14 Rules That Separate $300K Owners From $3M Owners

There's a massive difference between a $300,000 home service business and a $3 million one. In this video, I'm breaking down 15 specific shifts that separate them. Trucks, pricing, jobs, systems. I've built these businesses. I've coached thousands of owners. The pattern is clear. Entrepreneurs start out profitable as solo operators, but then start hiring employees and go bankrupt as they try to scale up. It is this invisible hand that keeps them from a 7-figure business. Why? $300,000 businesses are effort-driven. $3 million businesses are system-driven. On the screen, you'll see the 14 moves we're walking through. Most owners don't stall at $300,000 because they lack effort. They stall because they never change how they think. The question is simple: are you building hustle or something that scales? Let's get into it. Number 1: $300K owners buy cheap trucks. $3 million owners buy for cost per mile. Now, if you're a small operator and you're getting started, $100,000, $200,000 in revenue, I do think that most people should probably just buy a $15,000 truck, has 180,000 miles on it. And the reason for that is because most people won't be in business for 5 years. As you start getting employees, though, and you know you're committed to this industry that you're in for another 10, 15 years and you're not going anywhere, you're doing this full-time, you're hiring people, you're really building a legacy business. If that's your goal, having a truck that lasts 10, 15 years without a whole bunch of problems and downtime is gonna be super valuable. Now, a $3 million operator is gonna calculate the cost per mile over the next 8 to 10 years because they're not thinking about the next season. They're not thinking about this weekend when they're doing jobs on the side. They're not thinking about getting their first helper. They're thinking about what is the cost I'm going to pay on this truck over its entire lifespan of 10 or 15 years? They're also thinking about the downtime risk because as the company expands and you get more employees, it's not the cost of the truck that actually costs you a lot. It's if that truck is unreliable, if it stops working, if it has to be in the shop consistently all the time, if it's a lemon, it could cost you way more in lost revenue or in the wages of your team sitting on the side of the road waiting for the motor to get fixed than the actual cost of the truck. Another thing to think about and a $3 million operator thinks about is brand perception. When someone drives up to your house and you're the homeowner, you think a lot more value to the company that showed up in a nice new truck. It's well wrapped, it's painted, and it looks really, really professional. A truck that rolls up that's 25 years old, has 200,000 miles, a bunch of rust, oil is leaking all over your driveway. You're not going to be inclined to think that that home service business is going to offer a high level of professionalism when it comes to actually doing the work on your job. And again, when it comes to the decision to make a purchase, it simply comes down to value versus price. And I'm— if I'm able to increase the perceived value that the customer has when I meet them in person, I can also charge a much higher price. And so if I'm keeping a truck for the long term, I'm talking 8, 10, 12 years, many times buying newer trucks is actually the lower cost when it comes to distinguishing cost per mile, not just the initial cost of the acquisition. The reason a $3 million business owner is buying a newer truck is somewhat— a lot of times because of tax benefits. They have profits. They need to wipe those profits out at the end of the year using Section 179. But they're also trying to standardize their fleet. They're trying to make sure they have their trucks being the same brand, the same type of truck, the same parts when it comes to maintenance, when it comes to scheduling all the maintenance, it's all the same. It's not like I have, you know, a whole bunch of 350s, 150s, 250s. Some are standard, some are long bed, some are extended cab, some are single cab. Like, all of this irregularity needs to become consistent as a business scales because it reduces the complexity. And the reason that complexity reduction is so important is because my eventual goal as a $3 million operator is to hand daily operations off. It's really difficult to hand off daily operations to anyone besides an entrepreneur if I'm expecting every single truck to look and feel and be maintained and be repaired completely differently. So by having the same brand truck, having the exact same parts being able to be used across the trucks. Also, when I have an employee and I'm getting them trained up, I train them on one truck across the entire system. Not okay, the GM truck and there's the Ford truck and then there's the dump truck. Then you have a manual transmission, then you need the automatic transmissions, and then you have the dump beds and then You have the tailgate loaders, like, and then you have the flatbeds. All of this variety and this variability for the small operator, they do this to customize the equipment to the work that they're doing. Whereas the operator distinguishes the work they're going to do and then makes sure that the trucks and equipment they buy are standardized across the board. Number 2, $300,000 owners try to stay busy. $3 million owners cure seasonitis. Now, seasonitis is a term I made up. It's a sickness that is affecting many home service businesses, and it especially crushes small operators. People that figure out how to solve seasonitis and cure it in their business allows them to get to $3 million in annual revenue. Now, when it comes to small operators, they accept that seasonality is a feature of home services. They usually look 2 weeks out into the future, and that's how they determine everything in their business. It dictates their pricing. It dictates whether or not they keep their ads running and dictates their level of just scarcity in the business. How they feel about the business is, am I booked out a couple of weeks? Because if so, I'm happy. If I don't have any work on the schedule in 3 or 4 days, I'm in panic mode. I am scrambling for work. I'm telling my employees that I might not have work for them. Whereas a $3 million operator is going to track quarterly lead counts, revenue and profit. They calculate exactly which quarter is their most profitable. How much— which of the quarters— there's 4 quarters in a year. Which one's most profitable and how many leads are they getting in each quarter? How much revenue are they having each quarter? And they make sure that there is no quarter in the year where there's not negative profit. Also, they make sure that no month of the year drops by more than 50% of monthly revenue. That's what seasonitis is. So seasonitis is if there's any quarter of the year that you have negative profit, you have the disease that kills many home service businesses. Now, the second symptom of seasonitis is if you have monthly revenue that drops by more than 50% compared to your best month. So during spring rush, make $100,000 in monthly revenue. Awesome. But if during the off-season you go down to $20,000 in monthly revenue, that's an 80% drop. You now have seasonitis. And so A small operator, $300,000, they will just keep adding more services. They'll panic when there's not enough work on the schedule. Whereas an operator that's at $3 million, they design winter revenue intentionally. They're not just going to add a bunch of services because their customers keep asking for it. Or I could sell more work, or I don't have enough work on the schedule, so I added this other service. Rather, we're going to be intentional about solving for the off-season. This is why I wrote the book. This is the reason why home services are traditionally thought of as a terrible business is because we have an off-season, but we can fix it. And fixing it unlocks the stage from $300,000 in revenue to $3 million. Now, there's 5 cures we talk about in the book. You can lock things down and basically close down for the winter or close down for your off-season. The second option is to do more and better by actually leaning into advertising and being able to upsell existing customers. The third option is to have an adjacent service, meaning I'm only going to add the service if it's adjacent to my current service, but it's going to keep me busy during the off-season. The fourth option or cure to solve seasonitis that a $3 million operator is going to use is installing recurring revenue. That even though there might be less work to do in the off-season, I still have recurring revenue throughout every single month of the year. Now, the fifth cure and the one that some people jump to way too quickly is to start a new brand. Brand. So if you were doing lawn care, maybe you do Christmas lights. But before I do that, I'm going to make sure I go through the first 4 Qs and see if it can't cure seasonitis first. But ultimately, that Q4 collapse, that one quarter in the year, is what kills many home service businesses. And if you lose profit for any one quarter, it means that for the other 3 quarters when you have profits coming in, you can't actually grow. Because you're saving up cash and setting aside that cash for your off-season. What gets you from $300,000 to $3 million is going to be growth. It's going to be focusing on marketing, buying more trucks, hiring more people and expanding the business, not saving up cash so that during the off-season you don't run out of money. Number 3, $300,000 owners chase revenue. $3 million owners focus on service quality so they can raise prices. Small operators are trying to get big, and because of that, it's easy to chase new revenue. The fastest way to add more revenue to your business is add more services and add more service area. In other words, add more complexity to the business and drive further away from your shop space. Both of those things are very unprofitable. You add more jobs, you add more crews, you buy trucks and equipment with a bunch of debt, you spend more on advertising. Now, these will help you grow in top line revenue. But remember why you got into business. It is to make profit. It is to be able to take cash out of the business to be able to fund your lifestyle and things outside of work. Now, a $3 million operator is going to raise prices by at least 15% when they have so much work coming in, they don't know what to do with it. And they're not going to raise it by 2% or 3%. They're going to know and have confidence that when they raise prices, most of their customers will stay with them because they have a very high quality service. So when they hit capacity and they have all this work pouring in, instead of buying more trucks, hiring more people, spending more on advertising, expanding service area, adding a bunch of services, they're actually going to trim their unprofitable services. They're going to fire their worst customers because they understand that profit margins fund the systems needed so they can leave daily operations. The reason I'm trying to be profitable is so that I can have the cash to be able to delegate. And a lot of people never delegate because they don't have the confidence that when they go hire someone else to do the job, there'll be any money left over in the business. And so the whole objective of a $3 million operator is to get their quality of service so high that when they raise prices, customers don't leave and leads still keep coming in and jobs keep getting sold at the higher price. Back to our— the equation. If value is higher than price, the transaction goes through. And for the vast majority of home service businesses, they're providing so much value and their prices are so low and they wonder why they don't have any profit in the business. They're operating on 5%, 6%, 7% profit margins. If they raise prices, Because value is still higher than price, no one would leave. Now, if you're saying, "Well, if I raise my prices, all my customers will leave," what that likely means is that value is just slightly higher than price. And so if you did raise price, you would start losing customers. But the whole objective of the $3 million operator, they constantly are obsessed with increasing value. Better trucks, better employees, better training, better automations, better software, better answering the phone, better communication speed. All of these things How do I add value so that I can raise price and customers still stay? Number 4, $300,000 owners are the estimator. $3 million owners build estimate systems. So for the small operator, honestly, they're going to usually drive to every property. They get an estimate, someone calls, someone submits an estimate request form, someone emails them, someone DMs them, texts them, whatever it might be. They're going to go drive to every property. And I remember doing this because I thought it was the most personalized approach that I'd be able to close the most jobs. But as you start getting to $300,000, $400,000 in annual revenue, keeping this mentality actually hurts you from scaling because no longer can you drive to all the jobs. And if you do, you're no longer out in the field producing labor revenue and you run out of cash. Also, small operators— and I did the same thing— is I think I got to answer every question. So if the crew has a question, I got to be there. I got to revisit job sites with the crew. So I'd show up in the morning and I would show them the entire project. And then if there was a problem on the job site, I would show up again. I would clarify things. I would then show up at the end of the job and do the walkthrough with the customer to make sure they were satisfied, all with the good intention of being able to provide high level of service to the customer and answer all the questions for my crew. That worked great at $300,000. But once I started scaling past that, I started running up against this wall. And for all the things I'm mentioning today, that's what it feels like if you don't implement the systems of the $3 million operator, is that you just feels like you're running up against this wall and you can't grow the business anymore. Because a $3 million operator is going to use estimate videos. They're going to use detailed estimate templates and they're going to have prebuilt pricing matrices. Why? So that I can have the job notes. And an estimate video and my crew can get that and I don't have to go back to the job. I don't have to go return back and talk to the customer or show the crew the entire project. Why not? When I am doing the estimate in person on the property, I'll just take out my phone. I'll open up the HomeWorks Field Force mobile app. I'll take a video of the property and everything the job is supposed to happen. I'll attach it to the visit. It'll automatically be inside the CRM And on the day of service, the crew will be able to see the video. They'll see the estimate notes and those notes I'll be able to create in a matter of a couple of seconds because I already have them in a template. I'm not trying to make things up on the fly. I'm not trying to remember 3 or 4 weeks ago when I walked the property, whether or not the property line was 6 feet over here or 6 feet over here. These are little details that will keep you small because you can only remember so many things. You can only accurately get pricing when you're pulled in 100 different directions. And that's why we use templates. That's why we use systems like video. So I didn't have to go back to the crew at the end of every day and do the walkthrough with the customer because they had the video, they have the job notes, and they take over the job. They take full accountability and full responsibility of the entire project. And that means I don't have to spend the first 2 or 3 hours of every morning just driving from project to project, answering their questions. And talking to the customers. Now I can actually allow them to take ownership of the job and prevent every single hiccup on the project going from the customer back to me instead of just the customer out to the field crew, because they have all the information they need to be able to take the job to completion. Ultimately, a $3 million operator, what they have to realize is crews do not need the owner to interpret the work order. If you've got to take the work order that you give your crew and interpret it and give a whole bunch of extra explanation, That's what's requiring you to go back to the job site 2, 3 times a day, multiple times at the end of the job. And then you're having callbacks and then your crew's having questions and you don't remember from the initial walkthrough. Have a video, attach it inside the Field Force mobile app. It's automatically attached to the visit or to the property, and it's always there for your crew to see. Number 5, $300,000 owners pay hourly. $3 million owners use pay for performance. Now, I call this P4P, and we created a completely free course for you at p4psoftware.com and 30-day free trial to use it because this was the biggest one for me out of all 15. When I switched from paying people by how many hours they worked, like, that doesn't make me any money. Someone showing up, tapping a button at the beginning of the day and then sitting there for 8 hours and tapping at the end of the day. I made no money. I make money as an owner when they go out and be productive, when they produce labor revenue, when they get jobs done. And so when I changed this in my business, it changed everything. When I was $300,000 in annual revenue, I was paying hourly wages. I was always the typical owner just complaining about the productivity of the team, people being lazy, this generation not wanting to work hard. I was micromanaging. I didn't trust people. They didn't trust me. Why? Because we were going in opposite directions. I wanted them to go as fast as possible because that's where I made more money. They wanted to go as slow as possible because I was incentivizing the longer you stay clocked in, the more money you make. Crazy. So getting everyone aligned and on the same page and trying to work towards the same thing, that's what took me from $300,000 to over $3 million. And that's what a $3 million operator does. They use pay for performance. They track labor efficiency every single day. Budgeted hours divided by clocked hours. In other words, how long should the job take versus how long did it actually take? So if a job is supposed to take 8 budgeted hours and it takes 10 hours, that would be an 80% efficiency score. That's pretty good. But if that labor efficiency score starts getting down to 60, 50, 40%, I know there's a problem with either the training or the team members out in the field might be the wrong people for my team. But ultimately, a $3 million operator is going to tie the pay of the employee to their output. Now, you might say, "Well, that's not fair." The best employees, the hardest working team members love P4P. Why? Because they're tired of getting paid a dollar more per hour than the person that is slacking off, taking naps in the truck, taking 48 smoke breaks and stops at 15 gas stations throughout the day and is producing the business, by the way, way less revenue and way less profit than someone else making a measly $1 more per hour. If you can just make sure that the harder they work, the more money they make using P4P, it will absolutely change the way you talk to your employees and the way they talk to you. Because now we're all pulling in the same direction. I and the team want the job to get done as fast as possible and to a high quality standard so we don't have callbacks. By doing doing this, the $3 million operator allows wages to increase, productivity can increase, and owner stress drops. Why? Because I don't have to be worried about my crew being on TikTok in the middle of the day. If I see them on their cell phone, if I see them at a gas station, I don't worry. I don't start tracking them. I don't start waiting for them or checking up on their jobs. I just know that we've created a system that aligns the compensation of the team with the profits of the business. Number 6: $300K owners do sales, operations, and admin. $3 million owners delegate in order. Let me explain. When it comes to a business, there are 3 functions that every home service business has: sales, we get the work, operations, we do the work, and admin, we get paid for the work. An admin also answers the phone and greases the gears for the business and for all the work to get done. Most small operators are overwhelmed because they're juggling all 3 of these things and they are constantly switching throughout the day. They're out in the field doing operations, then they're answering the phone, admin, then they're going and doing an estimate, sales, and then they're doing follow-up phone calls, more sales. And then all of a sudden someone emails them and they're back in admin and then they got to run payroll. So they keep doing a little more admin. Nope, got to hop back on the job and they're constantly bouncing between all 3 of these all day long. And they're always trying to get out of the field too early. And they're thinking, you know, I don't really want to answer the phone. I don't want to do admin. I don't want to do the work and get sweaty all day long. I'm tired of it. I've done it for years. I don't want to do operations. I'm going to go sell. I'm just going to do estimates. I'm going to work, quote unquote, everyone says this, on the business. And they use that line of working on the business as a way to get off the truck far too soon. Now, scaled operators doing over $3 million, they're going to delegate as we talk about in the Copy and Paste Millionaire book, which means as the business grows, I realize that admin, answering the phone, doing emails, doing tax, running payroll, doing bookkeeping, all these admin tasks, I want to get that off my plate as fast as possible. Usually between as fast as possible, zero, right when you're starting, if you can, all the way up to $750,000 in annual revenue is when I want you to delegate all your admin tasks. Why? Because if I can get that off your plate, you can focus on operations. Because for the vast majority of home services, if you just focus on doing more of the work, you'd make $80 to $100 an hour. So why in the world would you go do a task you could hire someone else to do, like answering the phone for $30 or $35 an hour when you can make $100 an hour? But what a lot of people do is they immediately try to delegate operations, the doing of the work. And then people complain about bad reviews, poor quality work, complaints from customers. And a lot of times it's because at $300,000, $400,000 in annual revenue, someone delegated operations too soon and they usually lose a lot of money because no longer are they producing any labor revenue. The owner, the operator, The general manager, the head honcho, the leader in charge at $300,000, $400,000, $500,000 in annual revenue still needs to be producing labor revenue. In the book, we call that the working GM, the person that's still out in the field producing revenue at $300,000, $400,000, $500,000 in annual revenue. Now, once I get over $750,000 and I start getting past $1 million, that's when I can start thinking about just focusing on sales. In the book, we talk about over $750,000 up to that $1.5 million and beyond. That's when you do move to just doing sales and getting more work. But a lot of people never even get there because at $400,000, $500,000, they try to delegate operations and getting off the truck way too soon. So the $3 million operator is going to delegate admin first. Every single task. As they get past $750,000 approximately in annual revenue, that's when they start delegating operations, getting crew managers, crew leaders, or GM in place, an operations manager, someone to manage the actual doing of the work. And then only after they get above $750,000 in annual revenue do they become what I call a full-time GM, where they just focus on sales. They remove themselves from the lowest leverage task first. The task that's $25-$30 an hour, they then delegate that. Then the task that's $80-$100 an hour, operations, then they delegate all of that. And then as they get to a 7-figure business, they start focusing on the highest leverage task of the business, which is sales. Number 7: $300,000 owners turn off leads when they get overbooked. A $3 million owner raises prices instead. And you might say, "We already talked about raising prices." Here's the thing. The vast majority of not just home service businesses, but service businesses in general have way too low of prices and they go out of business before ever raising their prices. And for the people that actually take the risk of raising their prices, realize that, my goodness, I should have done this earlier and I should have raised my prices more because their value is so much higher than price. They raise prices, very few customers leave, and they realize that their customers are super satisfied paying a higher price for a premium service. Now, smaller operators pause ads when they get overwhelmed in the middle of spring rush. Leads are pouring in, the phone is ringing off the hook. They're backed up 4, 6, 8 weeks out into the future. So what do they do? They turn off their ads. Now, the reason I'm against this is because when you are busy during your spring rush, is when leads are the cheapest. And so what a lot of small operators do is they turn on ads when they're slow, when it's in the middle of winter, when they don't have work coming in, when no one's calling them. What that means is demand is low. No one needs your service. They're not looking on Google, they're not putting in the keyword, they're not seeing your Facebook ad and like, oh, I need that service. Demand is low. And so what most small operators do is pause their ads when they get really busy. When that's actually the cheapest time to buy leads. And instead, they go spend a bunch of money during their off-season when demand is low. And then they go on to Facebook groups and they say, Facebook ads don't work. Google ads don't work. When reality, they're spending money at the wrong time of the year. Now, a $3 million operator, what they're going to do is they're going to keep ads on. They're going to allow more leads to come in. They're going to make sure that they never actually turn away new customers. Because why would you turn away a new customer? Someone that's already seen your trucks or seen your reviews, seen your website, got a referral from a friend or family member that's calling ready to pay a high price. Why would I say no to them in exchange for keeping a lower paying customer? So a $3 million operator is increasing pricing until capacity matches demand. Because as you raise prices, demand does come down. Less people will have your service. Yes, if you raise prices. But unless you want to grow a business to infinity, eventually I want to raise prices and actually make profit. If demand is way higher than supply, raise prices because you can only get so much work done. Let's just say you can serve 100 customers. If you have all this demand and you're at 105 and you're already overworked, and there's still leads pouring in. That means demand is higher than supply. So raise your prices so that maybe some people leave. Your lowest paying customers, the cheapest customers leave. So now you have 95 customers. And guess what? You don't have to turn off your leads. You don't have to turn away new customers. You don't have to turn off your ads. And by the way, it's okay to change your prices based on the time of year. You're like, well, if I raise my prices now when I'm really busy, yes, that makes sense. I'll make more profit. But what happens when I get slow? Why would you not just reduce your prices at the time of year when demand becomes lower? Go ahead and lower your prices to be able to keep the schedule full. But when there's so much work pouring in, to turn off new customers, to turn off new leads, to stop advertising when they're cheap, you can get customers for a dime a dozen. To do that is insanity. Now I want to go a little deeper. Let's talk about why you get overbooked during your busy season, because it's one thing to say, hey, don't turn off new customers and raise prices. Okay, great. But let's first address the root of the problem, which is you were overbooked. You have so much work on the schedule, you can't get it done, and you start to see cracks in operations and quality of work. And so the right thing to do is let's just focus on our existing customers and turn off any new customers. I get where that comes from. Most of the time you're stressed. You've worked tons of hours. You're tired of complaints coming in. You got a bad online review and you're like, forget this. No new customers. I'm just focused on existing. Because a lot of times, you know those customers. You sold them. They were your first customers and you're loyal to them. And I understand where you're coming from. However, let's look a little deeper and ask, why are you getting overbooked in the first place? Because the $300,000 founder, books jobs on a first-come, first-served basis. Meaning if you called on Monday and you accepted the job on Monday, then the person who calls on Tuesday and accepts the job on Tuesday is going after the person that booked the job on Monday. That is not how a $3 million founder books jobs. They book their jobs and their schedule based on priority. So when all of these jobs are pouring in the middle of spring rush, They don't just take the first one that comes and put them on the schedule and the second one that comes and put them on the schedule and the third one and put them on the schedule and just follow the sequential first-come, first-served basis. That is a recipe for disaster. The $3 million founder sees all of these leads coming in and they put filters in place. They prioritize which of these customers, which of these leads are most important to me and to the business. And when it comes to home services, when leads are pouring in, I am going to prioritize recurring and time-sensitive jobs because I love recurring revenue. It's the highest quality revenue. It's awesome because it comes in time and time and time again. I also want to get time-sensitive jobs done that I can't book out 2 or 3 months from now. But why in the world would you put a one-time project that can absolutely get pushed off a couple of months? Why would I put that on next week? And as you go into the spring rush, Why would I even allow a one-time job that is time-insensitive? I can schedule in the future. Why would I put that on the schedule? I want to make sure there's plenty of room for recurring and time-sensitive jobs. If I do that, if I prioritize the leads during the spring rush chaos, I'll never be overbooked and I'll never get to the point where I even think about turning off new leads. Because when there's a spike of demand, We can, yes, ramp up number of employees, ramp up number of trucks, scale up for the busy season. OK. Or can we just move that demand into other times of the year by making sure the time-insensitive jobs, the big projects that come at the same time as the recurring jobs and the time-sensitive jobs? I want to move those projects out, reduce the demand curve, and make sure that I don't have to buy trucks and equipment to satisfy the peak of demand. But rather use my scheduling filter by having recurring and time-sensitive jobs focused during the busy season and then move out one-time projects and time-insensitive jobs into my off-season. Number 8: $300,000 owners have a logo. $3 million owners have a uniform brand. So when it comes to a small operator, you're going to see mixed truck colors. You're usually going to see their logo. Because that's what they're proud of and that's all you need to start a business. So they take the magnet and they throw it on any truck. Doesn't matter if it's white or red or black or gray, it doesn't matter. Usually different shirts from all their team, having brands like Nike and Adidas and Puma being presented to their customers instead of their brand. There's no uniformity. There's no uniform— the logo, although it might look cool, I just see it like randomly seen on the truck. But when I go to the website, it looks totally different, or there's no website. I go on to their Facebook page, I don't see the logo or those colors. There's no uniformity. Whereas a $3 million operator really focuses on creating a brand and a uniform brand across all platforms. What does that mean? Standardized wraps on all the trucks. They have clean uniforms with the logo and the colors of the brand. They have branded estimates, branded invoices. They have a clean website that shows their trucks and their uniforms and all the other elements of the brand. They have that website that also has a customer portal. In that customer portal, they can see the branded estimates. They can see the branded invoices. The customer starts to associate the fact that this is not just a logo. I saw the exact same logo and colors and shapes on the truck. I went on their website and their social media. I saw the exact same thing. And then I got the estimate from them. I see it again on their customer portal, the same colors, the same fonts, the same images, the same logo. And that's what creates a brand, because $3 million operators understand that perception drives pricing power. Honestly, if you can pay 5% of your revenue, so on a $500,000 annual revenue business, 5% of revenue, that's $25,000 a year. If you spend that on software, uniforms, truck wraps, and a website, immediately you could easily, easily charge 30% to 40% more per hour on your labor. So people always freak out about, "Oh, I gotta spend money on a website. I've got to spend money on uniforms. Oh, that's $10 or $15 a shirt. That's crazy. People leave." I understand that. But if you took 5% of your revenue and just spend it on those few things— software, uniforms, some truck wraps, make sure they're uniform, the truck looks the same, your website looks clean— if you just did those few things, you would easily be able to take from $60 an hour to $70, $80, $90 an hour. If you can go from $60 an hour to $90 an hour on your labor rate, that's a 50% increase in price. And I guarantee you, creating a solid brand, touching all those places of your business so the customer sees a uniform brand across all platforms will allow you to be able to charge significantly more. Number 9. $300,000 owners get around to bookkeeping. A $3 million owner closes the books monthly. So a small operator is typically going to look at their numbers for their whole business at tax time. That's probably the only time they think about having a balance sheet being updated or like a profit and loss statement. And most of the time, the balance sheet, they don't really know what's on there. They don't know if some of the equipment's not recognized or if there's some loans they don't really know about. The credit card is actually updated. But they really only look at their financial statements at the end of the year when they got to submit taxes. And most of the time they're just looking at their bank account to determine if they're profitable. And they always are wondering, like, why is my bank statements and my bank account not matching up with my profit and loss statement? Because on my profit and loss statement, it says I made $100,000 in profit at the bottom line. But when I look at my business bank account, I see the balance as negative $500. And like, why are these not matching? That's what a small operator does. What separates them from a $3 million operator is that the $3 million operator is going to categorize weekly and reconcile monthly. All right. Just dial this into your brain. Categorize weekly, meaning at least once a week, I'm making sure that every transaction inside of QuickBooks is categorized correctly inside of my chart of accounts. What is a chart of accounts? Think of it as the categories or the envelopes of all the different expense categories in your business. Now, as you go throughout the week, you're gonna have 10, 20, 30, 40, 50 transactions. I want to make sure I categorize them at least weekly, because if I would wait a month or a quarter or until the end of the year to categorize all my expenses, you will forget what that random $4.63 was at Home Depot. On April 4th. You're just going to forget. And so to make sure you don't forget and you have clean books, I'm going to categorize weekly. But that's not enough. I'm going to also reconcile once a month. Like, what does reconcile mean? It means that what is on your bank account and your bank statements actually matches with your balance sheet and your profit and loss statement. Like, what are these big words? Balance sheet is a snapshot in time. It's all of your account balances. Okay. And what is balance? Why is it called balance sheet? Because you have assets and liabilities. Assets always must equal liabilities. Otherwise, it's unbalanced. So we have assets equals liabilities. If those are correct, you have a balanced balance sheet. And I'm going to make sure that's done every single month. That means balancing out all of my loans, my credit cards, my bank accounts, my credit cards, everything. On my balance sheet is reconciled with my actual bank statements. Now you're like, that seems complicated. It is a little more difficult. The reconciling part is where most people do fall apart and what also keeps them at a $300,000 business. But for under $1,000 a month, you can hire a bookkeeper to probably do your payroll, your categorization weekly, and your monthly reconciliation and make sure that your bank statements actually match up. With your financials. A $3 million operator reviews their profit and loss statement and their balance sheet every month, not every year. If I could just ask one question to entrepreneurs to distinguish whether or not they'd be successful or they would fail, it would probably be how often do you look at your profit loss and your balance sheet after it's been reconciled? For most small operators, they do it annually for taxes. For the biggest operators, the most successful, They do it every month. A $3 million operator is also going to track their cash on hand. They're not just going to willy-nilly buy trucks and equipment. They're going to know how much cash do I have on hand and be able to create accurate budgets and forecasts at the start of every year so that they can avoid cash crunches. We all know what it's like to grow so fast that you run out of money. Why? Growth sucks cash. I don't want to run out of cash. Because cash is like oxygen and running out of it means you die. And I don't want to die. And so therefore, I'm going to have an accurate budget and forecast for how much cash do I have on hand for every month of the year. That's what a $3 million operator does, because they understand that not knowing your numbers is flying blind. Number 10, $300,000 owners say yes to every job. $3 million owners Pick a lane. So at $300,000, you'll do— if you're in the green industry, landscaping, I'll do mowing, I'll do irrigation, I'll do hardscaping, I'll do treatments, I'll do tree work, I'll do pressure washing, I'll do tree chipping, I'll do artificial turf. The list goes on. A $3 million operator focuses on specific services. You're like, well, no, I know someone in my market that's $4 million and they do all those services. I want to ask you two questions. Number one, are they profitable and able to— the business run without them? And number 2, did they add those services once they were already big? Because thinking that what they're doing now, having a lot of services, is what you should do when you're at $100,000 or $200,000 or $300,000 in revenue is likely going to cause a lot of headache for you in the future. I want to focus on specific services, and this is what a $3 million operator does. By having specific services they stay focused on, it's easier to train new team members because now within a matter of 2 or 3 weeks, I can get a new team member onboarded, trained, and efficient and profitable for the business. The only reason that a $3 million operator is going to add services is to be able to fill the off-season, like we talk about in Q3 and Q5 of the book. And that is, I'm only going to add more services if those services can be done when my primary services, there's no demand. So, for example, we do Christmas lights at Augusta Lawn Care because in December no one's grass is growing in many of our markets. We also do snowplowing, another service. Why? Because when there's snow on the ground, we're not mowing grass. We're not doing treatments, our primary services that we focus on. Most $1 million home service businesses are actually a combination of like 20 different $50,000 businesses. And this makes it very hard to ever hand off the business or delegate sales, operations, or admin. And so I look at a lot of businesses, for example, in the green industry, they're like $50,000 of annual revenue of property cleanups, $50,000 in annual revenue of snow service, $50,000 in annual revenue of treatments, $50,000 in annual revenue of bush trimming, $50,000 in annual revenue of patio installation, $50,000 of walls, $50,000 of tree service. Like, the list just keeps going on, and they have— say they have a million-dollar business. I think they actually have 20 small businesses, very small businesses, packed into one, making it so complex and so difficult. They'll probably never be able to take a 2-week vacation without being dragged back into operations. Why? The amount of complexity they've added to the business. Number 11: $300,000 owners advertise emotionally. $3 million owners build conversion systems. So for a $300,000 operator, typically they're going to run ads and they're just going to look for the cheapest leads. And if you look on like Facebook groups, they'll be like, what's the best marketing? How do you get the cheapest leads? How everyone getting leads now? They're looking for a marketing hack and they really just kind of spend money on ads and hope people call. They kind of cross their fingers. They send out 5,000 postcards and every door direct mail. They just spread a whole bunch of flyers. They just run Facebook ads and they just hope people call and they don't really even track their online lead conversion. They don't have a Facebook pixel. You have a Google tracking code to actually know where did this click come from? And how do I know if Google Ads are actually working if I don't track the leads that come from Google? Now, a $3 million operator is going to make sure that they don't just get the leads and track where they're coming from. They're also going to create a whole system to make sure they convert into a paying customer. Because, yes, the $3 million operator is going to have tracking set up for all their channels and making sure they know where the leads came from. But they're also going to make sure that the entire funnel gets them from click to lead to customer. That means text follow-ups on every estimate, automated email sequences, follow-up phone calls on all pending estimates. They're gonna make sure they get a credit card on file. And this is all going to be automated. They're not going to be spending time doing this, all like text, emails, phone calls. All going to be done automated. Cards on file, deposits are going to get paid. All of this will be automated because they realize that having a sales process is more important than just getting a bunch of leads. The quality of all leads are not created equal. I am focused on getting new customers, high-quality customers, and the highest quality customers, the $3 million operator knows, value their time. So they also focus on speed to lead. So they use over-the-phone estimates and instant quote forms on their website to make sure that when a customer comes to their website or gives them a call, they can actually close the job. They're not interested in just a bunch of leads or a whole bunch of people reaching out to them or contact forms. They're interested in conversion and getting them sold into customers. Ultimately, a $3 million operator is going to increase close rate before increasing ad spend. A $300,000 operator just keeps pouring money on and never realizing that they actually need to close people and convert them into paying customers. Now, number 12 is $300,000 owners have helpers. $3 million owners build leaders. A $300,000 operator, most of the time when they're hiring employees, they're really just looking for people to kind of like get more work done. Like, hey, hop in the truck. Let's get this next job done. If I can get another person, I get a couple more jobs done in a week. But most of it, if you actually boil it down, when it comes to the hiring process, the $300,000 operator is just looking for a couple of things. Do you have the experience or any certifications required to get the job done? That's mostly what they talk about, their previous job experience, their last job that they were working at, what they were doing. Do you have the correct certifications for the job? Great. I just want to be very clear. These things can be faked. Just because someone worked 5 years at your competitor does not mean, first off, that they even worked there 5 years. You got to actually check on that. But secondly, was it actually like— did they do a good job in those 5 years? Did they actually learn anything in those 5 years, or were they the lowest performing person that got fired from your competitor? Now, it's hard to validate this, especially if it's from your competitor, that they actually did a great job. They have the experience, they have the certification, and it's also hard for them to like show their level of competence without doing like a ride-along or working alongside you. And that might work at a smaller size business, but once you have 10, 15, 20, 30 employees, you're not going to do ride-alongs with every single new team member when you have to hire 5 or 10 or 15 in a month. And so what a $3 million operator does is when it comes to hiring, they're going to interview someone based upon their input. Not their outputs. The output is the experience. How many years? Who'd you work for? What certifications do you have? Those are outputs. They're easy to fake and they're hard to validate. Inputs are things that can't be faked and no one thinks about when they come to an interview. If I came to an interview, I'm expecting you to ask me about my years of experience, my certifications, who I worked for, what happened. I got all the numbers, all the answers. Programmed, ready to rock and roll in the chamber. But when it comes to asking someone about their inputs, they're usually not ready and you'll get the best answers. So in an interview, I'm going to ask, what are you reading? Who are you following on social media in the industry? What podcasts are you listening to? What influencers are you following? What are your goals? These are inputs. They can't be faked. People don't prepare for them in interviews. And if I know these things, I'm able to hire for ambition instead of those very tangible experience things that can absolutely be faked. Because I can teach someone how to run a mower. I can teach someone how to use an excavator. I can teach someone how to do these things. It is much more difficult to teach them hard work, discipline, ambition, and the ability to learn. At Augusta Lawn Care, the second core value is to be humble and teachable. The reason it's so important is because if you're teachable and you are learning constantly, you can always grow. You can always learn and you can always increase your skill set. That's why I like asking people, what are you reading? What are you listening to? Who you following? Because it gives me a very clear indication as to what they're feeding on. What are they aspiring to be like? And are they actually trying to learn and grow and be teachable? Because if someone's actively trying to grow, trying to improve, trying to gain more skills, That's the type of person that I know. If they're on my team, they might not have the experience. They might not have the certification, but give them enough time and they'll definitely catch up because they have the ability to learn. Number 13: $300,000 owners finance toys. $3 million owners protect cash. So for a $3 million operator, I see this all the time on the Turnaround Show. They'll buy skid steers, they'll buy new trucks. And they'll consider it a tax write-off. You know, I did that at the end of last year because it was a tax write-off. And I look at them, at their books, I'm like, you did $350,000 in annual revenue last year and you had $40,000 in profit. Okay, great. You were growing. But like, don't tell me you bought a $70,000 skid steer for a Section 179 when you have no profit. Because on that $40,000 of profit, you're not going to pay very much in taxes after a standard deduction. And so you might be saving a few percentage points on that skid steer. A $3 million operator is going to ensure that they have profit before they expand. They're going to protect their cash. They're going to buy equipment based upon return on investment and asset utilization. Am I actually going to use the skid steer every single week, or did I just get 2 or 3 jobs by chance that kept me busy last summer and now I think I need an entire skid steer. This happens all the time to $300,000 operators. But the $3 million operator knows that a write-off is a discount. It's not free money from the government. A Section 179 is only meaningful when you're making real profit. And so don't buy into the scam and all the social media hype about, "I'm not going to pay the government a single dollar." Okay, great. So you're going to pay the bank and a whole bunch of financing fees on an $80,000 piece of equipment you save 5% in taxes on and you don't really need. That makes a lot of sense. Number 14: $300,000 owners work 70+ hours per week for decades. A $3 million owner designs themselves out of the business in 10 years. So for a small operator, they are the bottleneck. They have to work more as they grow. So As they do more sales, they work more. As more work gets done, operations, they have to work more hours. As more phone calls come in, admin, more admin happens, they have to work more hours. And so all of a sudden you have a business owner that's doing $600,000 or $700,000 in revenue. But because they've never learned the skill of delegation, they start just working 70, 80+ hours every single week. And look, in the grind phase of growing the business, I look at it as grind, build and thrive. In the grind phase of business, I expect for you to have to do this for 5 or 10 years to build a really good business. I understand that. However, if it's been 15, 20 years and you're still working 70, 80 hours a week and you can't hand things off, there's a problem because a $3 million owner builds standard operating procedure libraries, SOPs they're called, and they make a library so that everyone else people can go in there and find the SOP that they need, look at the SOP and know exactly what to do. Like, I'm not going to create a library. Okay. It's digital. So a Google Drive folder, something on YouTube, unlisted playlist, somewhere where your employees can go and find recordings of your screen as you go through scheduling and dispatching and invoicing and answering the email and running payroll. All the things that you're doing now, that is what I need to create a standard operating procedure for. Create a library of those digitally that people can find. I'm going to create training systems. A $3 million operator is going to create manager playbooks so the manager knows what to do. They have key performance indicators they know they have to meet. They're going to have weekly, monthly, and quarterly reporting so that they can hand off admin to an office manager. They can hand off operations to an operations manager. They can hand off sales to an estimator. Or sales manager. That's what a $3 million operator focus on because their whole goal is that they can leave the business for 2 weeks without it collapsing. And that's ultimately the whole goal of building the business is to make it profitable and then give other people the opportunity to grow inside your organization. But you don't have to keep working 70, 80 hours every single week. And if you're like, well, I want to be able to provide for other people and I want them to be able to— I want to give them the same chance I got. Maybe no one is inspired by that because they're looking at you and be like, you've been working 20 years, 70+ hour work weeks, and you can't leave on a vacation for the weekend without this whole thing falling apart. Ultimately, when you take a business that can run without you, where you delegate, you have standard operating procedures, you have simplified services, you have systems and procedures. When you build a business like that, it is harder to build, but it is easier to exit. You're like, I'm never going to sell. It's not just selling. Maybe you want to hand it off to your kids. Maybe you want to hire a general manager to be able to have the business run when you're out on a vacation and you take distributions as the owner. But regardless, it will take longer and it will be harder to build all the procedures and the systems and make sure there's simplified services so that you can leave. It is harder to build that kind of business. I understand. But it's almost impossible to exit a home service business if you have not done these things And that's what keeps small business owners small. Building a business that runs without you will take much longer. But I want you to focus on the quality of the revenue because not all revenue in a home service business is created equal. I think of one-time projects is like the fastest, easiest way to get money. Like, it's so fast. I can grow a business very quickly doing one-time projects. I just need a couple of big $100,000 jobs and let's go. I can grow very quickly. But the quality of that revenue isn't as good as recurring revenue that comes every every single month, every single quarter, every single year, because the quality of that revenue is higher due to the fact that I can hand it off to a general manager. I can hand it off to other team members and the business continues to make money even if I don't keep selling more jobs. Now, the real question is, what kind of business are you going to build this year? Now, I've covered the 14 things to focus on if you're trying to go from $300,000 to $3 million. But if you're starting this year, watch this video because I show you exactly what I'd do if I was building a business from scratch.