Why Founder Work Makes Your Margins Look Better — Transcript

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1. 0:00Hello, my name is Caleb Kvakovich. Uh we
2. 0:02sell window tint, paint protection film,
3. 0:04and vehicle wraps. Uh we're on track to
4. 0:06do 2.2 million. I'd like to be at 100
5. 0:09million. And what is mainly stopping us
6. 0:11is copy pasting and opening them up all
7. 0:15over the country. So the main thing we
8. 0:16have now is
9. 0:17>> our store is at 50% margin. Ed kind of
10. 0:20taught us how to get to 70. We're going
11. 0:22to implement that when we get back. Uh
12. 0:24the main thing that we want to do is
13. 0:25make sure we're staffing them correctly.
14. 0:27So when we do start opening other ones,
15. 0:29they don't start falling apart when
16. 0:31we're no longer there.
17. 0:32>> Yeah. How many do you have now?
18. 0:34>> One.
19. 0:36>> Okay. Um, so how can I help?
20. 0:43>> What would be
21. 0:45I don't want to overstaff them cuz I'm
22. 0:47I'm worried that I'm going to do that,
23. 0:48but I'm also afraid that I'm going to
24. 0:50understaff them. Like I have a manager,
25. 0:52but then I almost feel like I take care
26. 0:54of everything. There's another owner
27. 0:56involved. We both take care of
28. 0:57everything.
29. 0:58>> Yeah, man.
30. 0:59>> And I feel like it's just gonna crumble
31. 1:01if I don't structure it correctly. And I
32. 1:04don't really know what the first step is
33. 1:05to start putting people in a leadership
34. 1:06position.
35. 1:07>> Yeah. So, you have a partner?
36. 1:09>> Yes.
37. 1:10>> 50/50?
38. 1:11>> Yes.
39. 1:12>> Yeah. It's tough. Um, it's tough because
40. 1:15right now you're probably running
41. 1:16artificially high margins because you
42. 1:18guys are functioning as one or two GMs.
43. 1:22>> Okay. And that'll get factored into the
44. 1:24business model, especially as it scales.
45. 1:26Let me tell you what I don't want to
46. 1:27have happen. Got it?
47. 1:28>> So, you say, "We're going to open up the
48. 1:31second location." You're going to go to
49. 1:32the second location. You're going to
50. 1:33divide and conquer with your partner. He
51. 1:35stays there. You go forward. You try and
52. 1:36spin this next one up. Now, you're both
53. 1:38working more time. Some of the work you
54. 1:41were doing there uh falls a little bit
55. 1:43to the wayside because that's what
56. 1:44you're better at. Your partner's not as
57. 1:45good as that. And some of the stuff that
58. 1:46he was doing, you're not doing at the
59. 1:48new location. The new location doesn't
60. 1:49go up quite as high as the first one did
61. 1:51because you have more word of mouth. if
62. 1:52you've been there longer and it doesn't
63. 1:53re reach that high water mark. In the
64. 1:55meantime, the one that was over here
65. 1:56goes down a little bit and now your
66. 1:57profitability, all of that extra
67. 1:59decrease comes straight out of the
68. 2:01bottom line.
69. 2:01>> Right.
70. 2:02>> Right. And over here it doesn't
71. 2:03increase. So, you doubled your
72. 2:04liabilities and your profit might
73. 2:05actually be around the same or even
74. 2:06less. And now you're like, wait, now we
75. 2:08have two twice as many stores, but then
76. 2:10you think, wait, this is now the stable
77. 2:12model. We'll open a third.
78. 2:13>> And then you open a third. And then now
79. 2:14your splits two on three. You go from
80. 2:16man to man to to zone, right? And you're
81. 2:18running back and forth between three
82. 2:19stores. now profitability than the other
83. 2:21two because now you're not all at any of
84. 2:23them starts to go down and now all of a
85. 2:25sudden you're like I have three
86. 2:26nonprofits. What the [ __ ] How did I get
87. 2:28here? Right.
88. 2:29>> That's what I don't want to have happen.
89. 2:31Right.
90. 2:31>> That's also, by the way, what happens
91. 2:32most of the time?
92. 2:33>> I figured.
93. 2:34>> Yeah. So, you actually have to get to
94. 2:37what Angelo uh got to with the pizza
95. 2:39shops, which is it has to be able to
96. 2:41grow without you.
97. 2:43>> Mhm.
98. 2:44>> For six months.
99. 2:45>> Okay.
100. 2:45>> That is my litmus test. And that means
101. 2:47that you and your partner need to
102. 2:48basically disappear and somebody at the
103. 2:51shop if that does person doesn't exist
104. 2:52need to find them or somebody who's
105. 2:54already there needs to become general
106. 2:55manager. That person should have their
107. 2:57picture on the door. This is Johnny's
108. 2:59shop. Johnny's the general manager here.
109. 3:01He's treated as an owner. Um and
110. 3:04basically he'll have the or she'll have
111. 3:06the ability to earn uh some percentage
112. 3:08of profit in the business likely. What
113. 3:11do you um
114. 3:14so you're making a million-ish, right?
115. 3:17Um,
116. 3:18do you have someone right now in mind
117. 3:20who you think could become GM?
118. 3:22>> Yeah, my manager right now.
119. 3:24>> Okay. The deal works like this is you,
120. 3:27what's your partner's name?
121. 3:28>> Nathan.
122. 3:28>> Nathan, where you at? What's up? So, you
123. 3:32say, "Hey, this is Nathan and I's phone,
124. 3:34>> right?
125. 3:35>> Um,
126. 3:37you get this percentage.
127. 3:40This doesn't ring." That's the trade.
128. 3:42And so, let's role play.
129. 3:44>> Okay. So, if there's a leak in the
130. 3:45ceiling, what do you do?
131. 3:47>> Don't call me.
132. 3:48>> Exactly. Any answer but call me is the
133. 3:50correct answer.
134. 3:51>> Okay.
135. 3:51>> Right.
136. 3:52>> Right.
137. 3:53>> It's like, let's try it again.
138. 3:55[laughter]
139. 3:55Right. And I mean, I make the point
140. 3:57because I like I want them to get it.
141. 3:59It's like, if this rings, that's not the
142. 4:01trade. The trade is this doesn't ring,
143. 4:04you make more money.
144. 4:05>> Got it?
145. 4:05>> If this rings, then I want the money
146. 4:07back.
147. 4:07>> Right?
148. 4:08And so if whoever your manager is can
149. 4:11actually run the store now part of you
150. 4:12guys are going to have to write down
151. 4:13what you actually do because you're
152. 4:15doing I'll bet you a hundred small
153. 4:16things.
154. 4:17>> Oh yeah,
155. 4:18>> right. And so you need to document that
156. 4:19with observable behavior. What can
157. 4:21someone see that you do that you can get
158. 4:23someone else to do? Now once you have
159. 4:24that list of stuff you can start diving
160. 4:26it up and putting it into their daily
161. 4:28tasks for the rest of the team plus the
162. 4:30manager. Okay. Now, if that guy can't or
163. 4:32gal can't do it, then you might need two
164. 4:35depending on like how the how how it's
165. 4:37set up with shifts and I the inner
166. 4:38workings. Um, but we want to get that
167. 4:41structure because like one of our big
168. 4:42things is you nail it before we scale
169. 4:43it, right? And so you want to nail the
170. 4:45model because this model you don't want
171. 4:47to be iterating your model location
172. 4:49after location. You get the first one
173. 4:51right.
174. 4:51>> And if you get that one right,
175. 4:53everything after that's much easier. If
176. 4:54you go one wrong, it's really tough,
177. 4:56right?
178. 4:56>> Because backtracking off a bad location,
179. 4:58bad bad decision, your cash flow is
180. 4:59lower, you expand to the wrong market
181. 5:01because you didn't know enough,
182. 5:03>> you you can get stuck for years.
183. 5:05>> Okay?
184. 5:05>> So, I'd rather you stack more cash. I
185. 5:07know that right now you probably like
186. 5:08want to go and like expand and make more
187. 5:10money. I'm all for it.
188. 5:11>> But if you nail this, there's actually a
189. 5:13lot more optionality because if you if
190. 5:15you were to come to me and say, "I
191. 5:16haven't been in the shop in six months.
192. 5:18It's making more profit than it did."
193. 5:20I'd be like, "Dude, there's six options
194. 5:22we can do from here,
195. 5:23>> but we got to get there." So, just see
196. 5:24it as like a very important step on the
197. 5:26milestone of where you're trying to go.
198. 5:27And then at that point, it's like, okay,
199. 5:29do we open up more shops? Do we buy
200. 5:31failing shops and flip them? Do we
201. 5:33license it? Do we franchise it? There's
202. 5:35a lot of different optionality from
203. 5:36there. But get to that point first.
204. 5:38>> Okay. Now, quick follow-up question. I
205. 5:41don't like not working. So, not doing
206. 5:44something for six months bothers me.
207. 5:45Yeah.
208. 5:46>> I don't know what I would do. I feel
209. 5:48like I would almost just like find
210. 5:50things to do or
211. 5:52>> I would be more worried I'm gonna call
212. 5:53him and be like, "Hey."
213. 5:55>> Yeah. How's it going?
214. 5:56>> Yeah. Sounds like an opportunity for
215. 5:58improvement. Okay. So,
216. 6:03you want to win, right?
217. 6:06>> So, do what it takes to win.
218. 6:08>> Okay.
219. 6:08>> Which might be something that's
220. 6:09uncomfortable for you today. And welcome
221. 6:11to growth.
222. 6:11>> Okay. Thank you, sir.
223. 6:13>> Yeah. Appreciate it. If you like this
224. 6:15video and you're a business owner who
225. 6:16wants to break through your current
226. 6:17revenue ceiling, I distilled every
227. 6:18lesson from scaling 10 businesses past
228. 6:2010 million and three businesses past 100
229. 6:22million into a completely free scaling
230. 6:24road map that I've used to go from 0 to
231. 6:261, 0 to 10, and 0 to 100 plus. And so
232. 6:28you can click here and you can check it
233. 6:30out. Again, absolutely free. And since
234. 6:31you're a business owner, appreciate you
235. 6:33and uh enjoy