14 Brutal Truths Every Home Service Business Owner MUST Know!

Today, I am sharing the 14 brutally honest truths that every home service business owner must know. My name is Mike Andes. I'm the founder of Augusta Lawn Care. We have over 190 locations around the world. We did $54 million in revenue last year. We're ranked on the landscape 100 top businesses. Number one, your business isn't profitable. It's just hiding behind your 14 hour workdays. If you took how much you're currently working 14, 15, 16 hours a day, that's the equivalent of like two employees. And if you're doing under a million dollars in revenue, I think the vast majority, if you have two employees just working for us for free, would probably suddenly become profitable. That role is what most business owners are playing. They're simply donating 40, 60, 80 hours of work every single week to the business. And because of that, it's able to make it, it's able to survive. But if you were to pay someone to do your job in the business, how much would the business actually make in profit? If you're working 14 hour days, it's two full time employees working for the business for free. Which means if you have four employees and you're out here hustling 1716 hour days, you're working the equivalent of two more people. So yes, you're increasing your labor capacity by 50%. So of course the business is going to be relatively profitable. So to really determine if your business is profitable, assign how much you would have to pay to replace yourself. Take that off of the profit and loss statement and then determine whether or not you're profitable. Now keep in mind, if you don't have a lot of cash and you're just getting started, you don't have a lot of experience. 14 hour days are required because you're paying down the ignorance tax that you don't have to know what to do in the business correctly, you don't have the capital, you have to work the 14 hour workdays. It's part of the recipe to grow. If you don't have debt and you don't have experience, but if the only thing you do have is time, then put that time in. Just know if you've been in business for 5, 10, 15 years and you're still working 14 hour work days and you're not profitable, the business is fundamentally unprofitable and not a good business model. That doesn't mean you need to throw it away. It needs to adjust, need to be made in terms of recurring revenue, price increases, profitability and efficiency to make sure. That if you don't work 14 hour work days, the business is still profitable. Number two brutal truth that every home service business owner must know is that you got to stop chasing growth, raise your prices, and profit beats ego every time. So oftentimes, our ego is what drives us to grow revenue. Hire more employees, buy more trucks, get more equipment, line it up against the street, make sure our competitors see it, make sure that when we wrap the truck, we post that all over Facebook and Instagram simply to show all of the competition, all of our friends, our family, the people that doubted us in high school, we made it. And that is your ego speaking. Unfortunately, what none of those people see is your bank balance. And I have been able to see hundreds of bank balances and hundreds of profit and loss statements and hundreds of balance sheets. And many times the people that have all the fancy shiny stuff, their bank balance doesn't look so hot. Instead of trying to run this treadmill of growth and more employees and more trucks and fancy stuff, focus more on profitability and stacking cash in the bank. And this constant idea that we need to keep growing top line revenue. And somehow if you don't grow top line revenue, somehow you're failing as an entrepreneur is crazy. Because when you stop growing top line revenue and you don't hire employees and you have an excess amount of leads pouring in, what happens? Well, all of a sudden, supply is way lower than demand. In other words, all these customers want our service, demand is high. The supply, the amount of employees that we have and the amount of trucks that we have, the amount of work that we can get done doesn't move up. When that happens, whenever you move demand really high and supply stays low, prices go up. And so this is what happened like during COVID All of a sudden everyone needed toilet paper, but the amount of toilet paper being made was low. So what happened? Prices went through the roof. The same thing is true in your home service business. And that is if you keep the amount of employees that you're hiring low and you keep the amount of trucks and equipment low, but then you let more and more customers piling up through your website. You have a great websites optimized on Google. You have reviews coming in, all these leads are pointing, they're seeing your trucks. And all of a sudden that's what happens. You raise prices. And when you raise your prices, you do that. So you decrease your close rate. So as the leads pour in, excess demand is coming in. You do not go out and increase supply and get more employees and get More trucks. Instead you simply raise prices, reduce your close rate, but make way more profit in the long term. Because if you raise your prices by just 20% and last year made 10% on profit, you will triple your profits. The third brutal truth that every home service business owner must know is that systems replace you. Chaos enslaves you. Choose wisely. Is very easy when you're growing a home service business to get addicted to chaos, to get addicted to being needed in your business all of the time. It's the thing that got you from zero to one. It's the thing that got you from to quit your 9 to 5 and start the job. It's the thing that got you your first employee, your second employee. But as the business grows a million dollars, you need systems to replace you. And the least amount that you need to show up to the business, the better. If you're able to get someone to delegate sales, delegate operations, delegate admin, you are now out of operations. You are now out of daily operations. When you have someone that can take over sales, someone can take over operations doing the work, and someone that can answer the phone, do emails, grease all the gears, pay payroll, and do all the administration. Those are the three fundamental pillars of the business. And the goal of every home service business owner should be to delegate those things in order to delegate sales, operations admin. Creating systems is the thing that's going to allow you to do that without pulling out your hair and without the business falling apart. And in order to create systems, I'm going to simplify and standardize. So here's how it looks. I'm going to simplify and standardize so that I can create systems. I'm going to create systems so that I can delegate and I'm going to delegate so I can get out of daily operations. From a sales operation admin perspective, that leads me into my next brutal truth for home service businesses, which is that custom work kills scalability. Standardize or stay stuck. I understand that it's very tempting to move into custom work. Every home service has a level of if I just go more custom, I can really, really increase my prices. And the reason that is the case is because many times it requires a huge amount of skill experience. And those are things that are very difficult to hire or delegate. It's required, they have certain certifications, 5 or 10 years of experience and have so much understanding, it's very difficult to scale that. And so I'm not going to go after custom work. I'm going to go after the work that can be done the same way every single time. So if I mow the lawn, I mow the lawn the same way all the time. If I'm going to clean the windows, I clean the windows the same every single time. If I'm going to even do something like a little more complicated and a little more complex, for example, I'm going to build a paver patio. I am going to build the paver patio to the exact same way every single time. And I'm not going to have a thousand variations with the different colors and patterns. I'm going to have two or three colors with two or three patterns because I know that custom work kills profits and kills scalability. And I don't want to be out there figuring out the design of my next paper patio because my crew can't figure it out. I've got to be able to standardize. I do the same thing the same way every single time. Otherwise, I stay stuck in the biz. I will never be able to delegate sales, operations, or admin if every single time I get a new lead, install a new job, or answer the phone. It's a completely different type of service. It's a completely different ask from the customer. That's custom. And it's going to require you as the owner to be the treadmill operator doing everything in the business forever.

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The next brutally honest truth for every home service business owner is that your employees will never care as much as you. Just accept it. Build systems anyway. It is so demoralizing when you pour yourself into a business and then you try your very best to pay your employees, and you're doing everything possible just to make payroll. And the people that you're sacrificing for don't care for the business as much as you. This lack of care showed up in the form of broken equipment, lackadaisical standards, doing a subpar job, not treating customers correctly, speeding down the road in company vehicles, doing stupid stuff in your uniform. They don't care. And as much as I want to lament that Fact, if you get caught up in that something that you cannot control, you're going to get frustrated and you're going to eventually go back to being a solo operator because you're simply going to get frustrated with dealing with human beings that are not putting you at their best interest. Like, you're not the main focus your business, the thing that you think about all the time is not what they think about all the time. And so what we want to focus on is create systems that incentivize the behavior you want to see. If you want them to be more efficient, make sure you have a pay for performance model that the more efficient they are, the more money they make. Make sure that you're incentivizing things around damage, so they don't want to make damage cases on customer's property, that if they make a mistake on a customer's property because of poor performance or poor quality, they're going back to the job site and they're making less money. By creating this kind of culture of accountability, you can at least get people to operate at 80 to 90% as good as you. I don't need them to be 100%. I do not expect that. And if you expect them to be as good as you at everything and care as much as you, you'll be so frustrated as a business owner and you'll be only more frustrated the more employees you have. The best plan doesn't win, the best execution does. I have met people that can whiteboard and put Excel spreadsheets and put incredible slideshows together of all the things that they need to change in the business, how they're going to get customers for $10, how they're going to scale to 10 million. And all of it is so good planning. But nothing, nothing will ever beat the person that can execute. Well, you might not do great at planning, you might not like spreadsheets, you might not like software and building out systems, but if you can execute on the thing that you've put your mind to, you will outperform the person that is constantly in this mode of planning. And they're constantly trying to get everything just right. And paralysis by analysis sets in when you start thinking more about the planning than the execution. And this is why so often the times I tell people in the turnaround show, flip a coin and make a decision, the decision is required to execute. So if I'm just planning, planning, planning, planning, planning, planning, and never actually, actually making a decision, I'll never get to execution. So flip a coin allows me to Make a decision and get past the planning phase and into execution. Some people interpret this as like, well, you should just go fast and you should rush everything. I don't believe that. I believe that the planning phase is the time to slow down. This doesn't mean that you rush planning or you get into everything as fast as possible. What it means is, once you have a plan, make the decision to execute. Don't just constantly stay in this circle of planning. This is why people listen to podcasts and books and watch videos like this over and over. And they constantly have their little mental massages of entrepreneurship making them think about marketing and think about hiring and think about different software and different marketing campaigns. It's just a matter of, like, look, figure out what you need to do and then go do it. That's all business is, figure out what you need to do, make a decision to do it, commit, and go execute. There are so many people that stay in planning and have so many good ideas and never execute on their business model. The next brutally honest truth for every home service business owner is that you are not in the service business. You are in the systems business. It's so easy to think, though. Well, what I do is I trim the bush. What I do is I paint the wall. What I do is I create the fence. And that is the service business. But ultimately, if you're going to take the business to the next level, if you're going to delegate, if you're going to get off the truck, if you're going to get out of daily operations, your job is to create systems. You're like, that sounds very cool. That's what working on the business is. Now there's this period of time we need to work in the business to make money and grow and scale. But as the business evolves and grows, we need time to step back, like an architect away from the building and assess where things are going wrong. And then we're going to spend time creating systems that, without us being there, will fix that problem. So throughout the week, you have three callbacks from customers. At the end of that week, I might spend an hour in my architect time to be able to figure out what systems could I put in place that would completely eliminate that problem from happening again, regardless of whether or not I'm there. And you might be like, well, what's a system think about, like this. Simplify and standardize. So if I get those three callbacks at the end of the week and then I'm assessing them as the architect, I'm stepping away from the business thinking about what went wrong and how do I fix it. If all three of those callbacks were one specific service, in order to simplify and standardize and create a system, I might actually remove the service from my service offering and it might only be 4 or 5% of my revenue, which kind of hurts. But if I was to do that, I would eliminate the constraints to growth, which are those three callbacks causing my business to flounder. Anytime there's a callback, a customer dispute, someone's mad about the service, an employee walks off the job. Those are all system failures and we can identify them as system failure. But then we need to take the time to step back and actually create a system that to prevent that from happening again. Look through the lens of systemization as I simplify and I standardize. The next brutally honest truth for home service businesses is that growth without profit is a treadmill to nowhere. You would be amazed at how many seven figure business owners, multiple seven figure business owners I talk to that make no money. I would rather have a business that has one or two employees, makes no money than have a business has 20 employees and also makes no money. Why? Because the risk of having 20 employees with a whole bunch of trucks and equipment is far greater. I have debt likely, I have a bunch of fixed expenses, I have salaries, I have overhead, I have huge amounts of insurance bills. I have mistakes being happening every day by my crew, I have trucks that could get damaged, all sorts of craziness happening. I would rather just lose the money at a smaller sized business and have less stress. If you're going to grow the business, make sure you're profitable first. Before I grow and I scale and I get debt and I get more trucks and I get more equipment, I hire more people. Make sure you're profitable first. Take the spark of a small profitable business and then dump gasoline on it. Don't just dump a bunch of gasoline and debt, any trucks and equipment and then you realize, oh, I don't have any fire. The fire, the spark that you need is a profitable business model that allows customers to show up for a lower cost than what you're able to be able to get them to spend in their lifetime. A profitable business model where you put $1 in via marketing, customer acquisition costs and the other side, I get 10, 20, $30 of gross profit from that customer. Build that machine and then scale it, then grow. Instead of growing and growing and growing and getting all this debt and mass amounts of revenue of a whole bunch of employees, a whole bunch of equipment and actually not having a business model that makes money. If you're doing everything, you're doing it wrong. The whole objective of growth in a business is to be able to gain freedom. You do not gain freedom if you are required to do every single part of the business. We have sales, we have operations, and we have admin. Usually the easiest thing to delegate as you grow your business is admin. Someone answering the phone, running payroll. You can have an accountant like home service, CPA do it. You can have your website being created for you. You have someone have a phone answering service, have a VA doing email or text message and respond back to customers. Great. That's admin. Usually you pass $250,000 in annual revenue. You delegate admin as you begin to grow the business. You then delegate operations many times. As you get close to a million dollars in annual revenue, you start delegating operations. That is doing the work. Someone that manages the employees, hires them, trains them, and makes sure that all the jobs get done to a high quality standard. As you go from 1 million to $3 million in annual revenue, the thing that you're usually going to have to delegate is sales. That's why getting to $3 million is kind of the golden goose for home services. Because a lot of people figure out delegation of admin. It's very low leverage task comparing to making $100 out in the field, being in operations. Then a few people get $2 million in annual revenue most time because they get a good operator, someone that can actually manage the crew and do the work to a high quality standard. And it's very difficult. It's very rare that someone can also then create systems enough to be able to delegate sales. Once you've delegated admin, once you delegate operations and once you've delegated sales, you're usually around $3 million in annual revenue. And then you are out of daily operations. Meaning I do not need to show up because someone else is managing the three pillars of the business. Next. Brutally honest truth is, stop buying trucks. Start stacking cash. For some reason, back when I first got started, I was told by a friend of mine that had a really big business doing construction that anytime they ever had any cash flying around, they just buy more equipment. Because eventually equipment will make you money. Here's the thing, if you don't use the equipment, it will never make you money. And so I got into this treadmill of buying a whole bunch of trucks that I never actually used very often. And I remember one day going out, I had like 12 or 15 trucks, and like five or six of them were just sitting there. I'm like, oh, they're burning a hole in my pocket because I have to store them, I have to insure them. And it's not just the payment if you have debt. And at the time, I didn't even have debt on these trucks, but I had to store them, so I had a bigger shop space. I had to insure them that cost more insurance. I also had to make sure that they maintained them. So breaks and oil changes and tires that all cost something. And so instead of buying more assets and buying more trucks and buying more equipment, focus on am I actually utilizing it? Am I using it more than one day a week? If you're only using a piece of equipment once or twice a year, once or twice a month, I would say rent it. Don't just compare the cost of the payment versus how much you're going to otherwise rent it. Like the payment on the loan versus how much I rent it. Don't compare that double how much you would otherwise spend on rent before comparing the loan. Because when you get the loan and you're only paying $500 a month, you're also paying an extra $500 a month to store it, to insure it, and to maintain it. And no one takes those into account. And therefore, they buy a whole bunch of trucks and equipment that they really don't need. The next brutally honest truth is progress over perfection every single day. If you're trying to get things to be perfect, you will never execute. You'll never actually pull the trigger, because everything's got to be just right. There is so often the times, if you just flip a coin and make a decision and make progress, you will gain way more traction, you will gain way more latitude. You will make way more progress made if you just get started. If you're a perfectionist, all the lines on the charts gotta be perfect. My routes gotta be perfect, and the billing, the automation, everything must be absolutely perfect. You will get lapped by the person that simply starts. The person that just starts running Facebook ads and then gaining that data and then comparing it and then split testing it and doing another version. They've made five variations of the ad before you even put your first one up. And meanwhile, you're trying to figure out, should I have a agency and what kind of camera should I be using? Should I have a microphone? When the person that just started making progress, they're the one that wins because they were able to get five variations before you Even got your first test out. And so focus more on progress than perfection. You will win every single day. The next brutally honest truth is that your business should run without you or it's not a business. And so if you're required on every job site, if you're required for every big payment, if every time there's a negative review or customer gets mad, if it comes back to you, whether directly, like they're texting you, or indirectly, your admin person contacting your, your office manager coming to you, your project manager coming to, your crew leader, your foreman coming, if it all comes back to you, you do not have a business. And I don't say it to be derogatory or push you down. It's simply a function of I've got to create more systems in order to be able to have this business run without me. The stress test of all stress tests is leave for a week and all the problems that happen, I'm going to assess what they were and then in my architect time, create systems, prevent those problems from happening again. If you can't build a business to leave, then you don't have a business. You have a job and it's very difficult to sell a job. You're multiple when you do an acquisition. Is a lot of times dependent for small businesses on can this business run without the business owner being here every day or every week? You don't need more leads, you need better systems. Everyone always thinks they need more leads. It is the answer that everyone believes is the truth. And I'm a big fan of getting a lot more leads, usually so that I get so overwhelmed with leads I am forced to raise prices. But honestly, you could take the exact same number of leads that you currently have and just sell them twice as much stuff in the year and double your business. How upsells cross sells. Making sure that during the off season you have a service to sell and getting creative with what that offer is going to be. How do I push demand from the fall into the winter? How do I pull demand from the spring back into the winter? These are the creative strategies that allow the most successful home service business owners to make more profit because they're not on this constant treadmill of getting more leads. They take the leads that come in and they know how to upsell them. Cross sell them, get them into recurring services, get them into winter services, and all of a sudden the customer, it's only worth $500 per year to the first business, is now worth $3,000 to the second business. Which one do you think is able to grow faster? Which one do you think is able to continue marketing? Which one do you think is able to afford better equipment, pay the best employees? It is the one that is able to upsell, cross sell and provide the most value to customers and get $3,000 per year or six times as much as the first company that just sold one thing to the company. Six times as much revenue as the first service business that only sold the one $500 product and failed to upsell and use automations and cross sell and talk to the customer individually to get them to buy more things. You don't need more leads, you need better systems to upsell existing customers into more services and more products. The last and final honest, brutally honest truth that every home service business owner must know is the off season isn't the problem. Your lack of planning is. In other words, when it comes to home services for the vast major of us off seasons and seasonality is a feature, it is not a bug. Like there's something wrong with this industry. I don't make money for three months of the year, I lose money for two or three months of the year. All my crew leaves every office. You're right. That's what happens in almost all home service businesses. And that's why most home service businesses are not a great business to be in. I wrote the entire off season book solving it with five different ways you can lay people off and have a come back to work bonus. That's cure number one for the off season. Number two, I can sell more and better of my existing stuff by creating great offers, getting people on subscriptions and year round billing. Or I can do an adjacent service. The third option is giving them adjacent service. Something else I can sell them during the off season. For example, if I mow grass during the summer, I then do snow plowing during the winter. The fourth thing is do recurring services. Get them on a maintenance plan throughout the off season. So I get recurring revenue even when all of my competitors are laying people off, they're selling off their equipment, they're in a cash crunch, I'm able to keep expanding. And number five, the fifth way to solve the off season is make another brand completely different. You do something like lawn care landscaping during the spring, but then during the winter I do Christmas lights. Completely different businesses have nothing to do with each other, but I create a whole new brand to make sure that I never have a time where I make less than 50% of revenue compared to my best month. So if in January revenues down leads are down by 80, 90%. The chances of you building a business that can run without you, the chances of building a profitable business, the chances of selling your business, all very low. If you fix the off season, you will completely change your profitability, the likelihood of you selling the business, and the likelihood you'll be able to build a business that can run without you. If you want to learn more about the off season and what you can do next to plan for it, watch this video here on my other channel.