Employees Lose $600, The Rollercoaster of Business & I Want To Quit

Welcome back to the Landscape Business Course Podcast. Listen while you work edition. Today we got three great segments for you. We're going to be talking about how one of Our employees lost $600 from this one simple mistake, as well as why most entrepreneurs will quit and three actionable steps if you feel like you want to quit your small business and how you can stay in the game. You can find the full length video episodes of these segments over on YouTube under Mike Andes. But let's just jump into it and talk more about how setting clear, objective standards is the foundation of building a strong culture. Here we go.

This question actually came from Landscape Business Courses Facebook group which you can join for free on Facebook. And this is the question Jose wrote in and said, what's your policy on being late calling in? I have several guys that are otherwise rock stars on P4P that's pay for performance. You can learn more about that p4psoftware.com but are constantly late. I don't feel like taking away their performance pay would be enough of a blow to them. Our base is $19 per hour and they're making $22 plus daily. So this is a great question. And for most of us as home improvement industries, we really struggle with getting employees to show up on time and then not calling out last minute putting the rest of the team in a bind because now we're all scrambling for supplies, materials, trucks, etc. And having to reschedule jobs. So this is my response. I'm going to talk about some of the differing opinions that came against my thought process. So I said we use profit sharing program to discourage unexcused absences or tardies. Last year someone showed up 15 seconds late, cost them $600 plus on quarterly profit sharing. Half is deducted. Check the two page P4P document or the P4P book for more information about profit sharing. Now one person wrote back and said, I apologize for saying this, but that's ridiculous. 15 seconds. If I was an employee at that would make me delusioned. I wrote back and said, but where do you draw the line? 1 minute? 2 minutes? A standard is only upheld if it is enforced. Otherwise is a suggestion. He stayed on talking about the employee that was 15 seconds late. He stayed on and wasn't late again and again. I'm not reading these to make this person look bad. This is a matter of a good debate. This is a good topic of debate. Then he wrote back. He said, there's obviously context here that I'm missing and I agree on standards But I wouldn't penalize a guy for 15 seconds. That's splitting hairs. I wouldn't even give a warning for that. If a guy is under 5 minutes late, I wouldn't penalize. Between 5 to 10 minutes late I would penalize, but only after having given a warning and had a conversation. That would have been a red light on the way to work or a watch out by 15 seconds. Getting penalized 600 for 15 seconds would be a slap in the face for three months of hard work. At least that's how I'd feel. So I responded back and I said I will try and make a video about this. Good debate.

So if your team meeting is at.

6:50 they aren't late until 7:01. That would be 11 minutes. But they're okay at 6:59 because that would be nine minutes. Buffers are subjective and if I am going to tie to someone's pay or their livelihood, I want to be crystal clear what the standard is. 6:51 is late. Yes. 6:50 and 15 seconds is as well. And so it went back and forth. You can check it out on the Facebook group. There's other people chiming in. I want to talk about that today. Because basically what we do is we have pay for performance where every single day the employee make is a percentage of the labor revenue that they earn for the business. However, because they could be on a crew with somebody else, one person could show up 15 minutes earlier than the other person, get the truck ready, get all the materials and the equipment ready for the day, and then someone else show up 15 minutes later, hop in the truck with them and they make the same amount on P4P. So what we do to ensure that everyone shows up on time is like, look, if you're one second late and you are going to be deducted half of your profit sharing. Not P4P, not pay for performance. We do not touch it. It's like sacred. But when it comes to your profit sharing, we give a quarterly profit sharing to the frontline fuel workers every single quarter. And they have to work through the entire quarter. And when they get to the end of the quarter it simply comes back to did call out. Which for us they have to give us two hours. Heads up. You don't call out prior to two hours. Like if you were up all night throwing up, you could let us know you don't need to wait until 7:55 and you're starting 8 o'. Clock. That would be considered an unexcused absence and you would lose half of your profit sharing. The same thing goes for being late. If you are one minute late, you're going to be considered late. And that is a definitive standard, in my opinion. Employees want standards. They don't want ranges. They don't want. Well, it's based upon some subjectivity. That's what I just get so disillusioned by as an employee. It'd be like, well, what is the standard? I want to succeed. I want to achieve more. I want to excel inside this company. I want to make more money. But I need standards. I need very targeted, clear goals and metrics by which I'm being measured by that determines my pay, that determines who gets promoted. These are the things that employees, I feel my opinion, that's what they want. They want to know how to get to the next level of their career. They want to know how to make more money. And if we have arbitrary, subjective standards in our business, that's what leads to disillusionment. That's what leads to frustration.

Because if someone wants to make more.

Money and the only way to do that is to talk to the boss and ask for a raise, it's like.

Well, I have no control.

I can't control how much money I make. That's why P4P is so important. It's very definitive. It's a very standard metric way of determining someone's pay based upon their performance. Not if they like the boss or the boss likes them, or if they need the money or they ask for a raise or if they've been around for a long time. The same thing goes for being late and for unexcused absences. Like, employees want standards. They want to know what's acceptable and what's not. They want to be able to judge each other and themselves on what is the standard. And like I said in my Facebook message, I truly believe that if a standard is not upheld and you don't fire and make punishments based upon that standard, it is not a standard, it's a suggestion. And if I'm going to give ranges and subjective measures of performance, it's very difficult for an employee to know how to get ahead, to know how to succeed at their job. And so, yes, this specific case happened, we give that quarterly profit sharing as long as they did not show up late or have an unexcused absence. If they have one of those, an entire quarter, it halves their profit sharing. Now, the specific quarter that I was talking about, we had over $1,200 in that quarter for profit sharing. As long as they just showed up and they did not call out and they showed up on time. Most of the team showed up 15, 20 minutes early. So it's not too much to ask someone just to show up on time.

Most people show up early, they're rolling.

Out of the shop by the time that we are requiring them to be at work. Like he said, the context that he's missing here is that on P P showing up late, when you're working with another crew member, another team member is going to lead to there being friction because now one team member is doing all the prep work. When else when someone else is showing up late. That's not fair. And that's ultimately what will tear apart a culture, a team, where there is not standards, there's not objective standards, and there's not clear and measurable ways to determine how to succeed inside of that organization. That's a culture that becomes fragmented. That is a culture where people start to get disillusioned. That's the culture where people start to look for other job opportunities, where they can actually see a path, path forward inside that company to be able to make more money and get ahead in their career.

Hopefully you guys found that useful and can already start thinking of some own ways that you can implement this in your business to start setting those clear, objective standards. Before we jump into why most entrepreneurs quit, I wanna let you guys know about this great tool for improving your business. The MBA for Entrepreneurs. This course walks you through a step by step guide on exactly how to grow your business, strategies for actually running a business, and so much more. Check it out with our link in the descript for the MBA for entrepreneurs. But let's jump into it and hear how the efficiency of your team matters. Here we go.

Today I'm talking about why your small home improvement business seems like a roller coaster. Now a lot of people will talk about the rollercoaster of demand and that's tracked behind me. You know, during the winter, typically people don't need our services as much. It's very generic. Obviously you live in places like Texas or Florida. This might be somewhat more stable, might have more 12 month mowing schedule or people want projects throughout the winter even cause there's not much rain, et cetera. But for most of us, this is what kind of our demand curve looks like. We don't really have a lot of work in say January, February, but as we hit March, et cetera, it gets very, very busy. And this is what we call the spring rush. So it gets very, very busy. This is when tons of Leads are pouring in, the phone is ringing off the hook. You literally cannot get to all of the estimates. And it's really just a restraint of how many employees can I find. This is the demand curve of most home improvement small businesses. Now, this is the reason why small business in this industry is so extremely difficult. Is that what we have to do in order to come and get ready for this demand, this massive ramp up right here? What do you have to do? You have to hire a bunch of employees. And when you hire a bunch of new employees, what's going to happen is they're gonna be less efficient. So now let's track on this graph what the efficiency of your employees looks like over the course of a year. So this is gonna be efficiency.

All right?

So efficiency is gonna actually start pretty high throughout the winter because your employees that are staying throughout the winter are usually most experienced. They've been with you the longest. They were there all of last year, and that's why you're keeping them on. And so your efficiency is actually really high, however, because demand is really low. You actually have the least amount of profit because there's not much demand. Your revenue is probably really low, even though you are doing it really efficiently, because your employees are the most experienced. But this is what's crazy, and this is the part that I want to talk about today, is when you start hiring, you're getting ready for this ramp up demand. So usually what we do, we start hiring in March, February, March, et cetera. And so all of a sudden, our efficiency drops.

Why?

Because we're getting new employees. They're not trained up, they're not efficient, they're not skilled enough. They need experience before they become actually efficient. If you're wondering about the watch, it's very big. It's from Ryan Payne, who is one of our owners at Augusta Nation. He got it for me and I really appreciate it. It's very big. You know what they say about people who wear big watches and drive big trucks? They're compensating. Okay, so let's go ahead and this is what I want to show you. You're hiring all these new employees, and because you get all these demand new customers.

What?

Do new customers also bring more complaints? Why? Because the customer's been with you for a long time. They don't have as many complaints because they know what your service is like. They know the service schedule. They know how you do things. They know how your backend works. So as you're getting more customers in this massive demand of spring Rush. Also, you're having less efficient customers and the customers. Sorry, less efficient employees. And the customers that you're getting, all these new ones are going to be the ones that complain the most because they're not used of your services. So again, our efficiency is low. Now, as the time for the rest of the year goes on, typically your efficiency kind of looks something like this. And that is, over the course of the year, the employees that stay with you throughout the year become more and more efficient. Now, there's two things I want to point out here. It's not necessarily to say that when your employees are the most efficient, that you make the most profit. Where most of us actually make the most profit in the home improvement industry is this part right here, where we have sufficient demand in order to stay busy. We're not hunting for leads. They're still coming in, but it's not like we're 12 months booked out. We're not like way booked out. However, our employees are efficient because they've been with us for several months. This is usually where most of the profits in the home improvement industry are made about, from about June to October. Those are usually the months where we're the most profitable because demand isn't crazy to. We're getting all these new employees, new customers. Everything's going wrong. Lots of callbacks because customers don't understand things. They're getting mad about whatever. They leave online reviews. It's very stressful at the same time that that's all happening. All these new customers, you got all these new employees that have no idea what they're doing. They break stuff, they mess stuff up, et cetera. So this is the roller coaster of small business. And this part right here, this spring rush, usually kind of ranging between March and end of May. That kind of few months there, March, April, May, June, kind of in this area here, you're ramping up demand and ramping up the number of employees, thereby having a massive decrease in efficiency. This cross here, this double cross, is where profits are their lowest. Absolutely the lowest during the spring rush.

Why?

Because demand is high. New customers, inefficient. New employees also inefficient. Cause they're not skilled. They make a bunch of mistakes. And that is why right now, as I'm talking right now, we're in the middle of May, and for the past couple months, most people are in this trough. They're in this trough of efficiency, all right? New customers and new employees creates inefficiencies, and it creates less profit. So why am I making this video, you've gotta remember, this only happens if you stay in the game. If you keep your employees, don't let them. Don't keep burning through employees. What happens if you do that? You're gonna do this and you're gonna be inefficient. You're going to be less profitable all year long. What you should be doing right now is focus on how do I retain my employees? How do I focus on keeping the customers that I got in this massive demand rush and keep them so this happens the rest of the year. And that is why the majority of small businesses in the home improvement industry go out of business right here. And that's between May and July, because they've gone through spring rush, they've lost lots of money, they've lost a bunch of employees. All their new customers are really mad. They're super inefficient. And because of that, they start to give up. So I encourage you, keep your employees. If it means if you gotta stop taking leads, if you have to stop this massive demand curve by saying, hey, you know what, we're gonna restrict leads a little bit, that's fine. Just do this. And that way you can retain your employees, you can go out and train them and coach them and make sure that they are efficient and they know what they're doing and aren't making a bunch of mistakes so that you can keep them and stay on the trajectory of more efficient growth throughout the remainder of the year.

Hopefully that painted a good picture for you guys on how efficiency of your team versus demand drives that roller coaster in your business. Before jumping into some of the burdens that may make it feel like you want to quit your business, I'll let you know about Lawn Care Bookkeeper. This fantastic service takes the hassle out of running payroll and keeping track of your books, allowing you to focus on what matters. Get back to running your business, and check out lawn care bookkeeper.com. but now let's talk about three actionable steps to stay in business when you feel like you want to quit. Here we go.

Hey, everyone, it's Mike Andes here. And maybe right now, when you're watching this, you're a small business owner and you feel like quitting and you're overwhelmed because employees have left you, customers are mad, there's projects that are going south, you're losing money, maybe payrolls has bounced, and now you're trying to figure out how to get debt and another loan to make it through. Maybe it's a spring rush and just completely drained physically from all the work and the long hours and no sleep. And that's who I'm talking to today. And for any business that's great, the ones that have been around for 20, 30 years, it's not that they haven't had problems. It's the fact that they never gave up during the low lows. And I've talked about before, try to have higher lows and lower highs. A more stable approach to the psychological and mental roller coaster that is business. I want to talk today, though, about when you're in those low moments. Because I've been there. I've been there borrowing money to make payroll. When things bounce and you're embarrassed and there's not much money in the account and spring rush and customers are just pouring in and employees are walking off the job, they don't like you, you're getting negative reviews, you made a big damage case. Projects are going south, and you're losing your shirt on them and the customer's unhappy, and none of the crew wants to go back and work on the project. I've been there. And so today, I'm gonna walk you through the steps to make sure that you don't quit. Because in that moment, that's when most people will quit, is in those low moments. The goal in business, though, is to get through the roller coaster and get through those low lows without quitting. Cause quitting is the only way to fail in business. I like the analogy of boxing in business, but the thing that's different between boxing and your business is, is that with boxing, there's a finite number of rounds. You only have so many rounds, and then the game is declared a winner. In business, every single day is another round, every single season is another round, every single job is another round. And ultimately, as long as you don't give up, you will win the game. It's not a matter of who wins in the boxing match. In business, like, if you just get to the end of the round without staying on the mat, you're the winner. And that's 99% of the case with business. Whoever can just get to the first five, ten years of business typically does really, really well. It's just those first few years are like hell, because the low lows are so extreme. And the low lows come with financial, mental, psychological, physical pain that lots of people will give up in that moment. And so I encourage you to do, because we're all going to get beat down. We're all going to fall flat on our face. But instead of staying on the mat, you've got to get back to your corner. And the beautiful thing about business instead of boxing, where there's defined rounds and you go back to your corner at a certain time, the cool thing about business is at any moment, you can go to the corner at any moment, you say, look, I got to step back at any moment. When you're down and you're beat up, you can call a timeout. It takes some self awareness, but you can call a timeout, get back to the corner, corner and be refreshed. And in the corner of boxing, you know, they stitch up the wounds, they wipe down their face, they have them smell salt, try to get them reinvigorated and slap their face and get them back, focused back on what the goal is. And maybe they were kind of like foggy and things were a little bit spinning. Try to get them some water, get them refreshed, get them rejuvenated, get them back ready for another day, get them back in the fight. And that is who wins in business, the person that stays in the fight. So today I'm gonna give you, instead of just the washy, gushy analogy, I wanna give you actually steps to do in your small business, your home improvement business, when things are just. When you're on the mat, how do you get back to the corner? I want you to keep in mind that the 8020 principle applies in our small businesses like no other. The 80 20, 20 principle is that 80% of all the problems in your business are caused by 20% of customers. All 80% of the problems in your culture and your employees and your team is caused by 20% of the team. All of your profits, 80% of your profits are created by 20% of your customers, 20% of your services, et cetera. So when we keep this in mind, what I want you to do is say, okay, what am I going to do to eliminate stress, eliminate physical stress, financial stress, psychological stress? Here's what we're gonna do. First of all, we're gonna going to cut the 20% of customers that are causing us 80% of the headache. These are the ones that are always complaining. You can never do anything right for them. They never pay their bill. All of the issues that come from us are psychological issues. Is most time. We're just, we're very good people that don't want to make our customers unhappy. We want to make them satisfied. And so there's just 20% of people you should be cutting out because that's 80% of the damage. Psychologically, that is Being created for you is the fact that they just complain all the time. You cannot make them happy. And it might not be them. It might just be the fact that your business is not set up in a way that's going to be most beneficial for them. They should go use a smaller company. They should use a bigger company, whatever it is. But cut 20% of the customers. They're creating 80% of your problems. Now you say, well, where am I gonna cut them? You're going to cut customers that are the least profitable. So, least profitable customers and services. So customers and services say, well, how do I cut these 20% of customers? Well, you're going to look and ask yourself, which customers am I most profitable on? Guess what? If you're traveling an hour away to do mowing service from your shop, they're least profitable. It's not going to be very profitable. Now compared to the guy that's five minutes down the street. Very profitable. Obviously, your pricing has to be adjusted and make sure it's correct. However, driving that far away is very rarely where I see profits being made. In a home improvement business, lots of inefficiencies happen in drive time. So what am I gonna do? I'm gonna cut out those customers. I'm also gonna cut the least profitable services in my business. I'm going to cut out the services that are literally creating 20% of my profits, but creating 80% of the issues in my business. And you know what they are? You know what services. You're like, man, I gotta do this. I've grown the business. And most people don't do this because they're afraid of having a down year. They're afraid of not having as big revenue growth as the year prior. Last year we did 200,000. The next year we had 300,000. This year we're on track for 400,000. Great. But can we just take a step back and realize if we just did 350 instead of 400 and cut out that 50, $50,000 of services, that is causing 80% of your mental fatigue. 80% of the reasons why you have customer complaints and employees being disgruntled is because that $50,000 in this new service that you offer, just cut it out. Realize that by doing that, you will stay in the game. Yeah, you're not going to have as much growth. Yeah, you're not going to hit 400,000 because that's an arbitrary number. You threw up at the beginning of the year. Yeah, you're not going to hit that. But staying in the Game is the only way to win. And as long as you, if you just push, I'm gonna get to 400. I gotta get to 400. We're keeping these services, we're gonna keep these customers. I don't say no to customers. I take all services. I'm just doing everything for everybody. If you keep that mentality, you'll stay on the mat because it's so overwhelming to stay in the game. And what I'm telling you right now is step back, get in the corner and start cutting out those customers that are causing that stress. Cut out the services that are least profitable that you're driving way far away. And you're only doing it for an arbitrary growth number that you put up at the beginning of the year. The next thing I want you to do is I want you to cut the least profitable lead gen. This is one that's new. This is the one that these other two you've probably heard before, but this is the one that I actually think is really important because it leads to number one and number two. And that is I want you to look at how you generate leads. That's what leads, lead generation. How do you generate leads? Whether it be an estimate request form on your website, whether it be through web chat from someone coming online, whether it be someone giving you a phone call, whether it be someone sending you an email, whether it be an existing customer replying to a newsletter, all of these are ways that people can notify you. You know, they can come through Facebook messenger, they can come through, they can go through Google messaging on Google, they can come through nextdoor. There's a bazillion ways leads can come to you and leads are generated. But I want you to notice something. 80% of your customers that come from these platforms, only 20% of them are really good. I want you to focus on them. If you only are getting your highest quality leads and they're being generated from recurring customers that are already on the books, existing customers that you've already done service for, focus on them. They're the ones that live with the less, the least amount of problems, the least amount of complaints. They're the ones who accept the highest closing ratio, they're the ones who don't question you on price. They just accept the job because they know you've done a great job. So I really want you to think about, well, where are my leads coming from and should I actually turn off certain types of leads? Should I turn off the person that wants to meet me for an hour and talk about their project when someone else is very happy to take an estimate over the phone, put a credit card file and just roll with services. Oh, no, I have to meet you. Well, you might be part of the 20% of people I don't want that's causing 80% of my problems. I truly believe if we cut out 20% of the customers, 20% of the services that you're offering, and we cut out the least profitable ways, that leads are coming into our business, Whether it be from online or existing or new customers, or coming from a new marketing campaign. New leads are great. I understand new leads is what fuels growth, But I truly believe they're the least profitable type of new business. I'd much rather have $100,000 in new revenue coming from existing customers. Why? Because I'll have a higher close ratio. I'm going to have a higher profit margin. They're going to accept things more, they're going to complain less, and that's where I want to be focused on. So why would I go spend a bunch of money on an ad campaign on Facebook when I haven't tapped into my existing database and asked them for services? I should be cutting out the least profitable lead gen, which in this case is I gotta go pay for leads in Facebook versus free leads that are sitting in my inbox because I've done work for them before, they're in my database. I can just reach out to them and tap into a lead gen stream that is much more profitable. Now you say, man, that was pretty deep. Okay, great. These are the three things that are gonna allow you to get back in your corner. This is like the water in your face. This is like banding up some water. Get focused. Step back a little bit. Yes, Revenue might drop down if you cut out services, you cut out customers. Yes, it will. But guess what? You're gonna stay in the game. And right now is the hardest time for home improvement businesses. After the spring rush, when you had massive amounts of demand and you've been working crazy hours and you've had the least amount of efficient workers because they're all brand new, this is when most people give up and quit. There's financial stress, psychological stress, mental stress, physical stress. Everything is just pounding you in the face. And people like, oh, I gotta stay in the game. I gotta keep these customers. I gotta keep doing this day on day. And every single day you just feel like it. And eventually you get knocked out and that's when you lose. I encourage you. Step back. Do these three things get back in your corner, refresh yourself, and then step back in the game stronger than ever. That is what leads to longevity, higher profit margins, and a company that stays in business. Cause staying in business, this is the equivalent of staying in the game. If you want a video about some of the really low lows of my business career, because I've had them too, watch this video here where it explains exactly some of the emotions you might be having that I've had. And I promise you, if you can just get through those times, success is on the other side. Not immediately. It might be three, five, ten years down the road, but it's worth every single moment.

Thanks so much for tuning into the Landscape Business Course podcast. As always, if you want to find more Mike Andy's content, head over to mikeandies.

Com.

We'll see you there.