Business Bootcamp: Aaron's First Zoom Call

Welcome back to the Mike Andes Podcast where we discuss ins and outs of owning a small business. If you're new here, the Mike Andes podcast is all about taking your business to the next level. For the next couple of episodes, we're going to have one Focus Business Bootcamp. We've been challenging four different home service business owners to overcome their challenges and build their business into something great. Part of the challenge is zoom call check ins that we do along the way. Mike has tons of great advice in here for anyone that runs a small business. So here's what we're getting into. We're talking to Aaron from AZ Lawn Maintenance out of Scottsdale, Arizona. Their business is currently worth 900k, but he's looking at almost 300k in debt and only 2k left in the bank. What they have here is a major cash flow issue, plus some massive payments being made on equipment they just don't end up using. But hey, Mike is going to talk to them and see if they can find a way out. As always, you can find all this and more over at the MikeAndYs YouTube channel. Well, let's get into it. Here's the first call with Aaron from AZ Lawn Maintenance.

Hey everyone, it's Mike Andes. And today we actually have an excerpt from last week's episode of Business Boot Camp. If you're not following along, this is a 30 day challenge. We have four different landscaping and home service businesses going through the program. And today we're actually hearing the full version of one of the zoom calls, the consulting calls that I had with one of the owners. So the name of this owner is Aaron and he runs a business that does almost $900,000 in annual revenue doing landscaping, lawn care, tree chipping. But he has almost $300,000 in debt and only $2,000 in his bank account. The is very, very tight and we got to really figure out how this business can work. This is the first episode. If you haven't watched the entire episode, watch it from last week and click the link up here. But this is the actual zoom call that I have with him, the full extended version. Make sure you sit back, take some notes because this one's going to get a little bit dirty.

Hello, Aaron, how's it going?

Pretty good, how are you?

Good, good. You out and about on the town?

Not quite. I'm actually, I, I'm at the hospital right now. My six year old stepdaughter has brain cancer, so.

Oh no.

Yeah, we're had a doctor's appointment, kind of go over like chemotherapy and stuff with her trying to explain. Explain everything. So that appointment is getting wrapped up. My girlfriend, she's in there with her right now, so. Yeah, I wish I was out, but.

Oh, man, I'm sorry. I'm sorry. How long. How long has it been that you known?

Three months. So she had surgery three months ago. They removed most of it. And then we had an MRI last week and like 75% of it grew back. So we're gonna start therapy. And the survival rate's high, so I'm up.

Good, good. I'm sorry, man. Thoughts and prayers for in that. Let's jump in because I only got 15 minutes with you, unfortunately. So they, they. The guys kind of shared a couple things with me from this week. And although I want to jump into some of them, like the crew management, you know, inefficiencies, things like that, I actually want to look at the profit and loss and the balance sheet because I do have some concerns and I just want to go over kind of like when I look at a company that is struggling, it's like, okay, first and foremost, we need to stay alive. Then we can focus on thriving and growing profits, et cetera, in the short, short term.

I look at the company, I'm like, we gotta do some serious surgery to, you know, really fix some things.

The reason I look at that is, like, if you look at the balance sheet, you know, I'm looking at end of August. So it's probably improved since then because you've had September underneath your belt. But, you know, when you only have 2,000 in cash, but there's, you know, almost 300,000 in liabilities, that's very scary. And I know what it's like to be there. And so I don't. I made sure. I don't want you to think I'm talking down you in this call at all, because, like, I remember what it's like to be there, and it's like, horrible. And especially with that compounded with the fact that your. Your. Your. Your daughter's, like, going through everything. Like, I can only imagine the stress and everything. So when I. When I was thinking about it today, I was like, as much as I want to be like, hey, like, let's focus on growing the business. Like I look at the business, I'm like, we, We. There's some. There's some serious surgery, like I said, that needs to be done in the short term to save at the business. And then. And then we can start focusing on how do we make it more profitable and things like that is there still an acute cash crunch in the business? Like I'm seeing at the end of August, because I'm seeing end of August financials.

So. Yeah, so that.

That, I mean, I don't. Right now I only, I think I only have like $8,000 in my account. Okay. But I have approximately like $25,000 that's owed to me. So one of the things too, I know that number for August showed I actually had like $15,000 that was owed to me. So I think one of the reasons that number was low is because I wasn't paid on that. It was on like 30 day terms of that, of that money. I know that a lot of my money has been going towards like personal expenses, like lawyer fees. I had a surgery done, you know, that was like $10,000. So you know, I, I've spent a lot of the businesses money on personal stuff and that's one reason I don't have, you know, like saved up money. You know, I probably have like around $100,000 saved up if I didn't spend it on like personal stuff.

Got it. Okay. So it's really been a, there's a combination of a lot of things it sounds like, because with the attorney fees and you don't have to give me all the details, but I'm assuming those legal fees is what led up to the insurance claim because you got like four or sixty thousand dollars or something back on an insurance claim.

So. No, that, that was actually one of my guys. They, they got in a car accident on the, on a freeway. So they totaled my truck, a trailer and my new wood chipper. They didn't total the chipper, but I got a bunch of money back on that. But it all went back into like repairing the truck, you know, rebuilding everything, you know, the, the wood chipper.

You know.

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Okay, a couple of things when I look at. So when I'm thinking about very Short term, I am looking at the balance sheet. That's where we can cut fastest. And I'm looking at the expenses, the debt. Right. So, for example, we owe 122,000 on the F450 to 2022.

What's the payments on that per month? You know?

Yeah, just over 1700.

Okay. And then we got like the boom lift. There's 36,000 on that. So do you know what the payment is on that per month?

Just under 800. So seven, six. I justified that. I justified that because the cost of rent, one of those is, is around five to six hundred dollars per day.

Oh, wow.

You know, so I have it on hand and I can utilize it whenever I want. I'm not at the, you know, I don't have to wait for a rental company.

Got it. And the RAV. The RAV4, I'm assuming, is that used for the business or is that personal?

Mostly personal.

Okay. Okay.

Okay. And currently on your balance sheet, you have the values of those, like the two thing I'm looking at the most right now is the RAV4 and the truck. Um, because I feel like you do use the lift and you use the chipper, I would assume, pretty much every day.

I actually don't. No, I, I don't use those every day. I. The chipper I probably use, you know, five to eight times per month. And, and then the, the boom lift.

You know, three to five times per month.

Okay. You know, it's still, the thing is the challenge with those pieces of equipment, it's not like you can just walk into any rental store and pick them up either. Like, if you, if you're going to use them even that much, you almost have to have them.

But. And what so on. On the, on the wood chipper, there's a $73,000 loan. What's that per month right now, do you know?

Fifteen hundred.

Okay. So right now we're sitting at around probably five, five thousand dollars a month in payments. Is that about right? Five to six thousand?

Yeah. Yeah.

Okay. Okay. The. Tell me the story about the F450. Why did we get $120,000 truck? I'm just asking.

Okay. So I know, you know, Tigrin, you know.

I joined Go Gang last year in December. Um, I went to the competitions, got close to winning some of them. Before that, I won the excavator competition. I picked up an egg, you know, without breaking it, the fastest. Him, Tigran and I worked out a deal because he still needed the excavator. I am getting $54,000. That same weekend. There was another competition the day after his and I got second place for 2021 F450. Almost won that truck.

And I, you know, they're nice trucks, you know, but I had all this, you know, I had $54,000 and I've been want. I actually put an order in for a, the same truck, pretty close to the same truck. But Ford has, it's been on back order for like a year now. So I had that extra money I considered a free money, you know, and I just decided to put, you know, $30,000 down and get that truck. And I use that truck every day. I figured it'd be good for advertising. It'd be a nice, nice vehicle. You know, I constantly overload my vehicles, you know, even before that truck.

So I guess that was my justification even though I'm overpaying for the truck.

Yeah.

Because I can, I feel like I can afford the payments. I feel like my, my biggest expense, what's killing me is labor. It's communication issues. As far as the guys doing.

You know, the job correctly.

And then drive time. My long term goal for the business is to fill up the valley. So I'll have a job on one side of town that's an hour and 15 minutes away from like another job. So I'll service the entire Phoenix area and my goal is to fill in all those gaps. That's my long term goal. And then I know the business is going to be very profitable when I'm eliminating that drive time. Right now I try to make the best route possible and I schedule the jobs to minimize drive time. I've thought about, you know, P4P. I haven't looked into it too much but my initial thinking was that it wasn't going to be the right fit for a larger crew. I wasn't sure how I could work that out. So I wanted to ask you that. Does it only work for like smaller crews, like two to three guys or how does it work for like a five man crew?

The, the bigger the crew. You mean on like one truck in terms of the crew size?

Yeah, yeah.

Like it really is independent of that because ultimately we're, we're going to be looking at budget hours. So whether you put five guys on it or three guys on it, I'm simply looking how many budget hours. Like when you go to a job right now, do you bid by the budget hour or how are you currently doing the estimating process?

It's basically yeah, I do the estimate based on how long the job is going to take. That's in my mind. And then I give the or the price for the job. Perfect them. It's hours hourly but. And I try to be profitable.

Yeah. And so like you know, even, you know, when I see the video of like all the guys at the gas station and that sort of thing, that's what gets cut out with P4P. Like our guys don't take lunch breaks. They pack their lunch because they know if they can just eat between jobs while they're driving or someone else is driving and they're in the backseat, they can make way more money on P4P.

Yeah.

And so when you look at say let's say there's a job that's 20 budget hours. If you have five guys in the, on the job, it should take them 4 hours, right? 20 divided by 5. 4 hours. If they beat that, they're gonna make more money. If they make, if they take way longer, it's gonna take them less that all that time in between the jobs on P4P. They're not getting paid anything. So they want to get to the job as quickly as possible and get rolling.

I think that's what, you know, I do that like the little lunch breaks and then the drive time in between jobs.

You know, I did recently I just required. I had them sign a paper saying that they're mandatory one hour lunch break. I did have an older guy, he actually died last month. He had a heart attack on the job.

So I didn't want something like that to happen again. You know.

It just worried me, you know, that the guys were getting overworked. I've also, you know, so I did that. But I'm also, I've considered changing my business model into.

Like I'm a tool rental company and then have all these guys show up to my house. I rent the tools out to them for basically nothing. Right. And then they go do the jobs and then I give them like a percentage of the jobs. That way they actually just, they have the in like the motivation to get the jobs done versus milking the clock.

You know, I. What are your thoughts about that?

The challenge with that is you're not creating any brand with the customer. Like they are not your customer at that point. Right. It's not, you know, Arizona, your brand is not showing up. They're not creating goodwill with you and you're not creating an enterprise value of the company because you become a tool rental company. Right. You don't have long term contracts. You don't have the ability to be able to know, okay, if I put some money into marketing, I get more, more customers and then I'm able to make more money. Like, I think that would be something to explore when you're like a million and a half or more at your size of business. The reason I look at the balance sheet first is because the acute issue of $8,000 in the bank with an $800,000 business, 1% of annual revenue in the bank is like scary. You're spending that on. In a couple of days worth of just labor with that many employees and just your overhead. Right. That's, that's where I get to the point of you're. You like, you're one big job that doesn't pay on time, away from like a really very stressful moment.

Yeah. And that happened last month. I mean, it's.

Yeah, that's why I look at the balance sheet first. But you're 100% right. And like, once we get away from that acute problem that I do see there, then it becomes a matter of the efficiency of the labor. And I think P4P is the right call. And so what I want to do over the next week is figure out, you know, answer the questions that you have about P4P, but in a way that is like actually looking at real jobs.

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So like when you look at like what software do you use right now for your, your projects.

For invoicing for.

For mostly the project management side of things.

To key. I mean, to keep track of my scheduling.

Yeah, Scheduling, for example. Yeah.

I just use the reminders app on my iPhone.

Okay. And then for billing, what do you use?

QuickBooks.

Got it. Okay. Okay. Because what we're going to have to do is somehow if we're going to keep track of budget hours that you're allocating on estimate we have to be able to look. Okay, we allocated the 20 hours. Now what was the actual hours on the job? Right.

So I was 1% software, but it kind of went. It's a dud right now.

Do you know anything about it?

I do, yeah.

Yeah. So I was kind of waiting for that because actually one second place got a free lifetime subscription of 1% software. So I've been waiting for that and I didn't want to implement a system and then end up switching it, you know. So I'm just sticking to how I've been doing it since, you know, small the Reminders app and I just, you know, go in there manually, you know, switch it to the next week or the next month, whatever job is for my reoccurring accounts.

Are you open to putting, implementing software though? Because like, are you gonna, are you gonna wait for that 1% software?

I don't have any really trust in it right now.

I would highly recommend not.

Yeah, I, yeah, I don't have any. I'll take your advice on that. I mean right now I don't have any trust. That's why I haven't used it, you know, because I'm not gonna, you know, put my business, jeopardize my business, you know.

You know, I, I wouldn't touch it with a 10 foot pole. I'd recommend getting started with some software though, like your size of business. The fact that you're running on your Reminders app must mean you're a reminder's app genius because I don't have a clue how you do that. The fact that just that size and you're doing that. I'd get started with something though. I don't care if it's something simple like Jobber, it's cheaper than 1% by massive and it's just simple. I would get that started because we got to start getting the point where if we're going to implement P4P we got to know budget hours on a job and then we got to be able to track that over time. And what I'd like to do is sit down with you next week on our call and go over a couple jobs of what you estimated how long it took them. And then I will run with you P4P in terms of what the guys would have made because ultimately you've got to sell them on the idea that they can make more money on P4P if they're efficient. And what's going to happen is a couple of your guys will leave because they're the least efficient guys and they're the ones that pulls everyone down. But, but because everyone else is so much more efficient, you'll be able to still get all the jobs done with the same number of guys.

Yeah. Okay, so do you want me to message you like, all my, all my jobs that I have, or like at least a week worth of my jobs that I have scheduled in the Reminders app? Because I also.

You could do is just, just, even if you screenshot whatever you're you're currently doing, the Reminders app, put that in with your daily footage, and then I'll be able to take a look at that. And then what, what I want to do. Even if you just, even if you just jot it down on a doc of reminders, I want to see, like, when you do an estimate and you put in how many estimated budgeted hours are on that job. And then I want to see. Okay, I'm going to break down with you what the guys would make on the job if they did it faster, if they did it slower, et cetera. And then ideally, if you're able to somehow clock the hours that the guys have worked on a specific job, I know you don't have the software, so it's going to be tough because typically they'd go on the app, they'd click, start when they get there, stop when they leave, and you'd have exactly how long they spent. But even if you can give me some rough numbers, because you've got to eventually just convince the guy that they're going to make more money if they're efficient on P4P, because it typically will increase their efficiency by 25 to 30%. And I truly believe that is the key for you long term to really turn things around.

Okay.

But in order for that to happen, we've got to get software because we got to get more organized around the budget hours and what we're estimating on the jobs. And then secondarily.

You know, we really got to get the team bought into this whole vision of what P4P is.

And they can make more. They absolutely can. It's a matter of like, knowing your math on the jobs to approve that to them.

That helps out with overtime too, I'm sure.

Massively. Because now you're both on the same page. Yeah, like, you don't want overtime, they want overtime. Massively. When it goes to P4P, they, they don't want overtime because when they go, when they switch into overtime, they don't really, if they're A high performer. They don't see a lot of benefit because they're getting base pay plus overtime when they go past 40 hours. Right. So I want to go over a couple jobs though, with you, and I want you to get start kind of in your, just your head when you're looking at the jobs to start running. Okay. This is what they would have made on P4P. This is what they made. It would have made an hourly. And I'm just going to give you access to the software so you could actually just run the math on the back end with them.

Because ultimately what you need to do is convince them and what you're going to do to, to do that, you're going to basically run their paycheck for two pay periods as hourly and then also as P4P and show them like, hey, when you guys crushed on this job, I could have given you an extra 100, 200, whatever it is.

Yeah.

And it's gonna, literally, it just sucks out all the waste of like drive time, smoke breaks, stop at five gas stations a day. That stuff is just immediately gets sucked out of their day.

All right, cool. So will you, will you mail that.

To me or say it again?

Will you email that to me, like the access of the software?

Yep. I'll get the team to send it over to you. And then if you can screenshot some of your reminders of kind of what you're doing now and just put it in with your daily videos so I can keep a track of that a little bit. And, and then on our call next week, I'll actually show you, based upon the jobs you do this week, what the guys would have made and kind of how P4P works. Um, but if you want, if you, if you're really into the software thing, I would highly recommend, like really flip a coin on any software at this point, whether it be Element, if that's something you want to do, or Jobber.

I don't know much. I don't. I'm. I'm pretty ignorant about it.

Yeah, I would do Jobber just for the sake of simplicity. Cause if you've been doing reminders, App Element is going to be a big jump for you. Honestly, even 1% would have been a big jump for you, like, just because you've had it so simple. So I would do something simple, simple like Jobber. But I'm really still concerned, honestly, Aaron, about the acute part of the cash crunch and you know, do we need these assets as much as, you know, seventeen hundred dollars a month, like you know, with your insurance on top of that, I imagine your insurance like 5, 600 bucks a month.

No, it's. It's more than that. I'm. I'm paying around like twelve hundred dollars a month in insurance.

Mercy. You know, it's like that truck's costing you three grand a month.

Well, no, I mean, that's for everything, though. And I have all my tools. That's for the.

Got it. For the whole. Whole liability. Gotcha. That includes the truck, though.

Like auto insurance, all my vehicles, everything, so.

Got it.

You know, I mean, when I do trees, you know, it's. It's pretty easy to make that, you know, I mean, just this last job, though, I mean, I've made around $20,000 in the last couple days, you know, two and a half days. I'm waiting on those funds, you know, so that's why I got all this equipment, is because I know it's going to be. I can just easily make money when I have this equipment.

The only way to make that work is growing it very quickly. Right, and you've done that this year. My concern though is like, are we gonna run out of fuel?

Right.

And that is this cash. Right. That is like my number one concern because it's like a two to three day burn that we're on. And as long as you can grow, like, I think you're right. You have the capacity with the trucks and equipment that you have to make probably 120, 130amonth, and that's where you'll be profitable. My question is, can we get there without, you know, running out of steam?

Yeah. Okay.

So let's stay in touch and then maybe feel free to look at Jobber. If you want to start with that, I'll get you access to P4P, but it won't make a lot of sense until we actually look at it together. And then we'll run some of the numbers next week together.

Have you watched the videos I've uploaded?

They've restricted me from doing so, but they've been telling me. Yeah. That they want me to have a live, live reaction just to you. And they just give me like bullet points of what they want me to discuss. So I will be watching the first episode with just as much intrigue as you.

Okay. All right. Sweet.

Awesome. Aaron. Yeah, we'll stay in touch. And again, thoughts and prayers for your daughter. We'll. We'll keep her in mind.

All right. Thanks, man.

Thanks, brother. Take care. Bye.

This has been the Mike Candice podcast. Now you have some ideas on how to take your business to the next level. You like what you heard? We have tons of lectures, interviews, and more over at the Mikeendys YouTube channel. That'll be right up your alley. That's all we have for you today. We'll see you next time.