ANKENY LAWN & LANDSCAPE | Zero Turn: Season 2 - Episode 3

Alright, we just landed in Iowa, Des Moines, Iowa. And we are headed over to see Sam Rankin today. He is with Ankeny Lawn and Landscape and so we are going to be trying to help him get to the next level. There's a few things that he's been working on. He has about four employees right now and he wants to get to the next level and figure out systems that he can focus on the sales aspect of the business. So we're on our way to Gie. It's gonna be in Kentucky, but on the way we're gonna go here in Iowa, then Illinois and then we'll head over to Louisville. But hopefully you can learn something today from Sam and the crew at Ancon. Any lawn care?

Third fastest growing community. Under 100,000 in the country.

Wow.

I'm pretty like. I think might be under like 7,500.

Living from.

Everywhere really. Yeah, we went when I moved here in 2000, I think it was at like 20,000 and now we're up to 60. So it's just like my dad grew up here and he's like this used to be the middle of nowhere and until like there's still. We're right on the edge of town really.

So it's been, it's growing fast and it's great. Like we don't, we don't do anything outside of pound. Our farthest drive is the shop every day. And from here It's I think 11 minutes which not perfect but like land is lands out. Great. Like to find anywhere big enough to build a shop, it'd probably be three quarters of a million and that'd be for five acres.

Just because the zoning's hard like to.

Find zoning's hard and just land is. It's outrageous because everybody knows that in five years they're going to be three fields old. Just the way it's expanding. Everybody knows that they can hold on to their land a little longer, that it's gonna be worth more. So.

So yeah, we do. I would say about.

30 to 40% is on the northwest side here.

The northeast side is where I got started. I was push mowing my neighbor's lawn. He ended up. He had a lot over here. He's the general manager, owner of the place. We get all of our hardscape materials from Quick Supply company. I don't know, it's a. It's all over apparently. But he, he's the GM of that and he had a lot over here that I was mowing and I, I was just mowing grass is Like, a foot and a half tall. I was 15 years old, like, just blowing through it. My mom's out there helping me pick up trash. And I mowed over an envelope. And I had gone, like, a week before to give quotes to everybody in that neighborhood. Two people took them. Nothing. Nothing going on. Like, nobody said yes. And so I'm mowing, and I hit an envel, and I literally just, like, looked like I took a pair of scissors, cut the end of it, and front of it was all washed off. It was Memorial Day. And I take the envelope, like, oh, I wonder who it's to. Like, it was all from wet from the winter. So I pull up what was inside of it, and I look at the name, and it was two checks for a total of $30,000 addressed to this one of the two guys who I gave a quote to. And I walked down there, and his wife opens the door from, like.

Wait, was the check from, like, a year before?

Three months. Oh, so the mailman had lost it. And they had said that they had issues with, like, the mailman had lost up before, which, I mean, whatever. Neither here nor there. But, yeah, I take it down there, and the wife answers the door, and I was like, is. Is your husband home? And she's like, yeah, what? Lima's wife? And I was like, I think I should talk to him. And he. So he comes up, and it was Memorial Day, and he. I was actually his intern a couple years ago, and he told the story to everybody. He's like, yeah, I stumbled upstairs after a couple drinks, and I saw this kid was trying to give me money, and so I hired him on the spot. And that's how I literally, how, like, I really started a business. Like, that was my first. And then I.

You hired. He hired you to do what?

He had just a mow.

He had a landscape.

I just had mo. Like, when I was 15, 16, like, I just One customer crossing street. And then this was, like, my first, like, real customer. And from there, they've been super influential. Like, they've pushed my name to all the neighbors, everybody. And there used to be. We used to see, like, five or six companies in this neighborhood, and it's. It's by far the wealthiest neighborhood in town. And I think now there's myself, my buddy, who. Him and I kind of started mowing together and ended up splitting off from each other. Last. Last year would have been the first year we were separate, which was. Him and I are still best friends. We just have different goals.

He.

He's an unreal golfer. Like, he's gonna turn pro. I'm pretty sure. And I'm really good at what he does, but I just wanted to make a business. So are they at peak speed? Like, because I don't know if you were the same way, but, like, first time I started turning lawns over to the guys, having them do it. I can do what?

Like, I'm like a guy and a half or two guys almost. Yeah. Yeah. And I will sit there. I'm like, how? And I know it's because nobody's gonna care as much as me, and why should they? And I totally recognize that. Like, aligning their incentives with their, like, aligning everything.

Yeah.

And the reasons they want to do what, like, I. I get that, but it's like, geez, come on, I should.

Be able to do that.

Like, I'm old and slow. 20.

We're. We're definitely learning. Like, it's.

Have you thought about paper performance stuff at all? Is there your head?

It does. Like, the concept is great. Like, obviously, it's really, really good.

Yeah.

My thing is, like.

It would just be one more thing to add to my plate that I don't want to worry about.

Like, this year, I was going to originally do a bonus that was X dol beginning of the year. Yeah. And every time we have to go redo a job, $6 an hour comes out of it. And the mileage and the. And just to show them, like, hey, this money isn't free. I don't know if this was your idea. If I saw it somewhere else.

Yeah. Yeah.

Did you do this?

That's like the alternative way I like to do where they're going up in terms of, like, pay for performance instead of being penalized. However, it's one way. It's an easier way to do it in terms of managing the system. And Cole.

Completely. Fair point. You, like, I don't want to be held accountable for others mistakes. And I said, well, we're a T. And that was my way of thinking at it. And like, it didn't sit well with anybody. And I, as a boss and definitely a pushover. I like, not on some things. Like, things that, like, don't make a huge difference to me, but the guys really want. Then I'm like, no problem. Like, we do. We pay weekly and we pay on Thursdays because the guys want to get the checks in on Friday.

That was my buddy right there. He actually, that kid who's driving was. When he heard me on your podcast, he's like, yo, Mike made a Podcast about your question, and I was like, really? Like, I didn't even know, like, you. You said, like, I was gonna answer in, like, a video, and I was like, okay, like, I'll see in the video. It'll probably be a short one. And then, like, you answer the whole podcast. My mom listened to it. Like, everybody's listening.

But he's like, yo, you have to. Oh, Actually, he wanted me to ask you a question. Yeah. You want to professionalize, like, the landscape industry. Yeah. Why, like, why does that matter to you? Is one of the things you wanted to know?

Yeah. Is he a heavy landscaping business?

He's got a smaller. Well, I guess he does 80 lawns a week. Most of them are subbed out to him, but, yeah, he's a freshman in college. Like, works really hard, does a good job.

Yeah. There's a few different reasons. The first reason is, as you get to know more and more, the owners, and especially if you go to, like, a conference or something, you'll find out, like, the quality of the people are, like, the owners are awesome. They're great people. And, like.

They just don't. A lot of them don't have the business side of things to back up their, number one, their skills in landscaping. But then secondarily, just the fact that they are great people, they have great hearts, they want to help their employees, give them opportunities. But at the end of the day, like, if we don't have a profitable business, we cannot give our employees more.

Correct.

Right.

We can't bend to what they want and make them have better opportunities or pay them whatever it is. And so the fundamental issue is that the employees want more, and in this labor market, you have to pay them more.

Yes.

And then.

The other side of that, the weight to that is that you have to have a profit to pay that come out of. Right. And so a lot of landscapers don't know the numbers. They don't accurately have a profit margin that is consistent. And then when they grow, it's unprocessed, profitable. It's just numbers and number of trucks and number of employees and customers. It's not an actual profitable business.

Correct.

Is that a real number right there?

Yep. That's pretty year to date. Like, I think I've got a couple checks I put in, so maybe it's a grand, two grand, three grand off.

Okay.

So that's your total labor.

And is that coming out, like, coming out of your account or is that.

That comes out of check.

Does that include taxes, though, like sales of payroll?

That's payroll tax through end of August.

Okay, so these.

Are weekly and this is for each employee.

Yep. It's not labeled per employee.

So they're not working.

We were. So like average week is like 35 to 40. Cole works the most usually.

Right.

In the last three weeks, I think you've been at like 40 to 45.

Like when Cole leaves his house, he clocks in on his way up to the shop.

The other guys obviously don't. We usually meet actually here to start mowing and whatnot. And they don't get paid to load up and everything. Yeah, they don't.

So they get start. They start clocking in. When they get to a job.

They start. The guys start clocking. Yeah. Whenever they get to the job or wherever they're meeting.

And they use essay to clock in.

No, I actually just run a Google sheet that's been.

Because they don't punch in.

Yep, yep. There. There's a Google form that they punch in, punch out. So it's all like timestamped. But then like I just had them put in what time they actually started because I know I would always forget.

So are you actually seeing this number?

Your bank account? Absolutely not.

Okay, so where, where do you think that money is going?

A lot of it's gone to like, assets. This year alone we've picked up dump trailer truck, two new trailers. Two new, like one enclosed, one utility.

Okay. Cash for those.

Everything's paid cash.

Okay. So where, where's your equipment on here?

It would be. That's an asset. So it'd be depreciation.

Oh, so you just do it in the Euro through that?

Yeah. Yep.

Okay. And so are you on five year final load?

So last year we straight or. We did. I don't know what the county code is, but we took the full deduction on the RAM and on the black and closed trailer. Because I was planning originally on like making this a two to three year thing.

Okay.

And then like end of last year, I'm like, man, like, we could have a good year this year. And so I was like, all right, let's. Let's do it.

You're in a good cash position. Very happy.

Awesome.

That's really our capacity. Both high.

Where are we at?

Yeah, 47.

Yeah. Is that average though? This time? They're kind of your, your automations help with that a lot.

Okay, good.

So like.

Before we did automations for AR, we were at like, we'd be between 50 and 70,000 and now we're between 10 and 15.

That's good.

And making Twice as much.

Yeah.

And like, so automation will really help with that.

Okay.

And then two, does your verbiage on your invoices, like, try to make it 10 days due instead of 30 because we're really.

We're 15. I just want to get everything to card file like next year across the board. It's going to be cardinal file every month you get or every week.

Like, and next year too, because SA just got bought by clearance.

You sure that.

Right. Clearance is gonna have much better rates and you will do ach.

Ach is like what, 20 cents a transaction?

55 cents a transaction.

Okay. So like way less percentage. Yeah.

So. And you'll be able to put those on file the same way you do a credit card now with Lupe.

Gotcha. So do you think you're gonna have trouble marketing that put people put an account upon.

No, it's like, hey, you can get 2% off by getting. Putting your thing on achievement. People go for it all day.

Yes. And they're still making more because they'll.

Make 1% on their cash back. Right. So. But. But some people rather just pay at the card. And it's fine. You get in your prices. So it's higher.

Yep. I think like that was one of the things was this year, like when we've increased prices, we've increased them by.

Like 1 to 2% on top of like just the standard price increase. Because I figure then right now we're at 50% pay card on file and probably. I think we're probably about 80% pay with a card.

Okay.

I don't want to buy anything.

Just quick. Okay. It's imovie final cut pro. They always pop up and I'm too lazy to figure out.

Okay, here you go.

Wow.

You have strong August and September. Well, you just didn't grow like crazy, dude.

Yeah, like, April was normal.

We haven't had a down month this whole whole year. Nice work.

Yeah.

It'S been a good year. We've had a lot of.

It's gonna be. The winter's gonna. Is gonna determine how good you do. So this is exactly what ours is because, like, during the winter, like these months here, your total income literally was 500 under a thousand bucks for three months, right?

Yep.

So that first quarter. Do you need this?

No, I don't care. My mom. Yeah. Oh, that's probably important. You keep talking.

You're fine.

Oh, she says. She said we're all good.

So like, the problem is, especially if you're gonna keep them busy during the winter, like those this determines your profitability. So, like, I know that, like last year we were. Our profit margin got tanked because we move shops and I want to keep all the guys busy. And so literally these three months of the year, we lost a bunch of money, and it took us like another three months just to get back all that money.

Gotcha.

Because you're trying to keep the guys busy, and it's not cheap. So the thing is, literally these nine months will be determined, like, probably over the whole year will be termed by these three months, hands down. Because you'll stay busy with cleanups in here.

Yeah.

And like landscaping jobs. This wall will be big. All of that you'll probably do, I'd imagine probably 40,000 in October.

Yeah, it'd probably be fair, so.

Because it'll come down off of September.

Yeah.

And then, you know, you'll get. Still. The thing is, your ar, you'll be collecting on through December.

Yes.

And so people always have a ton of money coming to December because, number one, no. 1, we're not working as much because they're not. Not as much work. But then you're collecting on the 45 grand you have owed to you, which, by the way, is your profit right now.

Yes.

So the reason you feel like you don't have any money is it because you have all.

It's all there. It's just. I don't have it yet.

It's all in ar.

Yes.

Right. So collecting on that is super important. And you can. You can do the credit cards, but you're paying a percentage of that. And you're probably paying.

2,000, 2,500amonth.

No, like two grand.

Well, the bulk of this we do.

In credit card processing fees.

Yeah. We do probably 15,000 to 20,000amonth in 15, probably a month in cards. The rest of it comes through.

Checks from landscaping. We don't do cards for landscaping because we have. We did our first one because they really wanted the points. They said fine. My chart.

You mean landscaping you don't do.

Correct. Yes. No cards.

Because now with a check or something like that.

Yeah, we've been doing. Originally I did like a.

Like on our big job. Those 30, we did 2500 up front. Just old spot, start working on materials. And then we did whatever's left half up front the day we start and half to finish. Okay. So that way, like non refundable deposit just to hold your spot on the schedule. Like, could we do more? Yes, do. I did. I feel like adding that barrier.

People will not wink on it.

Really?

Never. We've never had a single person really.

Okay.

So we added. So we were where you were at. Our biggest landscaping job was 10, had been 10 grand.

Okay.

And then we had done eight grand.

One.

And besides that it was like two grand. And this is right when Josh was coming on. Okay. And so we were starting to think about landscaping more. And so we were of the opinion that same thing. Like if we ask for a check, it's just another barrier.

Yep.

Right. Like, okay, we get an estimate where they got accepted and then like, I just want to go for it.

Yeah.

But. And so we started doing these bigger jobs and the account receivables just gets racked up. We had account receivables up to 120 grand. And I was like, this is ridiculous. Yeah. And so because we're super profitable, but literally you feel like you have no money. And so 50%, they will not wink a bit. 50% to get on the schedule. Put it on your estimate. They will not wink a bit. Because if you have a 50% margin on your landscaping job and you collect 50% up front, it essentially means you never have to bankroll anything. You get 50 to 50% up front. Say it's a hundred thousand dollar job, you get 50 grand, you can literally do the entire job with that 50 grand and not be in the hole. Even if they don't pay for six months, God forbid.

Yes.

Like you still nothing's off your back. Whereas if you get 25 and then like yours, you're still good. Because as long as you get the 60% before you break even like the shovel, that's great.

Yeah.

But having 50, like four weeks in advance gives you so much leverage. Because what you do, you sell a bunch of jobs in spring when everyone's wanting them and you're booking out, you're booking out and you're getting all this cash that you need to go do advertising and hire people.

Uh huh.

Instead of just getting the 25 and then getting the money, you still get it from the job perspective. But when you can get money four, six, eight weeks in advance, a big chunk of it, it gives you a huge amount of latitude to go hire people. Because otherwise you're doing the spring thing. Right. You're advertising, spending a bunch of money, you're trying to hire people and train them, they're unprofitable and you have a bunch of money going out and you can't ever get ahead of it. And so the same way is with accounts receivable is just the upfront collections. Right.

Yep.

So. But no, like this will be the absolute determinant this year. If you create work, if you have Duke, if you do cleanup, like if you don't. I know you hate cleanups, but if you do them just during those months even to keep the guys busy and just make revenue.

Yeah.

You know, Right. So like when he mentioned in the spring about the pay like that you start with a bonus and it gets chipped away as like mistakes are made in things. What was your apprehension to that?

What did I think about that whole thing?

Yeah, I thought.

I agree with that. I think that's like a realistic, like, you know, like if you make an obvious mistake, I. I'd say that, that that should only apply to like careless mistakes. You know, like, you know, everyone's human. Y' all make mistakes every once in a while. Like, I'll be the first to admit I've made mistakes. I mean, but I don't. I don't choose to windows yet.

Yeah.

No.

You guys haven't broke anyone. We haven't broken any windows. Pretty impressive. I've hit a golf ball.

Yeah, I was scared that it was.

We haven't and since I've ever been home.

But yeah, I do agree with that. They come in punches.

But I think that it should only apply to essentially just careless, you know, like somebody being lazy and just hands down just, you know, that shouldn't happen. But you know, mistakes happen and I feel like that's just part of a business, you know, like that just happens. But yeah, I agree with that.

Yeah, I. Yeah, I think it's. And it's like, where do you draw the line of what's careless and what's not?

That's the hard part.

Oh, I know.

And like, because sometimes like people make honest mistakes every single day.

Yes.

Josh is laughing because he knew he sound hot.

It's like they have good explanation. It makes sense. But yeah, they're super accident prone.

Yes.

And at the end of the day, one mistake on a mowing route wipes all profit for that whole day.

Oh yeah. Like there's not enough, like break a window. Like you lost your profit for the year on that. It's true.

Yeah.

And that's the trouble. And like I. The thing I hate is like.

On the bonus thing, like if we're chipping away at, we're chipping it away at. Then every single time there's a careless mistake, I feel like I am single handedly just taking from them.

That's why I hate the taking.

Yes.

Like if you can make It. Where it's adding. Yep, it's better.

Do you have a video on the pace? Performance stuff?

Yeah.

But I've been talking about a lot.

Yeah, I've heard it. I just haven't seen, like, anything directly.

But, like, here, I'll show you the actual system we use.

That's quickbook. That's not.

Oh, tricky. How do. What is this? Oh, I see. Dude, man, you got a lot of tabs over.

Oh, when I have my dual monitors going, it's like 20 tabs at a time, so.

So ours is a hundred percent pay for performance, but there's like a hybrid you can do. They have an hourly rate, but then if they make the business so much extra per pay period, they get a bump per hour. Right. And it can be as simple as, like, look, okay, if you make 15 bucks an hour, great. But if you make the business X amount in the week, which is easily trackable on autopilot, which you get figured this winter, budgeted hours and what you're charging every job. And if they beat that, then they get like, you can bump it up to 18. Right. Going from 15 to 18 is $3 more per hour. That's $120 more per week. If they are producing three or $400 more for the business, you can easily afford 120 bucks.

Yes.

And what that allows it to happen is someone like Cole, who wants more money, it's been here for longer, whatever, thinks he deserves it, maybe he can prove it.

Yes.

Right. And then you also have someone that comes in here and was like, I want 20 bucks an hour. And you're like, dude, you've been breaking stuff all the time. You're slow. You're on your phone all the time. It's like, just prove it. Go out and make the money. And then you can have the rate, like the raise. So the hybrid model is easier, Right. You have an amount they need to hit. And if they're on landscaping jobs, it's based on budgeted hours, Right? Like, if you hit budgeted hours or below on all your jobs this week, you get like a $2 bonus. Whatever it is, at the end of the day, it cuts out a ton of stuff, like loading up, unloading, gas stations, bathroom breaks, cell phones. And more importantly, like, the big thing we had implemented for a long time was because culture. I thought it'd be like, tearing everybody apart because they don't want to help people. They wouldn't want to. They always be, like, trying to find ways to make more money. But what happened is it eliminated the people that were already a drag on the culture of, like, the people who sit in the truck. And there's actually, you know, just zapping the system. Yeah, the people who went, like, took five breaks. I don't have to track them anymore on the trucks to, like, see if they're staying on task. You know, like what you talked about, like, okay, someone does two lawns when you know they couldn't have eight in that amount of time. It's so infuriating because you don't know what they were doing. You don't want to convict them because they're nice. But on the other hand, it's like, we're never gonna make any money. You can't give you a raise if you're doing two jobs. And you should be doing yes. Why not have it where they're getting paid based on the two jobs? Right. And so the thing is, it is more time. You said the reason you didn't want to do it is because it takes more time. It takes more time to create the system, to figure out budget hours, all those things. Like, the hybrid model is easy. They basically have two different pay rates. You either make your base rate, whatever that is. You could make it solid, too. Everyone here makes 14 bucks an hour. If you make X amount more per week for the company on your pay period, you'll go up to 18. I promise you. People will work their butts off to get to 18. And even if you make it, this is the thing, you don't even have to make it where it's on the table. You want them to make more. So even our last pay period, every single person made more than our base of 18. Every single person.

The highest person made 40 something because he did a landscaping job. He was half the budget.

That's not average. That's not average.

Like, they live in Washington, too. Fifteen an hour.

Yeah. No, the average. The average was like, 24. It wasn't like 40 is way high, but, like, it gives them the opportunity to do it. And when a job goes horrible, this is the thing the culture now has been built upon. Efficiency. That they're no longer, like, wasting time, they're shooting for something. And so even if they don't do well, they'll do it much more efficiently. So even if they don't do well on the job, even if it's raining and they're gonna be slower, they'll do it so much faster than. Compared to, like, when it's raining out, like, our last three weeks, usually we have to need at least two or three more people just to get through the season. When the grass just takes off in our area before, like after August is dormant, the rains come and it takes off for three weeks. Usually we need like two or three more people. Everyone's working like 60, 50, 60 hours a week. But basically their production did not change because it was raining, horrible weather. But now they're getting paid to work, not sit in the truck. Yep, go take an extra. And that's what you watch on those weeks when they're bad weather. That's where you're losing all your money.

And it wasn't so correct if I'm wrong. It wasn't that like, did the mowing itself take the same amount of time? Like, did the actual time on property take about the same?

No, because they're actually. It did take longer sometimes, but they.

Were done in less budgeted hour, in less hours because they didn't spend the time rinky dinking around.

It's the two minutes coming out of the truck, the two minutes getting back in the truck, the four minutes at the gas station instead of one minute. All of that add up over the course of the day adds up to two hours, which adds up to three more extra jobs it could have done, which adds up to 140, 150 bucks for the business, which can the up to an extra 50 bucks in their pocket. For 50 bucks in their pocket, they'll work harder.

Yeah, I agree. That's.

It's super nice to talk about. It's harder to implement. Oh, I'm sure that's what no one does it because it does take time. Yeah, it takes time to educate them. It takes time more for just to figure out the numbers. Yeah, right. And so like for us, this is what we use.

Every day to figure out their pay for performance. So.

Basically our base pays 18 bucks. They can't make less than that.

This is like, I swear I watched all your videos and yet this is not one that I've like seen.

And the thing is, the thing is, so like at conference in January, all spent an entire day on this because it's one of those things that owners and employees have question after question. Like if you explain this to guys, they're always going to have the craziest questions ever.

Like, what in the world?

Yeah, like they're gonna start coming like, okay, well what so and so, like what if I'm a two man rap crew and so and so my partner makes the mistake. That's when you say you're a team and you're both going back.

Yep.

Right. That being said, now they're gonna keep each other accountable. Like, if someone's slacking off, you're gonna hear about it so fast. Like, within weeks of us getting paid for performance, we two people were gone. Because they just weren't gonna work in that system. Right. Because everyone's gonna tattle them. Like, all of a sudden, we heard about them being on the phone for an hour and a half in the truck in the middle of the job, and everyone else slaving all of a sudden. Because now it's affecting. Because if they're eating budgeted hours, it's affecting. Josh. It's affecting their pay.

Yeah.

Because now they're working, and that's what creates even a stronger culture.

Yeah.

Now we're working as a team towards a common goal, which is the both of us making more money and getting the job done. Jobs done faster.

Yeah.

So it actually creates a more of a camaraderie. Not like I'm trying to get other people down.

I like it. I think it's.

I think it's very, like. Makes sense.

You already did really most of the work, and that is making sure that all your jobs are on budget hours and that all your numbers are in here. You've got to make it where when you multiply budget hours by your rate, you're gonna call this number.

Because most of them are like, I have some. And I just. Yeah, but it'd be easy to do.

And as soon as you. The thing about it is, as soon as you raise your prices, you're giving a third of that raise to them.

Yep.

Which then that's how you can dictate raises. But better yet, if someone comes in and say, hey, I'm only making, like, 16 bucks an hour. I think I'm worth 20.

Yeah.

You look at them, you say, okay, well, so and so has made 24, 23. Like, go learn from them.

Yeah.

Go research how to be more efficient. Go watch YouTube videos. Go research about grass. If you want to get, like. So we make this, the application side, really profitable. Like, they can make 30 plus an hour if everything goes right.

Yeah.

But it takes one burnt lawn. They're going back and spending an entire day to replace that lawn. But you're gonna have the craziest question. Like, if you try it next year, I would really. I really think that you shouldn't grow a whole lot more easier. Take one year, slow down, fill up cash reserves so you don't have to keep scaling and you're working to the point of, like, exhaustion.

Financial on the edge. You're doing really good from a cash flow perspective, like, money in the bank and stuff. You're doing really good.

Good.

Like, from a, like, risk analysis, you're doing fine.

Good.

Your company has more cash in the bank than a company. I just looked at their financials. They do a million plus, and they have 400,000 in debt, and they literally have 4 grand in the bank. So you're doing okay on that side, the risk side of things. But I think in terms of, like, if you really want to scale it, I'd get a little more cash flow by raising the prices, implementing a system for pay for performance so that you have consistent profitability even if you make less. I would much rather make a consistent, consistent 24%, 21, 22% margin on all my work. Then I would then make 50% on one job and then 15 on another, and then 60 on another and 2% negative on another. I'd much rather be always consistent, even if I make less.

Sure.

I'd much rather make a little bit less, but know it's gonna happen all the time. And then now you don't have to manage them as much. You can give him a job, and he, you know, he's gonna be kicking his butt to make it as soon as possible, most efficiently, coming up with creative ways. Like, the reason the guy made $40 an hour last time is because he got super creative with moving the material, got the blocks in the back, like, in, like, some amazing fashion. I don't. I wasn't there, so I can't actually explain it, but the estimators, like, I didn't think about it. The customer hadn't even mentioned that. And he came with a brilliant idea to get the blocks in the back faster. So he deserves 40 bucks an hour. Yeah, he would not have thought about that if he was getting paid an hour.

He went to the carry.

He wouldn't care. He'd been like, oh, I'm getting paid by hour. I want this job. If you pay by the hour, you're paying them. The longer the job takes, the more money they make. Which is the complete opposite of how you're getting paid.

Yeah. That is.

So if you slow down the growth next year by raising the price of the mowing.

You're just cheesing over there at this idea.

This would be then, like, if we do this texture, then it would be something like, you would need to help me with.

I'm fine for that.

All right, good.

And even if you Start a hybrid, which would be. All right.

Let'S say a third is if they average. Trying to make it as simple as possible. Basically, you'd need a number that they would hit if they make the business X amount per day. So if this crew, for example, made $415 each for the company, you could say if you make over $400 per day for the company on mowing crew, because it's really easy and serves autopilot, then you're gonna make an extra 2 bucks an hour. For example, that's 16 bucks if they work the whole day.

Yep.

All right. Now for landscaping, it's like, okay, you got budgeted hours for every hour underneath budgeted hours, you're gonna make X amount of dollar bonus.

In landscaping, it's a bonus instead of an hourly.

Because it's still based on hour hours, though. Right. Because the faster you go, the more money you're gonna make.

Sure.

Right.

Yep.

That's the. That's the. A quick hybrid way that you can, like, implement within a couple weeks something that is like, no skin off their back. They're not going to lose anything. Even if you say, look, your hourliest thing, the same, but you have the potential to make an extra two or three an hour based upon the budget hours. It's 100 hours budget on the job. There's an. And they beat it by 30 hours. There should be a dollar amount per hour. That's like a hybrid way of doing it. And then I would, you know, the push is always to go full performance.

Yes.

Because they have unlimited cap potential.

Unlimited potential.

Kicking butt. And he's like, okay, I have beaten this by 20 budgeted hours. I can kind of slow down and still beat by by 10, and I'll still be fine and get a bonus. Yeah, Right. Whereas if he's like, I know that if I beat this by 30, I can then go get another job and make an extra 50 bucks today and hop it. Like, so. Like, that's how they think.

Yeah.

And that's the way you're getting paid.

Yeah.

Because otherwise the tension is always, they want more, and you want to give them less. From a financial standpoint, I know you want to give way more.

Simply put. Yes.

From a financial standpoint, I always wanted to give them more. At the end of the day, it's like, financially, you cannot pay someone over 20 bucks an hour to start mowing lawns. Even in our market, like, we can't. It will not work. Right. But I can afford to pay them 23, 24. If they are earning it, like incredibly efficient.

Yeah, that is.

And you can make efficiency one of two ways. You either a get nicer trucks, better equipment.

No.

No trailers. Doing the ramp thing. That's one way to do it. Or you literally for free, make a system.

Sure.

That manages the biggest expense, which is labor. It's not. It's not gas. It's not fuel economy. You're not gonna save yourself thousands of dollars a month on fuel economy with a few trucks. They saved me 100 bucks.

Yeah.

Right. So it's the fastest way to do it.

And it's incentivizing them and gives them opportunity to grow.

Like, if he wants to make 25 bucks an hour, he can figure out how to be budgeted hours and get really efficient at building walls and moving material around better.

And do your budgeted hours then. So you're consistently. Say you're consistently beating a job by 10 hours.

You mean landscaping?

Like, yeah. So you're consistently beating a two retaining. Say you got five retaining walls, similar spec. You're beating them by. You do one in each month, one in May. They beat it by 20 hours. Are you adjusting then that. Ooh, man, they got that one done really quick. Let's see what they do in the next one. They beat it by 22. Are you then knocking that one instead of being at 80 hours and you're only budgeting them at 60?

Yep. So that's why from us, the estimator is also getting paid based upon if they're beating budget hours. Because I want the. I want the employees to beat budget hours.

Yep.

Because they can make more.

Yep.

I want the estimator for. I want to make sure he gives them enough hours. Right. So like, because otherwise he'd say he knows it's going to take an 80, but he'll just say 60 so that they're not going to make as much.

And get a job.

Right. So that's why I like I talked about one time on the one episode about commissions never on top line revenue. Because he'll sell jobs all day long at a lower budget hour, budgeted hours and make them super mad. And the customer is left with people running around trying to get work done because they just trying to budget hours.

Yeah.

So I make sure he's getting paid. His pay is tied to that as well.

The thing is, if you're cutting hours, like as the owner, it gets tricky. They have to trust you a little bit. But the bottom line is you just have to get enough work to keep them busy. So what it means Is if you're booked out five weeks, you want to get them more hours. You're making money on the budget hours. Like, if they're always below budget hours, you're not making money.

Correct.

Right. You're making money if they're hitting budget hours. So it's not like everything, if they beat budget hours is going to them, they're only making a third of it.

Yes.

You're making money too.

Yes.

Right. So you want them to be budget hours.

Yes.

Right. So first of all, that's the main thing. You want them to be budgeted hours. Makes you more money. Secondarily, if you budget too high on hours, you're not gonna be able to sell any jobs.

Yep.

Right. So that's the balance. And so that's the balance of my estimator, he knows he has to keep people busy. Now. I do not want them. I want to have at least two weeks booked out. So he knows if we're hitting out, like, one, he is gonna be tighter in hours he's gonna be on. Instead of giving him 80, he'll give him 72.

Yep.

Like, he'll be a little tighter because he knows his job is to schedule them out.

Yeah.

Because he'll all get on his case if we start getting the three, four days booked out.

Yeah.

Now if we're five weeks booked out and he's starting to bid jobs that are tight, I'm like, what are you doing?

Yeah.

You're leaving money on the table for the guys and for the company.

Right.

Because you're five weeks booked out. You do not need that job.

No.

You can go in there and instead of set, instead of 80, budget 88. Give the guys a little extra money.

Yep.

And then make the company extra money.

Sure. Right.

So you really allow the budget hours. Yes. You have systems in place to get what you need, but then you allow it to fluctuate based upon how much do you want the job. Right.

Gotcha.

And that's usually gonna be paid by how much work you have.

Correct, Correct.

So in the winter, you probably budget a little more aggressively.

Yeah.

Maybe it's a 72.

Yep.

But in the middle of summer, when you have eight weeks booked out, you're probably gonna budget 88. If they accept. Great. Means the guy's getting a little extra.

Yeah. It's a little mental gymnastics here, going through a workout. It's all, like, really good shit, though.

I would say, though, like, that's actually lower priority in terms of easiness.

Yeah.

Like, that's the thing that will Change your business. But like I'd say the easier steps is raise your prices next year on the moment because you don't passionate about anyways. You feel like that's your lower margin stuff. I feel based upon the numbers that I've seen. When you institute pay for performance, mowing is the part that gets the biggest boost because that's where the most inefficiencies are wrapped up. Because they're most in and out of the truck, most in and off, on and off the phone, the most driving around and all that's where the efficiency are gained. Usually if you have a good worker on a landscaping job, they're just working hard no matter what. Yeah, right. Like they're just gonna be working hard. They're gonna figure out they're usually creative in how they do things in terms of like not just head down grind. It's like how do you get creative about making this work? But the efficiencies of mowing takes you from a 5 to 10% margin on mowing to 25 plus. Like that's the difference on mowing. Because there are just so many inefficiencies that are baked into driving on phones, equipment stuff. And so callbacks, like a callback right now sucks. You send someone back, you, it's all they're getting paid. The longer they take on that callback, the more money they make. Unless they're on another job where they're breaking their back. Right. Right now our callbacks are like they are flying in there and they're trying to figure out too, like, can I route my callback into my next route? Can I cut tomorrow? Can I drive by that person's house, have two gallons of soil and some seed and fix the skid mark instead of oh, I have a call back, it's 5:30, I'm gonna drive 30 minutes to the customer's house, spend an hour doing it and drive 30 minutes back. And now you just paid them two hours on the clock. When that's a job they could have done in probably 15 minutes that they would have done it on a route the next day. So they start thinking more like that.

Yeah.

You know, and because of that you can pay them more. They've earned it.

Yeah.

If you were like, oh, you can't pay people 22. No, they earned it. They are the ones who work their butt off and they, it puts you in the position where the really good employees can make more at your company. The really bad ones get cut out. It's really easy to distinguish if I see someone at 18 three or four times in a row, I'd cut them. We haven't had anyone do that. But you know that someone's just tagging along. They're just hoping they get with a good person that's working and they get little money that day.

That is. I really like that.

So that's like the end goal, I'd say for next year, I'd really recommend scaling growth back by, you know, so instead of 5, 600, I'd shoot for like 350. But on that, 350 make 100 grand. Yeah, right in the bank.

Cash. Yes.

Right. And then the next year, you know, implement the system of pay performance as you get in the next year. So that way you have a consistent profit margin set. When you scale, you now have a predictable margin that doesn't change because with growth, usually you have higher overhead, therefore your margin slips. And so people get into 250, 300. They're really profitable. They jump to 6, 700. But they're overhead jumps. That's trucks, equipment, employees, now you got a shop, things like that, overhead jumps. And now they're not making any more money than they were when they're smaller. But if you institute pay for performance, where you have a set amount of percentage going to labor, you've taken the biggest variable of our industry, labor, and made it constant. The same way your materials are constant, the same way that your shop, everything is constant. The biggest variable is always your labor. If you can see.