Ep124: Your Moving Company Model for Ultra Profitability

All right. Welcome back here to the moving game. Today, we're going to talk about your moving company model. Now, what we're going to dive on is how do I structure my business as far as my org chart and the roles and duties within those roles in order to maximize profitability. So we'll start with, there's a lot of ways you could cut the cake, right? So there's a lot of right answers. There's a few wrong answers, I think, and then there are some premium models. And so I'm going to go over my model. I'm not saying my model is the end all be all, but I think that the more people I talk to, the more people that are assimilating their moving company to Biglick's model for profitability. So, you know, we are set up in a way that we have very lean overhead. We have a very concise sales team and we have a motivated crew. And so let's walk through basically three different sections of your moving company. I think this would apply for anybody from one million all the way up to 10 million plus. So let's start with the crew. And I've done an episode before about how you should create a roadmap for your crew, how to have a promotion ladder. That's what we call it. And how to have ranks. So you shouldn't just have movers and drivers in my opinion. You know, just only having two positions in the field is very limiting. And what's going to happen is over time you're going to have crew hit you up over and over for money and it becomes reactionary. So you end up having reactionary pay rather than structured pay. And so systematized pay is really the technical term. So to control your direct labor and to not allow your business to get away from yourself, systemized pay basically takes maybe one or two positions and develops multiple ranks or sub titles within it and then attaches money to each one of those ranks. And so that's how we do our crew here at Big Lake. We have first, second, and third rank movers and then we have first, second, and third rank crew leads. Each one of those positions is a stair step in the promotion ladder, hence ladder. And each one of those comes with a different pay rate. To be able to grow within the company, you know, we ideally, I think especially at our business size, we are very adamant about promoting from within at our current business sizes. We get bigger and bigger and bigger that that model has to flex to be able to find certain talent for certain roles. So our crew, we have to make sure that they're staying very motivated that they see a bigger picture that they want to keep climbing and that they want to be coachable and learn and hit new heights. And we also have to have KPIs. We have to be able to track, measure everyone. And so that crew promotion ladder is really key. So you might have, like I said, I think three ranks at the mover level, three ranks at the crew lead level. And then, you know, you have criteria on how someone goes up that ladder. Okay. So that's your systematized pay. And you never deviate from the systemized pay. Another concept of it is that everybody starts at the beginning of the ladder. Okay. Everybody starts in the same space, same place. And so what that does is every time you hire new people, you kind of reset and you're actually working your direct labor, averaged down every time you hire. And we want people to make more money. We're not trying to prevent it by any means. There's just a law of attrition that's going to happen in a trade service type business like moving, especially moving in storage. And so we never bring an employee in who maybe is very promising or experienced or skilled and just offer them a higher pay rate. We never do it. And I will tell you, you know, maybe there's one every two or three months, maybe maybe an employee every, I don't even know if it's every two or three months. I really think it's probably every three to six months where there's somebody that we really wanted, but they didn't come on board because of the money. And it's because we're really good at painting the picture for total pay. So we paint a big picture on review bonuses, tips plus the the base wages and the rider pay that we do on top of that for when they drive and crew leads. So everybody starts at for us a big look at 18 an hour. And that's our starting wage for guys on the trucks. And then they work that way their way up. And then the next part that I think is really critical is your sales team, right? So your sales team, another place that people bleed money is they're giving like hourly your base wages and and then and they're giving commissions or they're just not really sticking to the the comp plan and you know a sales rep doesn't have a good month and so they give them money anyways is kind of weird stuff going on. And what we want with sales is that obviously we want people who follow our process to the tea and that they're extremely hungry motivated. So in order to systematize pay and sales we have to do straight commission. And so at big like when we promote from within usually we're promoting from within for sales pulling somebody from the trucks who's got great promise. And for their first four weeks we give them a thousand dollars a week as just introductory pay. It's kind of what we call like a no true up it's a simple draw okay there's no true up on it. And so we give them a thousand dollars a week and sometimes depending on the crew member sometimes you can you can offer $750 a week right just depends on the person. And we give that to them for four weeks that allows them to have some guaranteed money when they start build up their pipeline and from there they're making full commissions okay and we pay weekly on the commissions. And so paying straight commission is valuable because you know what your cost are at sales and it makes it predictable you're not worried about anything over there it's just like hey you're just worried about performance right you're just worried about performance. So that's very critical we don't have like an office manager or admin or clerical type person who just answers the phone but then sets appointments or transfers calls we don't have any waste like that in our sales team. Everyone who's on the sales team can sell at any point when you answer the phone you must be able to sell you must be able to do the full quote and book that's our process. All right now go into the third bucket which is really you know I think the place where the most amount of money is lost for moving companies is your indirect admin and so the model we have for that is basically splitting think of the traditional operations manager a lot of moving companies they grow past like a million maybe maybe two million and then there's the owner is like gosh I'm getting getting pulled in every direction like I need to hire an operations manager so they hire an ops manager and then they just dump tons of things on their plate thinking that yeah they should be able to do it I was doing it but you're the owner you're way more incentivized also you know you're working you're working twelve fourteen hour days meanwhile you know you're asking an employee you're giving them a schedule but you're asking them to get what you're doing in twelve hours for them to get done in eight to nine or ten hours and they're less incentivized than you right so it's like it doesn't add up so what what our model is is we we throw out the ops manager concept and we make more specialist and our admin and so you're going to have a virtual team that's overseas for your back office and then you're going to have your in-person management team for dispatch and boots on the ground okay work and so you have in the beginning what you'll develop is you have an office manager and then you have a dispatcher okay the office manager is overseas virtual and the benefit for them is that they're not they're not getting interrupted through the day in the office by movers coming in and out they're locked into their computer in a in a in a quiet focused workstation and their job is to do everything that can be done behind the phone in a computer okay and we'll come back to that now the dispatcher is the in-person boots on the ground aspect of an operations manager so in the beginning as a younger company you know you just need honestly you just need a set of hands that's like got a good head on their shoulders so you're having them prep trucks dispatch crews Train movers, spot check, or quality check moves, do driver certification, or we call it driver certification, driver training, inventory management for purchasing. Somebody has to go through the warehouse or the shop or the office and actually count up, what's in there. You could have cameras all over the place, but it's still really hard to see for somebody maybe virtually overseas to know exactly what needs to be purchased. And so inventory management, something that just kind of in person really needs to be done. Also, when you receive those orders, somebody has to be there to break those orders down, put the stuff away, right? And so truck errands, if you own your own trucks, even if you have rental trucks, there has to be somebody that can drop off and pick up trucks when they need to be wrapped or worked on or body repair, whatever it may be. So think of the dispatcher, not as an operations manager. Think of them as the next step above your most senior crew lead. That's what the dispatcher is. They've been on the truck, so they should be one of your best movers. They should be able to go to any move and handle any item. They also act as the hot seat. So when you're down a driver, they go. Now, if they can move the schedule around, move some people around to fill, then that's great. They have their own task and duties they'll need to do. But our first and foremost thing is to go complete jobs at a five star experience for customers. And so if they need to go, they go. And that is the expectation. If they have to go four days in the week, then that's what it was. But the goal is not to be four or five days a week on the field. Probably they're going to be out there a couple times. It's just the nature of it. And as you scale, you hire more dispatchers and you kind of have like a senior dispatcher and that person probably doesn't go. Really very often at all. And then you have like a junior dispatcher and assistant dispatcher and that person goes more often. Now, on the back office, virtual side, okay, we have the office manager. Well, over time, that person's going to get overloaded because they're doing the schedule. They're doing payroll. They're doing truck rental pickup drop off. They're doing hotel lodging for interstate. They're coordinating subcontractors for labor on the other end for unloads. They are doing 10 a.m. and 3 p.m. check-ins on crews, checking in on their status and completion. They're doing close outs with crews. So that way we have proper bills in time. So we're not bleeding money right from the bill. They're handing claims. They're doing full cycle claims management, okay. They're communicating to sales about capacity. So they're the one who is controlling whether sales can go or not on booking stuff and constantly updating them on how full we are. Their biggest thing is schedule and capacity. That's the core part of that role. And eventually as they grow higher in the company, they keep that part for a long, long time because that's where the money is. Is in your ability to just push capacity and utilize resources really well, okay. So as you grow, you then add more virtual team members that peel off task from the office manager. That's the model. And so here's the skinny on all this. How do I know when to hire these people? How do I know how many I need all that jazz? Simple formula. This is my numbers. Maybe your numbers don't quite perfectly align, but you'll be close, okay. For every $1 million in revenue, you should need one virtual admin. Okay, somebody oversees virtual admin, okay. Don't hire your mom. Don't hire your cousin because they worked in something else and you think they'll be great. Don't do that. Just follow this model, okay. Can you do somebody that's virtual, but here in the States, you can, but it kind of, it changes the model. So then you can't follow this model as well, to be honest. So for every $1 million, one virtual admin team member, okay, for every $2 million, you'll likely plug a dispatcher. However, you're gonna wanna add your first dispatcher before $2 million. You're gonna probably wanna put them in there at probably when you're doing about 80 to 100,000 in sales a month, you're gonna wanna put them in there. Up until that point, you could have drivers dispatch themselves and then you go in there a couple times a week for quality and just training and coaching and keep things tight as an operator owner, okay. Now sales, how often do you add sales people? Well, roughly about for every $1 million, except that's not gonna hold true the whole time. You wanna do that rate in the beginning and once you get up to about three sales reps, they now, your business should be doing well enough and they should be doing well enough that you start having reps selling more on an average of one and a half million. And so one and a half million a year. So usually, you know, think about one sales rep for every $1 million until about the four or five million mark and now you might start stretching that to like 1.25 or 1.5 million per rep, okay. 'Cause you don't want to have too many people and then nobody's really making that good of money, right? So, but you don't wanna have too few and not have good speed of lead in coverage, right? There's a balance. So that's pretty much, you know, the model there, when you look at crew leads, we call drivers crew leads are the same thing for us. We don't let somebody, crew lead unless they can drive that's part of the model, okay. So it's like how many driver or how many crew leads do I need, okay. Well, if you run a four truck business and you own four trucks and you can book for four trucks, your goal is to have a two X driver ratio. That would be the goal. Now, you can get away with a 1.5 X. So if I have six drivers, I can get away with it but you're gonna get caught with your pants down on sometimes because somebody's sick, somebody calls out, somebody quits and then you're down the five and then another one quits two weeks later. Now you're scrapping to get it done, okay. So ideally, I wanna be ahead of the game there. I wanna be a two X driver ratio, okay. That's part of the model and then movers are pretty easy. You just fill in your roster for what you need to be able to cover, okay. So that's pretty much the gist. Another part of this model is just understanding how much can one crew do. With our pricing over here at Biglake, we're pretty well priced over here. I would say we're quite premium. We're running about 350,000 in sales per truck/3 man crew. So, and you can just follow that, those numbers. So let's say that like you're a $3 million company, divide $3 million by $350,000. Oh, I did improper math. Divide $3 million by $350,000. And that's about eight and a half. So you probably are a nine truck business, okay. When we say nine trucks, it doesn't always mean that you own nine. You could have some long-term leases or something like that. But if you're a lower, if you're not quite as a premium price in your market and you're still kinda climbing that ladder, you may wanna use 300,000 per truck, something like that. 250,000 is pretty low per truck in my opinion. But I guess you know, it just really depends on the pricing. So all in all, that's a model. And this is how we look at the business and operate. So we'll do about $4 million this year. And we don't have a dedicated general manager or branch manager. That's still not that big enough of a thing for me to go hire that too. Because we have such a robust admin team with four virtual admin, two dispatchers, that it just doesn't really cause a big need to have a GM who I'm gonna need to pay probably 90 to 140,000 a year. There's just not really that big of a need unless I really wanted to get my hands off of the business. That would be the decision if you really don't want to be involved. But I just think that's silly because you expect what you inspect. So like if you're not involved, then I just don't think that your profits are gonna be ultra profitable. And so that's part of this is like if you wanna grow profits, I do not think that you're gonna do that by, you know, being totally dissolved from the company. It's very difficult. I think you could run maybe a 20% margin and be pretty unplugged. For sure, that's doable. But if we're talking like over 25% net, that's gonna be pretty hard task without you being around, I should say, being around. That doesn't mean that you have to be working yourself 10 hours a day, five days a week, you could do it on two, three days a week. So I hope that helps as far as creating a model, how to look at your business, structure it for profitability and not just profitability, but ultra profitability and be able to go to the next level. All right, we hope that helps and we'll see you on the next one.