Cash Flow Management - Ep.37

Hey everyone, this is Mike Andes and you're listening to the Landscape Business course podcast. It's been a couple weeks now since I've uploaded something new. Just been super busy with Augusta Lawn Care Services and we've been growing. Got another truck today, had got a dump truck a couple weeks ago. So been super busy and so just haven't had time to upload. So I'm really sorry about that. I've been answering your emails and things like that from the course course members and enjoying that. But sorry I haven't been able to post each week like I have been in the past. You might notice I sound a little bit different today. I am recording on a new H4N Pro handy recorder. It's kind of like a professional handheld recorder and I'm going to use this more so I can record on the go. So as some of you know, if you've been following, I'm on Instagram, which is just Themike Andy's now. Just if you go to Instagram Themike Andy's, you can follow me there or if you watch me on YouTube, you see that I'm gonna be going into a new studio and so we're getting a bunch of new equipment. So got like a really nice, really nice podcasting microphone that sounds much better than this and especially better than the mic I've had for the past few years. And so we're moving over there in about a month. I'm guessing I'll have that all set up and we'll be rolling. But for now I have decided to take this mobile approach and be able to record on the go. So what that means is yes, the recordings won't be that great as far as audio, but I'll be able to continue to upload more frequently. So I'll see how many I do each week. I'm not gonna really stick to a schedule, but I think I'll be able to pump out two or three easily by recording in my truck throughout the day while I'm driving around at different job sites and doing estimates and just running a business. And so you're gonna kind of more of a day to day. We've kind of done a couple turns in the podcast format. Started out as I was just kind of doing like tips and things like that. And then we really switched to more of an interview format when I did consulting with different landscape business course members or landscaping business owners. And so it was a lot of fun and so just natural progression. We just kind of move from one thing to the next and I kind of find that a lot of the calls I make, a lot of it's little bit repetitive. And so I don't want to make everyone bore anyone to death. And I think if I kind of switch it up, you'll be able to get a little more into the nuts and bolts and some of the nitty gritty things that we don't necessarily talk about on the conference calls that I have and have been recording for the past 15 or 20 episodes. So I hope this little turn will bring some people value. And if you've been following me, I think you'll enjoy this kind of change in the podcast from for the next foreseeable future at least. So today, really, they just kind of wanted to throw those announcements out there and kind of let you know what's going on in my world. And I'll be doing hopefully, a daily podcast on Business Bootcamp podcast. So if you haven't checked that out, businessbootcamppodcast.com or just go if you're listening to podcasts on itunes or something like that, I'm going to try uploading that every single day using this recorder that I'm using right now. So that way I can kind of document what I'm doing. And like I said, you can kind of jump in with me on an everyday basis of running a business, seeing what I'm doing through the podcast. And so I'll be doing that one daily, but then this one's gonna be specific. This podcast, as always, is specifically for landscape business owners. And so it's gonna be very directed, channeled just to landscape business owners. So today I do want to give you value, and we're gonna be talking about cash flow, and cash flow is important, and especially this time of year. So as we come into the spring, a lot of people around the country and North America, especially right now, we're just in the first few weeks of mowing. So we've been in it about a month, like four or five weeks, and usually we've already been in like six or eight weeks. But we've had a late season because we had this weird snowfall in March, if you've been following the vlog. And so a little bit later than usual this year. But this time of year, as we go into spring, cash flow is super important. And you can have a very profitable business, very profitable, and be having good numbers and making good revenue, even having good profit margins. But if you don't have good cash flow management.

There will be times when it literally seems like you're broke. And the reason that it's so important this time of year is because when you start mowing, for instance, if you start mowing in April, April 1, and you're scaling up the business in the spring, you know, maybe have to get a truck or two, hiring a few more people, there's a lot of expense there. And then also it's really the core time to market your services is that first few weeks of the season because you're going to get your most bang for your buck, most roi, because the customer lifetime value, especially that first year, will be higher if you can attain them as a customer earlier in the year. So you're obviously putting money into marketing, if you're doing marketing at all, this is the time to do it in the beginning of the year to try to maximize that lifetime value of the customer. So all of those expenses you're trying to grow, you're trying to market, doing all those things. And yet April 1st comes and you start mowing. You've bought new equipment, you have new trucks, whatever, hired more people, train them up, and you start working and working, working. It comes like end of April, end of, you know, middle of May, four, six weeks into season. And it seems like, where's the money? Like, it seems like you're busy, you're constantly working, things are going good, you're getting new contracts, you're getting good referrals, the marketing is working great, getting lots of leads, putting out estimates. You're working 12, 14 hours a day, and you're just wondering, like, where's the money actually going? Because you look at your bank account, it seems like you can barely pay payroll and you can barely pay your expenses. And this is so important about, this is why cash flow is so important. You gotta have that cash flow management to make sure you have the money, even though you're profiting, even though you're making good revenue and you have a solid profit margin, if you don't have good cash flow, it can really sink you or at least slow your progress, especially in those first couple months. And the reason I'm talking about this today is because I'm living it. And that is, you know, last year I, late in the year invested in real estate and really got involved with a big project there lots of cash involved with that. And what the problem with that was is come spring, I didn't have enough, quite enough cash, as I would have liked to, to grow as fast as I would have liked to in the past six weeks or so. So it's changing now. Things are you know, turning around. But the problem is I had so much cash into the house before I can refinance it in June that it was really tough because as we. And we're still kind of working through it right now because tax came around all of a sudden, I had a $25,000 tax bill for the company. And then you got new employees and just got a new dump truck, was 30 something thousand. And then you got another truck, and then you got.

Three, four more employees that are full time and then a couple more part timers. So all of this going on in the spring, and yet the cash flow, the amount cash in the bank is low. And it just really goes to show how important is that cash flow really is. And how do you like? I'm not really giving any definite how to's or what to do here. It just means to show that you need to forecast correctly. Like, if I would have done this better, I would have put less cash into my real estate deal, financed it more just so I had enough cash flow to sustain the marketing and growth that I want to do this spring. Like, if you look at it from cash, like a net revenue, we're doing fine. And if you look at it from like my net worth, like we, the real estate's doing fine, like we're doing a remodel, it's all fine. However, when you look at it from a cash perspective, you can't pay, you know, payroll and your rent, and you can't pay for the gas in your trucks with real estate investments or with equity in your house. And so you do have to have the cash flow management. And so a couple ways to really help with the cash flow management. There's a few ways, and that is, number one, to cut down on your accounts receivable. So that's the amount of money that people owe you currently. And one way to do that is by accepting credit cards. And so essentially, accounts receivables, like at the end of the month, if you bill all of your customers for mowing, it might take two weeks before they actually get a check to you. But if you have their credit card on file, you'll instantly get that money just with a push of a button. If you have their credit card information on file or, or if you send it to them, and they're able to quickly and easily pay with card. And so that's one way to do it. Essentially reduce your accounts receivable, get that number down. Another way to do it is just make sure you have a good debt collection system and I don't mean like sending them to collectors or anything like that. I mean, how do you go after the people who are 30, 60 days overdue and make sure you get their money? Because if you look back, I guarantee you you're losing 3 to 5% sometimes if you're not staying on top of it. Losing 3 to 5% of that are 30 plus days overdue. And that's cash flow. That is money that you have worked for, you have paid for the labor, you have paid for the materials, you've paid your overhead, and yet the money still isn't there. And that's why so oftentimes, landscapers are cash heavy, I call it, or they have more cash than they expected in the fall because finally the people that they did work for in the spring are actually starting to pay. And so I think it's important for us all to remember to do those two things. Keep your accounts receivable down by accepting credit cards. There's another thing to do for keeping your accounts receivable down, and that is making sure for larger projects, you take 50% down or you require that they put 50% down on the project. There are so many positives that I could talk about this that it's incredible. We just started doing this in our company before. We're like, hey, you know what? We have enough cash. We don't need to accept. We don't want that to be like a barrier for people to not do their job, that they have to give us 50% and we can take the kind of cash flow swing of just doing the work, paying for the materials, labor, and all of that, and then just getting the payment at the end. However, not only does it help your cash flow by accepting that 50% up front, it helps the customer in their mentality of how they're looking at the job. It helps you have, like, they're committed to you and you're committed to them when that 50% is given to you. And it allows. Another thing that we're starting to do is doing. I'm probably doing a whole nother episode on this next week, and that is doing these, going back to their house. Essentially, I go to them, do an estimate, right? Well, in the past, once they accept the estimate, we would schedule the job and then go do it. Now we're starting for the larger jobs. When I need to collect 50%, I will go back to the property, collect the 50% check, but then essentially go through the entire estimate again with them, walk the property again. And this irons out any of the bumps that always come up later in the job of little things that they preferred or they wanted done and that didn't come out earlier when you met them for the estimate. So literally every single time I go back, there's a few things, little things, but little things that can become big things if we didn't get them ironed out before starting the job. So what I would recommend you doing to help with cash flow, to help not just with the cash flow though, but just with like your customers and keeping clients and being professional and having good communication with your clients, is do your estimate, send it via email. If they accept or if they want to go forward, they have questions, meet them again in person. If they want to go ahead with a job, collect the 50% check in person, or they can send it if needs be. But set up another appointment in person to go through the job, walk the property and iron out all those little things that you don't want to become hiccups or hurdles down the road when your crew is there. So I highly, highly suggest that we'll probably do an entire episode on just how to do that and why that's so effective. But that's another way. The 50% down is a great way to cut down your accounts receivable, especially in these large projects. If you're doing a large project that's 10, $20,000, there's absolutely no reason why you should have to upfront all the labor costs, all the material costs, and the client not pay till the end. And even worse yet, if you pay bunch of money for those labor materials and then they don't pay for 30 or 60 days, then you're really starting to talk about a potential hazard, potential hazard, a potential issue for your cash flow management. And so just another thing, that's another thing you keep in mind. And then secondly is obviously do follow up in your collections to go back on those people who are 30, 60 days overdue, perhaps charge a $10 fee if they don't pay invoices within 30 days. These are all things that you can do to increase the amount of cash that you have on hand and reduce the amount of time it takes from the time you send an invoice to the time it gets in your bank account. That's it for today. Landscapebusinesscourse.com we have a webinar coming up in just a couple weeks and I'm going to be talking about how I've hired and the hiring system that we use at Augusta Lawn Care Services and how you can hire All Stars without paying through the nose to get someone that has a bunch of experience. How you can find these people that are great workers, great talent, and you don't have to pay a bunch because they don't have a whole bunch of experience. But if you have the correct systems in place, you can train them. So you'll definitely want to check out the webinar. It's completely free. Just go to landscapebusinesscourse.com and we'll do a live webinar. You can ask all the questions in the world, and I look forward to seeing you there. Until next time, guys. Be great. Get out there, mow some grass, rake out some mulch, trim some trees and make some dough. We'll see you next time.