Coaching a $1.2M Landscape Business Owner

Hey, everyone. My name is Mike Andes. I'm the founder of Augusta Lawn Care. We have over 150 locations around the world. And today is actually going to be a coaching call that I had with a landscaper doing about $1.2 million in annual revenue. His highest performing employees are leaving because he can't pay them enough. Right now, he ranges between about $15 per hour and $19 per hour for his employees.

I am losing the best of my employees, all of them. Like, I don't want to pay them. 35.

Someone that's making $15 an hour versus someone who's making $19 an hour. The guy making $19 an hour might actually be making twice as much profit for the business, but he's only making $4 more per hour. And so in this case, this is when pay for performance is super important. That's where we pay the employee based on how much revenue they bring in for the business. So today is actually a coaching call, about 30 or 40 minutes. And you can actually get one of these coaching calls yourself. If you just go to p4psoftware.com, you can book a call with our sales team, and someone from the sales team will be able to speak to you about whether or not pay for performance is right for your business. Without any further delay, let's talk to John from Vine Landscaping. Building a big business and making sure you can actually switch over to P4P instead of hourly wages.

Mike Andes is on the call.

Hey, John, how's it going, dude?

My wife was like, yo, you're gonna have a call with Mike, Andy. I was like, no, honey, I'm gonna have a call with his team.

Well, Lael's knew the team, and. And so she's gonna be, like, long, kind of for the ride, for support. But I'll. I'll do the whole call with you, so anything I can help with? Let's jump into it.

Dude, I am so blessed to get you. I know I got 15 minutes of your time, and I'm obviously going to use it wisely. My whole business model is based off of yours, by the way. The entire thing, from up, left to right, front to backs. Um, so here we're at P4P, and I am losing the best of my employees, all of them. And it is crushing me. But I. I don't know what.

Mathematically and for the books, what this is going to do. Like, I can't give 33%. Just can't do it. You know, for landscaping, I can probably get 18, nine for mowing, I can probably do 25. But I need to know like what that's going to look like on my books. That's really the only question. I really have once demoed this last year. I did bonus up last year a lot. I, I think I demoed this very briefly. But I, I just need to know like what this is going to do to the books and how to roll this out.

Like I, I think it just comes down to the math. Yep. Is this go right.

What was your revenue like last year, for example, John?

819. Yeah, 819 for last year.

Okay. And then do you happen to have your P L in front of you or not?

Sure, I can share my screen.

Or even if, if I could just know how much your total wages were and if you know direct versus indirect, that'd be great. But even just total wages would be fine.

By indirect you mean. So the cost of goods, sold, everything, materials, subs, minus wages.

So if, if you even just know total wages, that'd be a helpful number for me for now.

Yep. So I got total wages minus taxes, total wages at.

153,940.998.

And then.

All right, disregard, disregard. That is for this year. Let me get the 2013 numbers. I'm sorry, 2023. I have one because I was going.

To say that was pretty phenomenal.

Now total tech wages is 236, 748. 52.

Okay, and then what was your material cost? Do you know? Have that itemized out.

Just like total materials, we're at 49,000 for landscaping.

Customer damages, repairs, chemicals. So we're about 4, we're about.

8,076. So we're about 57,140 for just materials for both lawn care and landscaping.

Got it. Okay, cool. So on, on the 236,000 in wages, does that include office or admin or any sort of other overhead expense or just all direct? So you're the only overhead in the business, I'm assuming negative.

It's me, my production manager, my admin last year.

Got it. And you're not including those wages in the 236. Got it. So just to be clear, right now you're paying 29% of revenue to direct wages. Now when we say 33%, for example, on P4P, that is a labor revenue only, which means you got to cut out all materials. You got to cut all, any sort of estimate fees, dump fees, equipment fees, anything like that. And so I would actually venture to Believe you're paying about 35 to 40% of labor revenue to employees right now. Sure. So that would be my first thing is like.

I actually think you're going to fit inside the system fine from a numbers perspective. It's just scary to think that, oh, I'm going to give 33% away because 33% of 819 is an extra 30, 40 grand compared to last year. But it's only of labor revenue. You don't give them 33% of revenue. Right. So I would just. I would just kind of put that as an asterisk next to it. So we don't have that limiting belief that, like, we can't afford it because, like, the percentage actually works decently right now.

Sure.

Okay, so in terms of.

The goal.

Being really keeping the guys, that's kind of like the main objective here. What's the current base pay for, say, the entry level guys?

Right now, all around my landscaping and mowing, the base Pay is around 17. Base pay for like some guy we bring off the street that doesn't know what he's doing is about 15 an hour. But collectively the average is 17 an hour.

Got it. And let's say like a project manager or someone like higher up, are they making more like 20, 25?

Our lead texts make about 19.

Okay, so it's pretty close. It's right around that 17 marker. Okay, cool. And then what's kind of your target hourly rate per hour? I know it's probably varied across services, but.

Yep. So I want to. So we have. It varies. Right. So we, we're changing job cost analysis stuff right now. I want to do a hundred dollars a man hour for landscaping and around 80 for mowing.

Yeah.

And then as like a very broad stroke, I know right now you kind of want the, the employees to be able to make more money. The ones that are higher performers, etc. The business, is it profitable enough or is it struggling from a financial perspective?

So.

Not for where I want it to be. Like on our current profit and loss, it says like a net. Net 10. Net 11. I want it to be like a net 20. Net 25. I know that that's possible. I know it's possible. But you also know P and ls, they have the hidden cost. They have the recurring monthly revenue. Like, so right now, like, it'll say net 10, but actually if you do all the. The monthly cost, we're almost like we're. We were broken even for the entire year. Everything else thereafter is now profit.

Got it.

So it's net 10. But there's always those taxes and hidden fees.

Got it. And then this year, 2024, what are you kind of projecting for revenue?

We would like to hit 1.2.

Christmas lights, which, by the way, great job. Nailed it. I was wondering if you're going to do that. That kind of brings up the rear for us and really helps us out getting to the winter.

So 1.2.

Yeah, we're, we're kind of, it would be like a Hail Mary to get there, but I think, I think we'll get there.

Cool. All right. So basically you're going to grow 50% year over year. So having a basically break even is not unheard of. When you're growing revenue by $400,000 in a year, $400,000 will typically take almost 80, like between 50 and $100,000 of just capex to facilitate that growth. So I'm not concerned about like right now having a zero. When I look at 17 per hour base and I look at 80 to $100 as what you're charging the customer, you're blowing the doors off the 25% rule to be able to make P4P like actually work. And so what that basically means is I want to be able to pay on base pay less than 25% of what I'm charging the customer. So for example, if you were charging $80 per hour, I don't want to be my base pay to be any greater than $20 per hour to the crew. So you're already beating that, like, massively.

So have you, what have you done in terms like trying P4P? Because, like, I think that like the business from a numbers perspective, it would work just fine. What, what parts are you kind of question marks around that?

To be honest with you, my only question is in moving forward, I'm just scared to see what it's actually going to do to the books. Like, I, I, I mean, we're, I have a coach BTA and they're like, yo, you can't even roll out P4P right now. And I'm like, that's the number one thing in my business. Even though there's all systems. And like the most scareful thing for me is like, if I roll this out, what's going to happen week over week, good, bad or indifferent, that's the only, that's the only worrier concern that I have. And now, like, what's their reason?

What's their reason, John? Did they give a reason? Is it a matter of like, you can't afford it.

That's what they say. But if you look at my books, I mean we can pull it up. Like if you look at my books and it's like we're at a net 10, going to a net 11, bumping up into net 12. Like it, it, it's there. So I'm kind of like, why? But I think it's because the system's not really in place in terms of like, it's not very strategic. You know, this is written down, which we can have that written down. I have your document from one to two pages document that you, I got that. Like it's already written. They've already signed it off before. We've rolled it out, rolled it back. We did bonus up last year. I'm sure you' familiar with that software. It just the concept of like your hour plus a little bit of like, hey, you made $7 a day. Like they don't, that doesn't do anything for them, you know. And you know, again, I got guys right now, the hurricane came in and they're like, yo, I need to get hours or I'm walking. And so I truly have really great people that want to see the vision that we have for this local area and blow it up. But I can't do that at just doing maintenance at $17 an hour.

Right? Yeah. Like so the bottom line is, especially with maintenance, you have a huge amount of incremental savings of labor as soon as you institute P4P because every time they get in and out of the truck is most of where the savings are at. So any sort of maintenance where they have multiple stops in a day, that's when P4P really impacts it the most. When projects are involved, there's a little bit less a savings because there's not in and out of the truck, they're not on and off their phones all day long. That being said, they get much more creative with projects when all of a sudden they are getting paid based on the get job getting done instead of clocking hours against the job. And so when you rolled out in the past or, or attempted what was the struggle? Why didn't that work?

They weren't just motivated. I, I, I don't know. Like if it, it wasn't hey, showing them the numbers every day and maybe it wasn't having the reminder constantly when you're reminding a technician, hey guess what, you could do this every day. But it's like the desire to want to go do that, but it wasn't in their face. This could be Possible.

I think that's kind of the problem is that it was kind of like out of sight, out of mind, like you could. But it was, it wasn't like in their face every day about making the money. It was just, I'm just going to be here as a technician to get the job done and collect a paycheck.

Did they ever get on P for P the app or not?

I think we got it before the app was like fully.

So there was no leaderboard and stuff.

No, got it.

Okay.

But we did like the leaderboard with bonus up. And there was no, like, it's not. When you walk in, it's glaring. It's in your face. You know what was.

What was kind of like the highest performers bonus ups on say a given pay period? Like a hundred bucks?

Not even.

Oh, okay. Yeah. So basically I've just seen unless they're making over 200 to $300 per paycheck, it just does not impact their behavior. Because someone's not going to bust hail all day long for an entire paycheck over an extra couple bucks an hour. They're just not like, if given the choice, like, I'd rather just stay in the truck and have AC. Now the difference. So for example, at my shop, the, the first one, our base pays 20 bucks an hour. You know, guys are making between 25 and 35 an hour. Like they know when they get to work, there is so much urgency to get outside that door and get start working. Like, no one's lolly gagging or talking. And if they do, they're going to get kicked to the curb. No one wants to work with them because they're going to take them from a 30, 35 all the way down to 15 or like a base payer 25 bucks an hour. And no one wants that. And so the bottom line is like, as you know, there are people in your organization, they're going to pay 19 that make twice as much profit for the business as the person that's making 17. And so the. You will lose one or two of your guys if you institute pay for performance correctly. The bottom line is the highest performers will absorb all of that work just fine. And now they'll be able to make 26 to 30 bucks an hour.

Go ahead.

That's just my concern. You know, we have a budget set now in LMN where they're only supposed to make a certain amount of revenue to clear like 1.2 based off of our last seven months going into the eighth month. They have. We're projecting like, this much revenue. So my, my concern is that they'll just blow that off the doors and we can't recoup overhead because it, they're just.

Yeah, but it doesn't, it doesn't matter because if you're, if right now we're paying someone 35% of our revenue is going to direct wages. Whether they make 30 bucks an hour because they get the job done in half the amount of time, or they make 15 an hour because they hit budgeted hours, I don't care. The job got done. They just did it way faster. So, yeah, it will throw production rates through, like, all over the place. Right. But I'm thrilled because they're getting more money and they're getting the jobs done faster. And instead of working 45 hours, now they're working 35 but making the same amount.

Gotcha.

And they hate overtime because when they go into overtime, they're not making any extra when they're on P4P.

Got it.

And so I would really, really challenge the idea that going to P4Pmakes you pay them any more money. You're already paying them 35%.

But that's my point. I don't want to, like, I don't want to pay them 35. Like, right now, our, our labor is a little bit less this year than it is last year. That's because our prices increased. But I'm not trying to pay them 33%.

So this is what I would do, John. I would probably.

Run like one crew inside the software, inside of a free, free trial.

Run them at 30% or even 28%. I know your, your, your prices will warrant this. Like, your pricing is differentiated enough between your $17 per hour base and $100 per hour for landscaping. Like you can. So like my, my shop, for example, I only pay them 25%. But I've raised prices high enough to where now at 20 the base, I'm, I'm at a hundred dollars per hour to the customer. Right. So you can absolutely do it that way. Just change the percentage. But I would just do it on the back end and just track it. Just see what they'd be making. And, and what I would challenge is the idea that switching to P4P is going to cost you any more. It won't. Because you know what the. It's a fixed percentage. So like, sure, sure. If they, if they crush it and you're like, man, I don't know if I can pay them 30 bucks an hour. You can if they get the Job done in half the amount of time. Yeah, right.

Yeah. So I want to respect your time. I know it part time's up, but I, my, my last question is.

Let'S say that, God, I just had it like you give them all of say 25. Like it's just more of like a commission structure because I know you. Okay, that's what I thought. Any like last words on like salespeople.

In terms of. So like how, how to bonus them or making sure that they're accurate on.

Their estimates to bonus them, I would.

Do more profit sharing instead of, you know, P4P around budgeted hours.

So doing it based upon profit, you could also do it based on revenue. So we usually do like a defensive and an offensive measure. So like offense being revenue, defense being profit margin. So basically if they grow revenue a ton but we have no profit, they'll make a bonus.

Got it.

This is, this is more important if you're not there. If you're there, you can kind of monitor them a lot better. But when you want to get out of the business and have like a general manager, for example, that's when you want to have like a very balanced, you know, profit sharing, revenue growth, and some sort of, you know, balance between the two.

But the thing is, what's nice about P4P is when they start using budget. Like you guys use budget hours on projects right now, correct? Yeah. So like when, when, when they start using budget hours, the crew will keep your, your estimators honest because if, if they try to cut way back and they go, oh man, we're just gonna like try to get this job. Great. Well, if they cut budgeted hours, the crew will revolt against them. Sure. And so there's this always this nice tension between sales and ops, the guys doing the work, and that is sales wants to get the price as low as possible, get the deal, but not so low. Do they cut budget hours to the point that the crew gets mad at them. Got it. And so right now no one cares because they just want to clock as many hours in the job.

And so I would really, really challenge. Based on your numbers, I know you can afford to switch to PvP. And if that means doing 25 or 30% instead of 30, that's fine. Your numbers warrant that. And I really believe if you ran the numbers in the background, some of these, some of these guys are make, could be making 24 or 25 and others are probably at 12 bucks an hour in terms of what they'd be earning on P4P.

So what about the, like, for example, we just had a $6,000 landscape job that they finished in roughly a day. So same, same percentage, same everything. 25.

So out of the 6,000. Right. How much of that was actually labor revenue?

I, I don't have to go back.

That's, that's. So like when you look at investment, right, you obviously have your materials and which you usually mark up. Then you have your equipment, you might mark that estimate fees, dump fees, etc. I'm only looking at budget hours multiplied by the rate I'm charging the customer. So if you're charging $100 per hour to. On landscaping, do you know how many budget hours were on that job?

34. Let's just say 50. 50 is a close. Yeah.

So 50, that means $5,000. Let's just do the math. So $5,000 of labor revenue, how many crews, how many guys were on the job? 5. So there's five guys on the job.

And how long do they work for that day? Like a 10 hour day, 12 hour day.

An hour day.

10 hours. Great. So they hit, they hit budget hours exactly on the head. 10 guys or 10 hours multiplied by five guys, that's 50 budgeted hours. Right. So then it's just a matter of. Okay, well, at $100, sorry, $5,000 in labor, let's assume we give them 20%. We're going to do 20% on P4P. That means $1,000 is going to go to wages divided by five. That's $200 per person. Right. So in this case, they would make $20 an hour, quote, unquote, on P4P. I would challenge the fact that we can actually afford 25%. And now all of a sudden, instead of $1,000 of labor revenue, there's 1,250. And they're making $250 per person and now they're making $25 an hour, which they deserve because to your point, they knocked this out in one day.

Yeah, it was, it was, yeah, it was good.

And so I, I would, I would bet that they would. This is the thing. They got done in 10 hours. I bet they get done in eight or nine if they are on P4P.

Valid. And so when they know that they're getting $250 for this job, no matter what, things change.

But explaining that to them is important. Like if you're just like, oh, you guys did a percentage, and especially if you've been back and forth, you did the bonus thing and no one really bit at it. Explaining to this crew in a very succinct way is important. It's this. It's simply this, hey, guys, some of you work like crazy hard, and other people, you know, you work. They're not really pushing it, and you guys are all working together. And so everyone can, like, people can kind of fall through the cracks. I want to be able to pay our highest performers way more money. I don't think it's fair that someone gets paid 17 bucks an hour and someone else gets paid 19 bucks an hour. And 19 bucks an hour guy generates twice as much profit for the business. I don't think that's fair. They all, in their mind, think they're high performers and they're going to identify with this guy. And so you say, look, what we're going to do is we're going to just give a percentage of labor revenue that you earn for the business. You get. Not revenue, labor revenue. And so now it's going to force you to be able to say, hey, we charge a hundred dollars per hour. So when you see 50, 50 budget hours, we're charging the customer $5,000 for that labor. You're gonna get 25% of that.

So I think what was really difficult and bonus up is actually inputting budgeted hours.

Cogs.

Let's just call it cogs for my knowledge. And then, you know, your labor hours, labor revenue is that is. I haven't seen the software. I mean, it's probably in a year or two years from now or ago. Is that. Is that clearly.

Yeah, I'll show you here real quick. Okay, so don't worry about time. We don't have a call after this, so I don't mind taking some time. I gotta get you convinced, bro. All right, let's see here, see here, 30.

I mean, listen, I was talking to my people. I'm like, if there's one person that can do this.

Mike, I been following you since I started, man.

I appreciate it. All right, so this is inside the software. So if you're doing a. Say, a project, right? So we'll do projects first. So all you're going to do is create a project. You're like, okay, this is Bill Smith, or now it's nil. Okay, Bill Smith. We're doing a rock install. There are 50 budgeted hours, and we're charging a hundred per rate. There's your $5,000. I'm going to go ahead and submit that it becomes an active project. But then on their time cards, I just assign them to this job for the day.

Now, I'm assuming there's no. The only place that you really integrate with this software, I mean, just correct me, is Copilot. Is that correct?

It is. And mostly. Mostly the advantage for the integration there is really on the recurring side, because then the crew can see how much money they're supposed to be making based upon what's on. On their schedule for the day. And then as they finish the jobs, it kind of like shows them how much they're making, which is a huge incentive on maintenance for projects. It's. There's not a whole lot there, but yeah, Copilot's the only one to integrate with. But literally, it will take you a minute a day to make time cards. So, for example, like, if you're in time cards here, even if you did this completely manually and the guys didn't clock in on the app, it literally still, like, we've kind of done over the course of a few years, at first, everything was manual. Like, literally, we would take punch in and outs from service autopilot, and then we'd go into here and just make the time card. Right. So if we go back. Let me just make a fake one. No, I can't do that.

That was the other miserable piece is trying to, like, do all of this by hand. And bonus up. It was miserable.

Yeah. So what you can do, though, is if they have the app, like, if you start. Okay, we're gonna do. If you eventually get to where you have the confidence in P4P and they clock in and out on the app, then the time card gets made automatically. So then you'll just be at the end of the day. All you really need to put is this information at the bottom. The hourly rate, how many budget hours they completed, the number of the crew, and then it'll figure out the labor revenue automatically.

And.

And then, like, that's it. That's all you have to do each day. Now, if they were on a project. Let me see if I can find someone on a project.

No one was on a project. All right, let's go back to a different day.

So if someone's assigned to a project, you don't even have to put in all that information because you've already done that in the project side. You literally just assign them to this job. Again, that project we. We created in the other tab. So you create your big. Go ahead.

Can you separate the percentages from projects from maintenance?

Correct. Yes. So you have additional rates. So basically you add. Here you can say, I want to add an additional Rate. So if you said, okay, I'm going to be giving 30% on maintenance, 20% on projects, you can just add it from here.

Yeah.

So, like, really, really. The thing a lot of times is with the software side, people get confused with. It's like, oh, man. Like, it's a lot. It's like, look, every day you're simply going to take their time card and if they're on a. On a maintenance route, you're going to put in their. Their rate, their budget hours, and how many people in the crew. That's it. If they're on a project, you're going to create the project at the beginning, and then you're going to assign them to that project on each time card for each day they're there. That's it. At the end of the pay period, we're simply just calculating, okay, what's their base pay plus. Plus overtime versus how much they made on P4P. And we're going to pay them the higher of the two.

Yep.

Right. And so as long as you can spend literally between one to two minutes per employee per day and do their time card at the end of the pay period, it's pretty straightforward.

Like, I'll show you. I'll show you this one. So we do bi weekly pay periods. So let me just go back to last month. So like, okay, this is my Bellingham shop. See what they got here.

Okay.

So assuming, do you do bi weekly or weekly?

Weekly.

Okay, so this is bi weekly, but you can see here the number of regular hours. Not too much overtime, but a little bit about $6,000 of paid out in bonuses. And then you can see here, it's like when you run payroll, all you'd be doing is their regular hours multiplied by base pay equals their base pay plus overtime. Well, now I'm comparing these two numbers. Which one's higher? Base pay or P4P? In this case, it's P4P and it's this much higher. So they're Gonna make this $295 bonus on this paycheck.

So let me just. So this is a really great piece of. Where I'm getting kind of hung up is. All right, so you see regular hours here, they're obviously not hitting 40 hours. So the difference between what they would have made on hourly between the 40 hours. So let's just say it's 12.

From my understanding, you would have been closer to paying them $853 regardless if he actually.

Exactly. They just. They just went faster.

Yeah.

And no one complains when they work 30, budget 30 hours in a week and make as much as they would have at 40, no one got it right. Like, you just go down the list. Like, these guys are. This guy's made. Made 900 on a pay period. She's working 30 hours a week.

Dude, that guy down there got 2,000. I mean, he got to be. He has to be a manager or something.

No, these. These base pay is 20. Revenue is 33%.

That's incredible. My guys will be chomping at the bit for this. Dear Lord.

So it's just a matter of running the numbers. And so, for example, this is right before we switched recently switched from 33 to 25. Why? Because we raised prices and we realized everyone's making a killing, and we can bring it down to 25. And they're all still very happy.

Okay.

So making 36 an hour, they'll be happy to make 30.

So this is still the same. So if I go, I mean, Christmas lights must be different. I'm assuming aeration over seating season is the same because it's. It's labor.

Yep. So what you always want to figure out is simply, it's. It's labor revenue. So on those other services, you just got to figure out what percentage of that is considered labor revenue. So for what we do is like across the board for all treatments, applications, Christmas lights, snow plowing, all those other services that are not maintenance and landscaping that we do all the time, we Simply assume that 50% of that revenue is not labor revenue. It's the cost of the seed, it's the cost of the fertilizer, it's the cost of all this other stuff, the lights. And so then on a two budgeted hour job, right, instead of it being $200, that is a $400 job. But 200 of it's not considered labor revenue. Makes sense.

Well, if it's too okay, it's because it's two budgeted hours. Okay, Exactly.

Typically, that would be like, oh, that's $200 to the customer. Well, no, it's a $400 job, but we're assuming half of it is labor revenue.

Got it. Is labor.

Y.

Got it. Okay, understood. So basically, when you plug that stuff in and it says, hey, budgeted hours, how much you charge to the client? You need to know how much you charge the client. So if I charge maintenance, in this case, landscapes, 100 lights is 120, because.

Everything is just ran by budgeted hours. So, for example, our crew is still going to see two budget hours on that job because the labor revenue assigned to that job is only 200.

Okay.

Right. The same way on your six thousand dollar project, five thousand is considered the labor revenue. So they get 50 budgeted hours.

Yeah, yeah, got it, got it. Okay. I'm tracking, I'm tracking. It's easy.

Yeah. So you're already doing a lot of the hard lifting as you use budget hours. You have, you have hourly rates. And then the beautiful part about this is as you, if you use the system, you start getting efficiency scores on every employee. Because efficiency scores budget hours divided by clocked hours. And having that number will delineate who is the high performers and who's the low performers.

Well, let me ask you this. Do you, so let's say you and at your location, other side of the U.S.

Do you, do you give them, let's say that's a crew of two. Do you give them split between 25% or do you give like 13 and 12?

Yep. So basically what happens on a time card. Here, I'll show you.

So here in the time card, if I do two, it splits the number of budgeted hours.

Yeah.

So automatically. So in your example, if someone makes a hundred dollars of labor revenue.

Yep.

They're both going to make $12.50 because it's assuming 25 is the rule.

Yeah. So I'm just, I'm mentioning like, so we have a crew lead here makes about 18 to 19 an hour and then our crew member makes like 15, 16. So would you split that 12, 5 to say crew lead gets 13, crew member gets 12. What's the thought?

Totally up to you. So, okay, we have it a flat across the board because in our opinion, it's like if you're gonna be more experienced and be better, you will earn more money. That being said, when you have an actual crew leader, like a driver, and then other people are not drivers, what you can do is you can say, okay, if you're not a driver, or you can tie it to even tenor or skill or whatever you want to do, or even certification. Some people do. And then they can step up their percentages. So you're, hey, you start at 20, you can work yourself all the way up to 30% based upon these criteria. Right. And if you just want to make it binary, you could say, okay, you get 20. If you are a non driver, you get 30 or 25 or whatever. If you are a, you drive the truck or you're a lead, for example.

Okay. Now do you add like bonuses? Let's say, yeah, reviews, you know, whatever.

So that's all through your manual adjustments. So manual adjustments can either be positive or negative. It's also going to account for things like equipment maintenance. Because on equipment maintenance they're clocked in.

Yeah, yeah.

But they're not making any labor revenue. So if you think about from the example of like P4P is going up as you make revenue, base pay and overtime is going up as well. And then at the end we just pay the higher of the two. Well, in the case of doing equipment maintenance, base pay is going up, but labor revenue or P4P is not. So we need to manually adjust this so they're not penalized for doing the equipment maintenance. So then you'd just be making a manual adjustment to either P4P. Or if you want to do like a bonus, I would actually, actually be technically manually adjusting both of them because I want to ensure they get the money even if they hit base pay. So when you make a manual adjustment in here, it's going to ask you like, are you doing this to P4P? Are you doing this? A payroll bonus? In other words, guaranteed in the bonus reports versus P4P, they might get a P4P, no manual adjustment, but they just stink the rest of the week. They're not actually going to see that money. So. So equipment maintenance, I'd be adjusting just the P4P because they're clocked in, the base pay is still going up. I just need to manually adjust P4P. In the case if I want to give a 50 bonus to a new customer, referral type situation, I'm going to do a payroll bonus because that's going to get tacked on no matter what.

Got it, got it. No matter what they do. Got it. Got it. Cool. And can you set pre like deductions like hey, you're late for the third time at 10 minutes, whatever.

Oh yeah. So you have the mark late. And then also if they don't show up, what you can do inside of the each user, it keeps track of all of their call outs, etc. Boom. Mark dates. So let's say they were late, you would have been able to check it from the time card. But let's say they didn't clock in. So therefore you have no time card. You can just go in here and be like, oh, they are a no show or a call out. And then at the end of the quarter, for example, if you're doing profit sharing, it's tied to this. You can just come into their user account and see all of their Mark dates for that period of time. Cool. So if I was you, John, what I would recommend is like do one crew, just run the numbers in the background on a trial. Use a different email so you get another trial month. Run one crew and just see what they'd be making and then play with the percentages. So even if you're like, hey, I don't think I can afford the 33%. Okay, great, let's start at 25. If they were making 25% what they'd be making now, this is the thing. When people do this and they don't tell their crew, they come back like, well, there's not really much incentive. It's right around that they're going to be making the same amount. Here's the problem. They're not actually incentivized yet. On P4P, you haven't actually told them if you work faster, you will make more money. And so we typically see a 25 to 30% increase in efficiency when you actually tell them. So if they can be making 17, 18 bucks an hour on P4P, when you're running on the background, just know that they're probably going to make $23 to $24 an hour if you actually institute the system. And if you're like, well, I can't afford it, no, it's costing you the exact same amount. They'll just get the jobs done faster.

So how do you roll that out? Let's say that you do it at 25% and they're really not making money yet. Then say, hey, guess What? I'm running P4P now. Let's track you.

Yep. So in inside of P4P University, there's a video on the exact process for rollout. So the first one is what I just told you, which is run the numbers in the background without telling anyone and expect them to be about the same. Like they're. You're like, there's not much bonus here. Then what you're going to do is for two pay periods, I would probably do three or four. Since you're weekly, you're just going to tell them, hey, this is P4P thing. Do very basic, you make a percentage of all the revenue you make for the business. It's 25%. If you are a non driver, it's 28 or whatever. If you are a driver, I'm going to be tracking that on the back end. You guys don't have to worry about anything. Just know the faster you work, the more money you're going to make and then what you're going to do at the end of each pay period, you're going to tell them, hey, I will give you the higher of either your base, what you're currently making, or P.

For P. So let's just convert. Would you recommend rolling this out, like as a consistent base? Let's say, hey guys, you either going to have two options. A, you're going to go with like commission. They'll understand that, hey, commission or your base pay. Like, you're not going to choose the two. So what I mean by that is if one person chooses to do P4P but they actually make 19 an hour, their base is going to go down.

Yep. You do not, do not want to have a split. You do not want to have a split because you're gonna have a. Two different cultures evolve. These guys are motivated to push and haul. They, these guys slow them down.

Ah, valid.

So either, either a, either A, you have split base pays, which I, I'm not a fan of, but assuming you have some sort of way to delineate the difference between a 17 and a 19. Okay, fine, that's fair. I like having a set, which means the 19s are going to have a little bit of a drop. Those are the ones that you're going to have to convince the most, but they're also likely the ones that will make the most on P4P it. And so what you do is you do this pay period things. Hey guys, we're going to do $17 per hour base. You can even go lower. I think you might be able with 16. You can book another call once you've done a couple weeks of, of testing if you'd like. But like, I would probably go with like 16. It's going to be a bit of a drop. But what you do is you tell them, hey, we're going to do an entire month for pay periods where you guys get to choose. Do you want P4P or do you want your what you're currently making sure so there's no downside for them whatsoever. And then what you do is you just pick the best performer each day and show how much they made from the software. Just screenshot it and send on like your chat of like so and so made an extra 50 bucks today. So and so made an extra hundred dollars today. And you start showing that it's actually real. And then at the end of the pay period, you just literally show both of them, like, which one do you want? And if in. In. And if you're doing it right. Most of them will have all four pay periods where they chose P4P. And then you just say at the end of this month, we're going to vote on which one we want to go with.

Yeah. So let me ask you, this is a very serious question in terms of how we'd begin to transition between, like, full throttle. I Wish I was 100 residential. I'm not so commercial, like, crushes us. So we have two commercial days. One of them is full commercial. One of them is split commercial residential. So my problem is, is how do you take a yearly contract? I'm assuming what you would probably do is what you would have charged them per visit is what should go to them at that point instead of, hey, I get $2,350 pay period, let me split it up into four. Rather you would say, hey, it actually cost me $835 to do this one mo then your residential most together.

Yeah. Like, so I'm not sure how you set up contracts in lmn, but do you set up a step, a whole bunch of different visits with assigned budget hours for each?

So we just, like, rolled into lmn, so we haven't even got that far.

Okay.

Yes, basically.

Yeah, basically how it works. So, like, I'll use the verbiage of copilot. I think it's pretty similar an element. It's basically like, hey, I'm training the customer the same amount every single month, but the scope of work changes dramatically. Like, if I show up today and I'm just mowing great, in next week, I'm doing a leaf cleanup. It's going to take me five times as long. So you can't be paying the guys the same amount of money, I. E. You can't have the same amount of budget hours on every single visit. And so really what it comes down to is having budget hours assigned correctly to each visit and each service inside the contract. And this is likely how you built the estimate. Like, you probably said, hey, we're going to have 30 visits of mowing and eight hours per.

Yeah, yeah, right.

So I just don't know how it's set up exactly. In Elmen, like, for us, we have budget hours assigned every visit. You literally build all these visits, and then you just have a. Underneath a, you know, a contract where you paying. You're paying a set amount per month to the customer. But internally, we see these as separate visits. So when the crew shows up, they only see the mowing this week, but next week they're going to see Mowing and the leaf cleanup, and we schedule them all differently. I just don't know enough about lmn. That is going to be a little more tricky if you're not doing budget hours assigned to every visit right now. Like when the crew shows up right now, do they see the entire scope of work or just what they're supposed to do for the day?

Just a lawn mowing line item and.

It have a certain amount of budget hours.

It does. When I first bid this, I've had this for three years. When I first bid it, I was like, yes.

Yeah, yeah, yeah. As long as you have budget hours, that's all that matters. Because now, at least now we'll have a benchmark of how long it should take. And the guys will tell you do if it's incorrect.

Okay.

Like with P4P, your crew keeps you. Keeps you honest on pricing, because if your pricing is off, they'll be like, hey, boss, I crush it. And then this one day on commercial, I'm losing my shirt on P4P.

Yeah. So. And now here's the reality and the honest honesty of, of my Monday. My Monday is $2100 for 4:35 budgeted hours. There's. There's no way they're going to get a bonus on Mondays. Zero chance.

So then this is what you, you can do. You say, hey, we're going to artificially increase budgeted hours on these jobs. And we're going to do that to make sure I don't penalize you all for the fact that I underbid this job. Because increasing budget hours only affects how much they get paid. It doesn't affect the contract value. And so if you want to save face with them on P4P, I would increase their budget hours. Hey, we're going to do this until we can raise prices to actually warrant that number of budgeted hours. Because remember, we calculate how much they're getting paid based on budget hours multiplied by the rate that equals labor revenue. In this case, usually how much we actually charge the customer would be the equal of those two. In this case, you're going to artificially increase budget hours so that it's more labor revenue assigned to them.

Okay. Yeah.

Cool. Hey, best of luck. Do the first part. And then I'd really Recommend There's. In P4P, there's a video of me going through the rollout process. And then at the end, everyone votes. And usually when that happens, you're gonna have one or two people vote against it. Those are usually your lowest performers. You roll the thing out, they'll leave and everyone will pick up their hours.

Okay, so getting on the trial, how would I go about doing that?

Just. Just use a different email than you did in the past. Go through p4psoftware.com Sign up. You should be good because the first 90 days. The first 30 days are free.

Okay. Because I didn't. I didn't see that on there. Um, or you just kind of go. Go through logon and go through that process.

Yeah. You basically have to. You get signed up, but then you don't get charged for 30 days. So if you want to cancel, just cancel before the end of 30 days and you'll be good.

Awesome. I cannot wait to tell my wife that I spoke with my candy today.

Best of luck. You want me send you a recording? She can watch it. You can convince her.

Oh, heck yeah.

Cool. Leo, could you send it to him after?

Yeah.

Cool. Thanks, John. Best of luck to you, man. You'll care. Good luck. Bye.