Calling Out and Being Late: Changing the Culture Of A Lawn Care Company

Hey everyone, it's Mike Andes and you're listening to the Landscape business course. Today we are going to be talking to Amity from Oracho Landscaping. You can check out their website on Facebook, etc. They have about nine employees, several trucks.

And are going to do over half.

A million in revenue this year.

And I think there's two and a.

Half years into the business, so really been growing pretty quickly. They've had some issues with their culture, people showing up late, not really caring a whole lot and just the stress of people calling out late and calling out sick and making things up so they don't come to work and just the stress of managing the business as it's growing. They're running a pretty good operation financially, but there's definitely a lot of stress that comes into play as the business grows and people aren't committed. They show up late, they don't show up at all. So we're talking a lot about that. Today we're going to talk about P4P profit sharing, all the rest of it. Make sure if you want to get one of these calls as well, so they're 45 minutes long as a zoom call, just like you're seeing with Amity. You can go in the description below and just click on the link that says 45 minute coaching call and you can purchase a 45 minute session direct with me, one on one. And if you can't make that, obviously come to the conference in January. Landscape Summit. We're gonna be having that for three days. Really looking forward to that. Some of the things that we're already starting to conjure up in terms of what activities and topics we're gonna be covering. We're gonna go really deep on the profit sharing thing that I talk about with amity today and P4P implementation and a lot about culture at this coming conference.

So check that out.

Just go to landscapebusinesscourse.com conference. But without any further delay, let's go ahead and jump into this episode. It's a long one, so maybe listen to this while you're mowing or doing estimates or something like that. But I think there's a lot of little nuggets in here, especially in the second half, about culture, making sure your guys don't show up late, making sure that they are committed and how you can actually make them care about your profit and loss statements instead of them just not really caring about open book management. You can share numbers all day long, but unless you tie their compensation to it, it's kind of Just a bunch of hot air at that point. So without any further delay, let's go ahead and welcome Amity on the show.

Here we go. Hi, Amity. How are you doing?

Hi, how are you?

Good to see you.

So exciting.

Very cool. Very cool. Are you in your office right now.

Or you're at home?

Same thing.

Okay, Very cool.

Hold on.

Give me a second. I'm going to get the dogs out before we get connected and stuff. One second.

Sounds good. Take your time.

Just leave them there. They're not gonna bark as long as the cat is not out. I'm sorry. I thought I had everything ready.

You're all good. How's it been? You guys been staying pretty busy?

We are so busy.

Good.

It's so busy that it's painful because.

It rained like crazy probably the past couple weeks. Right.

Last night it rained all night, and today we're praying that it doesn't start raining until the crews are done.

Oh, man. Yeah, we have. We have a franchisee over in Southside, like, just outside Jacksonville. So I kind of am more in tune now with the Florida weather patterns. Just watching it for him. His sake. But it's crazy over there.

It is because we mow all year long.

Yep, yep. Which is. Which is awesome. But then you do have that rainy season where it's just. It doesn't rain here like it does there. You know, here we work through the rain, you get sprinkles. But over there, when it rains, you stop.

And.

Florida.

Soil, it's like sand. And we're, like, standing on water. So everything gets. It's like water. Some places you can't even mow when it's raining for weeks.

Yeah, yeah, I know you had. I know you'd watched that video this morning. That was post about kind of growth versus the efficiencies.

That was so good. I was like, really?

This.

Like, I have it. I have it on my other screen, and I've been going back again, and I make notes, you know, because when Carlos comes home tonight, I'm gonna start like, it's in the same line of what you've been teaching in the past couple of videos that I've been.

Teaching him and talking to him. And it's exactly on the line of where we're at right now. So it's so funny because I remember a few months back, we listened to one of the videos where you were explaining, you know, when your company is from 0 to 300 and then from 300 up and then from 500 up, and then he's like this is the stage where you either make it or break it and go back to maybe just the two crews or you and somebody else. Yeah, and it's so true. It's really, really, really true. We have noticed that when, when you're pushing into the half a million is like, do I want to push forward or you know, do we want to wait a second. It's a little bit comfortable over here, but you know, that's not where we want to stay. So.

Just to kind of get on the same page. So you guys do about 300 lawns a week. I'm just going off the notes you'd sent in.

Yeah, three or four trucks because that.

Was, you know, super awesome. Three to four trucks. You got nine to 12 employees. That kind of just depends on the time of year. But it sounds like the biggest thing is just consistently them showing up. And I've watched even inside of the Facebook group, it sounds like occasionally there's the employee issues, not caring, things like that. Is that kind of the biggest struggle right now?

Yeah, our biggest struggle right now is equipment breaking down because we don't have a set, set schedule days or an employee assigned to.

Give the maintenance, keep track of it, you know, have it on a set schedule. And we are working.

The guys, the guys leave around 7:30, 7:45, 8:00 in the morning and sometimes they get here at 7, 7:30 at night. So some days it's 10, 12 hour shift because some, some, some routes are like 85 houses and we really need to work on route density. That's something that we're also trying to sit down and figure out, okay, these houses are too far and they're just taking, we're doing a nine hour day. Sometimes the drive time could probably be four, five hours just driving and three, four hours working.

So, you know, based on the videos and everything that you teach that I'm always learning, I tell Carlos, okay, no, no, at the beginning when you start, you just want any lawns because you're trying to make the money, you know. But then at this time, two and a half years in, I'm like, yeah, route density, route density, route density. This, this soft season. Because I don't like to call it slow, I like to call it my soft season.

One of my focus is really on closing the route and just probably only 10 miles from where we're at and just make a dance and just send emails to the customers that are far where I don't even want to charge them more because it's not Worth for me to drive all the way? 30 minute drive, you know, okay, I'll do six or seven houses down that way. But how long? 30 minutes to go. And 30 minutes to go. That's an hour. I'm paying the crew to be in the car.

Mm. So I'm looking at Orlando. Like how far do you guys focus on which side of Orlando or do you kind of take anything in and around it?

Can you close my screen so they stay outside and not on the porch, please? So I have a map.

This is how I work it. So I am the right here. This is where I'm at. This is a 10 miles radius. Like this is where we want to stay because we have a big density of house here. But like right now, some days we're going all the way up here and we're coming all the way down here. And that's what's driving me nuts. If you could actually see the picture. See?

Yep, yep.

So basically all the way from Sanford all the way into almost the airport, which is 30 minutes from here.

Got it. Okay.

It was worse before. We've made a lot of changes. The more videos I hear, the more changes I make.

Good, good, good. So. So right now you obviously route density and things, but what's the kind of the biggest thing for you in terms of. Because obviously have pretty good size, you have 300 lawns, you have quite a few employees and things like that. What's the big hang up right now? Do you feel? Is it the employees? Is it just their consistency? What is it for you right now?

You think retaining employees is a big thing? So I've been speaking with Carlos about doing the paper performance. I really feel in my heart that that's gonna bring a different culture. Like right now, if you search for lawn care companies where I'm at, we're the number one company without having to pay Google anything. Because I am really good on reviews after each service and following up. And we have a lot of reviews from, you know, different customers, good and bad ones. Because we want to be real. We are not perfect and things do happen. So basically.

We want to do it like I want to buy the long.

Long care web design.

Exactly. We. Not the design, but the other part where you teach about the paper performance. Okay, okay. So we're getting ready to do that next investment for the company because we want to learn. Carlos has his doubts, but we're also planning on coming to the, I call it the convention to come out in January and, you know, see how it goes and how other People that are already doing are working with it, because I think what that's gonna do is gonna stand out the company compared to everybody else where I'm able to pay. Like, I've been watching some of the videos and some of the guys are getting paid 26, 20, $29 an hour. And that will be a blessing for me to be able to pay that to my employees, because I know they're going to be coming to work happy. Because who's paying that right now in lawn care, right? Nobody. So we're trying to transition, but at the same time, we want to make sure that we are doing everything else correct. Because we started from scratch, no mentors, nobody taught us the little bit that I knew from my master's for my business degree and the experience of having a nail salon for 28 years. So a little bit of mixture of that. I don't know how I ended up being the operations manager of the company.

You gotta love your man.

So basically everything falls from this head on forward. And after three and a half years, we're finally getting to a point where we're able to sit down and I bring all the information, the ideas and everything in, and he's like, okay, what you got to do? I trust you. You haven't made that many bad decisions in the past couple of years. So, you know, we try to work it that way. So he knows. That's why even, you know, to schedule to talk with you, I was like, listen, babe, I need help.

It's getting to the point, like the size of the business game, the point where the changes of efficiencies actually start to mean something, right? Like there's a reason why even in that video this morning, I use this company size of 500,000, because making a 10% change actually moves the needle, right? Whereas if you're dealing with small numbers, you can save 10% all day, but it doesn't really make a big difference, right? And so, you know, in terms of like Florida's market, now that I've been more in tune with it too. Like, you have a very, very transient labor force, right? You have a lot of turnover traditional in this industry. And it's a lot having to do the fact that you do have downward pressure on prices, you have a lot of competition, and if someone's willing to work, they bounce from job to job.

Yes, yes. And it's really bad on the turnaround with the employees because even when Carlos used to work for lawn care companies, which is where the experience come from, he knew, like, his co workers is like, if somebody gives you 50 cents and that other company you'll go down for 50 cents. And it's really, really, we're really praying and hoping to find people that are committed with our vision. Even though we are blessed enough to have five of our six boys working right now in the company with us, which helps us because we know we have reliable drivers and we know they're going to do the job good because we all have the same mindset. We're all doing it for the company at the end, you know, for the family.

Yeah. And that's a huge blessing. Like honestly to have your family, you at least know their intentions are correct. Like if you had just employees, like it's even more important with P4P. Right. Because you're now, you don't have that trust of a family tie. And so, you know, having P4P is going to be the thing that sets you apart, allows you to pay more. It keeps them, you know, honest in terms of not wasting the clock, not being late, all that sort of thing. Like in the, in the meantime, like, because like P4P is not an easy switch. That's not something you just like, you know, switch on day one. That's something that, you know, takes time. It takes a lot of cultural changes and you'll lose probably most of your non family employees when you switch to P4P because it's a completely different mindset. It requires a completely different employee. And so that's probably going to happen. And during the slow season or your soft season, that's when, that's when you got to make that change. Right. Like by March, April of next season, you have to have made that change. Even if you scale back to the point of just having your voice working. And you can make the change and then start hiring next spring for just. It's already. P4P is integrated. They don't have any questions. It's not like a big issue. So like in your market, what do you pay per hour? Just on average like to the employee.

So we are at a fifth. We have some employees at 14, we have some employees at 15, another one at 18. And then Carlos is $20 an hour.

And he's an owner though, right?

Yes, but he only works 40 hours. He doesn't clock in any of his extra working. He just, he just does 40 hours flat. And that's it.

Got it.

We do it that way just to invest whatever extra money he will be getting back to the company.

So on average like 14 to $16 per hour, we can say for labor. What's kind of the labor rate that you're trying to charge the customer? Right.

We're doing $60 an hour.

Okay. Yeah. So that. That model that you're currently having is going to be perfect for P4P, because I know right off the bat that you could charge. You could have a base pay of $14 or even $15, which basically means your employees have no downside. Right. And I would imagine that 14 or $15 an hour in your market is probably a dollar or two more than the competition. Am I right on that?

I'm a little higher. Most of the companies here, by surprise, you'll be surprised. I've heard some higher at $10 an hour, even if you have experience. And for me, that's excruciating. I can't do that in my heart, you know, so.

So, like, your. Your average competitor locally, are they giving like, $12 an hour?

Yes.

Okay. So if you did a $14 per hour base and then you built your P4P system on top of that, you would be doing really good. Because if we do the math on that, like, if you take $60 per hour that you're shooting for, divide that by 14. That means that. Or, sorry, 14 divided by 60. It means that 23% is what you'd be having in base pay, which basically means if you're willing to give, say, 30% or 33% in terms of P4P, there's a lot of money that they have on the table to make if they're gonna go out and kick butt. Right. And it'd be like, where you know for a fact that it's a sustainable model, because.

Like, I would dream of having $14 an hour as our base pay, because it compared to what we are charging in terms of hourly, it's not much more than yours. Right. So you're in a prime position to be on P4P. The big question is right now, are you actually hitting that $60 per hour out in the field or are usually behind that?

I might not be able to answer that exact question because the brain of the. Of that. Of the numbers is Carlos. But we were doing some numbers, and he was saying, like, we're at a 32%.

Labor cost. Of labor.

No, out of 32%. Oh, my God, I forgot the word.

Oh, my God. Oh, my God, I forgot the word. Just 32% that we're winning. You know, that's how much we're winning at the end of.

Everything, after we take out expenses and labor and payroll and everything, equipments, you know, we're at a 32% profit margin. Profit margin, yes, that's the word.

That's pretty good. Like, is that like, after everything's taken off the table?

After everything?

Yeah, that's pretty good. That's pretty good. And like, so for you, I guess the big thing is not so much, like, from a financial standpoint, that's doing pretty well, but I'd imagine it's more of just the stress of just the turnover. That's the. The hard part.

Yeah. And. And for me, like, right now, for us, it's like employee retention, which I really believe by changing it to pay for performance, we might be able to, you know, to be in a better place in the market right now. And it was funny because in my notes, I had scaling or growing and then efficiency. And then you came up with this video, and I'm like, okay, this answers that question, you know, So I think.

I think it's really important that you have P4P implemented next spring before you grow and scale. Because if you have P4P in place, number one, you can pay people more. Number two, you have. You've created your variable expense of labor to where, you know, as you grow, it's not going to keep going up. It's going to stay the same. Right. And so there's two ways to look at it. A, you can grow really big to go build a $2 million business and then go create systems, create efficiency. But honestly, like, I would do it the other way around. Like, you already have a pretty solid financial model in place. The thing is, you're afraid to SC right now because all the employee issues just will compound more and more of.

Yeah, because I really, really feel we don't have systems and procedures in place. And I think if you ask me, what is my downfall? Systems and procedures. You know, I've done. I do a lot of the things myself. So we recently hired a virtual assistant that's helping me with the routes and the emails and stuff like that, because it was a lot of work, like payroll and everything. I'm the only person in the office. And if a crew member doesn't come, I'll hop on a truck. If equipment breaks down, I'll bring it to the shop. And it got to the point where I told him, I can't be implementing systems and procedures because I'm out doing. And I keep hearing what you're saying, stay in the office, stay in the office, stay in the office. And I'm like, I'm staying in the office the other day, the crew was like, can you go get this equipment and bring it to me? And I was like, you know what? I would in another time, but now I'm not going to do that. So you guys have to push mow. And that's another question. Like Carlos was saying, I don't know, what's the size of the houses over there that you guys are mowing with push mowers? So, you know, that's a joke. And I know you. You always say, people talk, you know, that I'm making them push, mow or whatever, because it's a choice. They choose if they want to do it or not. So in our case, we have 336 mowers and a 48 and a 42. And each truck has a push mower. And a lot of the houses that we do, they could be between 6,000 to up to 16,000 square feet. That's kind of like the average. We do have smaller houses that we do push more, but not enough to create a route for just one group to push more all the houses, you know. So what Carlos was saying, like, his question was like, how does the people performing model works when we're not using a push mower? And my crew guys are three instead of just one on truck like you guys do?

Yeah. So, like, when you have three guys on a truck, they're gonna be traditionally just less efficient. Just because you got three people that have to end at the same time. And that just rarely happens on a job. No, that's why. Especially if you're doing residential and you're moving throughout the day so many times and they have 30 lawns in a day, it's very inefficient to have three people usually. Like, if you say you had 30 lawns for three people, I can almost guarantee that if you did two people, they would get done 25 or 26. Just because that third person adds hardly any efficiencies if they're moving the truck that many times. Because every single time you move a truck, there's inefficiencies when you have more people involved because they are waiting for the other person to finish off, finish blowing off. They're waiting for the other person to finish up mowing. They're waiting for that person to finish cutting the line. Like, they're just so many different spots. Like, if you did commercial and you had two massive jobs, that's when you can throw three, four, or five guys on a job, and it doesn't make a Big difference.

Yeah, we have. And that's what we do on the hoa. We bring for four guys on a crew because we know that they're going to be working there two or three hours nonstop.

Yeah. Every single time you have a stop, you just add inefficiency. And then you compound that when you have more people on that. On that job, on that route. Right. And then you compound it even further if you don't have P4P. Because no longer they not thinking. They're not thinking about, you know, fueling up the trimmers while they're waiting for the other person. They're not thinking about that. They're like, on their phone immediately. Right. And so, like, there's one thing that I would say is something you could do right away instead of doing P4P. Because P4P is something that, like, if you do come for conference or whatever, I'd be highly, highly recommending you do that before you go to the spring rush. Because I imagine during your. Your. Your soft season that you go back to just your. Your. Your sons and your husband. Is that right?

You know, it hasn't happened that way last year. We stay pretty busy. Like October last year, and I did make some notes of that that I wanted to kind of like the numbers. October last year was our best month for the whole year.

So in the revenue that came in was $40,400 just coming in. And we were just starting because that was our second year. We're on a second and a half year going into our third complete year. So this year we have doubled and tripled that, where in the month of June, we made almost $82,000 on one month.

So we mostly do lawn maintenance. Like, we were doing a lot of other stuff, and I kept. I shrink, shrink. Like I said, no, no, no, we're gonna just focus on. So we only focus on lawn maintenance. That's our major, you know, thing that we do. But we do do sod and mulching and planting for the clients that we currently have whenever they want to do some work like that, or tree trimming or anything like that. And we usually schedule it for special days. And we have one crew that we assign for just doing those type of work.

So, yeah, like, what I would say is you gotta, you gotta change the culture, number one, from a compensation standpoint, right? Like, you have to be where they. If they work their butts off and they stay with you for a long time, they should be able to make more, and that should scale with how hard they work, right? Like if you just say, hey, you're making 15 bucks an hour. One day they might kick butt and they working their brains out, but they still make 15 bucks an hour. The next day they slack off, they make 15 bucks an hour. And it's just reinforcing that poor behavior when you pay them the same amount. Right. That's why P4P is so, so important. You got to reinforce the positive behavior of them working their brains out because then they're like, hey, if I can make 20 bucks an hour, I'm going to go do that again. Right? So that's the first thing, but that's more of a long term thing. The second thing I would say is from a cultural standpoint, like right now, do you do open book management? Like show them the numbers or how open are you with those?

We do, we do. But it's funny because Carlos is a little old fashioned when it comes to stuff like that. You know, I'm more open. However, since the bulk of our crew is our kids, I do reports and I bring down the numbers and I bring them in and I show them experience, expenses and everything. And I kind of explained a little bit to them. This is where we started the first year. We just made like $72,000 that first year. And then the second year we did 326. And then this year we're at 450 up to today. So I tell them, you know, this is what you're looking at. So where do you see this going? So they are able to understand, hey guys, you know, if we really work this together, we're able to change a legacy for this family and your kids and the kids of your kids, you know, for the regular employees, not really. But not really in numbers. Not really in numbers. But yes, when I come out or I go to a job site or something, you know, I try to get them involved and I tell them, this is what we're doing. You know, we want to add health insurance for you guys. We're changing it to people performance. You know, we're getting the trainings and we want to pay you guys more because we value your work. Well, we'll do, we'll do other incentives for them because that's just who we are. Like we'll buy them lunch when they're out on a big job and we also give them bonuses, give them, we get them gift cards and things like that. But sitting them down and showing them the numbers, not really. The office is in my dining room. We've had to push my dining room Table to the side. Because we've been trying to be wise and live in the building where we're working. You know, we were blessed with the homeowners signing the papers and letting us park. We parked three trucks and three trailers on the back of my house. So we're not actually having to pay for a building, for an office, for phones, or for anything. I've tried to keep expenses to the minimum as possible. For the first two years, I didn't even grab a paycheck until now that I'm. I closed down my nail salon, and now I'm 100%, you know, at the office. So now I gave myself a paycheck so I could balance that out.

Yeah, Like, I think. I think the big thing is if you want employees to actually care about how much the numbers. Like, for example, if you open up the numbers tomorrow, honestly, most of them aren't going to care because it has nothing to do with their money and how much they're making. And so it's very important that if you're going to have that level of transparency and you're going to open up the books, like, there's a reason why, you know, like, you share it with your. With your sons. The reason that they are more committed, the reason they have more, you know, skin in the game, is because they feel like the business is passing along to them. And they do have skin in the game. And so the game. The goal here, if you're going to scale your business outside of your family, is how do you get employees to think the same way? And because if you show them the numbers, I can guarantee, like, the reason, you know, Carlos doesn't want to show the numbers because, oh, we're making pretty good profits here, and we don't really want the employees to see that. Like, that's. That's really, at the end of the day, right? Like, it's not bad. Like, hey, you have a great little business. You're doing, you know, 30% profit margin. That's fantastic. You know, that means at the end of the end of the day, you should be bringing 140, 150 grand at the end of the year in terms of profit. Well, for some employers, the main reason they won't show that to the employees, they're going to think that, oh, like, the employees are going to see I'm making all this money, and they're going to expect raises. The bottom line is you got to make sure that your success and your profitability scales with their paycheck. And so, like, if you started sharing the numbers and then simply did a profit sharing program. Like say, for example, say, for example, we do 10% of your profits and let's say your profits for this year are going to be, let's just scale it back. Let's say $120,000 take home pay, all in. Right. That means that 10% of that is going to be $12,000. Then you have to ask yourself the question, If I gave $12,000 to my employees, theoretically I would go from 120,000 in profit to 108. But I can guarantee you you're going to make a whole lot more efficiencies than $12,000 by having them involved in the business.

That's good.

Like if you did a, if you did a quarterly basis where you did 10% of profit goes to the field crew. Not to the office, not to the estimate, not to the owners, only to the field crew. That's when they would start caring about your profit and loss statement. That's when they start caring about not wasting gas, not making sure, making sure the insurance doesn't go up, making sure they're not wasting dumping costs and all the, you know, damaging equipment. Now is a $500 mistake. Well, if it's $500 out of their paycheck in kind of in terms of profit, like, you know, $500 out of profit, well, technically that's $50 now coming out of the profit sharing.

Mm.

You know, like P4P is the best because it gives day to day.

You know, feedback on their effort. But you know, a step behind that, you know, in terms of second place, I would say, is a profit sharing program where they're actually going to care about your expenses. Right now they don't care because it doesn't matter. It does not affect it to make $15 an hour today or $15 an hour tomorrow, you know, breaking equipment right now has no impact on them whatsoever.

And, and, and honestly, it's gotten to the point where I'm like, okay, that's it. You're paying for this. Because how many times can you break them over in a month? Twice a week, every week? Oh, no, no, no, no, no, no, no. Somebody needs to have consequences because it's gotten off hand. It's really gotten off hands. You know, windows and doors and cars and everything.

And right now it doesn't affect them. Right? And so like either a, you can lead from a very authoritarian standpoint, say, hey, it's coming off of your paycheck, which will lead to resentment and they will jump at the next job when they have a shot, right?

Yeah.

So I would give them the profit sharing. And then look, at the end of the quarter, you say, hey, here's the profit and loss statements. I'd share those every month so they can track what you're doing, Start seeing patterns. At the end of the quarter, you say, hey, look, guys, here's the money. And off of their profit sharing should be able to come damages, or if they're late, they should be docked.

I like that, that you said recently, you said about the late one, because I have one of the guys that's always late. But then we had a conversation with him this week, and I was like, what's going on? And he said, well, I don't know how you guys do it over there, but here in Florida, the field guys don't start getting paid into their at the first property.

Okay? So they don't get paid once they hop on the truck. The driver gets paid once he's driving, but the field crew starts getting paid once they arrive at the first property. That's how a lot of lawn companies do. It is not really my chosen. You know, it's like a culture, whatever. But I really wanted to change it. So I told him, okay, so let's do something. You're gonna get here early and you're gonna help us get the trucks ready, get, you know, get ice for the cruise and have everything set up. Because this way we're able to be more efficient and efficient, you know, when we're out. Because the fact that you're coming late is just setting a culture for everybody else. That's okay. And especially because they're our son. So, you know, we're gonna have to start writing you guys up regardless, because you're setting the culture of the business 100%.

Like, the thing is, with P4P, honestly, you can usually get rid of 20% of your labor force and be just fine because the efficiency goes up that much. Right. So when you do switch to P4P, you're going to get some people leaving, but the amount of people that will step up to the plate and be more efficient will make up for that, no problem.

The bottom line is, if you already have that in place where they're not getting paid until they get to the job, you can make the switch to P4P so much better. Like, that is one of the hardest reasons for people to switch to P4P is because you don't get paid for that drive time. Right. So you already have that part in place. And so like the switch to P4P for your business is going to be a lot easier because you already have that in place. Like we are not allowed to do that in our state. Like the moment they get to the property or to the shop, they have to clock in. And so it creates that that effective, like get to the job as soon as possible. Right. But the thing is right now you have no leverage if they show up late. And so you want to tie either P4P or profit sharing to them being late. Like for us, we do it, we do a profit sharing program every quarter. But if they're late one time, 50% of that quarterly bonus is taken off 15550 half of it. And then if they're late twice, it's gone 100%. And if you're running a pretty decent business, like let's run the numbers on. So if.

We were on, $12,000 a year is going to go to the employees in the form of 10% of profit sharing. In your case, that's going to be $3,000 per quarter. And then if we are going to say that there is nine employees, let's just say 10 employees. So it's going to be $300 per employee per quarter. That's on the table for their profit sharing. Now that means if they're late one time, they're losing 150 bucks.

Say, look guys. And it doesn't usually settle in until after the first quarter when they actually all get a nice big check and then someone's left out. That's when all of a sudden they stop not showing up late. Right. But I can promise you by sharing $3,000 a quarter, but being having the consistency of all your crew showing up on time and not calling out, like if they call out morning of that's considered also an excused absence and they lose half their, their profit sharing as well.

Perfect. That's good.

So like that's an easy thing that you can implement right away. Like being like, okay, from January through March, from April through June, July through September. So each quarter at the end of the quarter we are going to give you, you know, 10% of profits and we're going to share that profit and loss statement all the time.

You can't just be like, so you don't know what exactly is coming in.

Yeah, you got to be sharing that with them. But now, now they actually want that profit to be as high as possible.

Exactly.

If you just share it with them, like, hey, we're just doing open book management. They don't Care, they could care less.

How much they'll be like just numbers. Yeah.

Yep. At the end of the quarter though, if you could say, hey look guys, here's what you guys were paying or paid in your quarterly bonus, by the way. We paid $6,000 in damages. That would have been $600 otherwise gone to you all. That would have been an extra 60 bucks to all of you if you would have cut all that out this quarter. That is starts moving the needle and actually start caring. Now when they break the window, now when they break the mower, that's something. Even psychologically, even though it might be five or $10, it's actually going to come out of them. It starts changing in their behavior. And when someone makes a mistake and it kind of affects all of them. And they're the ones that now are like, hey, why'd you do that? Be more careful. And they're making sure they're watching their crew team members, making sure they're doing things right, making sure they're efficient because it is indirectly affecting them, even though it might be small.

Exactly. That's really good. That's a really good idea.

Like profit sharing is great, but that's a quarterly basis. And the problem with that is every three months they're getting that incentive. P4P is definitely where you want to go because a day by day basis. Right. It means every single day that same level of accountability has happened. Like if you have a damage just wiped out your. Your profit.

When, when we go into buying, the system that teaches us is there like charts and everything already set up with percentage or each company decides how exactly you're gonna work it out.

Oh, you mean landscape business course. Like yeah, yeah. So in there it has an Excel spreadsheet where you can change like how much your base pay is and what percentage you want to give the employees. You just change those numbers and then each day you need to just run, run, you know, how much revenue they produced and it runs the numbers for you.

Yeah, I'm already doing that each day. How much revenue each crew is making, how much time are they taking out on the route, how much is drive time and work time, how much equipment per cre. We divided the expenses of the office within the three crews within the month. So we know, you know, we kind of have ideas on numbers like that.

So you're already doing all the legwork. P4P is simply going to be a matter of putting those numbers through the software and like 10 minutes a day you'll be able to run P4P in terms of like the office side of things, what I would recommend you do is go ahead and start running those numbers right away and you can start tracking them. Don't tell the employees yet, but you're going to start to see who's the high performers, who's the low performers, and more importantly, how much money the high performers are making.

Because when we're, we're going through something really crazy, the three crews that we have all the. Right now we only have three, six, nine, because we took one crew out because we were having issues with the driver. And all the nine guys that we have out of all nine of them, they're all high performers.

Yeah, they're working, you know, they're, they're there. Some groups are doing about 30 houses a day.

Yep. So, like, what I would recommend because, like, what you want to do is you want to be able to show them that this switch to P4P.

Is going to make them more money. That's how you get the buy in and then that's how you can make this. Excuse me, the switch. And honestly, because you're already running the numbers the way you are and because they're not getting paid right now to get to the job site, the switch to P4P is going to be pretty easy for you. So I would recommend is run the numbers, fill up the Excel spreadsheet for one pay period, and the end of the pay period you're going to be able to tell them, look, guys, on P4P, you would have earned 17, 19, 24, 23, whatever dollars per hour. It's going to spit all those out for you. And then you're going to say, this is what you actually earned. Oh, and by the way, that means that there's like an extra $900 that we could have given out if we use P4P. He wants to switch to P4P. They're all going to want that. Now it's going to seem like you have to pay more money, but the bottom line is they're becoming more efficient.

Which means, and I think that's the fear with Carlos. I think that's the fear with him. He's thinking, you know, but I told him I'd rather lose 5% profit for us and have peace and have happier employees instead of, or us making that extra 5% and going through all the stress that it brings.

You know, the cost of your turnover right now is a whole lot more than 10% of your profits guarantee you that every time you lose a good employee, it's costing you a lot more than $12,000 a year. And as you grow in scale, the more employees you get, it just can continually is going to be compounding damages, call outs, lates, all of that stuff. Right. And so that's why people scale back is because as you grow, it just keeps compounding. You have to have a system in place to curb that behavior. And so, like, yes, you are going to give more money to employees, but I promise you it'll make you more profits because you won't have turnover. They're not going to be damaging things as much. They're not going to be showing up late. You aren't going to be having to be scrambling to get on the job site because someone didn't show up. Because now when they don't show up, that's going to affect them by 150 bucks.

Mm.

You know, so like two more things, because I know time is running short and I want to make sure I ask you this. I personally deal a lot with the fear of the pricing because I think about people's bank account. Is that like normal.

The pricing to the. To the customer?

Exactly.

Yeah.

Like whenever we're giving a quote, I'm thinking, oh my God, is that a lot? You know, it's like, I don't know why I go through that where I'm thinking, could they afford it, could they pay it? You know, should we charge them a little bit less? And I've listened to all your videos when you're saying, you know, sometimes you charge people less because you feel bad for them. And then you go into a job site and you encounter all these issues and then you regret it. Which is, we've been through that already. It's like nothing you've said isn't true. You know, you're talking by experience. But in my case, I struggle a lot. Like, even, like, should we increase the prices right now? Because right here the prices, like you say, it's a lot of competition. A lot of competition. So people mow for $18 a lawn here.

Yep.

So my base is like, no. And nothing lower than 25. And this is a less than 6,000 square feet house. And we make sure we do a good job. You know, we etch, we mow, we, we and we blow. We want to make it neat. And that's why we've had, you know, the success we've had. But I'm thinking, are we charging too low? Should we increase the rate where we start getting other type of customers?

So I would say that you don't need to raise your prices based upon. I'm looking at what your labor rate is versus what your rate to the consumer is. And at $60, if that's what you're hitting, that's the major thing. If you're hitting $60 per man hour.

And you're paying them 14, 15, that's a great percentage.

Okay?

Now I'd be concerned if you were at 50 or. And you had a $18 per hour cost of labor. Right? That ratio is horrible. But at 23%, which you're currently at, that is totally fine. I wouldn't raise your prices. But this is what I would say in terms of, like, if you're in the office, you have to have confidence in your prices because it's gonna come through when you're trying to sell. And if you can't make sense of them spending X amount of dollars, it's gonna come through. And so you've got to convince yourself you've got to sell yourself on your value. Otherwise you're not gonna be able to call someone and have a conviction that you need to sell them. Right? I mentioned this to our team on a Wednesday meeting a couple weeks ago about, like, when you're selling something, if you actually believe it's the best thing for the customer, you're willing to, like, go salesy on people, right? You're willing to be like, hey, Mr. Jones, like, I want to be able to work for you on your property. What can we do? You're willing to push a bit if you know you're the best value for the customer. Not the best price, but you know that you're the best. If you have trained employees, if your employees really do care, if you really do care about the customer, if you are trained, you are insured, and you know that you're going to be better than the other guy who's half the price. You're willing to get on the phone and start selling to the customer because, you know, you have a conviction that if you don't. If they don't accept you have failed them and they've made a decision, that's poor, right? And so you've got to, first of all, make, you know, sell yourself on your own value. And a lot of that comes back to the fact that you hear all the negativity of all the issues with the crew, you hear all the damages, you hear all the customer complaints. And so first of all, you've got to. You do have to button those things down so that that way you can have confidence in the value that you provide to the customer. You can have confidence in your crew that is professional and all the rest of it. But secondarily, you got to step back and ask yourself, like, what are we really compared to the other guys? Right. Who, you know, don't care about the customer, aren't insured, all the rest of it, right? So you've got to sell yourself for your own value. Because when you get to that point, when you start selling, you're not selling out of. I want to make money. You're selling out of, like, if I don't convince this customer to choose us, I'm making an error here. And you've got to convince yourself of that. That's the first step in trying to become, like, a really good salesperson. So you really got to, like, convince yourself first.

Yeah, that's good. I'm going to write that note to me. Convince myself first.

Listen, last week, on Wednesday. So last Wednesday, we posted a video Josh did. Of our team meeting that we have with our guys. And I specifically talk about this. It's. Oh, it's the video called why I Want to Be Rich. The second half of that video. The second half of that video, it talks about selling and selling out a conviction instead of just like, I want to make more money. Right. If you can actually sell at a place of you knowing that you are the best value compared to all your competition, and that by you not convincing them to buy from you, you are making a mistake, that's when you can sell out to Wazoo. So listen to that part of the video because it's really important, especially as the office person who's getting all the emails and the phone calls. That's something. That's like something Augusta like with Command Center. We are constantly trying to sell our command center on them, knowing that we have a premium product, we're better than everyone else because they have to have that confidence when they got on the phone. But I know it's not. Not easy when you also get all the complex complaints, unhappy customers, the damages. And so that's filtering through your mind. And that's why you don't put this value that you should on your service.

Okay, that's good. So my other thing will be about the pay protection loan that the government gave. Do you know anything about that? Do I have to fill out some papers or send it for the forgiveness or would that automatically do it? I did mine through QuickBooks because it was so funny. You had a lot to do with the decision at the beginning. We're Dave Ramsey fans. Okay, so, you know, so at the beginning, you know how Dave Ramsey started ranting everybody and saying, no, no, no, no. And then you came up with your video, and I was like, you know what, Mike? You're right. You're on point. So then I went and I did it through QuickBooks, and they gave us, like, $1,400, because by that time, my payroll was smaller than now. Whatever. And. But now I'm thinking, okay, I need to know what it is to do, because like I said, we're just learning from scratch.

Is it 1400 or 14,000?

They gave 14,000.

14,000. Okay, so. And that's through the PPP, not the EIDL, right?

No, no, no.

So, so basically, right now, even on QuickBooks, they're still polishing up the forgiveness program and how that's going to be done, Right? So literally, as of last week when I signed in, they still have a banner at the top that says, you know, prepare for the PPP forgiveness program. The bottom line is you just need to make sure you have all of your payroll, you know, documents ready to roll, because they extended the forgiveness period from eight weeks to 24 weeks.

Okay.

And so it's almost guaranteed you're gonna get that forgiven as long as you spent $14,000 on payroll.

And I run my payroll through QuickBooks, so every time they say that, they tell me, roll it, and I hit click, and it tells me how much we're spending on payroll.

Yeah. So it's because you have QuickBooks payroll. I imagine what's gonna happen with QuickBooks since you ran PPP through that, they're gonna have all of your data already in there. They're gonna make it pretty seamless to do the forgiveness part. But the reason, like, every single bank right now is kind of stalling out on the PPP forgiveness part because they're still. It's still not set up correctly. So the bottom line is just make sure you stay looking at that top banner on QuickBooks. But in general, like, they will probably notify you when it's ready. The application for forgiveness is ready, but there should be no reason why you don't get all of that forgiven.

Okay, and then my other question was.

Eddm yes or no for marketing? You mean.

This is the thing. Like, what have you been doing this past year? Have you spent a lot of money on marketing or not?

So this is the thing. Like, this goes back to, like, the video this morning. You've been growing pretty quickly, and there's no reason to go Spend money on marketing. If you're growing naturally at that pace right now, we need to focus 100% of our time and energy on getting the systems in place so that as you scale, this is not going to, you know, send you to a premature grave or gray all of your hair. Right? Like, that's the main thing part of it.

That's why I'm wearing my hat.

It's so funny.

Systems and what's said on your hat is going to help you, you get through that phase. But, like, you know, the big thing is you're running a profitable business. If you're running a 32% profitable business, that's really good. The thing is, you will retreat from that if literally you're working 24 hours a day, you're jumping in all the time, all of a sudden you start working the numbers like, oh, I'm making like $10 an hour if I actually work out this, you know, between me and my husband, right? So, like, that will never work long term or sustainable. The only thing you should be thinking about is creating systems and that number one, P4P. Number two, profit sharing. That's like everything you should be thinking about. I wouldn't even think about marketing right now if you're running what I thought.

Too, but I just wanted, you know, to get the confirmation, like, if you're.

If you're cutting out services and all that, like you'll probably do next year, 700,000 in revenue, maybe just, just be okay with taking even less than that, but focusing on the fact that, oh, like, I didn't have to work any of my weekends this past year, like, that's where we need to get to. Because that's when you're like, okay, let's go to a million, let's go to 2 million or grow to whatever size you want because you have confidence that the systems are running right right now. You don't have any confidence that you could double next year without you just like, going crazy.

Exactly. And that's not the point because that's exactly what's been happening. We were tired, we're overwhelmed. Like, there's tears all over the place because we're so exhausted. I mean, we're working, the money's coming in. Like, at this point. It got to the point that recently I've been telling people, you know what, we don't have any more capability of servicing you. And I don't want to tell you. Yes, I actually tell them, I recommend you find somebody else. Because if you want us to do it, you're going to have to wait to probably the end of October, the beginning of November. Right now.

Yeah. I want that 10 and 12 grand that you would otherwise spend on every door. Direct marketing in your mind to go towards profit sharing. That will dramatically change the mindset of your employees and your mindset towards the business as well.

That's a desire that we also have. We want to have a business that is not just making money, but is blessing people, too. It's like you say, it's a big responsibility, the lives of the people that are around you. Especially mine is my kids. But we have other people we also love in the crew, you know, and their families, too. So they matter to us. They're not just employees, you know.

Yep.

So then my other thing is that me and Carlos, we started this company, and one of our goals is to buy a house. We still live in a house where we're renting. And like I told you, the landlord has been so nice to let us have the business, the mulch and everything. We. We bring it here. It looks like a landscaping company, but it's a house. So I.

This year we bought another truck, and this year we bought another equipment. Because, you know, we're trying to not have so many trucks breaking down and so many equipments breaking down. And instead of having the guys working 10, nine, eight and a half hours a day, we're trying to work, like six hours a day, three or four crews out, you know, like, make it less hours so they're not so tired all the time because they're also feeling the stress. It's not just us. And Carlos has been a bit disappointed because he's like, you know, we're putting money into the company, and I really want to buy a house that I told him, just wait, like, next year the company will probably reach the first million dollars, and then we're able to buy probably a better house or because we want a house with land so we could have the house and the business. So that is the actual question. A lot of people are like, no, don't do that because of your privacy, blah, blah, blah, blah. But I've been here for two and a half years in my house, running this business, saving money on red light water and all the other things. But then at the same time, sometimes I think, is it good for the business image when you have a business that you run out of your own house? You know, how does that kind of pros and cons?

Yeah, like, the cons are definitely that. That can become. It can be just Become common for the employees. Like, oh, they live here and like they see you in your personal life and in your business life. And there's hard for an employee to differentiate that that. My recommendation on that is if you were to go get land is keep everything like your house is over here, your shop is over here. You have separate entrances if possible. Not like they're parking in your. Parking in your driveway. And then you don't, you know, bring personal stuff over to the business. Right. So you're not like having breakfast as they're walking in. You know, you're not. It's like when I come over here, I'm in my uniform. When I over here, I'm at my house and like it's totally separate. Right. And you're not doing, you're not like, hey, just come over, come over to the house when you're done your route and I'll give you your paycheck. No, like it's like they never come in your house, they never come over there. That's in my opinion the only way to do it. But the pros outweigh the cons because the efficiency of you being there, not having to drive, but then also just the cost savings, you being able to manage the debris, have invest.

Yeah. And invest into the property knowing you're going to be able to keep it for generations. Not doing renting something, kind of doing stuff half, halfway because you don't want to invest money to the property. Right. And so that would mean the case like you know, putting more, more permanent structure versus like a temporary structure or like no plumbing instead of just doing an outhouse. Things like that that would long term benefit the company. But like in terms of the dollars and cents, the big question is going to become what your 2020 tax return in terms of what your income is going to look like on that, what you're going to go qualify for a loan. Right. This is a great time to get a loan because your interest rates are so low. But they're going to be looking because you're self employed, like what this year on your tax return, adjusted gross income. Right. What's actually going into the bank at the end? If it's 120, 130,000, you're going to be good. But if that profit number, then you're taking a whole bunch of other stuff outside of that. And now you're looking at 20, 30 grand, that's going to become less for a bank to be wanting to give you a loan.

Yeah. And what we did was last year, we we chose to not subtract everything we were able to get out. So the company looked like it was growing, making money, because that was a mistake I made when I had my nail salon. Every year we claim, oh, it wasn't. But then at the end of the year it was like I was working against me without knowing it. So this time around we were like, no, we're not just gonna deduct everything we could. And it's possible to deduct. Not until we reach the goal that we want.

Yes. You go, like when you're thinking about buying a house, you kind of got to manipulate when you depreciate things based upon what you want to show the bank. So like, if you want to show a really strong 2020, I'd talk to your CPA, like, look, we want to do a five year straight line depreciation on these trucks, not just taking it all in this next year. Right. So that way you looks like you make more income, know that you're gonna have to pay more taxes, but it's going to look really good to a bank if you go and ask for a loan.

And we. Oh, and we also did profit first. I don't know if you've read that book. So we were basically kind of doing that system when it comes to income, we have the accounts divided where money goes into different accounts. So we already have money for the taxes. So when that comes, it doesn't hit us as a surprise.

Perfect. That's awesome. So like, I would just, you know, have a good talk with your cpa, be like, look, we want to depreciate as much stuff as possible this year over the course of five years or you know, the lifespan. So usually five or eight years for like a truck or trailer or equipment instead of taking it all this year. Because like if you were in the mode of like, hey, we're not buying a property next year, we want to get as much cash together because we're going to grow a bunch next year. That's when I'd say, hey, appreciate everything this year. So that way you have a, you don't have to pay as many taxes and then you have that cash available. But that's not the case if you're going to try to show those financials to a bank.

Exactly. Yeah, that's exactly what we're trying to do. Show the financials that we're able to start pouring into our own property.

Yeah.

Anything else I can help you with?

That is so good. Are you recording it? Will you send it to me? So.

And then, you know, I made notes, but I know I definitely want to share with Carlos. He doesn't 100% speak English. He understands it, but when you talk fast, it just takes him a little bit longer for him to be able to understand.

I'm sorry, I'm sorry, I'm guilty.

But he loves you regardless because you've been a blessing in our business. Even though I know we didn't go with Augusta because like, you know, it is a family business. But we've learned a lot from you. A lot of the things that you're seeing, the results I'm having because I watch every video you upload, like every video once or twice a day. I'm like following, listening to your advice and it's really, really beneficent. It's been a blessing for our business. So you've doing a good job.

Yeah, I think the takeaways, the takeaways, you know, are, you know, we need to focus on, you know, I don't see, based upon the numbers you give me, I don't see financial flaws with what you're doing. I see this as not being able to scale because just too much stress.

And so you have to have those systems in place. And if that means giving up, you know, going from 32% profit to 28%, you should do that in a heartbeat, you know. And so I would highly recommend, you know, you already are doing the legwork of P4P in terms of calculating those numbers every day. Literally we're talking about 10 minutes a day punching those numbers into a spreadsheet and then coming up with those numbers and, you know, walking through that and then secondary thing is the profit sharing. And I would say, like, if you're, if you're not committed yet for P4P or, you know, caller doesn't want to do that this right away or like this winter. I would highly recommend doing the profit sharing, you know, because we just. What's it today? Today is September, end of September. So we're just about to start October. Right. So October, November, December, that's your last quarter. So you could really pitch the guides as, hey, we're going to start this thing. It's going to be October, November, December. We're going to do this profit sharing. Here's how it's going to work. And you're going to get deducted if.

You'Re late because we could start that into. I learned the paper performance system. So it gives me into January, February, March, where we're still at least doing, you know, the profit sharing. And I'm incorporating and getting ready to start them for next season. On paper, performance. That's a great.

And that. And that way during your soft season, you can have a little more extra time in the office to run the numbers, get used to using the Excel spreadsheet, using the software, understand it for you so that you can answer questions from the employees. And then come January, they've just gotten an extra bonus for profit sharing.

They're all hyped up, especially for Christmas.

Yep, 100%. So that would be the direction I would go is like, hey, let's try to. Even if you behind the scenes, before you even talk to Carlos, are writing the numbers on people understanding it, learning how what. Like, when did that. When. How to pitch it to the guys. What happens if someone makes a mistake and there's two guys in the crew? All those little scenarios, you figure that out in your head, you already have it nailed down. So that way it's an easy transition. But this quarter, like, it's coming up in October in a few days, just go ahead and pitch it right to your guys right away. Hey, we're going to share monthly profit and loss statements at the end of each month. At the end of December, we're going to give 10% of the profits to whoever's on the team in the field, and we're going to share exactly what those numbers are, and we're going to split it evenly. And if you're late, it's getting cut.

That's so good. We're doing that. I'm the type of person that when you teach me something, I incorporate it immediately. I'm down.

Hey, it's been great talking. I did record it. I will send you the link. Is it okay if I share some of it publicly, too?

Yeah, definitely. 100%. I know you do that on your own, your videos, and it's fine. We're a newbie. We're on baby food, you know, step on stage one. We're not experts. We're learning by the mistakes and learning by, you know, great people like you that are sharing videos. So we're not a problem at all.

Awesome. Hey, have a great day. We'll stay in touch. Amity?

Yes? One more question. Let me ask you something. We're planning on coming on January, and Carlos wanted to know, do you think we need a car or is it going to be near the airport and stuff like that?

If you fly into the Bellingham airport, that's the smaller airport, and you can literally walk across the parking lot to the conference. But if you fly into Seattle, it'd probably be a good thing to get a rental car.

Okay. And is it Seattle cheaper than the one in.

It just depends on which. Which airlines you fly. So, like, if you fly.

I was looking at and it was showing me. What was it?

Alaska Airline.

Yeah. If you can fly Alaska, they'll come right into Bellingham. And that would save you having to get.

A.

Rental car. They usually only get, like, one or two flights a day, so just a little bit. You might have to show up a little bit earlier or leave a little bit later. But, like, it's nice.

Day and leaving.

Monday, so we have time. Because from Florida is so many stops, and it's almost a whole entire day traveling.

Yeah. Yeah. It'll be worth it. I promise.

Yes. I am so excited.

You don't know.

I already told my daughter I can't babysit that week. We're going to Washington.

Awesome. I wish I could promise good weather like Florida, but it's not going to happen.

Anytime you want to come, when I have my house, you come. We'll have a guest room. You can stay here.

Oh, my pleasure. All right. Amity.

Hey.

We'll stay in touch. Have a great day.

Okay.