Chapter 7 - You Mismanage the Spring Rush ( Total Business Turnaround Book )

Hey, everyone, it's Mike Andes.

And we're gonna be reading chapter seven of the Total Business Turnaround. It's all gonna be about managing the spring rush and making sure you're doing scheduling correctly.

And one of the things that I.

Mentioned in the chapter, and I highly recommend you dig it and check it out, is go get trained on pay for performance. I'm gonna talk about later in the.

Book, but if you know how to.

Do pay for performance and using budgeted hours, it's gonna completely change your life.

It's going to change your business.

And I have free training on this@p4psoftware.com training.

It's completely free. It's called P4P University. And what that's going to force you.

To do is actually create budgeted hours on your schedule.

So if you listen to this chapter.

And you're like, man, I don't know what budget hours are. I just kind of guess. I kind of throw stuff on the schedule willy nilly and kind of just estimate it, like, you know, just quickly you can. There's a science to this understanding your budgeted hours.

And in order to know your budget.

Hours using pay for performance, or what we call P4P, is the best.

So highly recommend it.

It's completely free for the training. Just go to p4psoftware.com training. And let's dig right into chapter seven here about how to manage the spring rush.

Chapter seven, you mismanage the spring rush. Why you don't build a million dollar business. Reason number seven, you mismanaged the spring rush. In a previous chapter, we talked about May Landscaping. We covered some of the problems they were having. A man named Brandon owns the company. Here's a little refresher. When I arrived to do a turnaround for May Landscaping, the business had $30,000 in credit card debt. There was also a $50,000 business loan and more than $100,000 owed on equipment. When we showed up, he had $5,000 of cash in the bank. They'd made $800,000 in revenue the year before. The spring before we arrived, Brandon got 75 mowing customers for free. They came from a business that was shutting down. This allowed him to grow quickly, but it also ramped up his overhead much faster than he could handle. The business grew to more than 10 employees. The new customers were drastically underpriced. During the spring, he experienced a big rush. This is pretty standard in the home service industry. New leads were pouring in. Employees were making mistakes. Customers were complaining. It was a big mess. The spring rush is a great time to set your business up for the rest of the year. I recommended that Brandon use his spring rush to focus on getting more mowing customers. These jobs didn't have super high profit margins, but they had steady cash flow. They'd allow him to build up his recurring revenue. They'd keep him busy for the rest of the year. Once the leads stopped pouring in. We in the home service industry often feel like we have a disadvantage. We have a seasonality problem. The real problem is that we schedule jobs poorly and mismanage the spring rush. Seasonality is of course, real. Customers seek our services most often in the spring or specific times of the year when their properties come alive. They need our services. Our value is clear and urgent. Yet the resulting boom and bust cycle is preventable. It's the result of managerial or scheduling mistakes. Here's what a poorly managed spring rush looks like for three to six months. Add the year you are busier than you can handle. You're turning away work because you are so busy. The other six months, new jobs stop coming in. It's a struggle to keep the crew busy. The feast and famine experience is common in service industries. It's also draining, demoralizing and stressful. It is also one of the main reasons that home service business owners quit. This roller coaster of demand is exhausting. A mismanaged spring rush leads to burnout and cash flow problems. I addressed this problem by taking several steps. As mentioned earlier, when you hit your capacities, raise your prices. It's time to go into profit mode. You can also work on prioritizing services and jobs more efficiently. Schedule projects and services that aren't time sensitive for the off season. They can wait a couple months. Also raise your capacity before the spring rush. This means making sure you have secured enough trucks, employees and equipment. This will allow you to keep up with demand and avoid turning away work. Once the floodgates of Leeds open up. You can then spend most of your marketing budget during the spring rush. This will set you up for the rest of the year by capturing more recurring customers. Earlier, we talked about capacity limits. That is the most money your business can make. Your equipment, your team and your personal limits form the basis. It's important to understand these limits as you navigate the spring rush. Understanding your capacity helps you avoid overbooking. That keeps you from risking burnout. Remember, your max threshold is where your profits are highest. This is because you are using all your assets and you have the option to raise prices. If you are in growth mode, you could postpone price increases when you hit capacity. You could then schedule new customers out further and further. But the further you book out, the more likely you are to face cancellations or impatient customers. This is industry dependent. There are some home services that can get away with booking themselves 6 to 12 months out. Other industries are better off maxing out at four to eight weeks only. You can decide on the right threshold for your business. Once you hit the budget hour capacity for labor and assets, you will set the backlog threshold. Then you can start to raise prices. Once you reach that threshold, maximize your profit without losing out on potential jobs. By raising prices. By raising prices, our hope is that some estimates get declined due to price. This will keep the backlog in check and prevent it from growing too far out into the future. The alternative is to focus on growth. Earlier we explained that growth mode is when you raise your capacity limits. You do this once you hit them. You hire more people. You get more equipment. Keep in mind that when demand for your services is up, the customer acquisition cost is down. During the spring, people are actively seeking you out. This means you'll need fewer marketing dollars to get more customers. During the off season. The opposite is true. It's harder to get new customers. You'll usually need to spend more money to do it since very few customers are looking for your services. When customer acquisition costs are low, your break even point goes down. Remember, your break even point is the revenue you need to earn before a customer becomes profitable. To figure out your break even point, you add acquisition costs to the expenses of doing the job. So many business owners cut or stop their marketing during the spring rush. They are booked out, burnt out and overwhelmed with work. Then they overspend on advertising when work dries up. This is because the CAC is highest during the off season when demand is low. Then they say that marketing doesn't work. That's inefficient. It's better to increase your labor and asset capacity before the spring rush. Then you can ramp up the marketing and acquire more customers when they are the cheapest to get. Think of it another way you are planning a fishing trip. You know that during the spring your favorite spot will be full of fish. There will be so many that you can reach in with a net and grab dozens. That same spot freezes in the winter. You can still go fishing, but you need to drill through three feet of ice. You then stand over your hole shivering for hours only to catch one or two fish. When do you plan your trip? Ineffective marketing makes it much harder to grow a million Dollar business Spend your ad budget during the time when customers are plentiful and easy to catch. I see it all the time. Home service business owners say that their marketing isn't working yet. When I look at their numbers, I see that they are spending 60 to 80% of their marketing budget. In the off season, demand is low and customer acquisition cost is high. Of course, using the spring rush to grow and get set up for the upcoming year sounds great. But not everyone can hire new people and get extra equipment in advance. This is particularly true if you experienced a difficult off season cash crunch. In this case, when you hit capacity during spring rush, you will enter profit mode. You will raise prices instead of growing. One solution for an insane rush of work is to hire seasonal employees. Remember, your competition will also be staffing up. If you start two to three months before spring rush, you might beat them to it. One of my general managers once hired 20 new people six to eight weeks before the spring rush started. He staggered their start dates over a couple months. This allowed new team members to get trained without overloading the existing team. Quality was upheld. The business was adequately staffed throughout the spring rush. Demand ramped up. We added new team members to increase capacity. It is okay to staff up during the spring and let your natural churn cycle run its course. Demand dies off after the busy season. Your labor capacity will fall as employees leave. Employees will leave on their own throughout the season. In fact, the average tenure for entry level labor workers is trending below one year. Even if you aren't trying to bulk up your capacity, it's a good idea to plan for turnover. What happens if you have three people drop out in the middle of spring? Chances are overstaffing won't last long. Their turnover cycle will take care of that. I know the temptation to stop taking new customers. You might feel overwhelmed. You think leads are great, but they don't pay the bills. I have to do the work to make money. Because of this, it can be tempting to stop pursuing leads during the spring rush. You're busy. You just want to get your work done and earn the money. At Augusta, we ran into a similar problem during our second year of franchising. Our locations were turning away customers during the spring rush. Too many leads overwhelmed them. Turning off leads is almost always a bad idea. It signals to me that we could raise prices. We may lose some customers and reduce our close ratio. But this would make room for new, higher paying customers. But it's tempting to stop the bleeding by stopping all incoming leads in the spring rush. Most people's main goal is to finish work they've promised to current customers. They aren't thinking about maximizing their earning potential. They aren't thinking about later in the year once the off season sets in. The problem is that you have to plan ahead. If you are in the thick of things and lack the means to increase your labor or asset capacities, you will need to turn away some customers. So let's say you are at your capacity. Your team morale is low. Customers are mad because you are falling behind on the schedule. Team members are walking off the job because they feel tired and overworked. I've been in this situation myself. Preventing this from happening is the ultimate goal. We will focus on that in a second. But what can we do now? If you're in the middle of this storm, I would raise prices on recurring work. This will allow demand to naturally taper off while protecting your profits. Then focus on selling more recurring work. This will keep your cash flow steady throughout the year. You can even refer new clients to other service providers. When jobs come up that you can't get to, you may even be able to arrange a commission or affiliate structure with a local competitor. Don't waste leads. If things get worse and prices don't cut demand enough, you might need to cut services or customers. If you notice that some of your service offerings produce a low profit, cut them. You may also cut services that demand too much of your time as the owner. Services that add complexity and increase liability are also on the chopping block. A service relies on one key employee or rarely used equipment. I would remove it from my service offerings. It may be appropriate to reschedule certain one time projects out into the future. Push these jobs out a couple weeks to give yourself some breathing room. Use that time to find more employees, train them up and expand labor capacity. I've always been surprised by how many customers accommodate forced schedule changes. Honestly, even if they did want to change providers, they'd have a hard time doing it. Your competition is booked out just like you. If you don't want to cancel or reschedule jobs, there are other options. You can try to incentivize your current team to work more overtime or bring people in from out of town. If you are willing to overpay, you could attract talent from hundreds of miles away. They are willing to relocate for the busy season. Some employees are looking to work long hours for only a few months. None of these tips are what you want to be doing. I only offer this advice because I understand what you are going through. I know it feels like you want to quit. These are extreme measures. They are not ideal, but I would prefer you take them instead of giving up. Now that we've discussed stormy weather, let's focus on planning for the future. This way, you don't need to take these steps during spring Rush during the spring rush, plan for and prioritize time sensitive work and recurring jobs. If you can do that, your cash flow will stabilize for the rest of the year. You won't have to worry about the feast and famine cycle that most service providers deal with. All the leads for different services come pouring in at the same time. You can filter the jobs that need to be scheduled tomorrow versus in three months from now. Every customer wants their job done tomorrow. Which services do we consider time sensitive? You'll want to prioritize your services based on the time of year. If someone comes to me in the middle of April for a mowing job, they can't wait six weeks. Their grass will be two feet high. The homeowners association will write them a citation. They will find an alternative that's a time sensitive job. Better yet, it's also a recurring revenue job. Two for two. I want to focus on that service in my marketing and prioritize it on the schedule during the spring rush. Yet if a paver patio project got accepted on that day, I would tell them that we couldn't schedule it until July. Why? Because I know that March through June is when I have the best chance to build up my recurring work jobs that will stabilize my cash flow for the rest of the year. I learned over time that jobs don't need to be scheduled on a first come first serve basis. Some would argue that isn't fair, but you serve your customers better when you can give them the right amount of time and attention. During your peak season, block off time in your schedule for urgent jobs and recurring work. Otherwise you may be too buried with one off projects to take full advantage of the high demand. This will require anticipating when spring rush starts and it requires ensuring that several weeks before you are not putting time insensitive and one time jobs on the schedule. Make sure you are also pursuing the right work. Spend money on marketing to fill your schedule with recurring jobs. Get as many as possible. While customer acquisition cost is low and demand is high, you can then upsell to those recurring customers. During the slow season, you will upsell those other one time services. They are not time sensitive. They are ones the customer could also enjoy. Mismanaging your spring rush takes you further from building a million dollar business. Not only do you fail to maximize your revenue potential, but you also burn your team out. I've seen it in my own business. Full out mutinies with good employees leaving because of burnout. I once walked into a team meeting to find that the entire team had signed a document of demands to reduce the workload. A new general manager who had never experienced a spring rush before caused this. They'd mismanaged scheduling and focus on one off projects instead of recurring work. They were able to follow the recipe provided in this chapter to get things back on track. They completed one of the most profitable years that location has ever had. Remember, during the spring rush, leads for all your services will increase. This includes one time jobs and recurring work. Only one time time insensitive jobs can get scheduled for the off season. You need a reliable rotation of recurring work. Without it, you'll be stuck in the boom or bust cycle of seasonal demand. Bottom line, scheduling well during the spring rush gets you closer to a million dollar business. It will allow you to acquire customers for cheap. It will make sure you don't starve when the leads stop pouring in. You focused on recurring and time sensitive work during the busy season. Copilot CRM has a widget for scheduling jobs. It's called the Budgeted Hour Capacity Chart. This allows you to see your budget hours for weeks ahead. This is helpful when you head into the spring rush. Plan carefully. You can avoid overloading your labor while picking the right jobs. Backlogs can seem manageable, but as small jobs keep getting added, you fall way behind. By then it's too late. So what's the diagnostic tool? When I go to a turnaround, I look for signs that the business owner is promising more work than they can deliver. Are they exceeding their crew's labor capacity? Are employees quitting because of too much overtime? I know that the business has been mismanaged when I see business owners who want to quit during the spring rush. This should be the best time of year for our industry. It's time to make hay while the sun shines. From my experience, it takes three to four seasons to understand the demand curve in your local area. Unfortunately, many small business owners quit before they get to that point. If you aren't there yet, get ahold of someone who is. Understanding that demand curve is the light at the end of the tunnel. It will make it clear when you should staff up before the spring rush and increase capacity. Knowing the demand curve of seasonality will make it clear when you should only schedule time sensitive and recurring jobs. Join communities, franchises and groups in your community and industry. They can help you succeed faster. They will help you understand this demand curve and how to market and plan for the spring rush. Ultimately, a mismanaged, busy season comes down to a failure of preparation. This lack of preparation is what causes many businesses in the home service industry to fail. Hopefully this chapter helps you prepare for spring. Then you can use the leads to your advantage rather than being harmed by them.