► Get New Posts Via Email ► Get This Episode On iTunes
SUMMARY
In this video, Louis Massaro shares what you need to do in order to successfully open up additional locations in your moving business.
- “Create a Model Business” If you want to sell your business down the road, if you want to franchise your business, anything you want to do, you’ve got to create a model. From the model, you could duplicate, but in the process of creating the model, your business just becomes better, more efficient, more profitable.
- “Remove Yourself From Day-To-Day” If you’re stuck in one place dispatching trucks or booking moves, or whatever it might be, and you’re also trying to have business development going on in new locations, it’s not going to happen.
- “Establish Baseline Metrics” Baseline metrics means take a look at your P&L. You need to know what percentage do you spend in fuel? What percentage do you spend on labor? What percentage are you spending on truck insurance? In other words, you need to have a baseline percentage of what it is you spend.
- “Create a Financial Forecast” You have a game plan, you need to have the financial staying power to be able to muscle through any unforeseen circumstances, any slower than usual times.
- “Open a Separate Entity” If you are cross mingling funds, if there happens to be a big lawsuit or happens to be something that goes down, they could tie it back to your original company and now you put your original company at risk. So, obviously, talk to a lawyer, talk to your CPA.
- Watch the video to get full training.
HOT NEWS & DEALS!
- Join the Moving CEO Challenge: Official Louis Massaro Community Facebook Group! A place for moving company owners to connect, share ideas, and inspire one another. Click here to join!
- Latest Instagram!
Check out @LouisMassaro for new announcements, valuable tips, and enlightening videos to take your moving company to the NEXT LEVEL!
RELATED POSTS
Ready to Expand Your Moving Company?
Start Working ON Your Moving Company – Not IN It
Exit Strategies For Moving Company Owners
How Much Should Moving Companies Profit?
TRANSCRIPTION
Hey, my friend, it’s Louis Massaro, CEO of Moving Mastery, where we help moving company owners set up proven systems and processes to increase profits, reduce stress and live a better quality of life. I speak to moving company owners literally every single day. Our clients, our private clients, people that are interested in becoming clients, and one thing is kind of, pretty consistent across the board, is people want to open additional locations. They look at it and they say, “Okay, I’ve got this business, it’s running good and I want to duplicate it. Because I’m, I’m doing really well here, but then if I expand, I could do double the business.” And I also have clients that have done that and felt the frustration of not feeling everything grow doubly, or the new business actually hurts their existing business, and it’s one of the most frustrating things that someone could go through.
I went through it myself personally, and have seen people in the business in the last few years go through it as well, to be able to expand, open an additional location, and not only does it not bring in the additional money that you’d thought it would, but it creates more complexity, more work, and it actually starts draining the main business. Now, this doesn’t happen all the time, so I want to prepare you for what to do when it’s time to open an additional location. But this is something that people deal with and it’s a real thing. If you expand too quickly, it could create a lot of problems for what you have going on.
So what I tell people is this, if you’re going to open up additional locations, whether it’s one, whether it’s 50, whatever it might be, you have to establish a new blueprint for yourself in the way that you run your business day-to-day. Because now, you’re not just running one location where you’re there, where you’re seeing it, you’re running multiple locations where you’re not there, so your way of managing it becomes totally different.
I have this private client that, I met him, I don’t know, whenever it was, at one of my events, he wasn’t a client at the time. And he started telling me his scenario, and he was looking to open an additional location somewhere else, and he was going to buy out this company because they were a van line agent and he wanted to be part of the van line and this whole thing.
He explained his whole scenario to me and I said, “You’re not ready to do it. You know, you’re not ready. You need to do this, this, this, and this first, then you’ll be ready to do it.” Maybe a year later, 18 months later, he becomes a private client. He says, “Louis, I did it, and I should’ve listened to you. It’s been the worst year of my life. I’ve been traveling. This business is just costing me a fortune to keep it going. It’s distracting the people in my main office, and I need to figure out a way out of this.” So luckily, as a private client, we were able to kind of help him figure his way out of it to where, you know, shut down that other location gracefully, to where he came back to one location and started making more money with the one than he was even coming close to with the two.
And I’m not saying that as a way of saying don’t open up, or if you have a second, shut it down. But in his scenario, based upon his lifestyle choices and the way that he wanted to spend his time, the way that he wanted to… How many days a week he wanted to work, his traveling, all that, and how much money he wanted to make, we said, “You could do that in the one office. You don’t have to travel. You don’t have to deal with all these extra people. You don’t have to have all this extra aggravation, but you still get what you want.” So, it just really comes down to, more locations and more business does not always equal more money.
So, if you’re going to open up additional locations, which again, I encourage you to do that, but the timing has to be right and you have to go into it with the right approach. So I want to give you some ways to do that, to create a new blueprint for yourself for expansion. Remember, the way you run one business is totally different than the way you’ll run multiple businesses. I learned the same thing that my client learned the hard way when I had my one office and I started to open up additional locations. At first, I didn’t have that blueprint to run multiple offices. I went through the same thing. It was stressful, problems everywhere, on the plane, flying here, flying there, until I finally got it under control by realizing I had to approach it differently. Because I was no longer just running one business, I now had multiple businesses.
So let me give you the steps that you need to take in order to create that new blueprint for yourself if you’re going to open additional locations. And the first thing that you need to do is create a model business. And what is a model business? A model business is, if you’re going to duplicate something, if you’re going to clone something, if you’re going to duplicate something, you want to make sure that it’s exactly how you want it to be before you duplicate it, or you’re just going to duplicate a half-assed version of what you really want.
You want to create a model business, and what does that mean? That means that you’ve got your processes in place, that means that you know your numbers, you know where you’re at. That means that everything that you do could be duplicated exactly somewhere else. And a lot of that really is your processes, knowing your numbers, and being able to look at it, and if there is a problem, identify it quickly and resolve it. So no matter how you want to grow, right, no matter what you want to do with your business, even if you don’t want to open multiple locations, you’ve got to create a model business. If you want to sell your business down the road, if you want to franchise your business, anything you want to do, you’ve got to create a model. From the model, you could duplicate, but in the process of creating the model, your business just becomes better, more efficient, more profitable. You could see things clearly and you know how to maneuver day-to-day.
Second thing you need to do before you start going out and open additional locations, is you need to be able to remove yourself from the day-to-day. So if you’re involved day-to-day, meaning you’re dispatching trucks, you’re booking moves, you’re part of the main function of the business. You can’t go open another office. And, I know a lot of people aren’t going to want to hear this right now. They’re going to want to stop this video and say, “Louis, I could do it. I could run this, and I can run that.” We, as humans, we really underestimate sometimes what it takes to pull something off. And if you are stuck in the day-to-day of your current office, you won’t have the freedom or flexibility to run what needs to be run in the new office.
You now need to step into a new role, where you now can run everything from afar. You could be at a home office and run this location, this location, this location. But if you’re stuck in one place dispatching trucks, or booking moves, or whatever it might be, and you’re also trying to have business development going on in new locations, it’s not going to happen. So you need to be able to remove yourself from the day-to-day.
Third thing you want to do, is you want to establish baseline metrics. Baseline metrics means take a look at your P&L. You need to know what percentage do you spend in fuel? What percentage do you spend on labor? What percentage are you spending on truck insurance? In other words, you need to be able to look at boxes, all your cost of goods sold, all of that. You need to have a baseline percentage of what it is you spend. This is part of your model. This is knowing your numbers, what they are, so that when you go to duplicate it, you could see, am I on track or am I not on track? If you don’t know where your numbers should be, if you say, okay, hypothetically you spend 7% of your gross revenue on fuel, I’m just picking a number out of a hat, then, chances are it’s going to be similar where you go, right, with the fluctuation and price, but you want to have all those different metrics so that you can see how you’re doing.
Too many times people open up another location and they don’t know how well they’re doing until they have extra money in the bank account. That’s kind of the way of being able to tell that. So you want to have your baseline metrics so that you could set up your P&Ls and your cash flow statement, and you can know exactly what’s going on. Same thing with your marketing ROI, so all the key metrics that you need to know in your current office. Figure out what the baseline is, like where you’re at. Maybe you can improve them, whatever it might be, but then, this way you can carry them over to the new office.
Fourth thing you need to do is create a financial forecast. People ask me all the time, “Louis, how much does it take to open up a moving company, an additional moving company? How much money should I have?” Well, the answer really depends, people go about it very differently. I mean, you could do a shoestring budget, and rent two trucks, and have one mover go there and work out of a truck rental yard, and dispatch the jobs. And then, go and be one of the movers, and do all the administrative stuff from your current office. And it can be very inexpensive.
For me, I never open an additional location with less than… At least $75,000 to $100,000 in capital to put into an account to go open that office, because we got an office, trucks, marketing. And if you really want to go in strong you could spend $200,000 to go open up an additional location. When I opened up my South Florida office, where my call center was going to be, I spent about $500,000 opening that office, and it’s just because I wanted everything done immediately. It was like, we got this big warehouse, give me 600 vaults, brand new. Give me all the equipment, give me… And it was just, get everything out of the way that we need to purchase, get it done. So it’s a big variance.
So you want to create a financial forecast, so that you can see, okay, if we’re going to open up in, let’s say January, what do we anticipate our expenses to be, February, March, April, May? What are we anticipating our income to be in these months as well, based upon your level of how you’re going to open up? Remember, you could bootstrap it or you could just throw a ton of money at it and go that route. But you want to be able to have that financial forecast that you can see, so you’re not just tossing it out there to see if it works.
You have a game plan, and you know that you’re going to have the money to stick in there and make it happen because it might not take off as quick as you think it might. So you need to have the financial staying power to be able to muscle through any unforeseen circumstances, any slower than usual times. Now, maybe you need to adjust and adapt to the market and the way the competition prices, there’s a lot of things that could go on. You don’t want to be strapped for cash in that situation.
Next thing you want to do, number five, is you want to open a separate entity. So now, if you decide I’m going to go open another office, do not run it under the same corporation or the same LLC. Open a brand new corporation or a brand new LLC for that location. It could be the same name as yours, like Your Moving Company of this city, LLC, Your Moving Company of this city Inc. Open a separate one. You’re going to want to talk to your lawyer, talk to your accountant, I’m neither one of those things, but you’re going to want to fund that account from your personal account, put the money there, then from there, the new entity’s bank account, then you can now make all the purchases you need for that business.
You don’t want to cross mingle funds, you don’t want to take your new office, and then take your old office and start cutting checks for the new office. Because what happens is, you want to be in a position to protect yourself from anything that might happen. You’ve got to think about the liability that’s there, you want to think about your own asset protection. You know, you open up an additional location that you’re not there. Somebody who’s out there running it and they run a truck off a cliff, they go into your warehouse and steal everything from all of your customers, whatever it might be. Let’s just imagine the worst thing happens in that new location, you want to be able to have your legal liability separate from your existing location.
And if you are cross mingling funds, even though you have separate entities, if there happens to be a big lawsuit or happens to be something that goes down, they could tie it back to your original company and now you put your original company at risk. So, obviously, talk to a lawyer, talk to your CPA. There’s also tax implications for all this as well, but you want to make sure, open a separate entity.
And the last and final thing, commit and GO HARD. Don’t dabble. Don’t just say, “Let me roll the dice in this location and let me see if it works.” If you’re going to do it, do it because you’re basing it off of good information that you feel you can go into that market and go strong. You’ve created your model, you’ve removed yourself from your day-to-day. You’ve established your baseline metrics. You’ve created a financial forecast. You’ve opened your separate entity, don’t just like try to see if it works. GO HARD! Make it work. Put somebody there that you know is going to kick ass. Put somebody there that you know is going to take your processes and run with them.
A lot of times, when I see people that have additional locations and they fail, it’s because they think it’s as simple as sending a few trucks and a few guys over there, and everything else will be okay, and it rarely turns out that way. It’s when you send somebody there that’s trained, they know what they’re doing, they’re strong, they have a vested interest. Maybe they’re a partner, or they’re some kind of GM that has, they’re tied in the profits. That’s when the location is strong. That’s when you go into it and you make money, and then you could build upon that because now you have your new blueprint for the way you manage all of it. And I hope you go on to open 50 offices around the country, or whatever your goal is, but just know if you’re going to do it, commit and go hard, and wait until the time is right.
I hope this was helpful. If so, do me a favor, share this with somebody out there on social media or in one of the groups, that might find this helpful, what we talked about today. And if you could like this video too, I’d really appreciate it. Until I see you next time, go out there every single day, profit in your business, thrive in your life. I’ll see you next time.