Contracts VS Pay-As-You-Go... & Gas VS Electric Mowers

Hey everyone, it's Mike Andes and you're listening to Landscape Business Course Podcast. Today we're going to be answering questions live from the Facebook group. And before we get into today's show, a big thank you to today's sponsor. They've continued to sponsor the show to the end of this year and I want to say a big thank you to Jobber. If you haven't already, go to getjobber.com im andy's that's my last name A N D E s and try out their software. If you've listened to this podcast and you do not have a CRM or you're doing all of your book work and all of your accounting all through an Excel spreadsheet or Word documents or just through email or some app, I promise you that upgrading to something like Jobber is going to absolutely revolutionize your business and it will pay for itself by the level of professionalism that increases in the mind of your consumer. You'll be able to charge more, you'll be able to get your payments faster. And one of the things I love about Jobber so much is it allows you to send out automated collections invoices or collections emails based upon the invoices and how overdue people are, which greatly reduces your accounts receivable. And make sure you get paid for the work you're doing. Go and check out getjobber.com im andys a n D E S Last thing before we get started on the questions for those of you who have been asking, we are still accepting people into the franchise so we did fill all the spots for the November training and that's gonna be happening in a couple weeks here or week and a half now. But if you are still interested in the franchise, we are already starting to fill the slots in February so we're having another training for another 10 franchisees in February. I'd love for you to join. So if you have questions, if you want more information, go to augustalawncareservices.com franchise I have about 15 or 17 videos on there that ask or answer a lot of the questions that are frequently asked to me. And so listen to all of those and if you're still interested you can book a call with me right there, one on one and we can get the process going and see if the opportunity is right for you. So go check it out. AugustAlongCareServices.com franchise so about 20 minutes ago I posted a question on the Landscape Business course Facebook group and just asked if there were some questions that some people wanted me to answer. So I'm just going to go ahead and read them. I haven't even looked at them. And we're just going to go through them and see if we can get some value out of these. Carlos Rodriguez asks what is the most smooth way of changing yearly contracts that are split into monthly payments to either just mowing clients, pay as you go, or have them keep the contract, but pay as you go. All right, so this is kind of how Carlos is breaking it down and kind of how I look at it too. You have contracts where someone signs a contract for usually a year and they're paying a certain amount every single month. Then you have another type of contract which is you're going to have a monthly fee and it's going to not change throughout the whole year and it's going to include all these services, but you didn't sign anything. You can cancel at any time. Then you have pay as you go, which is. These are all the services we offer. Here's our menu of items. Choose what you want. You're going to get paid. You're going to pay for them at the end of, say, every week or every month based upon the services that are performed. All right, so at Augusta Lawn Care, we do both, but 90% of it is pay as you go.

But we definitely allow contracts and we use contracts especially for commercial or large residential full service people. They're gonna want that. They like that sometimes. So a smooth way of changing from this side. The extreme side of them signing is basically just to say, hey, look, here's a contract. Don't call it a contract. Here's an agreement of the services we're going to provide for you every single month and throughout the whole year. You're gonna pay X amount per month, period, End of story. You can cancel at any time. What you're going to need to do is pad your estimate more in case they cancel at the end of the season and then you don't get revenue during the slow months. If you're in a market and a demographic where you have slow months. Cause that's actually when you cash in on a signed contract. So if you have a signed contract for say $300 per month and you mow for eight months out of the year, that's when you're actually performing the work. But your profits actually start coming in the winter months when you're there for like five and just blow some things off maybe and you're still getting paid. And so.

You can change that too, though. Because the reason a lot of people get out of contract and stop doing contracts is because there's that dip in service. What you can try to do is get your property cleanups, your leaf cleanups, your trimming of bushes and other treatments that aren't specific around mowing. Try to do them in those winter months. So that way you even out the amount of workflow and on a monthly basis. So that way if they do cancel in the winter months and you're in this middle section, the middle type of contracts, if you're listening, this is tough for you to see what I'm talking about. But if you're in the area where they're not signing a contract, but they can cancel anytime, but they're paying a set monthly cost, then I would try to get as much work equilibrium throughout the whole year. That is putting cleanups, trimming, gutter cleanups, all in the wintertime. So that way if they do cancel in the winter, it's not like you're losing all of your profits. Alright, I was gonna say one other thing about that. Generally the reason most people go from signatures and signing for annual contracts to just set monthly year round, cancel anytime. And here are the services that includes the reason most people will use that middle option more is because it's easier to sell. Most people do not want to sign a 12 month contract. They don't know if they're gonna move.

Like a whole bunch of different things, right? And just they're not easy. It's harder for them to be to trust you because if you've never done service for them before, it's hard to sell it over the phone. It's generally a much smaller closing ratio. And so that's why most people will go to a monthly set fee. These are services you get throughout the year. This is the schedule that we perform them, et cetera. The reason that again some people don't even do that is because it's easier to sell a per service basis. It's easier to sell, hey, it's this much per mowing. And then once you get them on that kind of in the door, once they're in the door on say for example mowing, then you can go ahead and start upselling them on other services and pay as you go. Generally that client is not going to be as high a lifetime value as someone on a contract. And that's the value of contracts and that's the value of having that full service customer again. It's really what's your business model? What are you trying to do and what's your goals for your business that's going to dictate which one you do. But how would you smooth. Sorry, Carlos, I didn't really answer your question. How would you smooth away from that? I would first of all just not make people sign contracts. Or I would have them have a signature price and then have a price where they can cancel anytime and try to get them to go. You know, by having a little bit higher price, they'd be moving into that middle ground. Or they sign and you get an actual 12 month signature, but they're going to get a discount. And then how I also do it, if you actually want to move all the way to a la carte and you're existing currently doing contracts, pitch it to the customer as, hey, look, we want to make sure that you only have to pay for services as you use them. And so we're going to be moving to an a la carte system. Here they're, here are all your prices. Here's what you've been paying monthly and you can see that you're not paying any more. It's just gonna be certain times, some months will be higher, some months will be lower. But now you get to pay, pitch it as a positive. You're gonna pay for services as you use them instead of throughout the whole year and paying for services in the middle of winter when there's really no service being done. So always pitch it as a positive for the customer. And how is this benefiting the customer? Matt Roach asks, I would love to hear you discuss future plans, retirement, 401k, Roth IRA, anything along those lines. Maybe your plan in about 15 to 20 years, anything like that. Okay, Matt, so to be perfectly honest, I've had this question and even tonight we have an off site meeting with our whole staff at Augusta and I'll probably get this question again about retirement plans, 401k matching, like can we have that as a benefit? And the bottom line is I don't believe in them. I don't believe in 401k plans, Roth IRAs or anything like that.

And that's for me. And I'm not saying that that's for everybody. And I get the tax advantages. There's definitely benefits of having those plans in place. But the reason I don't believe them is because I know that really what those plans are in place for is really the government and Wall street.

In bed on that same. Basically Wall street knows that they need money to keep in the system and they're going to get hurt. If, when a recession comes, everyone pulls their money out. So what happens is the government's like, okay, in order to keep money, get a lot of money into Wall Street. And in order to keep it in Wall street during times of perhaps a scare or slight recession, in order to keep it in Wall street, what we'll do is we'll make sure that it's tax free going in and then it costs money you get taxed if you bring it out. And that'll keep the money in the system longer and less volatile and a whole bunch of other things. That's just one example. But I just do not believe in it. 401ks I don't believe that it's the best use of someone's money. I would much rather them put it in a whole bunch of different other financial products or investments or. And if they're only spending, if they're only putting 100 bucks a month or something, I'd rather see them put that into them, invest that in their own skills and bettering.

Their value to a corporation. Or if you're an entrepreneur, your value, invest that in a course or in some way of increasing your expertise and your skills. So I don't believe in those things. 401ks retirement, stuff like that. I'm not like you asking, Matt. Seems more like, personally for me, my plan in 15 to 20 years, I don't ever really want to retire. I love what I do. It's not work to me. Like, it's what I love. Like, if I wasn't working and wasn't building Augusta and all these things, I don't know what I'd be doing in 15, 20 years. I'll probably still, I will be still working. I'm sure I'll be doing something more along the lines of health.

Integration with technology. Those are two passions that I always had and will probably be exploring more as I have the funds to do so and things. So it'll always be in my mind in that regard and in terms of my future plans. I want in the next 10 years, I want Augusta to become a leading authority in the landscaping industry and change the level of professionalism by having a large enough footprint in terms of 500 plus franchisees that we can dictate and move the market. And so in the short term, next five years, that's what I want to do. 15 to 20 years at this point is a guessing game because things change, life happens. I could be married and have kids in that amount of time. So things change and stuff like that. But I know I'll be working and doing something that I'm passionate about. Cost. Josh asks, have you tried any electric equipment and or mowers or talked to folks who have. Seems like the maintenance and downtime would be significantly less as long as batteries hold up. Yeah. So I think electric equipment is coming a long ways. I've been watching this pretty carefully the past 12 to 24 months as I really feel it's starting to actually become commercially viable. I still feel like the cost is pretty prohibitive on the mower side like zero turns and for things like bagging wet grass there's certain issues I have too still with it. But like performance of the machines is pretty phenomenal. The torque that they have much reduced downtime, reduction in the noise pollution which is a big thing for older clientele. These are all massive wins. And so I feel like the biggest thing that electric motors have to do is equilibrate on price. And so as the cost of lithium batteries go down, or not just lithium batteries but battery storage goes down. And I think, I think the next 10 years the big thing that in energy and that's going to really revolutionize a lot of things, next 10 to 20 years is going to be a better battery. And so I don't even think it's going to be lithium. I think it's going to be something else. And so once that's figured out so many different channels of our energy system and our electrical system and just completely changed, it'll completely change fossil fuel. Anyways, I'm getting off a tangent but anyways.

I really feel like the battery technology is improving dramatically. It's now becoming commercially viable because the strength of those batteries and the performance time that you can operate them for is increasing. And so I feel like the biggest thing right now is cost. Right. So like a $20,000 zero turn mower, the equivalent in gas is still only going to cost 9 or 10,000 and so it's still double to buy.

An electric zero turn mower for example. And I'm just a big proponent of get more at cheaper. So I'd much rather buy three.

Pickup trucks that are 10,000 each than one nice 30,000 brand new pickup truck. I'd much rather get the three. I'd much rather get two 48 inch zero turn mowers than one even though it's electric. And so cost right now is the biggest thing I think that's gonna keep going down, down, down as the cost of batteries and cost per milliamp go down, it's going to eventually there's going to be a real conversation around this. Based on my experience, there's a very small percentage of landscapers actually doing this. Seriously. But definitely solar panels on the top of trucks, on the top of enclosed trailers can then become a battery bank and then charge pieces of equipment as you're driving throughout the day, which therefore increases their longevity as well. But another factor is again, like if you have a really wet, cold day and you need to be out mowing for 12 hours, still the best zero turn mowers are only lasting three to four hours of usage, so you might need it for five or six. Well, guess what, you're going to run out of juice. And so there's definitely technological advancements that are going to take place, which I think is going to be absolutely going to happen in the next few years. The amount of rapid growth I'm seeing, this space is increasing so fast. It's the cost that I think has to come down before it starts becoming a real conversation. And once that happens and more and more people start using them, they're going to refine some of the finer elements of the mechanics or the wearability and durability of the decks and things like that. But, but I'm super impressed and excited what that space has been doing for the past 24 months. Really lots of innovation there and I feel like it's going to be really good. My personal opinion is it's still an early technology that can be used as a selling feature to your customers. But from a financial viability standpoint, if you're scaling your business and have lots of crews and lots of mowing crews and things like that, it can get complicated and you can start running into some issues. So that's why it still hasn't taken off in my opinion. I feel like still some small owner operators, small crews, they can get away with it sometimes by having maybe a backup if things break, if things run out of gas, run out of electricity, things like that. But I don't see it being super economically viable right now in terms of the over the initial startup cost as well as scaling it across a larger organization. I think that's going to change within 18 to 24 months. We're going to start seeing more and more equilibrium between the two of gas and electricity.

Maria Dominguez. Sorry for that pronunciation. Maria asked how about advice for us females in the field? We help out our husbands. It's not always easy to sit in a room full of males, classes or trainings, advice, motivation. That's a good question. I've never had that question. So, Maria, I don't think you were at last year's conference, and I don't think I've said this before on the podcast, but here we go. Some people will take this wrong, but I truly believe.

That having a chief operating officer, or number two, whatever you want to call it, manager, whatever, as a female in this industry is awesome. My number two in all my businesses is a female, partly due to the fact that I am, you know, I'm a go, go, go. I'm just like, push, push, grind, I might say things. I need someone to balance that out. And I need someone that is more emotionally driven and is going to care a little bit more about people, care about customers, care about employees, things like that. I do it in a macro level, but in the trenches sometimes that can get overlooked. And so it's a great.

A lot of businesses around with the mail and the female, like in terms of husband and wife, and it's a great combo in this industry. It's killer. Amazing if everyone stays in their roles. It's very. Just the whole wife, husband dynamic and working with family is very difficult. And I've seen that time and time again. But the female, male dynamic in this industry is really powerful because the guy can't. I know the reason I don't talk about this a lot, because people think you're stereotyping and all this other garbage. But the guy usually, again, usually is going to be the one managing the jobs in the field, doing that sort of like work labor with the crews that are also 95, 99% male. And then the wife, the female can be in the office talking to customers, doing things that for most guys seem like petty but are very, very important. Answering phone calls, answering emails, making voice notes, talking to employees that are going through a rough time, empathizing with them, bringing a balance to the alpha male kind of mentality in this industry.

And I think it's a great balance. I look at companies that are completely male dominated, like 100% male in office, in management, in field, 100%. And I always go into them and I see a weakness. And usually it's around caring, it's around feeling, it's around culture, it's around caring for the customer, it's around caring for the employees. And just the dynamic of it, I usually feel something's missing. And so in terms of motivation for Maria and for other females, I think that there's a huge lack in this industry and a huge void that can be filled by having females in the landscaping industry, especially in places of management and to open up doors in so many different areas, customers employees culture is huge and so I don't talk about that a lot but it's something I did say at conference last year. If you are looking for a number two or someone to manage your business or to be your chief operating officer or the office manager, I would be looking for a female and people can call me whatever, but that's the way I look at it. So Keith Dodget asks, I'm looking into doing a website. I'm looking for a nice website but I don't want to spend all marketing budget on it. What company would you recommend to do a nice website? There are only two lawn services businesses in my area that have a website so it would be a great marketing tool for my business. I 100% agree and I'm going to defer on this question because we are actually building something for you. It's going to be announced in 2020. It's going to be something for people that cannot be a franchisee or don't you know they just can't be a franchisee. We're going to offer something that is going to basically do this for you, build a website, all of that good stuff. It's still going to be much more value if you become a franchisee. But we want to offer something for people like Keith here that's asking about this. So I'm going to defer on this question now because really right now there's two options. One, you go build it yourself. And usually I say, I used to say that a lot because I would say you want to build it yourself so you can have control over it. The problem is 95% of people who build their own website, it looks like they built it themselves and everyone can tell. So in that case it's like, well, there's no point in building it yourself. Yes, you save money, yes, you have control. But it looks pathetic. It doesn't look, it's not fast, it's not mobile, it's not responsive, it's not SEO friendly, it's just pathetic. And that's 95% of the ones that I saw people build themselves on Weebly for Square, Squarespace, like GoDaddy, all of those, they're just pretty pathetic. And then you can pay between 5 and $10,000 to get one built and then pay maybe 100 bucks in just registration for your domain, SSL, stuff like that. But the problem is that it's static, doesn't move, doesn't Change. It starts to have broken links, it starts to look dated. It doesn't get constant new content, doesn't get constant pictures and videos and things like that added. So we are trying to build a beautiful medium that basically would allow you have a custom site. And we are 95% done. But we're gonna launch it probably at conference. So that's why you should all come to conference. Landscapebusinesscourse.com conference only the people there are going to be able to take advantage of it, and we're really looking forward to it. So make sure you come to conference. That's all I can say. It's going to be an amazing deal. It's gonna be essentially what we build for the franchisees. But you don't get any branding support, you don't get any P4P. You don't get call center, nothing like that. It's just the website and it's gonna be customized to you and it's going to be a beautiful medium. But anyways, that is a diversion. I'm not really supposed to talk about that. Kosh, Josh again asks, how do you keep track of and update insurance about new equipment, equipment that is no longer used, new drives, et cetera? Do you use service autopilot for any of it? Is there an updating process? We have 16 trucks and 16 trailers and a ton of mowers, hand equipment, all which need to be kept updated for insurance coverage throughout the year. How do you manage this? Okay, so if you have financed equipment, this is super important. If you have equipment that you have purchased and you own outright, it's not as important, but it's definitely something you got to do at least twice a year to update your insurance policy. And so it depends on your insurance policy, right? So depending on the type of policy you have, again, you should talk to an insurance agent, you should talk to an insurance professional. But based on what I've seen, there's two different ways to cover your equipment. One is like more of an umbrella policy where you're going to have an amount of property insurance. And then usually they're still going to want a list of equipment, but at least you get an umbrella dollar amount. So say it's 200 grand. Hey, I want $200,000 worth of coverage. Here's all the equipment that would substantiate having that $200,000, because they're not just gonna allow you to make up a number, because you can't take a million dollars worth of coverage out on $200,000 worth of equipment. Right? But at least you have that number, that dollar amount. And then they're gonna want you to have a list of equipment. So what we do is at least twice a year, we update that list in terms of the hand tools, things like that, we don't insure those because the time it would take just to keep up with what's there and what's not, it's not worth it. Like, usually you're not gonna lose all of your hand tools at once, right? Like, usually it's gonna be a freak accident, and you lose, like, an entire trailer with, like, a zero turn, a couple hand tools, things like that. I'm more worried about getting, like, the trailer and the zero turn covered, which is gonna be like, 90% of the value of that damage in comparison to, like, you know, three or $400 trimmer and a $400 blower. Like, so we don't really ensure those smaller dollar amounts, they're covered underneath an umbrella policy. That is a dollar amount with those things just listed, and we just update them once a year. So in terms of our hand tools, we label them all with a labeler in terms of the date that they were purchased. And then they have a number that's attached and in service autopilot under assets. That's where we keep track of, like, maintenance also when things get broken, because as things get older, like a trimmer, a weed eater, for example, after three or four years, if it needs like, $100 repair, that thing's gone. Like, we're replacing it, and it's getting new equipment. So keeping track of that in your maintenance records is really important and a really easy way to do that so they don't have to even look at service Autopilot is on the machine labeling the date it's purchased. Excuse me. And some sort of nomenclature around, like, T50, which would be like trimmer 50 or like T41. Trimmer 41. And so that's how it's referred to in terms of writing things on, like, the broken whiteboard or like, the whiteboard which says when things are broken or, like, reporting it to the office. And then the office can then go into the assets and make notes if needs be. But again, that date that it's purchased and put on the fleet is put on the piece of equipment, the hand tools. And when I talk about hand tools, I'm like, trimmer, blower, et cetera. Because after three or four years, if there's a big expense for maintenance or something breaks, it might be worth just replacing it. And so Same thing goes for zero turns mower, zero turn mowers, push mowers, trucks, trailers, they're all labeled and they have a name. And then we keep track of it in service autopilot with their service records, maintenance, things that are breaking, truck keeps breaking. Like if a truck requires like a thousand dollars worth of maintenance in a year in addition to just like oil changes and it's a $3,000 pickup, there's a good chance we might be buying a different truck. And it's like an issue. But most of our trucks, we've never had a problem with that. We've only ever sold one truck because it was more maintenance than it was worth to keep. And we typically still keep a cheaper vehicle, like a cheap. We don't buy new vehicles. So anyways, hopefully that helps a little bit.

Josua Samaj asks Hey, so I get asked about other services that I don't offer, like tree service. I wanted to ask if you think I should partner up with a local tree company and refer customers and leads to them for commission or just hand it to them. The reason I ask is because I'm working on finding ways to bring more income since I'm in my first year of business. So again, everyone has their own opinion on this. My opinion is that I want to just give the lead away and get in return just goodwill from that landscape, from that tree service. Because that tree service company gets a bazillion times a day asked about landscaping. And so maybe they'll throw some stuff back at us. How to formalize that. I would meet with the owner or I would meet with the management of that company and get to know them a little bit so they know I have a face, exchange business cards, tell them you're going to be referring people to them. And also don't just we try. If we're doing, for example, landscaping job and someone needs irrigation, we try to tell the irrigation company that we refer them to say, hey, look, we told so and so to come talk to you. That way they know like that we sent them their way because sometimes the customer won't always say, hey, so like Augusta told us to come to you, so we want to get the goodwill from that person we're referring to. And sometimes you're not going to get goodwill like we do. We will sometimes refer out to cut companies that do everything we do, but a little bit more. And that little bit more is what we don't do. And so we will still refer to them knowing that we're probably never going to Get a referral from them. Honestly, it's just we feel like they're the best in that, in that category for the customer. And so we're trying to do what's best for the customer. And that might mean saying no to certain services, it might mean giving them to a competitor, it might mean just referring straight out to someone else. But in general, we will not do subcontracting. We will not take fees for our referrals. It just starts to get pretty hairy in terms of insurance, in terms of liability, in terms of the customer perception. Like, if you're like, yeah, we don't do that, but still pay us and we're giving you an estimate because we're going to have someone else do it, it just starts to get a little bit hairy. Some people build a really good subcontracting business around that model. So I'm not saying it's bad or wrong, but we tend to get distracted when we don't focus on what we're doing. Our core competency is, which is a direct relationship with the customer, building massive amounts of value where we can charge a premium. Our core competency is not building trust in order to have a subcontractor come on their property and then manage the subcontractor. Because it's very hard to tell a subcontractor that their employees can't smoke or that they have to wear certain. Like they have to act a certain way on the customer. Like, it's very hard to do that. And so I don't want to be out of that, out of control when it comes to customer and the service relationship. Any book recommendations on paying for performance? This comes from Jeremy Law? Not specifically. I will probably be writing a book next year that will detail a lot more. It's just, it's tough to write in a book. There's a couple books out there about piecework, about pay for performance, things like that, but none of them give, like concrete, like numbers and things. And so I'm going to write one. Definitely. It is difficult to convey in a book where it's not gonna go over everyone's head. So, like at conference, we're gonna spend a whole day on it and everyone's gonna build their own pay for performance system customized to their business. That's the best way to do it because you're in person, you can get feedback, questions, show examples, get feedback, like, go back and forth. And so that's the best way to do it. We're doing it at conference landscape summit 2020 in January. You should all sign up again. But I am going to try to eventually put this into a book for landscapers to develop the system and try to make it in a way where it answers the questions. And I'm probably going to make it in a way where it's like, if you understand what I'm saying right now, you can skip to this page. If you don't keep reading and I'll keep explaining more and answer frequently asked questions. Because that's kind of how it is. It's like, okay, I understand the concept. Okay, great. Now let's talk about the numbers. Okay, I get the numbers. Okay. Now let's talk about implementation. Okay, well, now let's talk about how to transition from hourly. So there's a bunch of pieces to it. And so putting it in a book might get a little laborious. So I gotta figure out how to make it interesting and then also how to make it where it kind of is customizable to the size of the company and who's reading the book and all of that. But if you come to conference, you will walk away with a pay for performance system customized to your business. Bring your laptop because you'll need to run your numbers, look at the numbers of 2019 in order to figure out what that system should look like. And so definitely, if you are interested in pay for performance and you want to build a system and you want to figure out how to roll it out and you want to go from hourly and Switch over to 100% pay for performance, or you want to have a hybrid model for like six months and then switch, you definitely want to be at Landscape Summit 2020. So on that note, I'm just gonna cancel. Stop there. I know I'm almost like 30 minutes. So one camera goes off after 30 minutes. So I know I'm at 30 minutes. So on that note, you should all come to conference. Landscapebusinesscourse.com conference. I'll see you there. It's 299, $299. It starts at 5 o' clock on a Thursday and Saturday, late Saturday evening. We got a lot of cool stuff planned and the big theme is pay for performance. But there's five other things that we're gonna be talking about and some other breakout sessions. So if you go to the website, you can see some more details, some of the things. But if you come to this conference and you walk away and say, you know what? I did not get $299 worth of value, I will refund you all of your money. I'M not interested in your $299. I want you to come and change your business, and I want to start seeing changes being made. And so the 299 covers all Thursday, Friday, Saturday. It covers four meals, two on Friday, two on Saturday, and a lot of fun. We'll give you a workbook to work your systems and write in all your numbers and things like that, and you'll meet a lot of great people. So I really do hope everyone signs up for conference.

The rooms at the conference center will eventually be booked out and you will not be able to get in last minute. So make sure you sign up now. And I look forward to seeing you then. I'm Mike Andes. You're listening to Landscape Business Course Podcast. I'll see you next.