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Business with Beers
The 4 Systems I Use to Run 35 Locations Without Being the Bottleneck | 326
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Welcome back to the Business of Beers podcast. Your daily dose of strategies, tools and tips to help you build an eight figure business. Today's episode is a clip from one of my YouTube lives. If you'd like to hear the whole thing, there's a link below in the description. Cheers.
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I just got this question in the YouTube comments, which is good stuff. How do you manage 35 stores? It seems impossible, and it all comes down to one thing, which is systems. And today I want to show you exactly what it takes to build a scalable company. So when most people hear that I own 35 stores, or anybody who builds a large business, this is what they visualize in their head. They visualize you in the center, and then there's all these different nodes, all these different stores, all these different people who pull on you in all these different directions. It was so much like you have no time, you have no energy, and you'd make no progress. That is like a common and very acceptable way to think, because when you start a business. When I started my business, it looked like this, where it was me. And then I had one store, two stores, three stores, four stores, and I was the bottleneck. Everything went through me. I didn't really have any systems. I didn't really have anything to remove myself from the bottleneck or so that the business would function without me. But I learned over time that, like, I could only do so much, and if I really wanted to grow, if I wanted to make a lot more money, have more freedom, have more fun, that I would need to remove myself from the daily operations. My goal was to be irrelevant, right? So it really came down to four systems right here. And this is how I run my entire business. And you can apply these to a business that you're building. These are universal. It's not dependent just on, you know, for context. I own 35 automotive repair franchises. We do about $50 million in revenue. We're kind of throughout the Philadelphia, New Jersey area. So I have four systems. Number one, we have operations. Number two, we have people, we have money, and we have growth. Today we're going to get into all four of these. First, operations, your business needs to have a strong operating system at the single unit level. So you've got this box, right? And the box needs to be able to make money, whatever that is for you. And we're in the auto repair business. We got to be able to get cars in, we got to be able to fix them, right? Customer's gotta be happy. We need the business to function. If you Run an agency, doing marketing or whatever. You gotta have a system on an operational level to get a customer deliver the service and have this end to end process on a unit level. So that's the first thing we wanna think on. When I think about operations, what we're looking at specifically are scorecards. Cause we gotta have the ability to keep score. We gotta know like, are we winning or are we losing? So we create scorecards to measure that. Just like in sports, we keep score. I have one in my business, I track all the important things. In us, it's how many customers did we have, how much do we sell, how are we growing versus last year. I look at our margin and I look at our labor costs. Those are the big ones that I am tracking every single week on our scorecard. Second, we have goals. You have to have great goals. I have a whole thing on goal setting that I don't want to get into here. But a great goal is one that motivates you every day, that's very clear that you're going to be proud of when you hit. And there's lots of different theories on it. I love Ben Hardy's book and all of his content. If you haven't heard of him, go check it out. It's called Ben Hardy the Science of Scaling. That's his latest one. Tons of great stuff in there. Then we're looking at our tech stack. Especially right now with AI, there are so many tools that you can use to improve the operations of your business, to improve the skills and the speed at which you service customers. And so we are constantly looking at ways to use tech to automate as much as possible to get it off. So it's not a manual process that I have to do or even a manual process that our employees have to do. And that is how we do it. And then finally it's global talent. Now we have an entire team. I think it's 15 or 20 people that work for us now across the world. We have people in the Philippines who help us in the office. We have people in South America and South Africa, in all parts of the country. And we leverage Global talent to be able to go faster, to scale easier, and just to make the business run smoother at a more efficient price. That's the first system that you need to have, which is everything related to operations in your business. Then we move out and we go to people. Now I'm in a service based business and anybody who's in a service based business, I like to say that I'm not In the business of fixing cars, I'm in the business of people, which means I need to hire great people. I need to be able to keep them, we need to motivate them and make sure that they're aligned with the company values. We need all those systems to be able to run. The first one is the hiring system where we need to be able to, on a reliable, consistent basis, be able to attract people in into our world and get them on board. So what does that look like? That sounds fancy, but we need to know how to write job posts that attract the right candidates. You scroll through. Indeed. Most of the job ads are complete crap. We try to write job ads like they're viral social media posts where they're eye catching. They're simple people. It's very clear what you're looking for. Nobody cares about the long list of benefits and you must have these qualifications and people just scroll through it. So we have a specific system that we use to hire people, starting with the job posts. Then it goes to the screening process where we say, okay, we've got all these applicants, how do we know who's good? We have a system to do that. What's one that's really important to develop? Then it's onboarding. So once you hire somebody, the next most important step is to get them onboarded. And that just means you accelerate them joining your company where they feel like they, they made a right decision and that they're right where they belong. We have a system for that. You need to have one too in terms of expediating the relationships that they build. Some of the things that work for us is one, you have a checklist that says here's all the things that you need to learn with the dates that we expect you to learn them by. Number two is integrating them with as many people as you can as quick as possible. Have them meet different store managers, in my case, district managers, office people. We want them to feel like they belong and if they don't have a good experience in those first even week, they may not last. And so we focus a ton on that and it's helped a lot. You need to have a retention system. And now retention is a big bucket, right? Retention means why do people stay with you? And again, we're in the people business. If I hire a bunch of great people, but they don't stick around because we don't have a good retention system, then it's all for nothing. And so when we look at retention, I'm looking at number one compensation plans. Do we pay people the right way. Do we have bonus plans where they can make a lot of money? If they make me a lot of money, like, I'm happy to pay as much as possible. If the numbers make sense. That's an absolute must. Second is culture by culture. It's like, do people feel appreciated? Do people feel that, like they're in the right team? So we send out handwritten notes when people are setting new records, which happens every single month in our company. We are sharing wins. We celebrate our core values and the people who embody those core values publicly every week. So there's a lot of things that we do to define what it means to succeed in our company, and that leads to very high retention. That's a key part of it. Then finally, you need to have development, development system where, I mean, I have in my organization multiple people that we've hired as entry level mechanics for $14 an hour who worked their way up to being a customer service, to an assistant manager, to a store manager, and now to what we call a managing partner, where they get. They're paid a percentage of whatever the store's profits are. They have unlimited income. The more money that store makes, the more money they make. We have systems to teach people leadership. You know, a lot of times, managers, people who become the managers of a location don't have any leadership experience. Like, they may be really good at sales, they may be really good at operations, but that doesn't mean they know how to lead people. Maybe they lead by being a boss, right? Just nail them. This is what you got to do. This is what you got to do. But people don't follow bosses. They follow leaders. They want to be inspired. They want to be motivated. They want to know that you're on their team, that we're all in this for the greater good. We have a shared vision. We have shared values. And so you have to have a system to develop your people. We leverage a book club where every week or so our leadership team is picking a new book and picking specific chapters out of that book that they believe are the most impactful and how everybody read it that week. And then on a Friday morning or whatever day, they're reviewing it and saying, what did we learn? What was the biggest. Aha. What was your takeaway? What are you going to start doing differently? We don't just want to read, but we want to put it to the test. That's super important that you have a system around developing your people. Next we get into the money system. We're in Business to make money. And we have to have a solid system there. So there's a couple things here. Number one, it's knowing your numbers like cold. I can know exactly if I made money or not based off of three numbers, not even two numbers, to be honest. If you told me this week that one of my stores did $40,000 in revenue and our cost of goods was under 25%, our payroll was under 25%, which means we had roughly $20,000 of what we call gross profit, then I can tell you that that was in a. A fantastic week that we probably made at least. We probably made 20% that week. We probably made eight grand on that 40. And if that same store does $20,000 in a week and our cost of goods is 30% and our payroll is 30%, I know that we lost money. Like, I know my numbers that good. Because I figured out that The P and Ls aren't that complicated and that in most businesses, especially franchises, if you're in my world, then you should know your sales, your cost of goods, and your payroll. If those numbers line up to whatever your kind of framework should be, that you're good or not. And so every single day, we know how we're building to the week, that if it's good or if we need to make adjustments or if the place is on fire and we got to jump in there ourselves and figure it out. So you have to know your numbers cold. I've made a bunch of other videos that we can link below to help you figure some of this stuff out. But that's the first key part of a money system. Second is understanding your cash flow and the difference between cash and profit. Now, for a lot of business owners, you have cash. Cash out of the business can be very painful at times. Even like this week for me, we have royalties that hit. We have credit card bills due, we have a payroll. We. We might have a sales tax payment, we might have a real estate tax bill that's due. Sometimes you may be looking on your P and L and you might make a lot of money, but that assumes it's made and paid the same day. But in a real basis, you might be accumulating and boom. All of a sudden you have all this money that has to go out the door in a very short amount of time, and you have very close to zero left in the bank account. You have to have a system to track that cash flow, to know your numbers and. And to be able to manage it. And the final one here on the Money strategy is your pricing. You have to have a solid system to know when it is a time to raise your prices. What systems are you having to know that we are under market that we need to fix our. How we what, what jobs we have add ons to? How do we price those add ons? How do we squeeze better margins out of our vendors? This is a topic that a lot of business owners totally ignore. They set a price and then they just set it and forget it. And they haven't raised their prices in years because they're so afraid that customers are going to like, turn on them or do something crazy if we raise the prices by $5 or whatever it is. So we are constantly looking at our pricing. We are constantly making changes to ensure that we are charging the appropriate amount of money for the value that we deliver. Now, did I say we were going to be the cheapest? No. Or we're going to be the most expensive? Probably not, but we are looking at that. So if our vendors start charging us more money due to tariffs or whatever increased costs, like guess what, our prices at the customer are going to go up. If our labor cost has to go is increasing because we need to hire higher quality people who deliver better, faster service, then guess what, we're going to raise our labor rates. And if our insurance goes up and if these different costs go up, as a business owner, what am I supposed to do? Just sit there and take it like, no, I'm going to be passing all of those along to consumers. Because listen, that's the whole deal. That's how capitalism works. And so don't be afraid to raise your prices. And when you look at raising them, do it in a number that would actually matter. So, for example, when I'm looking to raise my labor, we were at $170 an hour for the longest time. And you know, sometimes we would have said, hey, can we go to 175? And you know, at the end we said like, it's $5 on 170. It's, it's, it's like a, what's that, a 3% increase or something? And we ripped the band aid. I think we went to 190. So we went up $20, like less than 10% on the labor rate. But labor's only half of our revenue. So in total, we really only went up about 5%. And so here's how I think about pricing strategies as a quick example. So let's say in my business, we're in the auto repair business. I charge $150 an hour. And let's say I wanted to raise my rates by, let's say, $15 an hour plus 15. So that would be a 10% increase. And you may be thinking, whoa, 10% increase, you're going to lose all your customers. But then we got to actually break this down a little bit further. Labor is only 50% of our revenue. And so in reality, if our average ticket is, let's say, $300 and it's 50, 50 on parts and labor, which means we're actually only going to go up $15, which is a 5% increase. And at the end of the day, are you going to lose a job if it's $300 or $315 if somebody needs the work? Probably not. You're probably not going to lose because it's such a small number for an individual basis, but for you, and as the company grows and you have like, you know, more and more widgets or the thing that you sell, like, it really adds up to you and it ends up being a lot of money. So don't be afraid to raise your prices, don't be afraid to try new things. And let's move on now to the final and what most people think is the most exciting, which is the growth. So it's like, now we have a solid business. We have a way to hire and retain people. We have a way that we know we run a profitable business. And the whole point of owning a franchise and why I'm in this game is to copy and paste, is to rinse and repeat, is to take something that's working and we just go over and over and over again. And so there's a number of things that you have to nail if you want to grow a scalable business. Now, the first is having a nice extreme strategy. We want to grow, but we also want to grow smart. And you have to have a strategy for knowing what is the best way to grow. From my experience, it's been regionally where my goal is to buy out my neighbors and then another neighbor, and then I expand my radius and I want to buy stores in my market, and then I'm looking to buy stores in a market that's within an hour and a half. And then I would look potentially at new stores, at plane ride stores. Right. Like, I have a very specific strategy that I go through to determine what is the best growth path for me in my situation. And so you need a strategy for that. That's super important. You have to have an acquisition system. So how do we go out and acquire other businesses? If you're in franchising, you're acquiring other existing franchisees. I could also be acquiring independent automotive repair shops and converting them into my business franchise. I could look at acquiring another business that could coexist with my business. Right. There's lots of different ways I could go. It's just a question of what's the smartest way. I also need to have a development strategy, which is how do I open up new stores and not just acquire existing businesses, but ones that I want to build from scratch? In some cases, that makes a lot of sense. In other cases, it makes no sense at all. But I have to have a framework around how am I going to develop my systems. I have to have evaluation and due diligence. So we have a deal that we're looking at. How do we determine what's a good value of it? How do we do due diligence to ensure, like, what we're bought, what we, what we think we're buying is actually true, like, all that matters. And then finally goes back to your money system, which is you have to be able to structure these deals. You got to be able to fund them, whether that is through debt, whether that is through seller financing, whether there's cash flow, whether that is partners. You have to have as part of your acquisition strategy a solid system to do it. So how do you go about actually implementing this? I talked earlier how we're in the people business that just happens to fix cars. It all comes down to having people and that the whole point of a system, though, is that it is something that's scalable. And so it looks more like this where we say, okay, we've got like three divisions. We have operations, we have finance, we have people, we have hr. And so on the OP side, we have an operations leader. And then we've got district managers. And then each district manager is responsible for the operations within their stores. Each have about six, seven, something in that range. And then within the OPS division, we have to focus on all the playbooks. Pieces of all the playbooks get run at the division level and then every level, almost every level below. In terms of how do we have good operations, obviously, how do we have good people and compensation plans, money, how do we price things and execute on the pricing strategies and then grow. We gotta have a growth strategy and be able to integrate new stores, decide who we're promoting from within to take over new opportunities, etc. On the finance side, we have people that run the finance division. And they're really focused on the money system and the growth system. How do we fund growth? And then the operations is global talent. We use tons of people in the back office to run it all the AI to be able to track and look for anomalies. Right. And all that stuff. And then on the people side, it hr. Obviously, it's mostly our people systems, but also how do we leverage operations there to really grow. It's not that I run all the playbooks. It's that as a team, we develop playbooks that make sense, and then those playbooks become kind of the system of how we go about doing things. And then it's implemented across the board to different degrees and different pieces, but it all integrates into one. Then this is how we're able to run a significant size company. 35 stores. We'll do $50 million in revenue. We have plans for 2,026 this next year to do even more. And so you can do this in your business. You just got to go back and look at implementing these things.