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. I just got this question in the YouTube comments, which is good stuff. How do you manage 35 stores? 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. And so when most people hear that, you know, I own 35 stores or anybody who builds a large business, this is what they visualize in their head, right? They visualize you in the center, and then there's all these different nodes, all these different stores, all these different people who pool on you in all these different directions, and with so much, like you have no time, you have no energy, and you would make no progress. And that is like a 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 you know one store, two stores, three stores, four stores, and you know, and I was the bottleneck. Everything went through me. I didn't really have any systems. I didn't really have anything to like remove myself from the bottleneck or so that the 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. And so I have four systems. Number one, we have operations, number two, we have people, we have money, and we have growth. And so today we're gonna get into all four of these. So first, operations. Your business needs to have a strong operating system at the single unit level. So like you've got this box, right? And the box needs to be able to make money. Whatever that is for you, you know, and we're in the auto repair business, we gotta be able to get cars in, we gotta be able to fix them right, customers gotta be happy. Like, we need we need the business to function. If you run an agency doing marketing or whatever, like you've got to have a system on an operational level to get a customer, deliver the service, and like have this end-to-end process, right? On a unit level. So that's the first thing we want to think on. And when I think about operations, what we're looking at specifically are scorecards, because we got to 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 of my business, I track all the important things. And us, it's how many customers did we have, how much do we sell, uh, 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. Like 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 gonna be proud of when you hit. And there's lots of different theories on it. I love Ben Hardy's uh 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. Uh, 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. Right? We have people in the Philippines who help us with in the office, we have people in in South America, in South Africa, um, in 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. And so that's the first system that you need to have, which is everything related to operations in your business. And 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 like 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. Like, we need all those systems to be able to run. And so the first one is the hiring system, where we need to be able to, on a reliable, consistent basis, be able to attract people into our world and get them on board. So, what does that look like? That sounds fancy, but like 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 their 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 like the long list of like benefits and you must have these qualifications, and people just scroll through it, right? And 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, which is 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 made a right decision and that they're right where they belong. And so there's this, we have a system for that. You you need to have one too, in terms of expediating the the relationships that they build. Some of the some of the things that 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 like 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. Like 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 am happy to pay as much as possible if the numbers make sense. That's an absolute must. Second is culture. Like, and by culture, it's like, do people feel appreciated? Do people feel that like they're on the right team? So we send out handwritten notes when people are setting new records, which happens every single month in our 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. Uh, and so that's a that's a key part of it. And then finally, you need to have development, a 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've 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. And so they they have unlimited income if that 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, right? Maybe they maybe they lead by being a boss, right? Just just nail them, right? This is what you gotta do, this is what you gotta do. But like people don't follow bosses, they follow leaders. They want to be inspired, they want to be motivated, they want to know that like you're on their team and 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 uh 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? Like we we don't just want to read, but we want to put it to the test. And so that's like super important that you have a system around developing your people. Next, we get into the money system, right? Like we're in business to make money, uh, and we have to have a solid system there. And 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. Well, 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% or payroll was under $25%, which means like we had roughly $20,000 of what we call gross profit, then I can tell you that that was in a fantastic week that we probably made uh at least we probably made 20% that week. We probably made $8,000 on that $40,000. And if that same store does $20,000 in a week and our cost of goods is 30% and our payrolls 30%, I know that we lost money. Like I know my numbers that good because I figured out that the PLs aren't that complicated. And that in most businesses, especially franchises, if you know you're in my world, then you know your you should know your sales, your cost of goods, and your payroll. And if those numbers line up to whatever your kind of framework should be, that 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 if the fire, 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 uh 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 uh your cash flow and and the difference between cash and profit. Now, for a lot of business owners, you have cash, cash out of the business can be uh 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 might have a sales tax payment, we might have a real estate tax bill that's due, right? Sometimes you may be looking on your PL and you might make a lot of money, but then but like that assumes it's it's made and paid the same day. But in a real basis, like 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. And so you have to have a system to track that cash flow, to know your numbers 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 the 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 gonna 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 are gonna be the cheapest? No, or gonna 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 to the customer are gonna go up. If our labor cost has to go, you know, is increasing because we need to hire higher quality people who deliver better, faster service, then guess what? We're gonna 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 gonna 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 rate, 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 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 our revenue. So in total, we really only went up about 5%. 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, you know, I wanted to raise my rates by uh let's say $15 an hour plus $15. So that would be a 10% increase. And you may be thinking, whoa, 10% increase, like you're you're gonna lose all your customers. But then we've got to actually break this down a little bit further. Labor is only 50% of our revenue. And so in reality, on if our average ticket is let's say $300, and it's it's 50-50 on parts and labor, which means we're actually only gonna go up, you know, $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 gonna lose because it's such a small number for an individual basis, but for 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, 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 to be if you want to grow a scalable business. Now, the first is having a nice 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 you know with 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 franchise. I could look at acquiring um another business that could be 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 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 a valuation 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 buying, what we what we think we're buying is actually true? Like all that matters. And then finally it 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 it's cash flow, whether that is partners. You have to have, as part of your acquisition strategy, a solid system to do it. And so how do you go about actually implementing this? And I talked earlier how we're in the people business that just happens to fix cars, right? And 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 we have people, we have HR. And so on the ops side, you know, we have we have an operations leader, and then we've got district managers, and then each district manager is responsible for you know the operations within their um their stores. They're each have about six, six, seven, something in that range. And then within the ops division, we have to focus on all all the playbooks, pieces of all the playbooks get run at you know the division level, and then and then every level, almost every level below, terms of how do we how do we have good operations, obviously. How do we have good people that that and compensation plans, money, how do we price things and execute on the pricing strategies? And then grow. Like we we gotta have a gro 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 the operations is global talent. We use tons of people in the back office to run it. Uh all the AI to be able to track and look for anomalies, right? And all that stuff. And then on the people side, HR, you know, obviously it's it's mostly our people systems, but also how do we leverage operations there to really grow? And so 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 the kind of the system of how we go about doing things, and then it's implemented across the board to different degrees in different pieces, but it all integrates into one. And then this is how we're able to run a significant size company 35 stories, we'll do 50 million dollars in revenue. You know, we have plans for 2026 this next year to 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.