BUSINESS is a MARATHON

Hey, everyone. My name is Mike Andes. I'm the founder of Augusta Lawn care. We have 150 locations around the world and do over $50 million in annual revenue. And today, I want to talk about something that I recently talked to one. An owner at Augusta Lawn Care, one of our owners that actually has multiple locations. And one of the most difficult things in business when you're doing home services is going from one location to a second location. The reason for that is because you physically can't be in both spots at the same time. And so this owner last year had a very, very profitable location, very efficient location, and the employees at that location were making a lot of money on pay for performance. Last year, they were. Their efficiency score is over 100%. An efficiency score is simply the number of budget hours divided by clocked hours when employees are working. So the crew is super efficient, crushing it on pay for performance and doing super well. He contacted me the other day, and it was actually late at night. I gave him a call because I could just tell he was kind of at his wit's end. And they were working, like, seven days a week, him and his general manager. So he had put general manager in place that had worked with them already. And for some reason, this location now was, like, not doing well. Their efficiency score was between 50 and 60%. So literally half it was last year. And last year, he said the moment they switched to pay for performance, because they it. They moved over to Augusta Lawn Care, literally the next paycheck, everyone was making above base pay and making good bonuses on P4P. But then now, all of a sudden, this year, for the past, like, couple months, no one's made above base pay. And it kind of boggles his mind because, like, look, we raised prices in April, and we should be technically more profitable at this location. And yet he sent me the P and L. And, like, they're barely above getting out of the trough of the off season and, like, above zero for the spring rush. And it's actually relatively common for home service businesses that have a bad off season where you lose money for a quarter for you not to actually get above zero until end of May, even into June, or I've seen some people even into July, because so much of your revenue gets collected in the back half of the year. However, this location should have been in massive profit mode, making a lot of money. The team should have been super efficient. And so I called them, I said, hey, you know, if you have 20, 30 minutes, we. Let's talk about this now. And so what they had kind of come to the agreement was that the general manager was not necessarily managing the location well, wasn't managing it super efficiently. And what was kind of interesting actually, is that the general manager agreed with the owner that he wasn't doing a great job. When they graded themselves, they said that they both graded the general manager's leadership skills as a circle. And so that was really interesting to me. A lot of times I've seen it where a general manager doesn't have the.

You know, self reflection enough to know that they're doing a poor job and then the owner's just stressed out of their mind and eventually have to let the general manager go. But this general manager was not that way. They were working really, really hard, like working Saturdays and Sundays and long hours, trying to do their the very best they possibly could. But the crew was not making above base pay on P4P. They were not efficient and literally had not made any bonus on pay for performance for a couple months. And so this owner was a little bit befuddled, like what is going on here? So I drilled into the numbers with him and really it came down to this. Do you want to make a long fix and like take a long time to fix this business, or do you want to fix it quickly? And today I want to talk about is the fastest way to make your crew more efficient. The fastest way to take a business that is unprofitable and make it profitable. In home services, assuming you have more than one employee, assuming you have some other laborers in the business, the number one way to be able to make sure that they are more efficient and you become more profitable in the business is simply making sure that they are incentivized to be efficient. And the problem with pay for performance, if they're not hitting above base pay, there's absolutely no incentive for them to work faster. There's no incentive for them to work more efficiently. And the thing that was most confusing for this owner that I talked to was that he's like when I look at the budget hours, because he could see in copilot like budget hours versus clocked hours. And like he said yesterday, they beat budget hours on every single job besides four. And so why is their efficiency score so low? And that's what can be somewhat confusing, especially because they just raised prices like that increases budget hours and all the job. It can be very confusing. But most efficiency gains and most waste is actually hidden between jobs. It is hidden on drive time, it's hidden on load time. And every single Time you have a stop on a route is basically opening up the door for more waste. And the more crew members you have on the crew, so more team members, more employees you have on each crew, even more opportunity for waste is inherently baked into every single stop because they have to get in and out and have to start and stop their work. And I so often times see that's where most waste is born. Because not every crew member jumps out of the truck immediately when they park the truck. It's, you know, they scroll for five or six minutes, then they punch into the job. And so even though the budget hours and clocked hours seem very, very good on the jobs themselves, it's all that time in between. Also, when we started to dig into it, there was nine yellow slips in the past week. A yellow slip is a callback. It's a mistake on the part of the crew where the customer complains they have to go back to the property. And so this was not only racking up a lot of costs on admin. And so their command center bill is exorbitantly high compared to the size of the business and the fact that they're in profit mode. And the reason is because they're having all these callbacks and people are calling. And when you have a customer that does a callback, it's not like they just call one time. They email you, then they call you, then they call you again. They want you to show up, and then they complain, Then they make an online review. So it takes all this admin time. So not only was it racking up the cost of their admin, it was also slowing down the team. And that's not tracked on the per visit basis. So even though, you know, a mowing job might say one budget hour and they do it in 45 minutes, it doesn't. That. That doesn't track all the other time around. Driving out to yellow slips repairs, they had broken fence. They had drove a mower up on top of a stump and ruined the mower. Like all these yellow slips were piling up also for the past week before the owner called me, he'd actually kind of help, help try to manage this location. And he realized that the crew multiple times every day were forgetting their, their rewacker line. So the general manager would have to leave their project and go and go get the weed whacker line for them. One time they actually ran out of gas on the side of the road because they forgot their credit card for the day, their gas, their fuel card. These things were just stacking up. And so often the time, it's easy to jump into, like, am I charging enough on the job? And that's when we look at budget hours versus clocked hour in our efficiency score. But your efficiency score takes into account the entire day. And when we drilled into it again, it was like, okay, how do we fix this? So we identified the issue, and that is the efficiency of the crew between jobs. And we, we tended to believe, both the general manager, the owner, and myself, that the, the leadership of the general manager was being called into question and could be improved, in part probably because they were new, they were trying very hard, but there was just so many different areas that they weren't pushing the team. They were allowing little things to slip through the cracks. Notes weren't being added to the jobs. Things were being forgotten. Lots of yellow slips, which a lot of times is indicative of poor management or poor leadership. And so that's the long fix. And this is what I told him. I said, look, we could fix this the long way. And it's like, try to change the leader, retrain the leader, jump in and work for a long time with the leader on how to manage their day more effectively, be on time, make sure that they are more organized throughout their day. Training the crew, that's the long way to fix the business. The short way is just make sure that the crew is. Is incentivized to work faster and work more efficiently and not forget things and not have yellow slips. And in essence, that's what pay for performance is supposed to do. But if they're just hitting base pay, there is no incentive for them to work faster or harder or more efficiently or cut out waste. And they actually enjoy the fact when they sit on the side of the road for 30 minutes waiting for the general manager to bring them their trimmer line that they forgot. And so the fastest way to fix an inefficient business, an inefficient crew when it comes to labor services, is to align the incentives of the business with the employee. And in this case, the fastest way to do that was raise the percentage that was being given to the team members on pay for performance. So on P4P pay for performance, we give a percentage of the labor revenue to the employee, and they were making 33% or a third of all the labor revenue go to the team. And I said, look, we can do the long fix, we can do the leadership thing, we can retrain team members, et cetera. But the fastest way to actually fix this problem is to raise the percentage that we're giving them on P4P from 33% to 40%. And to a lot of owners, that seems counterintuitive, like, we can't afford it. We're not making enough profit. This location should be printing money. And now we have five or six employees that are being inefficient and we're losing money. The reason I knew that that was the most efficient way and most effective way to make the business more efficient was this. When I looked at the P and L as a function of revenue, their wages were already making up, like, 45 or 50% of their total revenue was going out the door to wages. That cries to me. Probably there's room for efficiencies to be had. Now you say, well, you're only giving 33% away on P4P. That assumes they're hitting budget hours and they're above base pay. But none of them were. So I already knew by moving the percentage that we gave them on P4P from 33% to 40%, we were effectively giving them, like, if you do the math, like a 27 or 28% raise. But I knew that they were all a couple dollars below base pay when it came to P4P, which means if I gave them that extra boost now, all of a sudden, if they did the exact same amount of efficiency, they'd be like a dollar or two above base pay, which would mean like 100 or $150 as a bonus on each paycheck. So. But as soon as they got a taste of that bonus and that incentive, they would now be incentivized to work faster and turn that $150 into $300 or $400 or $1,000. And yes, I have seen frontline team members make over $1,000 on pay for performance on a single paycheck. And trust me, those team members are very incentivized to move quickly. They're the ones who pack their own lunch. They make sure they don't have 15,000 smoke breaks and four stops at the gas station and three bathroom breaks. Like, this is not what they're doing. They're not going to the gas station, fueling up three times out the day so they can enjoy the ac. Why? Because they're incentivized to move faster and be more efficient and make sure that the drive time is short, make sure that when they show up to a job, they've already read the notes. They already are hopping out of the truck as soon as they hit park, there's not a lot of wasted time in motion. And this is the part that kills so many home service businesses is those inefficient moments and minutes and seconds between every single job and between every single stop. And so that was the most efficient way to fix the business was actually increase for, for six weeks. I said, hey, for six weeks, increase that from 33% to 40%. And so then it was a matter of, okay, how are we going to tell the team this? How are we actually going to share the team that, hey, this is the problem and we're going to Change this on P4P. So I said, hey, look, it's important how you roll this out because you as the owner are stepping in and your general manager is usually the one running the show and you're stepping into your team and running a meeting and you're going to make this change. I said, first off, we need to explain that there's a problem. And the problem is that the business is not making money. And you're going to do this in a very relaxed, calm manner. You're not going to get worked up. And as mad as you might be about the fact that the business isn't making money, this is not the time to get mad. I said, this is the time to just show the numbers and that is show the year to date for 20, 24 and the last month's P L and show that like we aren't making money. And I knew that even if continuing as they were, they make, they make a small profit as we ended up in the second half of the year. But we needed to focus on the fact that this efficiency score, 50 to 60% was literally half what it was last year and we had a price increase earlier in the year. So the they should be slaughtering on P4P. And so I said show the numbers and the profit and loss statement from this year to date and then last month just to establish that the business is not making profit and do so in a very relaxed, calm manner. Just let the numbers speak for themselves. And then I want you to get worked up and agitated and mad if you'd like. And actually he told me later on that he got pretty emotional. And he said partly it was probably because he was tired, but, but it was also a matter of I said this is the time to let it boil over. And that was when you want to make it clear that the crew is not making above base pay. They're not making good P for P dollars and I want you to get mad about that. Mad about the fact that the team isn't making more money, not that you aren't making more money, not that the business isn't making more money, but that your team isn't making more money. And so I told him, hey, take a couple paychecks from last year from team members that are in the still in the business. And in that going to be in that meeting, and I want you to actually show their paychecks and show them making 3, $400 extra on bonuses with P4P. And then I want you to say, look, for the past two, three months, no one in this room has made above base pay. No one in this room is making more money on P4P. And that makes me mad. And that really grinds my gears. And I'm not happy with the fact that you're all making base pay, 18 or 20 bucks an hour. I want you to be able to make several hundred dollars per paycheck as a bonus. And that makes me really unhappy. And so I said, hey, take two paychecks from last year of crew members that are in that room that they can validate. I said, you need validation, like nodding heads in that meeting, stating that, yes, we made pay for performance. It's not fake, it's a real thing. And it was, it was obtainable last year, and it is obtainable still. And so, sure enough, that's what he did. He showed the paychecks, the two people that were still from the crew the year before. They were nodding like, yep, we made a really good money on paper performance, and now we're not. And I said, that's when you get worked up. And this is the part where I feel like using emotion as a leader is effective. And I, by no means am the best leader. I make mistakes, a lot of them. But one thing I have that has served me well and I think would help many small businesses is get emotional at certain periods and certain junctions and do it for the right reasons. Let me explain. There are, there are business owners that get worked up over everything and they make little issues, big problems, and they blow up. And an employee makes one mistake or a team member makes one error, and they just freak out. The owner, the business owner. If you do that, you're going to lose the credibility of your team. That when you really do want to make a point and you lose the ability to actually make the point and get emotional because they're used to you always flying off the handle, they're used to you always screaming, yelling and crying at them. Whereas this owner I said, look, you're going to do this calm and collected, showing the numbers so that they know that this is like a problem. And then I want you to get really agitated by the fact that they're not making a bunch of money, like they are not making more money. We know that because of P4P, we've aligned the incentives of the employee with the business, which means if they make more money, the business will also make more money. But don't harp on the business making more money. Focus on what everyone else wants, because people are inherently selfish. Everyone is inherently selfish and wants to know what's in it for them. And so make this stump speech and make your emotion around them succeeding and them doing better instead of yourself and the business. And so show the numbers, no emotion. Get really agitated about pay for performance and the fact that they're not making more bonuses and they're not making more money. And then share that you're going to raise everyone's pay from 33% to 40%. And so that was an effective meeting. And I believe that over the next couple weeks, they'll see almost an immediate switch in efficiency. I think they'll go from 50 to 60% efficiency to 80 to 85% almost overnight, simply due to the fact that now by raising that percentage on P4P, the crew is actually incentivized to work faster. And they're going to see that in their next paycheck. And now they're going to actually think about the fact that, okay, before I go, I. On my day, I actually scroll through my jobs and look at my job notes and make sure I understand all the equipment I'm supposed to have, make sure I'm supposed to have my gas cans, make sure I have my gas card, make sure I have my. My trimmer line, make sure that everything is stocked up and all the supplies that I need for the day are on my truck. Because I don't want to have to drive back there. I don't want to have my general manager have to come back. I actually know the business is losing money. And my boss just stood in front of us, got really emotional. The fact that we're not making more money and actually gave us more money. He gave us a raise of literally 30, 30%, and he could literally show me that last paycheck. If this raise would have been in place, I would have made a few hundred extra dollars. He's literally giving me more money when I just saw that the business isn't making any money. And so I believe that Using the sword in business as a leader is extremely effective, and that is getting emotional and getting really agitated and really showing emotion. But I think pulling it out too often people will start to get afraid. People also tend to believe that you don't actually care about the thing that you really do care about because you blow up over the most stupid things. You become radioactive over any little issue and problem in the business. And so.

I believe if you want to see someone's behavior change, align it with incentives. And instead of rules and regulations, the vast majority of owners, when they see this sort of problem of inefficiency, they would just make more rules. They would simply say, okay, you must do X, Y and Z before you walk out the the the shop in the morning. And they might even get systems which are great checklists and procedures. They might say, okay, you can't clock in until these things are done. You got to clock out before X. You can't go get coffee in the morning. They make all these rules. They would say things like, okay, if you're not clocked out by this certain time, you're going to be clocked out automatically, or the last job of the day you're clocked. Like, they start making up all these rules and regulations and maybe doing good things like training and systems and procedures. But systems, procedures and training and rules will not replace incentives. And I would rather be the carrot instead of the stick on the horse. And it's a horrible analogy, but most people would much rather be going forward, running after something and trying to obtain more for themselves than just being beat over the head by someone that's telling them something to do. And here's the part that's really confusing. Here's the part that super bugs people out and why most owners will adopt the mentality that they need to use the stick because the stick gets results immediately. If you tell your employees who they rely on you for their paycheck and for them to be able to provide for the family. If you tell them they must do something or they lose their job, you're going to get compliance immediately. And the hard part about the stick versus the carrot, Incentive versus beating people up over rules, regulations, and telling them what to do. The pro the hardest part is that the rules and regulations will immediately take effect, but I promise you they will not last long because the employee is ultimately looking after their best interest, as is with any human being, including you as the owner. That's why you hired an employee to make more money. And so if you're going to constantly beating them and creating more rules, more regulations. And every single time that they start to get out of the system, you start to just put more rules on them. Just expect that when you're not looking and when you aren't there and when you have multiple locations, they will turn on you because no longer are you there to regulate and be there to show all sorts of bouts of emotion and beat them into submission. And the reason most of us do it is because if you want to see change today in your business, it is easiest to simply tell people what to do. It is easiest to get mad at people and beat them into submission. And that's a harsh word, beating someone in submission. But that's what you do when you blow up at someone or when you just constantly are pounding down rules down people's throats, or you're using security cameras, you're using dash cams, you're spying on your guys, you're rolling up in the middle of the day seeing what they're doing. These are all forms of simply micromanaging, simple ways of getting immediate feedback on the repercussions you're giving. You're doling out instead of just asking, like, what do they want? What does the business want? How do we align those two things together? And in this case, we were actually using the correct system, which is pay for performance. But because the team wasn't making enough on P4P, there wasn't actually any sort of incentive for them to run after.

And so in like, 30 minutes, we decided this is what we're going to do. I look forward over the next few weeks to see what happened because I believe, I believe that over one pay period, it'll change the behavior of the team members. They'll actually see the fact that they're making more money, and they'll actually see that their owner gave them the extra money because they really did care about their paycheck and they wanted to see them succeed and they wanted to see them make more money inside the business and make a bonus. And one thing actually, recently I shared on, on social media because I. I got off the phone call and I remember thinking, like, right after the phone call, just like, if I was going through that, like, eight or 10 years ago, I would have had no idea what to do and I would have probably got mad at my general manager. I probably would have put down more rules and regulations. I probably would have kind of threatened people, like, underhandedly and made it personal. And in my opinion, when you get emotional in your business to try to drive A point across. Get emotional at the thing, the problem, not the person. As soon as you make it personal, that's when people start to get hurt. That's when people start to go, they will conform in the short term, and in the long term, they will bite you in the back. Because most people don't want to be berated at work. And so.

The reason that I got off the call and I was like, okay, what would I have done like eight or 10 years ago? And I promise you, it would have been the wrong action. More rules. Probably would have installed, like dash cams, probably would have tracked the trucks more, probably would have done more quality assurance. Thought that I would. I needed to have more systems around their daily checklist. When they showed up, I would have set up security cams around the shop to make sure they weren't, you know, dilly dallying while I was gone, things like that. And really what it came down to is the fact that I've seen it enough times now, and a lot of times I go on these turnarounds. People are like, well, how do you know what to say and what's going on? How are you able to, after 30 minutes or an hour talking to these owners, know exactly what to do in their business and give them one or two or three steps to change the business? It's just seeing it over and over and over again. And this is something a post I made on social media recently, and it was basically, success is not linear. The part I didn't put in the post is that success is exponential and your learning is exponential. And the only thing that separates you from where you want to be at in the future and where you are today is simply skills. And the only way to get those skills is reps. And the way to get muscle is go to a gym. And it's not easy at the beginning. The first few days you're sore, it doesn't feel good, it's hard to go to like sit down on the toilet. It's not fun or exciting. But done enough times, those reps over time build muscle and the reps in business eventually, over time build skills and skills only difference between where you're at today and what you want to become. The same way that in the gym, reps and adding more weight to the bar is the only thing between where you're at physically and the muscle and the physique you want to have down the road. And so if that is true, and if you want to have a larger business and if you want to run a business at 40, $50 million, that will require so much more muscle, that will require so much more skill, and that skill will require more reps in order to achieve the skill required to build and manage the $40 million business. And so when I go on these turnarounds, a lot of times you'll notice the first little bit I'm just asking a bunch of questions. I'm just asking. And I'm pretty low key. I don't get worked up at the beginning. I'm just asking questions. And it's essential. What the framework I was using with this owner is like, get the numbers and get the data and then get emotional about the problem and how it can become better for the team and better for the employees and get focused around that and get emotional about that. And you'll see me get worked up in the turnarounds. When I see that certain things are going wrong in the business or that the owner is mistreating themselves, I'll get really, really worked up at that problem. And this is actually just a kind of graph of revenue at Augusta over the past 10 years. Because I've, I've had Augusta lawn care now for 10 years. And the first four years of business I made exactly $0 in profit, like take home distributions, zero. The fifth year I made more in distributions than I had all the years prior. Those first four years were full of 70, 80 plus hour weeks out in the field, doing the work, doing estimates, working seven days a week, weekends, holidays, nights, you name it. I still remember coming back home from church on a Wednesday night and just being like, it was like 10, 10 o' clock at night. And I just remember thinking like, okay, I'm gonna be, I gotta invoice the end of the month invoicing. It's gonna take me all night long. I'm gonna wake up at 5:30 and start mowing again in the middle of summer when my allergies are flared up and I can't last but maybe 30 to 40 minutes without my chest breaking out in hives, hard to breathe. My eyes would get really itchy and all swollen, like brutal.

And this is the thing. What if I would have quit after four or five years? And like the vast majority of business owners don't make it past five years. Over 70% of small businesses that start don't last five years. And yet it's like someone going to the gym, getting sore, getting beat up, not feeling good because they lifted weights, and then being concerned and agitated by the fact they're not getting the body they want, and they're not achieving the goals that they. They would want to aspire to have. And the same thing is true in business. Yes, it's going to be hard, and you're going to get sore the same way you do in a gym. In your business, the first few years stink. Unless you have hundreds of thousands of dollars to pump into having teams of managers and salespeople, the first three to five years are going to be brutal. Physically, financially, psychologically, absolutely demoralizing on every single level. And the reason, when you look at an exponential curve, when you look at a curve like this, this is a typical graph. This is exponential. All right, when you look at this, this is over the course of 10 years. The problem is, when you're here.

That'S year five. And when you look back in time, you have no evidence of success. And you say, I want to be up here. I want to achieve great things. And right now I seem so inadequate, so incapable of actually attaining that. And you are, because you don't have the reps and you don't have the skills required to be this. But that's fine, because the same way that muscle is gained so much quicker as time goes on, because you get. You start putting more weight on the bar. And that higher weight evokes greater stretching of the muscle, greater tearing, and larger volume and mass down here. This is the equivalent of you being sore going to the gym. It's hard. It really, really stinks. And you're looking at what you want to become, and it seems so far away. And you have no evidence to look back in time and actually see any evidence of success. And in year five, I had no evidence of success. Like year four. Year four and a half after year five is when we started doing pay for performance and having systems, et cetera. But like, I looked back and I. All I saw was a business that almost took my life because I had no systems in place. And I went on the job site and I got sucked into a PTO with my. My sweater and almost killed myself because I didn't have systems, I didn't have procedures, and I was working myself ragged.

And that's what the first three to five years of business looks like. And it's easy now to look back here 10 years down the road. 10 years down the road, you know, having 150 locations now, we do over $50 million in annual revenue across Augusta. Like, that's all good. But just five years ago, half of the journey had no evidence of success. And so I implore you, if you're in your first three to five years of business, realize you're the person right now that is going to the gym and putting in reps and trying to gain muscle. But you're sore as all get out and you're miserable and you're tired of being hungry and tired all the time and you're drinking water, you're peeing all the time and you're tired because you waking up earlier going to the gym. That's what business feels like for the first three to five years. Because at the gym, the only thing between where you're at the day and where you want to become is simply putting in more reps and adding more weight to the bar. And in business, adding more weight is having more employees, having more equipment, having more customers. And those things are difficult. And what you are doing today will seem like an absolute simplicity, like a repping 10 pounds seems like nothing. But just several years ago in your business, having your first employee was difficult, having 20 or 30 customers was difficult. And what is crippling you right now will literally seem like a warm up down the down the road.

But the vast majority of people will give up in the first three to five years and they'll give up because they're sore and because they're tired and because they feel like they're never going to attain the goals and dreams that they have. But it is so important, the time there, the time under the bar. As Alex Hormozi says, the reps required to gain the skill is the only thing that is delineating and separating you from where you want to be at.

And so that's what I was thinking about after getting off the phone call with the owner. How quickly were we able to identify the problem, come up with a solution of the thing that was going to solve the business problem the fastest? It was because of reps. And over time you will attain these skills and you'll achieve the success you want.