jobs and charge more money.

Grow from there. Start power washing entire parking lots for shopping centers. Get the contract to do it twice a year for $15,000 per service. You can get one of those big ride on power washers eventually and start doing larger commercial jobs.

Maybe new opportunities will arise and you will shift to other areas of cleaning. Keep your ears to the ground.

As your company grows launch a branch in a neighboring city with a management hire. Then another city. Sell the company or just cash the checks and sit on the beach with your family. You’ll likely get bored and end up building another business.

Buying a business. Is it the right call for me?

Show notes for podcast episode 26.

On one hand if someone is selling a business I’m immediately a little skeptical. it must have some problems. Why would they sell it if not? It might require too much of their time and energy. It might be stressful. It might be losing money. The future might be looking bad for the industry as a whole. You are often buying yourself a problem that you will need to fix. You are often buying yourself a job.

On the other hand if it is a very healthy business and it runs without the owner that owner will want too much money. It will be too expensive for you to buy. It would make much more sense investing in starting a company and growing it from scratch and copying that business model.

That said it might just make sense for you. I recently read an article that highlighted the fact that a lot of businesses are going to come on the market for sale as the baby boomers approach retirement. Baby boomers rule in the service area. They own the contracting companies. They own the home service businesses. I’ve designed this podcast around the fact that most of them run their businesses like its 1985 and you can out operate them, but still as these businesses either go up for sale or shut down I look at this as an opportunity. So lets discuss when I think buying a business might just be a great decision.

Lets look at a series of questions. No matter what business you are looking at you need to think seriously about these questions and answer them honestly.

Do you understand the business? Have you worked in the space? Do you know how each aspect works?

Have you done a complete market study? Do you know the competitors in the space like the back of your hand? Have you called them and played a customer and taken notes on what you’ve learned? Make sure to call the business you are considering buying as well, playing a customer and asking a laundry list of questions.

What are the barriers to entry? Do strong brands in the market have a serious advantage?

Is the service itself repeatable and scalable? Can you train others to do it? How long would training take?

What are the risks associated with the service or business? Do you have 18 year olds driving around box trucks? Thats the number one risk in my student storage business.

Is the industry in general growing in size? Is the service getting cheaper or more expensive? Are more customers coming on the market each day or are less?

Does the company have a good online reputation? Make sure to look at the customer service inquiries for the entire previous year during your due diligence. Look at online reviews.

Is the real estate it sits on included with the purchase?

How valuable is the human capital within the business? How long have the key employees been there? How skilled are the service providers? How likely are they to leave if the business is sold? Are they easily replaceable? Don’t count on buying key employees and having them stay. Businesses that rely on extremely talented people and fail without them aren’t the types of businesses I like and this is a risk if you are counting on this.

The big million dollar question is how does the business get their customers?

Does the business have infrastructure in place beyond marketing spend that brings in a lot of business? A top google ranking? A lot of word of mouth? Brand awareness in your area? A prime physical location? Or on the other hand are they spending money on new fresh leads each time they get clients? Obviously you are looking for the former.

Is the business repeatable or subscription based? Do they have a book of clients that come to them for service on a schedule? What contracts are in place with customers? How long are they committed? Do they have 50 accounts that are in place for eternity until they cancel? Thats serious value and you want this. On the other hand if a business spends marketing money to bring in every ounce of revenue thats a red flag. Low barriers to entry and not much value in the brand as it exists.

If I’m starting a lawn care company, a pest control company, or a cleaning company I would consider buying an existing one because they would come with a book of accounts. You would automatically inherit their scheduled customers and the revenue that comes with that. On the other hand if I’m considering buying a brick and mortar mechanic shop and the customers all come in off the street there isn’t much value in that to me unless you are also going to own the prime location and real estate associated with it.

What is the owners role? Does she personally know the big clients? Did she bring in the clients? What is her day to day at the company? What will happen when she leaves? Will she take the clients with her?

What will happen to the operations if she leaves? Is there a massive hole in the company? Would you be required to take it over and basically be buying yourself a job?

Okay those are the main questions to ask yourself. Now lets talk about situations where I think buying a business might be the best move.

If you own a competing business in the same industry and owning that business aligns with your strategic plan.

Lets give an example from my experience. We own a student storage company. Our strategic long term plan is to develop relationships with universities and sign contracts with them to be the preferred vendor on campus. We would consider buying another student storage business if they had contracts with universities. We know those contracts are critical to our growth so that would add serious value to our business.

Its worth more to you than it is to anyone else.

As you know we are in the student storage and the self storage business. In October 2018 we bought out a neighboring storage facility that was more valuable to us than it was to anyone else..

We built our facility in 2017 and had originally planned for a two phase development. We have a very high traffic location which is great for our business but the site has some geographical issues and we were required to build our building into the slope and make it two stories. So not only was there a ton of earthwork to do but we also had to build a two story building which requires a lot more infrastructure and steel. This makes it very expensive to build our second phase. We made a budget and it was going to cost us around $60 per square foot. We needed the space badly because we were about to fill up our facility.

There happened to be a neighboring facility that was around the corner and off the beaten path. It had almost no traffic and no sign so it was very hard to see from the road. But it was only about a quarter mile from our main facility. 12,000 beautiful square feet of rentable storage space. This was $10k a month in revenue if we could get our hands on it.

I reached out to the owners. They were interested in selling. The facility was underperforming. It was only about 20% full. The lack of traffic was killing it. Nobody was interested in buying it because it had no traffic. The buildings were in good shape and it even had a gate and fence around it.

We had the traffic and it could be rolled into our current operations easily because it was so close. We could direct customers from our main location over there easily and wouldn’t even need to rent the units at a discount.

We knew we were on the short list possible buyers so we came in with a low price. They countered. We stood strong. We came to an agreement at $400k. $33 per square foot. Instead of building more space on our parcel for $60/sf we purchased for $33/sf and this was a win win. They would have struggled to find anyone willing to buy at that price but it was worth more to us than it was to anyone else. We closed shortly after and rolled the buildings into our operations seamlessly. It was a huge win for my partner and me.

Another time I love to buy is when I’m one of a very very small group of buyers or possibly the only buyer.

I like to shop in a market that is small. That’s the problem with buying rental properties on zillow right now. If it’s on zillow you’re competing with thousands of other people looking to buy a rental property. Not ideal right? The person who is able to clean up tax liens or buy foreclosures is always getting a better deal because they are competing with a smaller market of buyers.

What makes the buyer pool smaller? Problems. Problems like the ones that come up when you ask the initial questions we started with.

Consider looking for a business with some problems with the business that you can solve but others can’t. That makes you the only possible buyer. That was the case with the self storage facility we bought. Traffic was their problem. We had the solution and we were the only ones with the solution. Perfect situation.

Don’t look for the perfect business to buy or you’ll be in a tough market and you’ll overpay. Consider buying the business that has some problems and being the only person to bring an offer at all. That puts you in the power position during negotiations and you can find some great deals that way.

Opportunities do come up. Maybe you work at a company on the management team and the owner (who is very involved) gets sick. Or maybe he needs to retire. You are in prime position to be one of the few people to buy the business.

The way the process works is you are first asked to sign a non compete and non disclosure. Basically stating that you won’t use what you learn to try to steal customers or share it to the public.

Then you get basic financial and customer numbers that can give you what you need to make an offer and go under contract to purchase. Then you will want at least 90 days due diligence to really dig in to the nitty gritty. Make sure the due diligence you want to do is explained in the contract. During due diligence you can often uncover things and then negotiate the price further and that is very common.

If you are going to buy a business make sure you do very in depth due diligence. Do extensive interviews with all key employees. If they don’t allow this then thats a bad sign. The employees should be in the loop with what is going on. Ask them all the same questions. Anything fishy? Do you they would leave when the company is sold? Do you need them at all?

Depending on the type of business consider interviewing key customers and talking about the business reputation and their experiences.

Make sure the accounting and bookkeeping is well organized and the record keeping is tight. Run the other way if the owner talks about taxable income in a different way than the amount he pulls off the business. This is a huge red flag. How are the books? Are the accounting practices solid and organized? Don’t give an inch here. If the tax returns don’t prove it it didn’t happen and discounts are coming.

Consider including a performance hurdle that the business must hit in the coming years to finalize the payout figures agreed upon. This is a way you can hedge risk but you’ll also end up paying more for this and it could complicate things.

Consider keeping the owner on board in a hired position during the transition. This can help you learn the business but is also complicated and you must realize they will not be very interested in working hard.

Lets talk briefly about the valuation of the business you are considering buying. This is extremely tricky. Owners often overvalue the work they have put in as well as the future potential. I’m not going to be able to give you 100% accurate advice here because all businesses are so different but lets go over the basics.

Before you even start you need to figure out what the business is worth to you.

Make a pro forma to estimate your cashflows. I have a sample pro forma on the website. Search cashflow projections. Spend a lot of time on this. Run them 5 different ways ranging from as expected to better than expected to worse than expected. You need to have the capital to make this fail proof. Even if things go as horribly as possible it won’t force you into bankruptcy. This likely means you need a lot more cash to make the purchase than you think you do.

If you take over the business how profitable will the customers that come with that business be?

Use your data to run the cashflow projections at your margins and come up with a projected profit figure. Now what return are you looking for on your investment in the business? I would think at least 20% for most service businesses. If you spend X on the business you are going to get a 20% annual return on that purchase. Now you have a price that the business is worth to you.

Now secondly you need to get a professional valuation. Pay for an appraisal to determine the market value. Consider paying for it yourself (or through your bank) and keep the numbers to yourself early on because you might not want to pay market value.

No matter how you do it you want to have a value in mind before the negotiation begins.

You want the seller to be the first to name a price. It will likely be a lot higher than what you’d like to pay. React accordingly with a short response email “this is much much higher than we had in mind and we are not in the market at that figure.” and let the days tick by. You can get more and more aggressive with the negotiations depending on the position of the sellers and the amount of buyers in the market.

A little off topic here, but while negotiating it helps to have some “partners” that need consulting, even if they don’t exist, between communications. You can use this to your advantage in a few ways as you play good cop bad cop and draw hard lines in the sand.

Should you use a business broker? If a business is already for sale you probably aren’t going to have much of a choice. But if I’m buying a business I don’t like going through a broker. They don’t have my best interests in mind. They just want to sell the business and take their 10% cut.

They also keep me from having initial conversations with the owner that I think are critical. I love to get on the phone with an owner and listen to them talk. Ask some open ended questions and just listen to them. I can learn so much about someone and the situation that way.

I call around businesses and ask the person on the phone to get me in touch with the owner because I’m a local business owner who is interested in a partnership. I say partnership because often a business owner doesn’t want his employees thinking hes going to sell the company. Once I get the owner on the line I begin the conversation about an acquisition.

Now just because I don’t prefer using a broker doesn’t mean I’m not going to enlist some professional help. I’m going to hire a great attorney and accountant to help me with my due diligence and with my contracts. I’ll also pay for a third party valuation of the business.

Funding can be tricky. If you are buying a service business without any physical income producing assets you will likely only be able to finance about half of it through a local bank. That means you’ll need some serious capital on hand.

Remember that you can get creative with the structure. You can do seller financing and have them hold the note for you. You can pay out over several years and the amount can change based on performance hurdles. You can keep the owner on board as a salaried employee and structure an earn out over a few years. There is really no limit to how it all can work so consider thinking outside the box.

Overall, buying a business can be great. Now lets look at the other side of the equation.

Generally speaking if you aren’t a business owner already and you don’t have extensive experience in the industry buying a business is rarely the right call.

Use that capital instead to start a business and pour rocket fuel on it in the early days to get it to grow very very fast.

If you aren’t an experienced business owner buying a business is often just buying yourself a job and taking a lot of risk to make it happen.

So many people buy businesses because of their own interests and their own passions and not the needs of the markets. I can’t overstate the importance of doing a serious market study and looking at this whole thing through clear non-biased eyes.

Put the principles in this podcast to work and build your own business. Start small. Add value first. Work on the stuff that is important but not urgent. Simplify the job for your employees so normal people can do really well with minimal training.

Think about your time in the early days of building a business as adding long term value in the form of appreciation. Not just an hourly wage based on your income at the end of the year but the value that you are adding to the business in the event of a sale down the road.

In year one you might only make $20 per hour of your time in income at the end of the year. A lot of reinvesting. A lot of marketing and equipment purchases.

But what if the business you started 12 months ago is now worth $100,000 on the open market. What does that do to your hourly pay? Now we’re talking.

I know every situation is complex. There are a million variables at play here. You might have a great opportunity to buy a business right in front of you and taking my advice might lead to a bad decision or a missed opportunity. Keep these things in mind but don’t think what I say is the golden rule. Its impossible for me to give accurate advice on every situation out there based on the generalizations I’ve made here.

It comes down to weighing the pros and cons, getting professional advice and looking at this stuff with a clear logical mind. Don’t let your emotions get involved. Don’t sort information and accept only the stuff that supports your personal directive.

If you are in this situation and want an outside non-biased opinion (for what its worth) I’d love to help out and give you some advice. Reach out to me by email at nick@sweatystartup.com.

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 thiseach week to get you fired up and get your gears turning.

Short term rental concept

Go on craigslist and look at furnished apartments, condos, and homes for rent. Note the number of bedrooms, location, parking etc. Look at condos in great locations. Look at homes near beaches or conference centers. Places near campus in a college town. Those are good targets because they will rent for much more on AirBNB than they would as a monthly rental.

Go on Airbnb and compare the asking rents based on all of these factors.

Create an extremely detailed month to month pro forma (cashflow projection model). Property taxes are listed on public record. Estimate insurance. Estimate utilities. Estimate all the related expenses.

Now estimate the income. It all depends on your town and the location of the property. Note all of the events and raise the prices on those days. Note all the off times and price reasonably and assume lower occupancy.

Compare the rental returns vs the home values. Is it nearing a 10% annual return on overall value? Thats really good.

Could the property do better on Airbnb than on a monthly rental plan with a tenant? If so then thats good and you might be able to convince the owner to let you try it.

Now find a way to reach the people who own the homes that are ideal short term rentals. A lot of them are listing their rental themselves on craigslist so you’ll reach them when you call the number. Another option would be to find their information on the public tax records. Send them a hand written letter.

Show them the projected income. Let them know you are estimating based on research you’ve done. Convince them to let you give it a shot. Agree to share the profit 50/50. Be up front with them, let them know the risks, get the required insurance, and manage expectations. Make sure to check your local regulations around short term rentals.

Get very aggressive with the pricing strategy. Most people under price their short term rentals. Read and study ideal occupancy rates. Read and study ideal times to rent and raise prices. Study events in your town when demand will skyrocket. Learn and learn and learn about this space.

Outsource the cleaning to yourself to make more money.

Collect data. Data will be your biggest asset. Its what will allow you to predict income and sell new property owners on hiring you. Once you can reliably predict a 10% return (on total value) for an investor they will gladly buy properties and hire you to manage them.

Eventually you can expand and try to get people to let you manage their homes who will be traveling for long periods. Or people who want to spend a month abroad. Or people who simply want to stay the night with a friend and make money when there is a college football game in their town. Some of the property owners might pull the listing and just decide to own the income producing asset and let you manage it full time.

When you have data you can eventually predict the value of the properties. You can begin to find investors to buy properties with the sole purpose of having you manage them as short term rental properties.

The data will start to pile up and you will get more and more confident in the income projections. You will have a track record.

Now you will have the cash to put a down payment on a cheaper house or condo and own it yourself. Enjoy all the cashflows.

There are a ton of advantages to this from a tax perspective over a typical service business. You can depreciate your asset each year. Your tax rate on it is 15% vs standard income tax rates as long as it is a passive asset (which it is because your rental company is your main business). Your asset will appreciate by 2-5% per year. When you sell it you can do a 1031 exchange and put off those taxes even longer.

Buy 1 property the first year. Then 2 or 3 the second. Then 5 a year for 2 more years. Whatever pace you are comfortable with here. Soon you’ll have your own portfolio and you’ll be on your way to real estate wealth.

Faculties might have to illustrate a frequent graduate is calculated yearly mortgage fee doesn’t exceed 20% of 8% of the overall profits or his or her discretionary income.

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Lawn care concept

Lawn care is growing extremely fast in the US. 20 years ago 5% of people paid to get their lawn mowed. Today 40% do. 10 years from now 60% will. That is a lot of new customers coming on the market every day.

This was my first business as a 13 year old in 2003. When I left for college I had 40k in the bank working 20 hours a week each summer.

Buy a web domain and hosting for $1.99 per month and build a WordPress site. Get a Google My Business location. Get some reviews on here as fast as possible. I wrote down all the early tools I used here if you’d like to check it out. Doing this while you have a full time job is the perfect way to start. More on that here.

Its competitive. A lot of companies are doing it. Answer the phone every time with friendly, eager professionalism and enthusiasm and you’ll be in the top 10%.

Watch Zillow and Realtor.com and filter for homes that are recently sold in your target areas. High priced houses on small lots (1/4 acre or smaller at first) so you can use a push mower.

Get a logo and some door hanging flyers put together using a freelancing site. Get your logo embroidered on a nice polo shirt. Don’t forget a market analysis.

Put on your polo and a pair of khaki shorts and go to the homes that recently sold and knock on the door. Smile at them and shake their hand firmly. Tell them you just started a lawn care company and you’d love to offer them a free cut and trim with no obligation. If they don’t answer hang the flyer on the door and go to the next house.

After you have a few customers interested buy a self propelled push mower and a trimmer used. Get a leaf blower too. You can start small with this stuff at first and upgrade later. Practice mowing your own or friends lawns. Mow in lines to make it look nice. Edge the sidewalks and driveways with the trimmer. Blow off the pavement when you are done.

Watch and read a ton of stuff online. There are great resources on YouTube that will teach you a lot of tricks and tips. Study the different types of turf and what length you should cut them.

Play around with the pricing you charge. Use the free promotional mowing as a test and make sure to time it. Price your time at $40 per hour at first but make sure to charge by the cut. Most of the small lawns will take less than an hour even with a push mower.

Get some nice lawn signs made and ask customers if you can put them in the lawn. Some will let you if they like you. If they don’t offer them a discount on a future service.

When you start to get some momentum set up a CRM like Jobber. It allows you to look way more professional than you are. Do all of your billing online. Attach photos of the lawns as they are completed.

You are not going to compete on price. You are going to compete on professionalism, service and quality. They are going to like you as a person and want to do business with you. Learn more about this concept in my episode#13 “never compete on price again”.

How about a text message when you are on the way to service a customer? How about a link in that text to a picture of the smiling clean cut person who will be stepping onto their property? And a note about what you can expect from the person and how the appointment will go?

How about instead of a t-shirt and dirty jeans you have a collared shirt and khakis? How about hair up in a pony tail, tattoos covered, and beard neatly trimmed? How about a giant smile, a firm handshake and an enthusiastic opening statement?

Eventually you will get some momentum. You will be able to upgrade your equipment and get a nice zero turn mower. You’ll be able to take on larger lawns.

Keep business cards in your pocket all the time. Customers will approach you as you work. Offer referral rewards for your customers. Send them Christmas cards. Form a personal relationship with them. Know the names of everyone in the family. Show up with a teddy bear when its the little guy’s birthday.

Maybe partner with a few realty shops in town or watch the MLS and visit homeowners the week before an open house. A home looks a lot newer with a perfectly manicured lawn. Use google maps and street view to quote jobs instantly over the phone with customers. Don’t forget commercial real estate.

Make sure to get the proper insurance and permitting in place before you start. If you’ve never operated a lawn mower this is not the business for you.

Consider learning Spanish so your customer and employee base is expanded. Consider getting into herbicides. You’ll need to take a class and get permits for this. Treating a lawn with $10 worth of pre-emergent in February or March will make a lawn look 10x better all year. Another few treatments of 2-4-D and fertilizer and you’ll have it looking like a million bucks. Consider exploring landscaping projects.

Eventually you will build a great little. You will compete on speed and quality and not price. You will charge more than the average joes who offer lawn care and people will be happy to pay it. You can chose to stay small and charge a high price or try to grow and scale the business.

Make sure that person is presentable and clean cut. Simplify the job so your employees can thrive. Train them to do their core task really well. Don’t ask them to do 20 things or they’ll do them all poorly. Don’t forget workers comp.

Now spend all of your time answering the phone, dealing with clients, and quoting jobs and managing the marketing. Build a series of youtube videos targeting your city and the keywords so you show up on the second largest search engine in the world (Youtube).

You can chose to plow snow in the winter or you can spend the cold months down south. Seasonal businesses are great because you can revamp your operations in the off season and really make great improvements.

Don’t like lawn care? Check out this list and take your pick.

Effective marketing is laser focused

The highest ROI you will ever achieve is when you spend money to reach out and touch the people who need exactly what you are selling.

Who is the one type of person who your business is designed for?

Who is your perfect customer?

What life event just happened to them that makes them need what you are selling?

What do they own (or just purchase) that makes them need what you are selling?

How old are they? What neighborhood do they live in? Where do they work? Where do they hang out on the weekends?

Ignore everyone else. Stop shooting from the hip at 18-99 year olds. I know you might service a lot of different people, especially early on. Who is your most profitable, perfect, easy to deal with customer?

Think hard on these questions. Get creative. How can you can get in front of them? Do things other businesses aren’t doing. Do thing differently. Think outside the box.

Eager professionalism

ea·ger pro·fes·sion·al·ism – /ˈēɡər/ /prəˈfeSHənlˌizəm/

(of a business) the strong desire and excitement to exude competence and skill.

Invest in the customer experience and you will reap the rewards. It starts by answering the phone with a smile on your face, excitement in your tone and a genuine desire to add value first and profit later. That will get you ahead of 95% of all companies out there.

What else can you do to separate yourself from the crowd of hungry businesses?

How about a text message when you are on the way to service a customer? How about a link in that text to a picture of the smiling clean cut person who will be stepping into their home or business? And a note about what you can expect from the person and how the appointment will go?

How about a policy to put 20 cent shoe covers on your boots before you walk inside?

How about instead of a t-shirt and dirty jeans you have a collared shirt and khakis?

How about hair up in a pony tail, tattoos covered, and beard neatly trimmed?

How about a giant smile, a firm handshake and an enthusiastic opening statement?

Thats eager professionalism. And it works.

Why services over tech or products?

Service based entrepreneurship is what I promote for a number of reasons.

People are specializing more and outsourcing the services they need in their home and business. More and more customers come on the market every day. 20 years ago 5% of people paid to have their lawn mowed. Today 40% do. In 10 years 80% of people will.

The customers are already there. You don’t have to train a market and take a big risk teaching customers what you are offering. You don’t need a big new idea. You don’t need venture capital. You can bootstrap and own everything.

You can start out as a company of 1 making really really good money and chose if you want to turn it into a big business or not.

You have a ton of data out there to study and look for holes in the market where you can compete and carve out your niche. You can copy the businesses that do things well. Take a little bit from this company. A little bit from that company. Find one that does what you want to do in another city and mimic it in your city.

Who would you rather compete with? Massive companies and brilliant people from the ivy league or mom and pop down the street that runs a business like its 1985?

You can target your customers physically instead of competing online for clicks with every company in the world.

You can do one thing really really well and all you need is a handful of customers who need your service to get started and build a healthy base.

If you answer the phone and provide professional customer service you are ahead of 95% of the companies out there. You can compete on speed and quality and name your own price.

Its low risk. Its not getting cheaper every day like web development and software.

You can automate the business and gain location and time independence.

All the wealthiest people I know got started small like this. All the people with the best quality of life and the time to do what they want got started like this. My friends who tried going the product or tech route ended up getting jobs.

I could go on and on and on.

Thermal imaging concept

When you get home from work one day go to your computer instead of the couch. Buy a domain and get hosting for $1.99 per month. Set up a website with WordPress. Pay someone on a freelancing site to create a simple logo and some marketing material for you.

Make sure your flyer has great copywriting. This is an example of what you might want to say:

Predict your home utility bills with affordable thermal imaging
Where is your home leaking heat?
Understand your home utility bills BEFORE you buy
Protect your investment with a thermal imaging analysis
Affordable energy auditing

Buy $100 worth of door hanging flyers created on UPrinting or your local print shop. Make sure your phone number and web address is on the bottom of the flyer.

That weekend go on Zillow or Realtor.com and get in your car. Drive around and hang a flyer on the door of every home for sale within 10 miles of where you live.

Read and learn about thermal imaging by watching videos like this. Take one of the many online classes. Consider getting certified. Watch an updated video on equipment so you can decide what camera to buy. Study the industry and learn as much as possible. Buy a camera for under $350. You can upgrade later.

Create a report template that you will use to report back to customers. Use the many many examples

on the internet and take what you love from each of them.

Your phone will start to ring. Do some studying and take a class. Get out and service some customers at heavy discounts. Get the required certifications. Learn a lot.

Provide professional reports for them to use.

As you gain momentum start to grow your marketing channels. Partner with realtors to send you referrals and pay them a cut if necessary. Watch the MLS. Show up at open houses and hand out business cards. Get creative with your marketing. Find local real estate investors and offer your services to them for free at first to gain trust. Word will get out about your work and business will start flowing.

You’ll start to bring in $150+ per service and it will take you about an hour. Begin to partner with contractors who want the leads you have for new windows, roofs, insulation, doors, etc. Tons of opportunity here.

As soon as your weekends and evenings are full and you are bringing in enough money to replace your 9-5 quit your job and get serious.

Invest in some equipment like a drone and get certified to fly it. Start doing big commercial thermal imaging projects. Maybe expand to be a full on building inspector. Develop consulting relationships with developers and real estate investors in your city.

As soon as you are too busy hire employees and begin to build your company. Simplify the job so your employees can thrive. Train them to do their core task really well. Don’t forget workers comp.

Provide super amazing customer service. Answer the phone every time and be in a super eager positive mood. This along with the “on demand” nature will put you ahead of 99% of your competitors.

Don’t like thermal imaging? Check out this list and take your pick.

A great entrepreneur’s Rules of Success

I saw this post online recently:

These can be inferred from various interviews of a great businessman:

Never give up (his famous words: “I don’t ever give up. I’d have to be dead or completely incapacitated”)
Really like what you do
Don’t listen to the little man (as in, seek advice from people you look up to, not the people you are trying to get away from)
Take a risk
Do something important (as in, affects a lot of people)
Look for problem solvers
Attract great people
Have a great product (“It’s not enough to have a better product. It has to be A LOT better”)
Work super hard

Now my words:

I love the business man in question actually. People like him are going to take our economy and our world to the next level. His story is absolutely incredible. The fact that he continues to risk it all to drive amazing change is fascinating and we need more of our wealthy people and big companies to adopt this mindset.

But let me play devils advocate here. I’m not saying I’m smarter than anyone. I just believe this is misinterpreted.

Our entrepreneurial culture idolizing this rhetoric is why so many young brilliant minds end up missing all together and getting jobs.

Once you have had massive success like this person you can adopt this kind of attitude. For the average beginner only one or two of these principles should be adopted.

Giving up and pivoting to something else is 100% necessary in the early days. If I didn’t ever give up I’d still be trying to launch one of the 10 businesses that didn’t have the potential as my one that finally did. Never throw good money after bad money. The sunk cost fallacy sends so many business owners into total financial ruin.
Doing something you really like to do is not at all correlated with what the market wants. Most people like art, music, sports, food, cocktails, beer, electric cars, cripto, video games. Those make up less than 5% of all jobs. This is why businesses fail. People start them for selfish reasons.
I’ve learned a lot by taking advice from all people – especially the little man – and sifting through what advice I turn into action. Having an unbiased perspective is critical.
Take a risk. Risk your time yes. Risk a little bit of money yes. But take a risk like a gamble? Like a long shot? Like a tech company with VC? But I have a family to feed… No. Minimize risk. Play the odds that are the best for you. Entrepreneurship is about reducing risk. Take as little risk as possible. INVEST when you are pretty sure your $1 investment will be worth $1+.
Trying to affect millions right off the bat is a big mistake. Less than 1% of successful entrepreneurs get started this way. Even Zuck started with just harvard kids. The most successful people I know all had a very specific target customer who needed one thing and they did that one thing very well. They ignored everyone else. They started very small. Now that they have made it they give away a lot of money and devote energy to doing important things.
Look for problem solvers? I guess this is a good one.
How is an average joe going to attract great people? While they are waiting for saviors and unicorns to arrive I’ll be out grinding myself and working with average people doing manageable things. You can’t attract great people all the time. You have to build a business that can thrive with normal people.
Your product doesn’t need to be “A LOT BETTER” if you pick the right growing market in an underserved area and base you decisions on data and market analysis. If you think you need to be A LOT BETTER you will never end up trying anything and you’ll sit idle waiting on the perfect idea to magically appear.
Working smart and finding the 20% of your efforts that get you 80% of the way there is much more important than hard work. 99% of business owners work hard but still 95% of them fail. Working efficiently and taking a step back and deciding where to work is much more important.

Take this critique with a grain of salt.

I think this business man in particular points his rhetoric towards a lot of other business owners. Hes frustrated that people have made great money doing normal things and now they refuse to risk any of it to do something worth doing and for the betterment of all people.

Start lean and stay lean

Your hypothesis (that there is a hole in the market for you) is still an educated guess until you get out and sell it and prove it. Don’t invest heavily until you know the demand is there and you have the customers to prove it.

You can (and you should) build out your financial projections 100 different ways but at the end of the day you can never build an accurate forecast. You can’t forecast because this is new. Its changing every day. There are thousands of variables. So much uncertainty.

Early on its about putting together the tools necessary to offer a core version of your service as cost effectively as possible. Here is my toolbox. The goal is low overhead and instant profitability.

Cast a wide net, then specialize

As your business grows you will specialize. You are focusing on the customers that are most profitable. You are reading the market signals and finding the underserved niches. You are designing your service around the 20% of customers that generate 80% of your profit. You are ignoring everyone else.

This involves casting a wide net at first and compiling data. You are tracking time and costs and complaints or refunds against revenue.

When the data points to high margins on certain aspects of your service focus on them. When the data points to headaches, refunds, and low margins on other services ignore them or cut them out all together if possible.

Keep your expenses as variable as possible

Things change quickly. So 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.

Its about widening the gap between income and expenses

I’m not suggesting you hold on to your money and refuse to spend it. You have to spend money to increase income. Every hour you pay an employee and every piece of equipment you buy creates income. Every time you spend a dollar you are making an investment.

Its all about maximizing income and minimizing expenses. Do everything you can to widen this gap as much as possible. Remember this doesn’t have to be right this minute. Maximizing income in the long term is the focus – not tomorrow.

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? Use this buying guide to find great value here.

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.

Purchase wisely

I’m not suggesting you spend hours or days shopping in order to save a few dollars. I’m suggesting you put effort into buying the big things right and saving money on the small things by forming good habits around your spending.

Buy your vehicles and equipment used. Avoid splurging on meals and entertainment. Avoid an expensive office by working remotely or using a co-working space month to month. If you need to unload your equipment you’ll be able to recoup a lot of your costs.

Use craigslist and ebay. Let other people eat the depreciation and buy perfectly good vehicles and equipment for pennies on the dollar.

Outsource your weaknesses

“Someone who practices a thousand kicks once is no where near as scary as someone who practices one kick a thousand times.” – Bruce Lee

If it isn’t in your wheelhouse then don’t focus your energy or 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.

There are some things you shouldn’t be in the dark about even if you outsource. As a business owner you need to be competent and knowledgable about your accounting/projections, tax planning and marketing. You need to analyze data within your business to calculate profitability of each service you offer. You need to be a great delegator and communicator to your employees. You need to be driving and managing the training programs and overseeing the customer service. You need to be organized. You need to have a positive attitude and continue to do quadrant 2 work.

Market like a guerrilla

Adwords and social media marketing can have a great ROI but a lot of new companies don’t have the budget or the ability to analyze the returns.

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.

If you are exactly where you want to be in life this post isn’t for you. If you have already designed your life exactly how you want it then by all means do what you want to do with your personal finances.

But if you are working towards a future goal and building a business its time to lean out your personal life.

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.

You are tied to your job right now because of the money you need to finance your lifestyle. If you are serious about leaving your job as soon as possible its time to get serious.

Remember this is only in the near term. You are delaying gratification now so you can build the life you want and buck your 9-5 and do what you want to do on a daily basis.

Every dollar invested in your business will become 2 or 3 dollars in the near future. Every dollar invested in everything else will either be gone or worth pennies. Free up your capital so it can work for you.

So you have a business now. Some momentum. Some profit. 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 you see an opportunity or things get hard it will put a ton of pressure on your business when the money is flying out the window in your personal life.

If you stay lean a few amazing things will happen

You will avoid unnecessary financial stress. Your quality of life will improve drastically. You will have the peace of mind that comes with being able to ride out tough times or uncertainty and limit losses if they occur.

If you aren’t strapped for cash you aren’t forced to milk early customers and turn a profit right away. You can play the marshmallow game and delay profits and gratification. You can learn a lot and customers won’t be as harsh on early mistakes and growing pains.

The longer you can go without pulling big money out of the business the longer you can build a following and grow your volume.

You can invest in making speed your competitive advantage. You can frontload your hiring to provide on demand services and charge a higher price.

You can make more investments in growth and marketing. When you find a marketing channel that turns $1 into $1.50 you can double up your marketing spend. Instead of having that money tied up in a depreciating vehicle or a big office you can have it ready to invest and ignite your growth.

You can focus on adding value first. You can get out and offer a discounted service or a free service to new customers. You can get a following. You can learn more about offering your service. You can build a brand. You can get reviews on the most important online channels.

Offering a free first time service in subscription or recurring business models like lawn care, cleaning, mosquito treatments and others is an investment.

You can track your data and record how much each free service is costing you. Then you can track how many of your free services end up converting into a paying customer in the future. It is an investment and you will be able to easily calculate your return.

Risk is managed and reduced drastically

Business is all about risk and reward. Nothing is risk free. You are always risking something. Maybe time. Maybe money. Often both.

Running a lean business drastically reduces your risk. It makes your business more likely to survive. It limits financial losses if your business fails.

When the next recession happens and 50% of the businesses in your sector fail you will survive. You will be able to ride out the storm. You’ll be poised and ready to ride the next boom and capitalize on the opportunity.

When things change – your business must be able to change

If you are lean and your expenses are flexible you are ready to change course at the drop of a hat. You are ready and able to chase opportunities. You are able to specialize and turn down more customers than you accept.

Entrepreneurship is fluid. Nothing is certain. New competitors arise. Technology changes. Government regulation changes.

Your path will change. Stay lean so you can capitalize and build a healthy company that can survive the journey. Be frugal where it doesn’t matter so you can invest where it does.