100K Subscriber Special: LIVE CALL-IN SHOW

Hello, everybody. Welcome to the Mike Andes show. In today's Q and A, we touch on fixed versus variable costs advertising in a competitive market. One versus two, man cruise, growth mode and revenue. Without further ado, Mike Andes.

Hey, folks, we're live. No sound. You gotta love it. Okay, we're back. We're back, folks. Okay, I apologize.

I was saying is last night was quite the night because it was like 2 o' clock last night and I looked at our YouTube analytics and we had about 150 subscribers left. I was like, you know what? I can't go to sleep. Because if I go to sleep right now, I'm gonna miss the moment. And you know, it's one thing to get a subscriber count above it and then take a screenshot, but if you can get it right when it goes across, that's good. And I really wanted 99999. So stayed up 3:40am we crossed the marker. 100,000 subscribers. I appreciate all of you. I did make a post on the YouTube channel as a community post for everyone. Kind of what I've learned over the past seven years of doing content. And some of those takeaways I think will be useful. I will go over those today. But we do have the call in show. So if you would like to call in, call 361-733. 3332. Now this is not a congratulate Michael for 100,000 subscribers show. This is not what that is. This is a Q and A session about business. Okay? So I appreciate the thanks, but let's get right into it and then if we have time, I will go through some of those things in a little more in depth of what I have learned over the past seven years of doing content on the Internet. Very, very fun. Okay, let's go ahead and get the next first caller. First caller is coming in from 704. Welcome the show. Thanks for coming on.

Hey, can you hear me?

I can hear you. What's up?

Wait, two things. One, the audio was not on in the YouTube live. Don't know if you changed that yet.

Yeah, I did. Thank you though, for letting me know I missed it for the first time there.

Cool. The other question I had is I know I'm supposed to know it. I was going through all your videos. I have all of your stuff. But how or what's the formula for profit margin?

Yeah. So basically like how to find it. Yep. So just the. The amount of profit and on the bottom line divided by your total revenue is going to give You a. A fraction. Right. So if it's. If you did $34,000 in profit, divide that by the total revenue of 100,000, you're in at 0.34, 34% profit margin. So what percentage of your revenue is? Profit is essentially what that's asking. Make sense?

Okay, cool. Yes, sir. Thank you.

Cool. All right. You got it. Have a good one.

You too.

All right, bye. Bye.

Sorry, I thought you had a second question, but we're moving on to the next caller. The next caller is 618. Welcome to the show. Thanks for coming on.

Hey, Mike.

My name is Ashton. Thank you so much.

First of all, I will. I have a quick question, short and sweet, but I do want to thank.

You so much for all the wisdom you've shared on the Internet. You helped me grow, not just grow, start my lawn care business this year. So I want to say thank you for that.

Absolutely.

So my question is, I'm 14 years old.

I'm making 250 a week in my lawn care business. And I was curious what you would recommend I do the fall and winter months that keep generating revenue and make money.

Cool. And how old were you again? Sorry.

14. And so you're in school still and are you going back to school in September?

Yeah, yeah. So the big thing is like you're going to be constrained by the fact that you probably only have maybe 20 hours a week worth of working daylight during that period anyways. So what you're going to be wanting to do is take all your existing mowing customers and just selling all of them leaf cleanups. Right. And so you should be able to stagger them in a way where you should be able to get them all done. But you're probably going to be limited to like one a day, like after school or maybe like two on the week, weekend.

Right.

So I would just be really intentional about making sure you get all of your mowing customers scheduled to do leaf cleanups. And then I would go ham on Craigslist next door, Facebook local groups and just be trying to sell as many leaf clamps as possible. And then along with the leaf clamps, bush trimming, weeding, and basically just an overall property cleanup.

All right, awesome. Well, thank you so much.

You got it, brother. Take care. Have a good one. All right, next caller is coming in from 612. Welcome to the show. Thanks for coming on.

Hello. 612.

Is saying that the name of the. The business is 24 hour towing. 612 going once, going twice. Make sure you're Unmuted because I can't hear.

Okay, well, I'm gonna go ahead and drop you, but feel free to return back to the keep. Oh. What?

Hello?

Hey, can you hear me? What's up?

I'm sorry, man. My name is Wyatt. I'm 13. I own a landscaping company. So I want to thank you because you helped me start mine.

Awesome.

I make around on average 800 bucks a month.

Okay.

From mowing customers. I have three bi weekly and three weekly. And I'm looking to expand. I have a truck trailer, zero tone push mower, two trimmers, an edger, and two backpack blowers. I got everything. So I'm looking for the best and best ways to, like, expand.

All right. And how.

I live in a small.

Yeah. How old are you right now?

I'm 15.

15. So are you able to drive then?

No, I actually have my grandpa drive me around because during the summer I do farm work for them.

Yep. So, yeah, if you're just trying to get more customers, what I'd really recommend you do is lean into the fact that you are as young as you are. And I know that's harder to do because you're trying, you know, wanting to be professional and, you know, seem big and all that. That is your unique advantage right now compared to everyone else. So I would recommend you do is go to all the places where that's really encouraged, and that's going to be local Facebook groups and next door, maybe a little bit on Craigslist even too. And that is just post a picture of you with your grandpa in front of your truck with your equipment, and you're going to say exactly what's going on? Tell your story. And that's like, I am 14 years old. I'm mowing lawns in our area. I was born and raised here. I'm doing this. I'm saving up for X, Y and Z. I want to become, whether it be a business owner or whatever you're trying to do, whether college, that's what you want to lean into because that's what really makes you unique. Does it make sense?

Yep.

Awesome. Thank you.

All right, brother, take care. All right, next caller is coming in from 4:1:7. Welcome to the show. Thanks for coming on.

Hey, Mike, thanks. A quick question about just like a.

Kind of a big picture thought, how much would you expect a business owner.

To make with four employees, one general.

Manager, kind of your model.

Typical.

60, $70 an hour labor charge. How much?

You know, if all four guys are doing full time work, the owner's doing Sales and marketing.

What would be kind of a projected.

Take home pay for that owner?

Great. Okay, great question. So you can do this two ways, right? You can kind of do it more of a generalized way. And that would be like just me using your number of employees, which. So in this instance, I would say if you're only charging 60 or $70 per hour, you're probably going to be lucky to do 400,000 in annual revenue. Assuming that you're able to keep the guys busy year round. What's your, where do you live?

Southwest Missouri.

Okay, great. So you're going to have a little.

Bit snow, Christmas light, something like that.

Cool. And you can, you, you're going to, you're either going to or you have the ability to do those services in the winter?

Could. Yeah.

Cool. So I'm assuming you're trying to like, you're thinking about starting and your goal is to you know, just kind of make, make a plan for that right now. Is that correct?

Yeah, I've got one full time guy.

He'S about 50, 50 in landscaping, you know, smaller cleanups and then mowing, just wanting to grow and. But I don't want to get bigger than that necessarily.

Got it. Okay. Yeah. So like, you know, the easy answer is, okay, if you're having a general manager, you're going to be looking at paying them probably $60,000 on minimum, maybe 50 in your area, depending on where you're at. But like, you know, let's just call it $60,000. So if, if we can assume that each of, each of our employees can bring in 100k, that's 400k. And then you got to subtract out the fact that you got overhead of this manager. Right. So by the time you do, let's just call it, let's say you're 25% profitable. That's $100,000 on 400k, then you've got to take out the cost of that gm. Right. So on the low end, I think you, you could probably say you get 40 to 50k of distributions as an owner if you're not going to be there working. And is that kind of your model, is that you don't want to actually be doing any of the work?

Yeah, I would say so. And I'm just trying to look at.

Is that, is that a good long term option? Would it be worth, you know, worth doing?

Yeah, when you start, when you start looking at. Yeah, totally. Like, if you're looking at it from the perspective of the owner not being involved at all it just is going to have a lower ROI on that size of business because you don't have a very large revenue base. And, and that, that general manager is going to cost you a lot of money because if you, let's just say you were that general manager, well now all of a sudden you take their $60,000 salary tack on that 40, $50,000 that we just said, you're going to be taking distributions as the owner and now you're making a six figure kind of income if you are the owner, operator. Right. And keep in mind, the business isn't going to do that right off the bat. Right. During that scaling process. There's going to take capital requirements, finding the gm, all the rest of it. And so another way to do this though, which is going to be more accurate is really to actually look at how much in revenue each employee is going to do per hour. So $70, let's just say that they are actually going to work full time year round. So, you know, 2,000 hours in the year. And let's say that they're 75% efficient, which is kind of average. So let's just say that they complete 1500 budget hours in the year. There's your $105,000 in gross revenue that that employee should be making for the business. Right now if you're doing project based work and doing some landscaping, you're probably going to get more around 120 to 130 per employee because you're going to have cost of product in there. Right. So it's not necessarily going to drive a whole lot of margin. But in terms of the revenue, you might do more around that 500,000 level if you're doing some, you know, 50, 50 projects and then you might drive more along that 60 to $70,000 in profit that you could take as distributions. But in my opinion, that's going to take at least two years to build the infrastructure and the team, the general manager have, getting them in place as well as making sure that you actually have pricing all at correct levels to where they're making 1500 budget hours per year is being completed by each employee. Does that make sense?

Okay.

Yeah. That's really good. Amazing how you can fit all that out.

Yeah. Like the big thing, when as soon as you bring a GM in, you're just going to bring your margins way down. Right. And that's fine. When you start getting above 6, 700,000, that's when I really like the model of having a gm. Just keep in mind it can be harder to Find that gm. So your model is more a passive model that an owner would be like myself and that's exact size that I'm looking for, 500,000 or so where that GM can have about three to four employees and it's really profitable. But it usually takes me into year three and four to get there because that GM is going to learn a lot about pricing. They've got to dial everything in exactly right. Turn it into profit mode, reduce their close ratio, increase prices. And so as long as you're patient with it and you're looking as more of like a passive investment, that's fine. But I, I see like even some people in the comments saying about it too is like usually it becomes more profitable from an owner's perspective. You're if you're hitting 7, 800 to a million in annual revenue and then getting a GM because you can afford their overhead and now you know their 70, $80,000 even in in salary isn't a big dent against a million but versus that against 400,000 is potentially the majority of your profits.

Okay, yeah, that makes a lot of sense.

I've got, I'm trying to do this part time first and so I'm just kind of strategizing.

Yeah. Like what I would do if I was you. What I would do if I was you is basically keep growing it part time like you are. And then if you find an employee that you think could become a gm, that's when you potentially have some dry powder where you have are ready to deploy to growing. Right. And so I would be very patient because he doesn't sound like you're in a big rush to make this happen. Right. So if you have another job and you're kind of doing this on the side, I would keep doing that but then go out and hire, go through guys. But when you find someone you're like okay, if I don't have a GM position for this person to move into, I'm going to lose them and their long term thinking and maybe you give them a percentage of profits that that's when it would be the time where I personally would be like yes, let's do it. Because if you try to force this to happen, what's probably going to happen seeing that you've never hired a GM before and you don't have the systems in place to train them, is it A lot of times it's going to be pretty difficult. So I would wait for a great hire to pop along and it's like okay, I have to get this person to be my gm or else I'm going to lose them. And they're the person that I believe could be the kind of the cultural standard for the next three or four employees. And scaling it up to four.

Yeah.

Love it. I love it.

All right, man.

Thank you appre.

All right, next call is coming from 757. Whoa. 757. Welcome to the show. Thanks for coming on.

Hey, Mike.

Thank you.

Absolutely.

Hello.

Yep.

Hey, buddy.

So, been in business for seven years. In 2021, I scaled back, cut my business by about two thirds, went down to just me, reduced the one zip code, increased prices by about 20% across the board.

I'm doing well with that, but I'm nearing the end of what I kind of knew was going to be about.

A two year overhaul.

And you really got me sold on pay for performance. And.

I think what I need is just some guidance to make sure that this is all for next year. Not right now, I'm not in a hurry, but just to make sure that I'm going to get this thing going down the road correctly when I start it.

Currently doing about 60 properties by myself. Revenues growth is about 4,500 a week. Assuming that I hand off 40 properties to an individual and pay them at 33% of gross, they would earn 9,90.

What are your thoughts on that and.

Suggestions and guidance going forward? If I put that into action?

No, it's a great, great way of breaking it down to obviously know your numbers and so you're running the math. Okay. If I give someone 40 employees, here's what are. Sorry, 40 customers, here's what their gross revenue is going to be. I know I'm going to be giving them 1/3 on P4P, therefore this is how much they'll be making. Great math. The only thing you'll want to figure out is, is is it actually feasible for them to do the 40. Right. So do you already have your budget hours calculated for each property?

What I have is the GPS data where I know what the actual time on site is for every individual property.

And is that based upon your. What you're charging or is that based upon what you've done in the past?

That is based. Well, both really. It's based on what I've actually done in the past. I just take the. I take the time on site and then I put it in an Excel spreadsheet and then I run that across the year. But then I try to make sure that I'm earning, you know, whatever per man hour. So I adjust at the end of the year for the following year. And I kind of have to look back, you know what I mean? Like in December, I'm looking back at the previous year.

Yep. So two things. What it sounds like to me is you're taking what how long the jobs have been taking you and you're saying, okay, I think I could give 40 of these properties to someone based upon how long it's been taking me and they could get this done in a week, therefore here's what they would earn. Is that. Am I hearing you right on that?

You're absolutely right.

Okay. So my concern with that, and I don't think it's wrong necessarily, my only concern is this. By using that method of determining how long the jobs are taking, assume that they're going to be working as quickly as you. So what I would do is just be more conservative with how many properties are going to do. So if you're getting done 50, I think 40 is the right number. What I would also really push you to do is figure out like, do you know what your hourly rate is or at least kind of what your target hourly rate is?

I'm earning before my price adjustments for this season, which were kind of modest, I was at about 78aman hour.

Okay, cool. So what I would recommend you do is go through all of your jobs that you currently have the all 40 of those customers and let's just say it's a $60 mo. I would divide that by 80 and that's going to give you 0.75 budgeted hours. And then I would add all those budget hours up. And then I know that conservatively, if you give them 30 budget hours a week, you'll probably be, they'll probably be able to get it done in a 40 hour work week. And so that's a much more as you scale because like right now you have the most accurate data and that's how long job does the job take. And that's what you're using. The problem is everyone's version of fast or efficient is different. So what you want to do is standardize it using budget hours. And the budget hours should not be based upon how long it's taken you, it should be based upon the price. And then if, if, if the budget hours ever are incorrect, then you adjust the budget hours, therefore you adjust the price. Right. And so what I would do on these 40 lawns is simply divide all of their what you're charging by 80 and that's going to give you how many budget hours for Every single lawn. Add those up and then if it's above 32, you're probably going to be, you're going to, they're going to start running into overtime if you hire someone out. If it's, if it's around 30 to 32, you're probably just fine. They're going to hit 40 hours a week. And so that would be kind of like my barometer. And then you can also just go into P4P and like run their time cards and see what they would be making and actually run it on yourself too.

Okay.

Does that make sense?

Yeah, it does. That was a whole the.

I'm following on adding up the budgeted hours. I'm assuming the divide by 80 is. That's, that's man hour rate.

Yep.

That's going to give you the number.

I think I have it perfect.

That's going to give you number budget the amount of budget hours per job. And then if you add it up for all the jobs you're expecting to give to this employee. Because right now we're just doing projections, right. You just got to see is this projection actually accurate. And the way to do that is figure out whether or not they're going to be able to get these 40 jobs done. And if you add all this up based upon 80 an hour and now you're like, man, there's 43, 44 budgeted hours. It's going to probably take them 52, 53 hours a week of working hours to get that work done. Because you can generally generalized. 75% is a really good benchmark of efficiency to be able to calculate how fast someone moves. And if you're way off of that, you'll need to adjust your pricing. Right. So if, if, if you go into this like, man, I'm getting it done in, in, you know, 30, 40 budget or work hours a week, but someone else taking 50, it's just because you're working so much faster. Right. But I would definitely recommend using budget like which, which CRM are using right now.

Yard book.

Got it. So I know some people have been putting their budget hours in the title, but it's also a great way that when you do hire someone, you can tell them like, hey, if you hit budget hours for this week, you're going to make 999. You're gonna make $990. And if you do it in 40 hours, that's $24.75 an hour. That sounds pretty good. And you could literally market that like make $999 a week. That would be like your pitch for hiring. Right? So what I would recommend.

I thought about that.

Yeah.

Yeah. What I would recommend doing is, you know, breaking down the. The numbers like we just talked about, making sure it's in that 30 to 32, 33 budget hours likely means that they'll be able to get it done in a week. And then I would also do the math on yourself. Inside of p4pssoftware.com, you can do it for 30 days for free. So even if you're not going to use it, just use it for like a few weeks and run the time cards on yourself and see what you're actually making per hour. And then if you take off about 20%, that's what the employee will probably be able to get done. Just because they're going to move slower than you.

I like it.

Cool. And listen to this again. I know I dumped a bunch on you, so listen to it again. And you can go through that math and stuff, but I think that'll be the best way to actually recognize and know for sure that your projections are accurate.

Okay, Mike, thank you so much for the time.

You got it, brother. Take care. All right, next caller is coming in from 708. Welcome to the show. Thanks for coming on.

Hey, Mike, it's Will Kelly.

Hey, how's it, everybody?

Hey, Quick. It's going good.

Quick question for you.

Actually, I got a couple. So I figured out our fixed costs. They came to $6,000. Do you add the office staff to that? And then my salary, too, when we're trying to figure out fixed costs, or are those separate?

Yeah. So technically it's overhead. Right. When I try to break down variable cost versus fixed, I do try to just put them in those two buckets. And so when I look at my office staff, I ask myself, am I going to lay them off when we get slower? Because if I'm not, then they're going to be fixed like that, their salary. And so before we had command center, we would have two assistants and an office manager in the office. And I would not lay them off during the winter. So that meant is I basically knew 35 to 40 hours a week they're going to be working when I only need them for maybe 15 or 20 during the winter months. But I was willing to do that because I wanted to keep them for the spring rush. And so I then would look at it as fixed expenses, their. Their cost. And I would just kind of average out, okay, like a 6, 7, 8,000amonth, whatever that is I would put that into fixed cost because I know I'm not going to let them go. And so again, fixed cost is any expense that doesn't go up or down based upon your revenue. And so if you know that it's going to stay at that same level, I would assume that is considered overhead. And I, I personally would throw it into fixed expenses.

Gotcha. Okay, that makes sense. And then is there like a, a number that you shoot for, like 4x your fixed, your fixed cost or 6x like a healthy ratio on that?

Not really because there's so many factors that go into that. So it's really, you'd be painting with a really broad brush if you gave it a ratio. Because I'm higher with a.

I'm okay with a higher fixed cost if I'm growing really fast because that's typically meaning that I'm going to have like truck payments, equipment payments, etc. Which is all fixed cost, which is usually going to inflate my insurance cost. As I'm growing and expanding and getting more leads, I'm going to need more overhead in the form of office staff, estimators, etc. Because I'm getting new leads. When you turn into profitability mode and you're not trying to grow, grow, grow, and you're not spending a bunch of money on marketing.

You'Re not getting as many new leads, but you don't need to because you're just trying to replace churn. Right. And so growth is a big indicator of whether of what I'm okay with in terms of what that percentage would be. So I don't really have a number because it's, it would be all over the place based upon size of company, what the owner's wanting to do. Like are you kind of. The previous caller talked about like they wanted to be completely out of the business as the owner and having it like more passive with a general manager in place, that's going to be a higher overhead, higher fixed cost kind of business. So there's so many variables. But honestly, the bottom line is you want as many of your costs to be transitioned from fixed to variable. I can always say that with confidence because in this industry, why people die financially is not because they run out of, they're not profitable. They run out of cash in the spring rush because they lost all their cash reserves during the winter. And, and so how you can prevent that from happening is tying as many of your expenses to your revenue as possible, I. E. A variable expense. So for example, can you contract the Office labor. Right. Can you get someone to do it on a more per minute or per hour basis or where they don't work during the winter months, and then you'd be able to tie it more to variability of your revenue. Does that make sense?

Absolutely. Absolutely. Yeah.

All right, brother. And then.

And then I just. I. I have. I had one. One other question.

Yep.

So we have six trucks now, and I just. I'm going through your landscape business course, and you talked about, like, asset utilization. And my original mindset going into the season was to have my core crew kind of run solo routes. So that way they're making super high P for P and all that stuff. But I'm finally starting to realize that, like, I just watched your video on like asset utilization and how we could put two guys in each truck and like double their productivity. Like, we could be pre be doing 600, 000 with like three trucks. But I've got six of them and sometimes, you know, one sitting in the parking lot or whatever. I'm curious, like, on your Bellingham, like, main location, do you have them all running, like, solo or are you gung ho, like every summer? Like, hey, we need to double up all these trucks that pump, like, as much as we can. As long as the GM can like, handle that.

Yeah. So we. When you're having more trucks and you're getting the guy to go solo for the sake of P4P, you're doing it for the guys. Because ultimately on P4P, from your cost, it doesn't matter if they're in solo or if they're in double. And it costs you more to have the other truck on the road in terms of maintenance and insurance, et cetera, storage, all the rest of it. However, I like that trade off. And as the company becomes more profitable from a tax perspective, that's usually why I. I recommend people in years 3, 4, 5, as they switch into profitability mode and they're not trying to grow, grow, grow. Because if you're trying to grow, grow, grow, you should put two guys into a truck, right? Because the most efficient way of growing, because you can take the capital you would otherwise spend on the truck and spend it on marketing. And so if you're trying to grow, grow, grow, you should fill the capacity and then buy the truck. Fill the capacity and then buy another truck. That's what you should do in the perfect world. Once you get to profitability, though, you're typically not going to have the best asset utilization, but you do it in order to be able to have higher P4P. Well, as to eliminate any and all downtime. So if you have any trucks, like if you have six trucks, I recommend having one just always sitting there, one of them, just in case something goes down. Because the cost of something of having downtime is far greater than the cost of one more truck sitting on your in your parking lot. So as the company size gets larger. Just keep in context what I'm saying there about asset utilization. Yes, in the perfect world, every truck's moving, but as the company grows in size, the cost of downtime also goes higher. And therefore I'm willing to have some more redundancy when it comes to used trucks, especially because I can get them for a third of the cost of new. And so I'm willing to have one of them sitting out of every seven or eight or nine sitting at the shop all the time. And so we, at the Bellingham shop, we do not have. We do not use all of our trucks. There's always one or two at least sitting in the shop. And that because we do not want to have downtime. And we're in profitability mode. And like this winter, some people are going to lose their mind. When I go out and buy five brand new trucks for that shop, it'll be because of taxes. And so when you get to profitability mode, you switch from I got to maximize every dollar of marketing and you switch it into I got to save money on taxes. And to do that, the most efficient way is actually to go get a nicer truck or more trucks. That's the first step. More trucks. In order to be able to just help my guys. Because now keeping your guys happy and keeping them making more money on P4P is far more important to you than an extra 2, $300 of incremental maintenance costs. Another truck. Does it make sense?

Total sense? Yeah, absolutely. Awesome.

All right, dude, have a good one. Take care.

Thank you.

All right. Next caller is coming in from. Wait, this person's already called in and have to skip them. Next caller is coming from. They might. Oh, maybe this is the one I skipped.

Okay. I'm not gonna let the people who've already gotten calls today quite yet, so you can stay in the cube. I'm going to wait until everyone else is out. Next caller is three three zero. Welcome to the Mike Ganny show. Thanks for coming on.

Hi, Mike. My name is Spencer. I actually own a power washing company. So repeat clients are fairly inconsistent as it like, it takes more time for clients to come back from power washing than like you know, long care, billing your lawn.

Right.

So I've been going like really hard on marketing for like the past two years, like spending more than I was more comfortable with doing. But I know the only way to grow, spend more money on marketing. So basically I've been having trouble with marketing because a lot of companies around me, I'll just name one just for like whatever their name is.

Perfect.

Power Wash. They are a huge company. They're in like eight different states. They just got bought out by a private equity group about four years ago. So now all they do is they just drive the crap out of the Google CCP keywords. And like it's getting to the point where it's like I'm paying like $30 for one click and it's just like that's not worth it at some points when you have a click through rate of like 9% even then is like insane. So I tried Facebook. Facebook's okay. But like the leads you get on Facebook the customers are usually lower net worth. Lower net worth customers. So you know, the neighborhoods you get in, they're really small and like the caught like the average amount of money you get per weed is just not worth it compared to Google. So I've been staying on Google because of that fact. But with Power Washing, like I said, it's inconsistent. You need way more money in marketing going out there. So I was just like wondering like if you were in that situation of like you gotta go, hey, I'm on marketing. You got to try to get repeat clients. It might work out here and there, but it just takes time. Two to four years is what I've known. Like would you just keep trying to go at the company, try growing it or just try like a different avenue such as like, you know, lawn care. Just try going into that, get out there watching. Especially because of all the private equity groups out there.

Yeah, like anytime an industry is hard is not a reason to switch industries ever. Because if it's hard for you, it's hard for everybody else. And if there's private equity moving in, that's actually a really good sign because they actually see that this is a sticky industry, that this has margin, this is its ability to scale and there's a lot of good things. So in any industry there's going to be, you know, hurdles and when you hit those hurdles, you're going to try to find, you're going to prove yourself right and find evidence to back up the hypothesis that you should either switch industries are why it's being difficult Right. So what you've just said is across the board for most industries right now in home service and some of it has nothing to do with private equity, some of it has nothing to do with people rolling up and it definitely has less to do with the whole recurrence versus projects. A lot of it has to do with the economy. Now that being said, I do know a lot of what's going on in pressure washing and I know kind of you know what you're talking about in terms of they are so cheap and they're just flooding the market in terms of marketing dollars. So what is your city or state like where you live right now?

I live in Ohio. So it's only like four months, five.

Months of pressure washing.

Got it. And what was the city name?

My business name is Super Power Wash. Super Power Wash.

I'm looking it up.

Ohio.

You have a website right now?

Okay, I do, yeah. I do everything myself. So I'm like the only owner. I don't, I don't, I don't pay anyone because I just decided to learn everything on my own.

Yep, I'm looking at right now is this. Are you able to see my screen right now?

It's like a five second delay.

So it's light blue.

Yep.

Cool. Good job man. Really good job. If you create this yourself, great work, fantastic job.

I just use bluehost and stuff like that.

Yep. No, great job. So what I would say is this. If one marketing channel is not working.

And there's a ton of money moving the market, there's big players and big competition. What that means is you've got to figure out the channel that they are not willing to do or that they can't do. So for example, I think a really good strategy for you is what we do for instant quote door hangers for mowing I think would be a great opportunity for you be able to do for cleaning of houses because the vast majority of your houses your in terms of cost are relatively similar. You have a, you have a, like once you get a customer it, whether it be an $800 or a thousand dollars cleaning isn't a huge difference to you. And so you have a lot of electricity there and you could go into neighborhoods, have two door hangers, one for larger houses, like two story ones, a small cheaper for smaller houses. And I guarantee you would have a better penetration rate than us because you are a one time service and so, and people need this every, you know, five, six, seven years. So literally no one's doing this themselves. Like it's the same like with mowing. Most people do it because they gotta do it 20, 30 times a year. If you're doing this once every five years and you don't own a pressure washer or you don't know how to do cleaning, you don't wanna go get all chemicals, they're gonna hire someone. And so I really do believe like a one, an instant quote door hanger strategy would be the move. Have you done anything like that? Like where you actually put the price on there and then tell contact you?

Yeah, I've done about a thousand and only like two came back. I also did a, every door direct mail campaign to one of the higher income counties in my area. I did like 5,000 and we only got three or four.

Cool.

But I, I mean on the door hangers is so saturated here.

On the door hangers though, were you putting the price specifically for their, their property with marker and then telling them to send a picture of it with their email name and address on it?

We didn't do the email name and address. We kind of just gave them like a ballpark estimate because we're not going to walk in the back and stuff like that. But then we just told them like, hey, if this sounds good for you, either go on our website, send us a quote or like either one. It's just like a lot of people see that price and they're just like, oh, that's too much money. And they just don't do it. Even though it's really, when you think about it, you get them like once every three or four years. Like it's really not that much.

Right? Yeah. So this is what I want, this is what I'll show you here, one second. Let me show you exactly what I think you should do. One second here.

Boom.

Add a stream. Okay, this is what we do for lawn care, right? So this is on lawn caremedia.com if you want to go look at it and get more, you can zoom in like I'm doing right now, lawn caremedia.com but you do the exact same thing for pressure washing. And you're going to have a marker and you're going to do a thousand of these before you put them out. The difference between what you just said and what I'm talking about right now is the fact that you one, did not have an exact price, you gave them a ballpark and two, they can tell this, oh, this door hanger is going on. Everyone in my neighborhood, they know that right off the bat. And so what I want you to do is make a door hanger similar to that one and have a price for pressure washing, driveway washing, whatever you want to do. Put two or three options in there and then they actually have to put their name, address, and phone number and then they email you a picture of the door hanger. I guarantee you, if you got. Let's just call it two out of a thousand, I guarantee you that will go to 10 out of a thousand. And so that becomes very interesting. Me, I would really recommend that. I think that will crush it for you, especially if you're doing it right times of year and especially if you do it around, like spring and fall cleanup season before we go into winter and then like right after we come out of winter. But I really believe you will 5x the your response rate by doing that. And these bigger guys will not be able to do it because they can't scale this. They're not going to have the confidence to put their brand at risk by going and putting door hangers on. You're gonna. It'll crush. It'll do really, really well.

All right, that sounds awesome. I appreciate that.

All right, you got it, brother. Best of luck. All right, next caller is coming in from 904. Welcome to the show. Thanks for coming on.

Hey, Mike, how's it going?

Good. How you doing?

Hey, I'm good. Hey, I had a couple questions. I'm at a point now. I'm a solo guy. I've got about 45 to 50 accounts. I haven't really had time to stop and consider the amount of growth that I've had in the last few weeks. But it's. I mean, not a whole lot. But I. I'm at a point now where I have a few commercial clients and residential clients. And, um, I'm at a point where I'm trying to. To prune off. Not. Not right now in the wintertime, trying to prune off the. The less profitable clients. That way when I go into spring, I can focus more on one type of client or another. And I'm wanting to know your thoughts on the profitability. Profitability between.

Residential versus commercial clients. And are there any particular benefits or negatives to doing either besides margin or profitability?

Okay, the last part is what mixes up, right? Because what my answer was going to be originally was I just care about my hourly rate. And if I can get that on a large property like commercial or hoa, I could care less versus a residential as long as I can get that rate. And typically it's harder to do that. But you can Find especially property managers that are willing to pay a bit of a premium and you're able to maintain that same hourly rate. Typically it's harder to do that because you're competing with larger businesses that have the equipment, equipment, manpower and crew size to be able to get these properties done so much faster. Because they're buying 15 and 20 thousand dollar mowers and you're not. Right. And so. Or they got four guys all on fourteen, fifteen thousand dollar mowers and you don't have that Right. So that's what, where it gets challenging is from a pricing perspective. As long assuming, now let's assume that you're able to get the same price on a commercial property as you would on residential from a man hour rate using the same equipment, all things considered, everything's equal. Then it's a matter of what kind of business do you want to build. Right. Do you want to build a business that has more contract based 12 month revenue, that's going to be commercial but you're going to have to probably hire a. As you scale up, how big do you want to get? Like that's my first question.

Well, that's really, it's. I guess I really need to focus on what my vision is for the future. I see myself being a 3 to 4 truck size company that's been about it. Maybe having a working GM.

Work for me and then eventually that's like the kind of ideal point that I want to be where I can step out of the company and not have my entire life consumed by it.

Right.

But I don't, I'm not sure about that.

So based upon that I would generally say that's going to be difficult to do in commercial mostly because the type of GM you're going to need to hire is going to be more of like a project, not a project manager but an account manager. They're going to be able to be more buttoned down. They're going to have to be really good at sales because they're going to be going into commercial accounts, property managers, site inspections. They're going to be very organized with checklists, especially if you're doing larger accounts. I'm not saying you shouldn't do those, but I personally would probably recommend if your goal is three to four trucks and hiring a general manager, finding someone that can manage three or four trucks is going to be easier. If you're doing smaller properties, there's less sales. Like the sales cycle is faster and you're able and in the perfect world you have more price flexibility. I can raise prices by 20, 30% on residential mowing customers and usually lose less than 10% of my customers. The same is more difficult to say that about commercial. And so I'm not saying you shouldn't do it. I'm just looking at the perspective. If you're going to have three or four trucks and that tells me you're probably not going to be having massive 20 foot trailers with massive zero turns with crews of four people in each of those trucks. And so that's going to be probably hard to compete with the guys that do. What I would say though is what you could also do is be the guy that can focus on smaller commercial and make the numbers make sense because there are properties that are $1,1500amonth in revenue that the big guys don't even want to touch. They're too, they're too small for them. They can't send their massive truck with four guys to it. It's a waste of time and money. And so what I would say is go ahead and build the recurring maintenance for on the residential side and then as the commercial comes to you, and if it's coming to you at the same rate, just go for it. And then you might find a niche that you can go into and you know, get more revenue and more customers at that same rate. But I wouldn't actively knowing that your intention is three to four trucks and handing the off to a general manager and not having to deal with, I would say avoid the complexity and the size of operation unless it falls into your lap and you somehow are able to make the math work. That's just typically a longer cycle. Like I think in three years you could build what you're thinking if you go more residential and small commercial. Right? 1500, $2,000 a month or less in annual, in monthly contract value. I think that could potentially take five or six years if you're going the commercial route where each of these trucks are going to be bigger, you're gonna need bigger equipment, more maintenance, and you're gonna need to have a higher level of sophisticated general manager to run the sales and operations for the company. Does that make sense?

Yes, absolutely. Yeah.

Cool. Did you have another question?

No, just I appreciate your time.

Thank you.

Thank you very much. And also I want to congratulate you on 100k, man.

Awesome. Thanks so much, brother. Appreciate it. All right, next caller is. I think it's gonna be our last one. Okay, you know what, let's just. This is another. This caller was already in here, but he's been waiting 25 minutes in the call queue. Welcome to Show 704. I think we've already talked.

Yes, sir. I apologize for calling again.

You're good. Go ahead.

So my question is, it kind of makes no sense to me, so maybe you can help me make sense of it. But I'm in growth mode, and so right now my profits are negative, like when I'm tracking everything. But I had money in the bank when I bought everything, like a new truck this past spring. And so I'm just trying to figure out when I'm tracking expenses.

I kind of track separately what was in the bank account before the season or kind of, I don't know.

Yeah. So keep in mind, if you're in growth mode and you're buying assets like trucks and equipment, technically speaking, when we talk about being negative profit margin, you are looking at the bank balance, right? But if you're growing really quickly, it's very likely that you're going to have a negative cash flow because you're going to be buying. You buy three or four trucks with a setup behind it. You're looking at, you know, a couple hundred thousand dollars depending on the size of your equipment and then shop space and all the investments that you're doing there. And so the likelihood that in year one when you do that, you go out and make profit of 200,000 is very low. Therefore, you're going to have a negative P and L for that year from a cash perspective. Technically speaking, though, you should be looking at from an accrual perspective, and that's what you're going to be giving the irs. And that is that that truck is going to be amortized and you're going to make sure you expense it over the course of five years. And it's not all in this year. But from a cash perspective, from what you're seeing, yes, it's negative. Now the question is, what revenue did you do last year? And then what are you on track for this year? Like, what type of growth mode? You know, what level are we at here?

So I did like 32,000 last year and I'm on track for 100k.

Okay. So you have to buy one truck and probably another mower.

I. So I used to use a van. It's just me, but I used to use a van.

And then she just upgraded, basically.

Mower and. Yeah, I just upgraded.

Got it. And what did the truck and like the quote unquote upgrades cost you this year?

The truck was 17,000.

And the mower was 10.

So and did you pay with all.

Of that was 38? Yes, sir. I, I don't have any debt. I just take half everything.

Perfect. So basically you have spent 30% of your annual revenue this year. So I would assume you're probably thinking like you're going to be 5, 10% net in the red. Is that correct?

Yes, sir.

Yeah. So you're really running like a 20% profit margin business now. That's not great. At 100,000, right? At 100,000 I would expect you be to do 50 to 60%. But what I also expect is that this upgrade in equipment is going to allow you to probably unlock more revenue in the future as well as raise your prices because you're going to be more professional like I'm assuming, like, because the growth rate, like if you just stop growing in this year, you'd probably do 130, 140 next year and now you'd be profiting 60, $70,000. And so I'm fine with that. You're going to be in the red this year and so I don't think there's a huge red flag to me. Just make sure if you hire someone and you go beyond the one truck that you take into account the cost of their wages because that I feel like you're, you're, you might be either, you might be a little low on pricing. Simply do the fact that you're already running a pretty tight 20, 25 margin on a solo operation. If you take out wages, then you are in the red. And so I would just be noting that before you try to scale beyond yourself.

Okay. Yeah, that makes sense.

Cool. All right, brother, have a good one. Take care of.

All right, last caller coming in from 440. I apologize for everyone else that's in the queue, but it's gonna have to be the last one. Go ahead.

Hello, can you hear me?

You're on.

Yeah, you're on. How's it going?

Oh, wow. I didn't think I was gonna be on here. I apologize.

No, you're good.

I was just kind of sitting here, sitting here watching my wife do. You're in or month end. My fault. So two questions. One, Mike, Bob here. Gosh, I can't believe I'm on here. I wasn't even really prepared.

First question regarding copilot, Is there going to be a scenario built around snow?

Yeah. So this winter we're going to be working a lot on chemical application and snow. So there is a currently a pending dispatch and that's what we would usually tell someone Right now to set up in snow, but we think we can really refine it a lot better. But there is currently a pending dispatch where you put in your route. You'd be, you know, one click, move it over to the dispatch board. It is there but we are going to be making a lot of improvements to it. What size of business are you at now?

So we're, we're hoping to do, you know, about two 90 this year growth snow is snow volumes anywhere between 30 and you know, 45,000.

Got it. Yeah. So I think, I think right now.

Single truck, just one truck.

I hear you. Cool. Yeah. So like you'd be fine inside COPA now, but it is going to get refined substantially during the winter in terms of snow and chemical applications.

All right, so second question, and this is obviously going to be the last question to close out today and probably a little bit deeper than what you can just answer at surface level. Not knowing any business but man is, is there, there's got to be. Is there a secret button, right? Like what's, what's the secret? You know, I mean I'm 42 and I understand like I read the book and I read and I watch and I try to study from people doing a hell of a lot better than I am. But I understand you can't, you can't work your way into wealth, right? Like blue collar people don't get wealthy. And I understand like I watch you and, and some of the people that are excelling and stuff and you know, these, the only way is to really get paid for other people's time. But it costs money to hire people, right? It costs money to scale, cost money to buy drugs and then ultimately there's going to be a decrease in quality. You know, we're, we're basically a husband, wife team with two employees and we're there on the job, right? We're on site, we're working and you know, quality is imperative to us, right. That's why we have the reputation we have and the company we built. But as soon as you start leaving that job, quality goes down and then, and then you just lose control. But, and I've heard you speak at the Spencer event, right? I guess you pick your pain. You know, you, there's a sacrifice right now my sacrifice is both, you know, stress and in physical. And then if I scale it becomes only stress, less physical. And it's, it's what side of the scale you want to lean on. But I mean how do you get there? How do you get to not just maybe it's just a part of being in business is how do you get to a point of just not worrying as much about everything?

Yeah. So the, so the worry part won't go away. Right. Because that, that is a. That is a character issue. And I don't mean issue in the fact that, like, it's a problem. I just mean, like, that's a characteristic of yourself. There's some people that would be going through exactly what you're going through and have all the problems and all the issues and all the stress, and it would be like, who cares? I don't care either. A, because they just don't care at all, or B, they've done something so much larger that this is like, like a rounding error for them. Right. So it doesn't create stress for them. And so what I would ask yourself is, like, what do you want the business to become? Right. So, like, can you answer that? Do you know what you want it to become? Is it. Or is it more a matter of like, hey, I just want this thing to run at the same size and I don't have to be as stressed about it and worried about my crew and their performance and all the rest of it?

Yeah, I mean, my end goal is to be able to put my, like, put my wife more into just a design role and then move myself into less of a laboring role and managing projects and overseeing it and just keeping being more of a sales aspect and managing the cruise or so to speak. But it just, and it just, it's just awesome money to hire people. And it's being at $300,000, you know, there's, you know, I'm not young, you know, and I'm 40, 42 years old.

And.

Well, I mean, let's just be real, you guys. 42 year old. I mean, I have a family, you know, I have a teenage daughter. And you know, we have bills. Right. It's just not, it's not like I'm by myself, you know, and I have to make sure things are squared up at home. And. And my business now is at a level where it, it costs money every month just to be in business, you know, like the. I have two trucks, I have a shop, I have stuff, you know, I have to. At this level, there's too much. Too much equipment, you know, so. And we are, you know, as a, as a company, we are debt free. Other than my two trucks, you know, all my equipment, mowers, trailers, everything's paid for.

How long have you been doing it now, the business?

So five Years.

Okay. And I'm have you kind of stayed that same size the last say two or three? Like there's not like you're growing a lot. It's more kind of staying around the same level.

The growth has slowed in the first few years. We were doubling in size every year and last year we were able to grow 20%, 25%.

Okay.

So we went from 205 to 265 last year.

Okay. And right now you have two employees and then you're in ref. Okay. And then right now let's assume that you wanted to grow. Would you have to spend money on marketing or do you have to turn away leads right now? Especially during spring rush.

So during spring rush, I mean we, we were booked out probably close to 12, 12 to 14 weeks. So yeah, we were actually, I, I was turning down, you know, mowing properties. I was, there was smaller jobs, anything less than 4 or 5 yards and mulch, I just couldn't, I wouldn't even look at it. You know, I just couldn't do it because it didn't make sense for. And when I let me quantify that, me and my wife, one full time and one part time guy, it did make sense for all four of us to show up for four yards and most we just couldn't do it, you know, if we're not going to be there all day to mobilize. It just, it wasn't fair, you know. So yeah, I mean in the spring, yes, we were turning stuff away but now that, that we're, we're only booking out, you know, probably three weeks at the moment, you know, but it is that summertime wall leads are scarce right now. But you know, I imagine in another two or three weeks things change. You know, it's like this every year, you know. Yeah.

So there's two ways you can take the business. Right. One is you scale it to, let's just call it 500 to 600,000 because that's where you need to be if you're going to have your wife step out of that role and be able to do more of the admin only and not do out in the field. And then you focusing more like projects, that's what's going to bring in the extra revenue. So this is my thought is there's two ways to do it. One is the fast way and I'm not saying this is the right way, but this is what you would do that is next season you would actually go get another truck and yes, that's going to cost you three $400 a month, plus insurance, like 500 plus a month. Okay. That truck is going to be the thing, though, that allows you to get projects on the schedule. So you're not 14 weeks booked out. And you're going to pull that demand forward in spring. You're going to be able to accept the mowing jobs. You're going to go hire one more person to work with you on that truck doing projects, and that's going to unlock growth, right? That's going to get you to that 5 to 600,000 level. And I do believe that's possible, especially if you're going down the project route and that's what you want to do. And it needs to be the size of business in order for. To get your wife out and being, you know, out of the field. The other way to do this is when you have excess capacity. You have right now more customers than you can handle and your 12 to 14 book weeks booked out and you're turning around mowing jobs. That screams to me that you need to raise your prices. Now, I know that's scary during, right now when there's less leads, but the bottom line is if you raise your prices and you're able to now actually take customers during that spring rush because you cut out the bottom ones, right? If you raised all of your prices right now on all of your customers, I can guarantee you, just knowing the way you're talking, that you would lose less than 10% of them if you, if you raise the prices by 25%. So on a $40 mo, if you raise that to 50, I can guarantee you less than 10% of your customers would leave. By doing that, you would double your profit margins because I would imagine you're. You're bringing less than 25% of profit to the bottom line. And so if you're able to double, if you're able to literally double your profit margin going from, you know, you know, $10 in profit, let's just call it, to $20 in profit on that lawn. That immediately fixes the problem of profitability. It doesn't fix the problem which is your end game, and that is your wife getting out of the field and you working on more projects. And so what I would personally, based on what you just said, you feel I, I hear you're burnt out. And what I would recommend is next spring using the second route, and that is raise prices immediately. I guarantee you will not lose as many customers as you think. I know it's scary, but you will dramatically increase it.

Is it Is scary.

It'll dramatically increase your profit.

I mean, we do have, we do have two trucks right now.

Oh, you do? Okay. Sorry, I miss. Sorry.

Yeah, we just. No, no, no. We, I, I bought my second truck in late winter, early spring. And you know, so I do have two trucks, but we, I don't have anybody to run it. You know, it goes with us because we do install works on Monday, Tuesday, we mow Wednesday, Thursday and Friday is a makeup day or a day we do half or three quarter day jobs. The way we kind of map it out. So when we have installed, like, because we do specialize in flower beds and flower bed renovations and stuff like that, because we just, we excel at that, that kind of work. And so that's what we do, you know, and if there's a job like we, we need to get two trucks or mobilization, have, you know, other tools and stuff there, we have that additional truck and it serves as a runner truck. Yeah, but that truck maybe works once every two weeks, if at all.

So you have excess capacity.

That's not very productive.

Right. You have excess capacity when it comes to assets. The truck just sitting there. So you could literally almost double the business with that. Right. Then you have the fact of like, okay, personal capacity. Can you build the business to double like 500 6000? Sounds like you can. I think you can. Especially if you're wanting more projects. You have plenty of work on the schedule. Trust me, it takes a lot of work just to keep a backlog of 12 to 14 weeks booked out. Like that's, that's a task in and of itself. The part you're missing right now is the capacity in terms of labor. And so what you're struggling with is the hiring. But part of that, in my opinion, I actually feel like just based on talking to you, you're a good person to work for. What you're struggling with is the financial sense of hiring someone. Right now. It doesn't make sense because you don't have enough profit. So by raising your prices immediately, it's going to unlock a lot of stress from you because you now have the margin to be able to go hire someone. This is something I was talking about with the franchisees recently at Augustine. I was like, hey, look, if you're struggling to find workers and you're turning work away, think about it like this. I'm going to raise my prices by 25%. All right? So on a 40 mo, I'm raising to 50. On a $60 mo, I'm raising it to 75 okay, 25% increase, meaning that you could theoretically go raise your wages by 25% as well and still walk away. Positive, net positive. All right. And so I really believe that if you went and hired someone and you raised your base pay by four, five dollars per hour, like that's crazy. Five dollars an hour for a full time employee is $800 a month. If you were able to raise your prices by 25%, I guarantee you you'll make probably 2 to $3,000 of profit on top of that. And so you got to ask yourself, is going out and hiring somebody that is $5 more per hour going to be the unlock I need to get good people that I can trust that are the best in my market. And furthermore, I'm going to pay for it and take off that, that worry of that extra cost by raising my price to the point where I cover that incremental increase in wages as well as increase my profit margins dramatically. And so I think if you do the price increase, it'll give you the confidence and then go hire the person that is of high enough caliber to like, hey, I can keep doing this, I can fill my second truck because I can now trust this person because they're not, you know, 1450 an hour. I'm paying out 20, 21, whatever it might be. Does that make sense? A little bit?

It does. I mean my current guy, I pay $20 an hour.

Yep. And so for him currently, do you, do you just not trust him or what? What's the thing that's keeping you from getting another employee?

No, I mean I do, I trust my guy. I mean he's, he's rock solid. I mean he's as good as they come. But the projects and stuff we do, it needs, I can't just him on by himself because they're, they're big projects. It takes me, him, my wife and our part time guy which is going back to college next week, but it takes us a full day just to do one, one project.

So what, what's keeping you from hiring.

One and the margins there?

What, what, what, what, what's keeping back from hiring another person?

I don't know. It's cost Fear. Yep, fear. I, I, I don't know, I don't know how. I mean I, I'm just, I'd rather just, I don't know, some, some things that I just, I got, call it, call it willful blinders. You know, I just put my head down and I, I work, I just normal just work harder to not, to not do It. But I'm not getting anywhere.

Yeah.

You know what I mean? Like, I'm not, not getting anywhere.

Yep. So right now, how many mowing customers do you have?

44. 44.

Okay. And what's your kind of average cut cost per.

We do 22 a day.

Okay, what's that, what's your kind of cost? The cost per cut on the 44 mowing customers? Average.

We'll say average $50.

Okay. So does it sound right that you're making about $2,200 per week in mowing? So like about 10 grand a month in mowing?

Yeah, yeah. I would, I would say anywhere between 9 and 10, depending on the, the month, you know what I mean?

Okay. Yep. So if we, if we are making 2200 and we are going to raise all of our prices by 25% and we're going to have times 1.25 times that by 4. Okay. So you're going to be able to increase basically, if you're able to go increase your prices on the 44 million customers, if you're able to raise them by 25%, you're going to bring about $2,500 to the bottom line. Okay. And by doing that, let's say you lose a couple customers, you're going to replace them right away like you're turning work away during spring. Right. And so that $2,500 is literally going to pay for the next employee.

And so I, what I want you to do is do it, the price increase first, just to take this massive load off your head. Because I know what's happening. I know you're thinking, I can't afford another employee. When in reality, that next employee is extremely profitable because you already have your insurance paid for, you already have your shop paid for, you're already paying for the truck that he would be driving. The incremental cost of hiring that employee is their wages and the gas. That's it. You have the leads, you have the truck, you have the equipment. You just need that labor. And so that labor is like, let's just call it $25 an hour with taxes and all the rest of it. And let's say another $5 an hour worth of overhead and, you know, management of their time and another $5 of equipment maintenance. That's 35 an hour. If you're charging $70 an hour, you're literally gonna be 50% profitable on that employee.

And so when you have that is.

Our man hour rate anywhere between 65 and 70.

Yep. Because like your first employee that you had, you had to go buy the second truck to get him. Right. There was. There's incremental cost of buying more assets in order to unlock more revenue. There is no more purchasing of assets. You don't need to go get more insurance. All of that. The fixed costs are paid for. So the only thing you have to pay for now with this new employee is variable costs of their wages, the gasoline they burn, and some equipment maintenance. And you already have the leads. It's not like you need the leads either, because that'd be another conversation if you're like, well, we're not busy. And that's why I asked you that part because. Because if you went next spring and hired somebody after raising prices, bring that $2,500 to the bottom line to give yourself a little bit of cushion. So you felt confident, go buy to go get another employee, put them in that truck, you work with them in terms of projects, I guarantee you double the revenue. But you're not going to double your expenses because you're just hiring one more person. And their incremental cost is literally $35 per hour versus the 70 that they're going to be bringing to the business.

Right.

Cool. I'm gonna let you go. But just realize it's very, very common when you're feeling that. I felt that way back in the day. Everyone has gone through this. You are not weird or strange. It is normal to feel, like, burnt out and like you're hitting yourself head up against the wall. And the more you grow, the more stress you get and the less money you make. That's like normal. Unfortunately, the thing is that you're an in a really good spot to know when you're turning work away. You can raise prices. That gives you flexibility. When you raise prices, it gives you options. And when you raise your margins by raising your prices, you can then go afford the employee or the other truck or the equipment that you need. And so ultimately, the game needs to be, how do I increase my margins in order to be able to give me the flexibility and give me the time back and give me the money back so that I can have the mental space to go hire somebody? Because that for a lot of people would fix most of their problems if they could just go hire someone and let some estimates go to the other person or put a couple jobs and then take some of the responsibilities around the shop. If hiring one more person for a lot of business owners that has four or five employees would solve a lot of problems. And the reason they don't do it is because they can't afford it. And I get it. I know exactly what that feels like. But you have to realize if you're booked out three and four months, you should be raising your prices and then that will give you the mental flexibility to actually make sure that you are rolling. So I appreciate all of you. It's over an hour. I'm gonna let you all go. The live show. I love it. Thank you all for calling in. It's. It's been a great seven years of building the channel up to a hundred thousand subscribers. I really do believe in 24 months we will be at a million. I do believe that I think we'll get to a hundred thousand within one year or 200,000 within a year and go from 200,000 to a million in the next year. I just think that. And so I really do appreciate the media team. I know I put it in the post, but especially Tori, Zach and Steven. They've been with me for the longest. We have a whole bunch of team behind it in terms of whether the web Design, Home Service, CPA, all the stuff that we do, the videos, etc. But I really do appreciate could not do it without them. By no means. Otherwise this would be the only type of content. There would be no fun exciting things to watch on YouTube because this is the level of production that I can do myself. Is this so really do appreciate them. If you haven't, check out the community post I put on my main channel and I walk through 11 things that I've learned over the past seven years of building content. But keep in mind, this is what the very first thing that I learned. Success is not linear. Which means it took me five years to get 10,000 subscribers. And I'm only using the subscriber thing because we hit this milestone. This is applicable in any business. The first five years of your business is typically really, really hard. All right, first five years doing YouTube, 10,000 subscribers, over a thousand videos. All right, the sixth year went from 10,000 to approximately 20,000 subscribers growing. And in the past one year we went from 20,000 to a hundred thousand. And the vast majority of people watching.

Have only found about in the past year. And so in your small business, this exact same principle is true. You will feel like you're beating your head up against the wall for time and time and time again. And then 10 years from now you'll look back and like, man, I'm doing, You know, all this stuff has come together. But it, it hockey sticks, it goes, it it, it accelerates, it is not linear. It's not like, well, I'm gonna do a hundred thousand and two hundred thousand, three hundred thousand and four. It's not how it works. For example, I talk about, you know, I have multiple locations at Augusta. It took me seven, it took me six years before I ever got a second location. Within the past couple years, it's ramped up to seven locations. So success isn't linear. And so right now, what you're going through, if you're in the first 1, 2, 3, 4, even 5 years, a lot of times it's very, very discouraging because you look back and you have no track record of like any success because, like, well, I'm just like straight lining. But if you'd actually able to zoom out to the 10 year picture, you actually missed out if you quit at five year, five on the hockey stick. Growth that came because the first five years of investing, time, energy, money, investing back in the business, learning, educating yourself, and that's what beating your head up against the wall feels like. Because it feels like you're not getting anywhere. And if you would have asked me two years ago and I had 10,000 subscribers, what's the likelihood that you're going to get to 100? I don't know if I would have thought it would get to 100 like in my. And honestly, I don't know if we'll get to a million. Like, I don't even comprehend or fathom that. However, when you hit the milestone, you look back and realize that all the time that you put in at the beginning, the first 70, 80% of time, when you had zero, hardly any results, anything to actually point back and say, yeah, look at me, I did a great job. It all happens in the tail end of people's career. That's why there's a lot of most billionaires are like in their 60s and 70s and 80s because they work their brains out when they're 20s, 30s and 40s and no one knew their name and they stayed in one industry and just kept going and going and going and becoming the best of the best of the best. And then like, oh man, they're so successful. It's like, no, they were doing that for 40 years and no one even knew their name for the first 30. Keep that in mind. All right, everyone, have a fantastic rest of your weekend.

If you enjoyed today's episode, be sure to go to our YouTube page under Mike Andes. Or you could check out our second channel, how to start a Lawn Care Company for similar content. Thank you guys for watching, and we'll see you next time.