Do THIS, and your business will run itself!

This video will show you seven secrets to be able to have a business that runs without you being there because you have great employees. My name is Mike Andes. I'm the founder of Augusta Lawn Care and I have over 100 plus employees around the world and if I left today for vacation, the business would run just fine. They'd also probably get better. Furthermore, I have two lawn care locations that I never even visit and they run well because of great general managers. I'm going to give you the seven secrets that make this possible so you so you can do the same thing. The first secret is that off seasons will keep you poor. If you have an off season, getting rid of that is extremely important if you want to be able to leave the business and not lose money. A lot of home services for three, four or five months of the year actually lose money. Their cash flow turns negative and it actually takes them until July or August in a year to actually make above zero and making profit. If you can solve that problem and not have that massive trough, you will absolutely be able to step out of the daily operations much sooner. So how do we make sure we don't have an off season? You're gonna have season specific services with season specific offers for your customers. You're gonna go to your existing database of customers and either offer them more of what they're already buying or an adjacent service to what you're currently offering that is allowed to be able to be done during the off season. For example, you might do mowing during the busy season and then during your what used to be off season, you're now going to do snow removal or you're going to do winter services like trimming the bushes, or you're going to do Christmas lights or some other service that allows the revenue throughout the entire year to be more continuous. The reason that off seasons really crush you when you try to leave daily operations is because a general manager or an office manager or a salesperson, they're usually considered overhead. And that overhead stays even if revenue dips and therefore you go negative cash so much faster compared to if you were in the business, you probably just wouldn't take any payroll for yourself during the off season. So keeping off seasons away from you will allow you to be able to step away from the business much sooner. The alternative to having an off season is having no season at all for three or four months. I've seen some business do this successfully and that is simply close down operations for three or four months so they have no wages. You can only do that if you've cut down on your overhead, secret number two is I'm going to scrutinize with a very fine tooth comb all my fixed expenses and my overhead. Now, when we look at expenses, there are really three major expenses. The first one is variable expenses. Variable expenses are usually your cost of goods sold. Your cost of goods sold are usually your labor, any money that is spent on materials, and any contractors that actually go into producing the actual work that is variable. Which means as I sell more jobs, usually my variable costs also go up. If I don't have any work, I'm not going to be buying materials. I'm not going to be having direct laborers go out in the field. I'm not going to have contractors going out in the field. So my variable costs basically vary based on. Based upon how much revenue and how many jobs I have on the schedule. Fixed expenses. So we got variable expenses. Now you got fixed expenses. Fixed expenses. As is stated, they're fixed, they don't change. And if next month you made half as much revenue, they stay the same. This is things like your rent for your shop or your office space. This is your insurance. Your cell phone bill doesn't change. If you text more this month versus last month, it's fixed. Also a big one for home services, especially if you're growing quickly. You gotta be careful of fixed expenses is loan payments. Because guess what? They're not gonna pause payments for the next six months. At least most of them don't. If you have a bunch of equipment debt or an SBA loan or any sort of debt, those are fixed expenses. That monthly payment, that mortgage that you're paying on is gonna come out every single month. So I'm gonna scrutinize those fixed expenses dramatically because I do not wanna have where I go into the slow season. And my fixed expenses are so high, I'm making negative cash flow. So we have variable expenses, then we have fixed expenses, and then we have overhead. Overhead is things that go into making the business work. This could be something like the payroll for your office employee. This could be all of the software that you need to run the business. An example of overhead expenses would be like if you have a salesperson, their wages straight overhead, and they are required for the business to stay in operation. So I'm going to really pick apart and scrutinize my fixed expenses and my overhead. Variable expenses. They'll go up and down with how much work is on the schedule. But I'm going to really dive into these two because I got to get Those down the lower I can get those fixed expenses means that when I'm not around during the off season and when things slow down, there's no chance of me losing money. And the last thing you want to do if you're trying to get away from your business in terms of being in daily operations is every ever losing money. And the one number one way to do that is get rid of the off season. And the number one way to make sure your off season you actually don't have to get as much revenue is just reduce your fixed expenses and your overhead. Now for everyone, that's like, oh no. Variable costs are very important. You're about to get your tree. The third secret is you gotta know what percentage of your revenue is going to the actual direct labor that goes into making the job happen. Ultimately in home services, or we are selling an hour of labor that costs us 25, $30 an hour and we're selling it to the customer for 100 or $120 per hour. Everything in between is the systems, the procedures, the training, and the equipment required to make that happen. And so it's very important to know what percentage of my revenue is actually going to paying the guys that are actually out and doing the work. The guys and the gals. And so if it's 30, 40, 50%, I need to know what that number is. How do I determine that? How much of all of your wages that go to frontline team members that are doing the work, what divided by your revenue is that percentage? Okay, in general, when it comes to home services, if I see a percentage of revenue that's being spent on direct labor being over 50%, that business will not make money. Why? Because that only covers the direct labor. That doesn't cover the cost of the materials contractors, it doesn't cover the cost of my fixed expenses, and it doesn't cover the cost of my overhead. Oh, and at the end, I should probably have a profit over at the end of that. And so if more than half of my revenue, total revenue is being spent on direct labor, usually that home service business doesn't make a lot of money. Again, wages is probably, if you look at your profit loss statement, the biggest expense you have. So we have the direct labor, but we also have the indirect labor or the admin. I don't want to be spending more than 20% my revenue on admin. Now, I personally consider admin as the rent for my office space, the wages for my office folks, and all the equipment required to be able to have them operate Inside of that office. I don't want that over 20%. I shoot for between 8 and 12% of what I make at my locations. I want that going to command center. They cover all my admin stuff. So that way I can focus on everything else with the daily operations, with the general manager. But, but in terms of my admin, I want to be shooting under 20%, which means buying a big fancy shop space is probably not the right move if you have a $200,000 business. Once you get a million plus dollar business, you're in profit mode. You've been around for five or 10 years. That's when investing in real estate in a bigger shop space might make sense. But if 10%, 15% of your revenue is going out the door to shop space, either rent or a mortgage, it's likely you're not going to have enough meat on the bone to actually be cash flow positive. Because If I'm spending 30% of my revenue on just the cost of my admin and then I'm spending 50% of my revenue on just direct labor, that means I have 20% left over to cover all the other expenses in my business. You won't make any money. That's the bottom line. The fifth secret to having a business that can run without you in daily operations is having hiring and training systems. That means having a system to attract people to come to an interview, having interview questions, they actually accept the job offer. Having a system for onboarding them and then training them, which means having a system for the trainer, having a system for the trainee. So when they show up to work the first day, it's all like, here's your uniform, hop in the truck and go. It's like, okay, let's go over the procedures and the policies for the business. Let's go over who's going to be your trainer. Here's the checklist of things we expect you to know in the first two weeks. So at Augusta Lawn Care, we give them a trainee checklist that they're required for their day one and day two, they're going to use a stick edger. Day three and four, they're going to use a blower. Day four and five, they're going to use a push mower. And then day six and seven on the week number two, they're going to actually use a zero turn. Then they figure out the trailer and the truck. These are all different tasks they're required to do. And a trainer is supposed to sign off on each task as they get completed. This assessment is the Type of thing you'll want to create systems around when it comes to hiring and and training your employees. By doing this, you're gonna be able to make sure that you don't have to be there to be the expert at hiring, the expert at interview questions. Just make the questions that you would ask and then have the interviewer ask them and write down the answers. These sort of systems will allow you to step away from the business instead of you being the master juggler that has all the answers to the business in your head. This also means having systems in place to be able to take your really hungry employees that want upward mobility and giving them something to chew on. Whether it be audible programs and audio books, or meetings about how they can get to the next level of their career. That's all part of the system and having a way for them to have upward mobility inside the company. Whether it be learning how to do estimates or learning how to equipment maintenance, or becoming a general manager or starting their own location. Having those systems in place will allow you to have a much stronger culture because no longer do people think this is a dead end job because they just got a part time deal at the local lawn care service, now they can actually see upward mobility in a way to get more money and get to the next stage of their career. The sixth secret to having a business that runs without you in daily operations is having profit sharing and open book management. Now I understand that you worked very, very hard for many years and it took a long time to become profitable. And now you're like, I'm going to give my profits away to my employees and they just showed up here two months ago and I'm going to be giving them piece of. Yes, I'm going to, I understand that inclination, but you want to give them a piece of the pie because if you give them a piece of your success, guess what? They'll make you more successful because you give them a piece of the action. And so if you're really making a ton of money, give them a small piece of it and they'll want to make more money. And then if you're not doing good, like, well, what do I do if I'm not making any profit and there's no profit sharing to have. That's when you want to have openbook management regardless. So either way, I need to have openbook management which is sharing all the numbers in the business with my team. Whether I'm making a bunch of money and I'm giving them a piece of profits or if I'm making no money. I'm still gonna share the numbers with the team, even though there's no profits to share. Why? Well, because if you're not doing good, you need everyone to band together, rally together, and understand just how bad the situation is. Otherwise, they're just gonna look for evidence that you're making tons of cash. They're gonna look for the new truck that just drove in and be like, they're making a ton of money because I bought a brand new truck. And in your mind you're like, well, we are four weeks behind and we can't find any employees. And so I went into debt to go buy the truck so we can get some of this work done for our customers. They're not gonna think that, though. They just see new truck, the owner is making a bunch of money off of me. And if that's not happening, prove it to them. If you want people to be able to work harder for you, it's probably better idea that they like you. And the number one way to make sure they don't like you is to hide things from them. Cause if you feel someone hides something from you, you probably don't trust them. And if you don't trust them, you don't like them. If you don't like them, you're not gonna work as hard for them. And instead of trying to actually get more work done through, they'll just spend their time trying to plan your demise. That's when they siphon gas out of the truck. That's when they try to damage equipment. That's when they say stupid stuff to customers to try to make your business look bad. So they don't like you. They probably don't like you because they don't trust you. And you're not gonna share numbers with them. And you're gonna hide things from them. They probably aren't gonna trust you. So my recommendation is open up the books, show all the numbers, and then give them a piece of the action. So when you make a lot of profit, they get a piece of that too. The seventh and final secret to having a business run without you and you being out of daily operations is 3M. What does that stand for? Money Motivated Managers. You say, why do I want money motivated managers? I want managers that are going to take care of people and take care of their customer. Guess what? When you're gone, you need someone defending the bottom line. Because if they don't defend the bottom line, you won't have customers and you won't have employees. So you need someone that's money motivated so that you can give them a piece of the action and pay them according to their performance of the bottom line. So I want people that want more money and so that they make the company more money, they defend and make sure that the bottom line is protected. They're going to cut out waste, they're going to make sure that we don't spend frivolously. If they just want to make friends with all the employees, that will work for a while until guess what, the bottom line goes negative and no one's paycheck is going to go through. So I need a manager that when I'm gone, they're constantly thinking about the bottom line and their paycheck is directly incentivized by that bottom line. I need them defending it at all costs. If you do these seven things, you'll be able to have a business that runs regardless of whether or not you're there in person. These steps will get you out of daily operations. But if you're a little bit smaller of a business and you just want to get out of the field, watch this video here. It'll show you exactly how to make a bunch of money and not have to work out in the field with the crew.