Finding the Perfect Profit Margin, Chuck in a Truck and DON'T get into Lawn Care!?

Welcome back to another episode of the lawn care business course podcast, listen while you work edition. Today we got three great episodes for you, but if you want to check out the full video versions, head over to Mike Andy's on YouTube. We're going to talk about building that perfect profit margin, what the future of the industry looks like, and hear how some people think that lawn care is a horrible business to get into. But to kick it off, let's start with the perfect profit margin in the equation that you need to figure that out. Here we go.

Today I'm going to be sharing with you exactly how much profit your lawn care, landscaping or home improvement business should be making based upon your revenue. I get this question all the time. That is how much money should I be taking home? What's considered profit? Today we're going to break it down. I'm going to give you a formula so you can run in your business whether you are above average or below average when it comes to your profitability. Now, the reason most people don't talk about this is because there are so many variables. But the biggest one I want to talk about today is growth. Because how fast you are growing your business is gonna be a big dictation of what your actual take home profit is because growth sucks cash. If you were growing a business, it takes capital expenditures in the form of buying trucks and equipment and hiring and advertising and just overall waste because you do things that are wrong as the business is growing. And therefore you're going to have to reduce your profit percentage expectation. And so when you go into Facebook groups and forums and people are like, well, I made so much money on this size of business, that's fine, but they're leaving out one of the biggest variables and that is how f you growing. So I'm going to show you the formula. I'm going to walk you through exactly how you can use this formula to determine how profitable your business should be. And so revenue is your total gross revenue for the year. So annual revenue multiplied by your profit percentage, this can either be historical or be the percentage that you're trying to achieve minus your growth percentage year over year. So maybe you go from $200,000 to $300,000 in annual revenue. That would be a 50% year over year growth. Therefore, you need subtract out 50% of profit because that's what the cost of that growth is going to be. I know these numbers are round and this is by no means a perfect science, but I think it's a good benchmark for something that most of the time people just gloss over, don't talk about or they feel bad about because they're listening to some person that put a comment that said they made $200,000 in profit on a 400,000 annual year revenue business, which is fine and good, but there's a very good chance that business is not growing. It's in its 5th, 6th, 10th year of business. And I also wanna clarify what exactly profit is. I'm gonna go over this in just a little more detail and break down what this number should be for your business. So hold on just for a second. But I want you to realize when I talk about profit, I'm looking at the business as an organism, separate from you as the owner, which means you get a salary. And when I look at a business's profit and loss statement, I want the owner's salary to be above the bottom line. Because if you're working in the business at all, if you' more than 10 minutes a week, you've gotta be taking some sort of a salary. Especially if you're an S Corp. Legally you have to be taking a W2 as an employee from that business. So even if you aren't an S Corp and you're a sole proprietor or you're a single member llc, I still want you to think of yourself as an employee and think of profit as the money left over in the bank account after you've been paid your salary. And so what I want you to think about is, okay, well, what profit percentage should I be getting? What is standard for my industry? And I'm gonna break this. And again, this is not a perfect science, but I want someone to have hard numbers that you can actually use. So how I look at this is 10% profit is going to typically be going to be for commercial work and this is for landscape maintenance. This is for a lot of big, big commercial projects and very, very stiff competition. You're up against Brightview and very big companies. And a 10% margin is actually not that bad in the industry. And again, I'm talking about bottom, after the owner's been paid money in the bank. Profit percentage of 10%. So on a $2 million business, after the owners have been paid, $200,000 would be in the bank account as profit. Now again, these are rough numbers, but 20% is what I would use for simple services. These are gonna be things like residential mowing, installing a mulch. This is going to be trimming bushes, property clips, and mostly residential services. This is where Augusta Lawn Care really focuses on is this 20% marker. And we do that because we mostly focus on simple services. We focus on mowing, trimming, bush cleanup and fall cleanups and all the rest of that. Now, a lot of times the reason people are allured to this next one is because the highest percentage is actually not in either of these things. It's going to be in custom work. This is going to be custom, it's going to be design build, and it's going to typically be hardscaping.

Very complicated forms of landscaping or even construction style work. So design build type of work. Now you have to ask yourself the question, and that is, well, why wouldn't we always go to custom design build work? In my opinion, it's the least scalable. That's why it has the highest profit percentage. It's very difficult to have a design build company or an excavation company that has multiple locations and has hundreds of employees because very, very hard to find that labor, as well as the fact that growing each of these different types of businesses is going to require something very special. Now I have some notes here. I wrote all of this down. So let me refer to this. In order to scale up or grow a commercial business, you're going to need one thing. You're going to need labor. This is why it's so low in terms of the profit percentages. Because it's really, whoever wins the labor game and gets the most low cost of labor is usually going to win the game of commercial work. And that's why Brightview and all these other players do so well is because they get massive amounts of, whether it be immigrants or H2B programs, or they just hire thousands of people, or they do subcontracting. All of that is in the realm of commercial. And typically, how you grow that size of business and you grow that type of business is through expanding labor. Now, when it comes to simple services, it's a little bit harder to scale this up, but not as hard as the last one. But it's a little bit harder than just scaling labor. And that is gonna be the fact that you need to scale systems because again, if we're doing simple services, everything needs to revolve around efficiency and making sure those simple services are done in a very, very efficient manner in order to scale up the business. So that is going to be the bottleneck or the thing you need to focus on if you're in the simple services type of business. Now, if you're doing custom design and build, the bottleneck for growth in this regard is gonna be capex that means capital expenditures. The reason it's so hard to really scale up a design build firm is you're going to need to buy excavators and bobcats and track loaders and ditch witches and all these really expensive pieces of equipment. So capital expenditures is going to be usually the bottleneck that prevents a custom design, build, construction, hardscaping business from scaling. Whereas labor is going to be for commercial and then systems. Building out systems is going to be the complex or the bottleneck part of growing a simple service based business that's typically residential. So let's go ahead and look back at this actual formula and punch some numbers in and actually see what happens when we throw in some of these numbers. Let's go ahead and assume the simple services. This is what again we use at Augusta Lawn Care. We have almost 100 locations around North America. And everyone in the system knows that the goal between the next five to 10 years is to build a business that is over a million dollars in revenue and has 20% in profit. And again, profit is after the owner has been paid. So local. The very first Augusta Lawn Care location Last year was eighth year in business. It did just under $1.6 million in revenue. It did well over $300,000 in profit distributed to myself as the owner. And that's after I was paid a salary. And I only show up there maybe an hour or so a week or less, one or two times a week. But still I still take a salary from that business and as an S corp, and I still want 20% in profit after my salary has been paid in the form of distributions like money coming out of the bank account to me. So that's what we're shooting for at Augusta Lawn Care. So I'm gonna use that as my proxy here for this example. And the reason I'm talking about this is because so many people get so distraught when the first few years of their business, they're not making any profit. They're working so hard and I'm growing my business, but I'm not making any profit. And the bottom line is cause this equation is working against you. Let's run some numbers. Let's say a first year in business, you're really, really good after it and you do $200,000 in annual revenue. And so let's again use the 20% as the goal that we're gonna have for profit percentage. So that's gonna be 20%. So in theory we should be able to have $40,000 in profit from this business. And again, that's after I've been paid my salary as the owner. So let's just say I take $50,000 out in my salary, but then I also am going to have $40,000. I'm going to write that here, $40,000 in profit. Okay? So theoretically you could say I had $90,000 from the business. But we're not going to look at like that. The salary, that $50,000 is yours. The $40,000 in profit, that 20% profit margin is in the business. However, let's go ahead and assume that you now are going to grow the business from 200,000 to $400,000 in revenue. What that means is that your growth Percentage going from 200,000 to 400,000 is 100%. Your growth rate year over year is 100%. What that means is it's going to wipe out this entire profit, that 40,000. We now subtract out 100% of that number. We don't make any profit in the business. We literally just took our salary and at the end of the day, our bank account was the exact same. At the beginning of the year, we doubled our business. And here's the part that really gets scary is you might say, okay, well, we broke even at least. But the thing is, when you go from a $200,000 business to a $400,000 business, you can't have the same bank balance. You need more working capital because you have more payments, you have more payroll. And so actually, even though it might say, you say, well, we broke even because I had to go buy trucks, I had to buy other things. That growth sucked up a lot of my cash. That $40,000 in profit. However, it's also actually going to take out more because I've got to just get my bank balance higher for working capital's sake. Now, let's say you really scale up your business, you really push it to the next level. And instead of just growing from 200,000 to 400,000 in revenue, now we're going to actually grow from 200,000 to $500,000 in annual revenue. Alright, so $500,000 in revenue imputes 150% year over year growth rate. What that means is not only am I going to lose this $40,000 in profit, I'm actually going to lose another 20,000 or 150% of 40,000 is 60 grand, which means I'm not gonna make 40 grand. I'm actually making negative 20 grand. Now, this is what gets people really, really frustrated. I'm growing my business. I'M trying to build my company and I can't even take my own salary of 50 grand out of the business. You're right, you can't because your growth rate is so high. And I believe that this equation works at smaller sized companies and it also works at larger sized companies. Let's look at a company that is a little bit more established and is not gonna be growing as much. And this is why I so often say it takes five years to really grow a good sized business that is profitable. Because you've gotta get to the point where you're not growing a lot, you're not growing 50, 60, 80% a year. Because as long as you're doing that, all the profit is gonna go into growth and that's fine and that's normal. So stop judging yourself. If you're in that hyper growth phase, your first three, four, five years of business and you're not seeing any profit, all the profit is simply going into growth. Buying more trucks, getting more equipment, hiring more people. All the marketing it takes to get the leads required to actually see that growth, that's what's sucking up all the cash. But now let's look at a more established company. Let's say that this company is gonna do $800,000 in revenue and the owner's like, you know what, we don't really need to grow a bunch. We kind of like this size, maybe get a general manager. But at the end of the day, I'm going to be a simple service based business doing mowing. I'm going to work on my systems. That's how I got to 800,000. Revenue is building out my systems. But we're going to shoot for that 20% profit margin. So 20%, there we go. And we're not going to grow a whole lot this past year. Let's just say we grew 10%. So 10%. Now let's run the math on that. So if we take out our calculator, we're going to do our revenue, which is $800,000, open up the trustee calculator, $800,000 and we're going to multiply that by 20% or multiply by two. So now our profit on this business is going to be $160,000. Okay, so $160,000. Now I'm going to grow the business though, from $800,000 to $880,000. So 10% growth year over year. And that might be literally just mean raising my price a little bit. That literally might lead to a 10% bump. In your top line revenue. At the end of the day though, I'm just gonna assume that I'm gonna grow 10%. Now I need to take off 10%. So I'm gonna essentially multiply this by 0.9. That's gonna equal $144,000. That's what I can expect an actual bottom line at the end of the day, after I have been paid as the owner, profit from this business. Okay, now if you don't grow at all, if I had zero percent growth, I have that 160 grand in my pocket after my salary's been paid. But if you're going to grow, you have to realize that growth sucks. Cash. I literally lost out on $16,000 in profit in order to grow the business by 10%. And that $16,000 of profit probably went towards another crew, another truck, another piece of equipment. That's what allowed me to get from $800,000 in revenue to $880,000 in revenue. So if you're growing your business massively and you have a 50, 60, 70% year over year growth, you can absolutely expect to not make much profit. Let's run the exact same numbers. But now assume that this owner wants to grow a lot. Instead of growing 10%, they want to grow 50%. Okay? They're going to go from 800,000 in revenue. And next year their projection, their goal is to get to 1.2 million million in revenue. Let's see what happens now with this formula. Okay, so we're making the same amount of money, $800,000. But now we're going to try to grow up to 1.2 million. That's the year over year growth that we're trying to achieve. Alright, now let's run the numbers. $800,000 in revenue multiplied by 20%. We're still having that $160,000 in profit, but now we got to subtract our growth rate and that's going to be what, $80,000. And this is what gets people really frustrated. Because if you do $80,000, that's not.

A lot of money.

It's like, man, I'm growing, I'm putting money into my business, but I just don't see it. Because at the end of the day, I might need to have my bank balance go up by 30 or 40 grand. This might need to be cash out in order to be going into my bank account just to keep my working capital up high enough. So I'm not actually going to even see this $80,000. Because when your growth Rate is high. You need extra cash to actually keep your working capital high enough in your bank account. So this is what gets people really frustrated. At the end of the day, this owner might literally make, I don't know, maybe 70, $80,000 in actual take home profit on an $800,000 business. But if they're growing to 1.2 and their year over year growth projection is 50%, they're probably not going to bring a lot down to the bottom line even after their salary. So this is extremely important to remember. If you're growing your business and you're growing top line revenue, you're essentially building your assets. You're not gonna see that in the form of cash. You're building your assets because you're buying equipment, you're hiring staff. And if you're building a business that is doing more and more in revenue, assuming that there's good systems in place, you're actually building an asset that is gaining value. It's like a piece of real estate. It's growing in value, it's appreciating. And so it's not a bad thing if you're growing to not have a lot of profits. This is why people get frustrated. They, because in their first three years, they might go from 100,000 to 200,000 to 400,000 to 800,000 in revenue. That first four years, they literally, because they're growing 100% year over year over year, that means they literally had like $0 in profit. And because of their being just, well, we broke even, that's fine. No, because they have to have more working capital, it's actually going to be a negative number that they can actually take out from for their own personal use. This is the number, this is the formula I recommend you would use. And so when someone says, I'm making X amount of dollars in profit and I only run X amount in revenue, what you have to step back and ask is what is their growth percentage? This is the thing that really moves the needle. Whether or not you're gonna actually be able to take that money home is because if a business has been around for 10, 15, 20 years and it's just relatively stable in terms of their revenue, they don't have a lot of growth. They're gonna, they're gonna probably be really, really profitable because they're not trying to grow their business. So this is always why I say years three to five is when you start to see profit because you're going from 100%, 150% year over year growth down to 20, 30, 10, 5% year over year. Growth is absolutely where you're gonna maximize your profits simply because growth will no longer be sucking a large portion of your cash.

Hopefully you guys found that helpful. Definitely try running the numbers in your own business to see what sort of profits you can be expecting for your growth going forward. But before we talk about the future of the lawn care industry, I want to tell you guys about P4P software dot com. P4P is a better way to pay. You can finally pay your guys based on performance and not just on an hourly wage. P4P software helps you manage running daily reports and metrics for your crews in real time. Book a call with Brad today@p4psoftware.com to learn more. Well, let's get back into it and hear what the future holds for Chuck in a Truck. Here we go.

There's this menace in the home improvement industry, the character we've labeled Chuck in a Truck.

Now, Chuck in a truck might come in a nice truck, but that truck is not insured. Potentially that business is not insured. Licensing, registration? No, none of it. However, Chuck in a Truck, because he's not licensed, because he doesn't pay his taxes, because he doesn't pay his employees above the table, because of all of these things he can do the work for so cheap, whether it's mowing lawns for $20 when every other company needs to be at 35 or 40 at least, or whether it be improving someone's fence and charging $100 or $200 when every other company needs to charge at least $500 just to break even. So this menacing character is something that landscapers, contractors, builders, all home improvement services, we've come to dread them. Today I'm going to be talking about their history. I'm going to be talking about what is in the future of truck in a Truck, how you can compete against a Chuck in a truck, how you can whip a truck in a truck, and whether or not Chuck in a Truck is going to be able to stay in business over the next few years. Now, in 2020, when the pandemic hit, I believe that it was the biggest boom to Chuck in a Truck ever. The reason was this. At the end of the day, the government was giving people $600 per week in an unemployment boost. Basically, if you were unemployed from your job. Now, I understand that there were millions of jobs or displacement because of COVID I own a gym and I know for a fact we were closed down. However, there were also people that took advantage of this after getting laid off from their job. And they flocked to industries like home improvement, where they could get cash and money under the table while still getting their sweet $600 per week plus state benefits. Some people were literally making 40, 50, $60,000 a year just on unemployment benefits for 2020 and parts of 2021. However, over the past few, few months, that sweet, sweet money from the government has began to dry up. Inflation is going up, the cost of living is going up, and yet those benefits and that stimulus money is beginning to go away. So the question is, are these chuck in a truck, these people that took advantage of the system, and we're getting paid with cash under the front mat, money under the table, paying their friends to help them on the side without reporting that to the labor department, are they going to be able to stay in business? Are they going to thrive? Or are they going to go out of business, allowing legitimate companies to thrive and succeed by taking their customers? So here's my take on it. I believe that as we become more and more of a socialist society in the United States, that we are going to see more and more Chuck and A trucks simply because if we can just prove to the government that we are making less money, if we can get more and more and more benefits because of this distribution of wealth from rich to poor, well, then why in the world where I want to go get a job when I can just do something on the side, make cash under the table, plus any benefits that I get from the government? And this is what people are concerned about in landscaping, lawn care, mowing, and many, many different contractors in the home improvement industry. It's like, well, how are we going to compete with this person that doesn't pay, registration isn't licensed, and they literally just pay people under the table. Like, you can't compete with that because the cost of labor is going up and taxes are going up and licensing and insurance is going up, how in the world are you going to actually be able to stay competitive? And so in the short term, I do believe that chuck in a truck is going to be thriving. People trying to make money on the side, money under the table is going to become more and more rampant. However, I do believe that this next 12 to 24 months is going to flush out a lot of chuck in a truck that started in 2020 and 2021 and saw a boon in business making money under the table. However, they're going to quickly find out that once this stimulus money is gone, they don't get their unemployment Check, they have to start paying mortgage forbearance is gone and they have to start paying their rent and now they have to start paying on their student debt again. When those things start happening all of a sudden, that really good paying job that in this labor market can pay 20, $25 an hour starts to look pretty appealing compared to them doing really, really low end cost services in home improvement. So I feel as the labor economy heats up, it's going to become less and less appealing to be a chuck in a truck. It's going to become less and less appealing as the cost of labor in the other industries becomes more and more. But what's actually going to catch up, I believe in the downfall of truck in a Truck is going to be the fact that the consumer is going cashless. What you've seen over the past couple of years, if you look at the economics of creating currency in the form of cash and change, it's extremely inefficient for the government and they do not want to create cash. The reason they don't want to create cash is because they know what's happening. They know that people can transact and not have a ledger in the form of bank statements and credit card statements to be able to prove to the IRS how much money they made. So in my opinion, the government is wanting us to go cashless because it's easier for them to track that money from the IRS perspective. And that's why in 2020 and 2021, we've seen a massive shortage of cash and change. And you go to stores and they'd be like, we only accept credit card payments because we don't have enough change to give you back. And so I truly believe over the next few years, we're going to see more and more of a trend towards cashless. We're going to see more and more of a trend where like if you don' cash and I don't have cash, the millennials don't have cash. And as we see now, the technology adoption by the baby boomers and people that are 50, 67 years old, what we're going to see is people that do not have the cash to pay Chuck in a Truck because at the end of the day, Chuck in a truck cannot get a check written out to them. Why? Because that's going to be on a bank statement that is going to be show proof to the IRS that they are making income. And as the IRS gets more sophisticated and even as you see legislation that's to going currently in process of being passed that is going to give the IRS more and more insight into bank statements and transactions over certain volume and certain amount of dollar transactions. Is going to be a very, very tough time for Chuck and a Truck to be able to do this without getting caught. Because the reason Chuck and a Truck has been able to survive is because as long as we're getting cash, as long as we're not getting credit card statements, we don't. We can prove to the IRS that we did not make enough money last year that we can get bunch of money back in our tax returns. We can get stimulus money and tax credits and refunds and get handouts and food stamps and all the rest of it. But as long as the gravy train continues, Chuck a Truck is going to thrive. As long as there's more and more benefits given to people that don't have proof of income, we're going to see more and more Chuck and a Truck survive. Now the question is, how do you compete with Chuck and a Truck? And is there an actual opportunity that I feel is going to happen over the next five to 10 years? And I do believe this, I feel it's happened with this massive boom of people joining home improvement industries like lawn care and landscaping is what's going to happen is it's going to push a lot of good companies out of business. The ones that really, really thin margins and are struggling right now to hire laborers. They're going to have a very hard time competing at such thin, razor thin margins if they're competing against Chuck and a Truck. But what's going to happen? They're going to go to business. It's going to create more opportunity. There's going to be more customers. But these customers are not going to be willing to pay cash under their front mat. They're not going to be willing to do the cash app or send someone via Venmo that money. Obviously, the government has become privy to this and they're going to create legislation that tracks this money. And it's going to get the not only the business owner in trouble, it's also potentially going to get the customer in trouble if they're doing these things and not paying sales tax. Because when Chuck and a Truck takes payment, not only are they not claiming that and paying income taxes on it to the government, they're also getting around local and state taxes and sales tax. And that could become a potential problem also for the consumer. So the downfall of Chuck and a Truck is going to be, first and foremost, that the transactions are going to become Much more traceable by the irs. The government is going to get better records of cash and Zelle and Venmo payments that are being transacted across from one bank account to another. This is actually relatively easy to track, especially when there's large volumes of transactions or large amounts of transactions, like would happen if you were mowing someone's lawn every single week and getting cash, or if you were getting Venmoed from dozens of people. You're obviously running a business. This is only a matter of time before the IRS catches up to what this technology is. The second thing that's going to be a big challenge for Truck in a Truck is the fact that consumer sentiment and the type of customers that are going to be the highest value are going to start expecting licensed, insured and a more professional image from contractors. And they're going to be willing to pay a premium price because they're having their valuable asset, their real estate, gone up so much in value, they're willing to pay an extra 10, $15 or 10, 15, 20, 30% in order to get a licensed insured contractor on their most valuable asset. As we've seen real estate prices go up and the value of people's assets and what they've put in terms of nest egg their retirement, they are not going to want to jeopardize the most valuable asset they have as they go into the retirement. If they have a million dollars in their house in the form of equity, they don't want to be trying to weasel their way by saving $10 a week by simply having someone that is insured. And if something does go wrong on the property, if something breaks, they cause a fire, if something crazy, if someone gets ran over by a truck on their property, that they're going to be covered and they're going to be insured, and they're not putting their assets in jeopardy. There will always be low bidders and Chuck in a Truck in every single home improvement industry. The way you set yourself apart from that is making sure you make it clear, clear to the customer that you're different from them. Make it very clear by your trucks, your equipment, your uniforms, the way that you're trained, how you answer the phone. All of these things are things that separate you from what Chuck in the Truck is doing. Because guess what Chuck in a Truck is doing. He's answering his phone and in the background you hear pounding hammers and the weed whacker going off and they're panting and they can't hear you because there's a dog barking or they're trying to talk to someone else, a customer, while they're talking to the person on the phone. Or worse yet, you don't hear back from them for four or five days after you leave a voicemail, or you never hear back from them after you give them an estimate proposal. That's the type of thing that customers are not going to put up with as time goes on and as the wealth of our country is held in the hands of the baby boomers who also can't do the work themselves, but can afford to pay a premium price for a premium service that can speak English, communicates well, and does a really great job in a manner that makes sense. Them feel safe and their assets are also in safety. I feel like the rise and fall of Chuck in a Truck over the next 10 to 15 years is going to be the thing that allows this industry to go from massively fragmented to actually relatively consolidated. Currently, right now in lawn care landscaping Specifically, there's over 600,000 landscaping companies and lawn care green industry companies in the United States. I feel like in 10 to 15 years that number will not go up. I feel it will go down. However, over the next five years, I feel it will go up. Truck in a Truck is going to go up in the next several years as legislation and our economy becomes much more socialist where we give money to people that do not have claimable income. However, technology is going to catch up. The ability for the IRS to track this money and the way that the consumer demands that we be more professional and that we have a higher level of service I do believe is going to create a vacuum where the people that are left to standing that get through the next several years of these Chuck and A trucks really ramping up. If you get through that time, you're going to be in a prime position to be able to take their customers when they go out of business and when they go get another job. Because now the cost of labor has gone up to the point where they'd rather make more money just being a W2 employee than trying to run around doing cash, trying to get around the government not claiming money on their taxes and doing things. Everything under the table, specifically states such as Florida, Texas and California, where they have landscaping is done year round. These are the places where Chuck and a truck abounds. There's lots and lots of competition and I feel like this is going to be most pronounced in those states where there's currently a majority of companies that are in these home improvement industries are truck and A Trucks. I think this is going to be most pronounced in those states where over the next few years it's going to be very difficult to compete on price. This is going to weed out a lot of the competitors that are larger, that cannot find labor and cannot compete on those razor thin margins. We're going to see a rise of Chuck in a Truck and then in my opinion, over the next 10 to 15 years as technology catches up and consumer demands and transparency changes, that's what's going to lead the demise of Chuck and Truck. And that's going to allow the remaining core group of professional companies to actually take massive market share. And that will lead over the next 10 to 15 years to a consolidation in these home improvement industries, allowing companies that are big to take over and take market share from these truck and A Truck operators. This is my opinion. I could be wrong, I could be completely off base, but that's what I think is going to happen. With Truck and a Truck. We've seen a massive rise and it's going to continue for the next several years. But eventually I do believe that running your business the right way, above board, doing it licensed, doing it insured, is going to work win. So what should you be doing now? If you're in a market or an industry where there is a lot of Chuck and a Truck, the question is, should we try to compete on price? And at the end of the day you're going to have to to some extent, I believe over the next three to five years you're gonna have to bring your prices down and you're gonna have to make sure that your efficiencies by using software and maybe really lean with your labor. If you can do that, you'll be able to compete and then you'll be able to stay in business for the time when those Chuck and A Truck operators go get jobs. Those Chuck and A Truck operators have to go out of business because they no longer can do anything under the table. You'll be in a prime real estate, prime location to take market share. At that time it's going to come to the person that's patient and the person that is willing to take systems, procedures and be ultra efficient to be able to compete with Chuck in a Truck and beat them at their own game. At the time when consumers start to change their behavior and as the customer begins to expect and demand that you have a professional service, that you are licensed and you're doing things above board. Let me know in the comments below if you think that Chuck and Truck Operators are going to thrive over the next five to 10 years? Or are you starting to see cracks already in their business model that might potentially lead to them becoming extinct one day and a massive consolidation in our industry happening?

As Mike said, patience is key and being in the market at the right time to strike and give you a leg up on your competition. But if you want to leg up on your competition this year, I would check out lawn caremedia.com we have affordable pre designed templates. We're talking flyers, door hangers, yard signs, and so much more. So check it out@lawn caremedia.com to make a splash in your local neighborhood. Let's get back into it in here. Why starting a lawn care business is a horrible idea. Here we go.

Trying to get gray hair. Just thinking about this.

All right, all right. So shots have been fired. And when someone comes against your industry and says that people should not start a lawn care and landscaping business, I have to say something. So I'm not gonna call it who this was exactly. Cause it was a few years ago that they wrote this and so maybe they've changed their mind. But the article's name is 5 ugly reasons not to Start a Lawn Maintenance Business. So I'm gonna go through this today. I'm gonna go over the five things that this author suggests that you should not start a lawn care business with. And yeah, let's just go through it. So the first one is competition. The author says that there are plenty of lawn care businesses out there and competition is most areas is. Competition in most areas is huge and there's well established businesses. Okay, so this is the deal. Every great business started in a very competitive industry. Even the ones that you think are like super, super technologically advanced and innovative, like Tesla, Apple, all these industries that like have been disrupted by these companies started in industries where there were dozens, if not hundreds of alternative options. When you start, never do you have an advantage. There's always movers in the market. And if you're the first one ever to think of something, guess what? Those don't usually succeed. It's the ones who start in a crowded market, dominate that market, and then grow and innovate inside of that market to become industry leaders. Competition is something you should run towards when you're starting a business. When you look at all the flashy new startups in terms of like the new app, the rate of success of the new app that's going to change the world is so minuscule. There are literally millions and millions of apps on the App Store and all of us have maybe, what, 50 or 60 in our phone. And they're mostly the same ones because guess what? Most people don't win the brightest, flashiest new app. They don't. And so competition is something that's good. If your thing is so revolutionary and so new, I honestly don't think it's going to do very well. Start in a market where, you know, there's demand. Great. Lots of competition mean there's lots of demand for the services. Therefore, there needs to be lots of competition to supply the demand. I like competitive marketplaces. I like to start there because I know there's demand for my product. And I like to focus on how do I serve the customer better to the point where I can innovate and make it a better customer experience. So they come to me instead of the competition. All right. The second reason why you should not start a lawn care business is because it's financial risk. Starting a lawn maintenance business is a huge financial risk. You need to buy equipment, purchase insurance, and you need to form a legal business.

You have to start an LLC and get insurance. Yeah, it's called starting a legal business. Anyone in their right mind has to buy some sort of equipment. I don't care if it's a mop, I don't care if it is squeegee. I don't care if it's a lawnmower. I don't care if it's shearers. I don't care if you start in a tech business, like, you gotta have some startup capital. You gotta put something at risk. And to say that, you know, it's very difficult because you have to purchase insurance and you need to form a legal business. What other business would you start that you don't start a legal business? It's just like there's only, you know, what are you going to do? Do pot and drugs on the street? Like, yeah, you don't need a legal business for that. Probably not the best option for you, though. Goodness gracious. That all can cost quite a bit and might even require to take out a loan or borrow money elsewhere. Like, honestly, lawn care maintenance has one of the lowest barriers to entry. And that's why there's so many competitors, over 600,000 landscapers in the United States. And it's because it's easy to get started. For a few thousand dollars, you can be up and running, and that leads to a lot of competition. But it also leads to an awesome opportunity to get to profitability within a year or two or less. If you Grow slower. Whereas there are businesses that spend 5, 10, 15, 20 years in unprofitable territory before they become profitable because they're extremely, extremely capital intensive. Amazon was not profitable for 10, 15 years prior to ever making a single dollar in profit. So we should not start Amazon because we would have to start a legal business and we'd have to get insurance. What would we do if people drop off packages at the wrong house and then people steal the packages and oh, this is business. There's risks. There's absolute risk to capital. There is risk legally, and that is why capitalism works, is because the free market gets in and figures out ways to do things better. And yes, it's going to require risk to innovate. I'm not going to read the rest of the financial risk one. It's a joke. If a customer doesn't pay you, it might mean that you're going to miss your personal financial obligation. Like seriously, you're the business owner. Profit at the end of the day is going to you. If a customer doesn't pay. Yeah, you're right. You're not going to be able to pay your personal bills. If you have a retail store and someone's coming and steals from you, guess what, you're going to lose money. It's called risk. If you're a business owner, you're going to have to put risk. Capital at risk is what leads to outsized returns. If you're going to just want average returns in the stock market, you're going to put into an index fund, get 4, 5, 6, 7%, even a well diversified portfolio of bonds and real estate and things like that, 7, 8% a year. If you want to have outsized returns on your capital, you're going to have.

To put it at risk.

All right, let's move on. Next one. Starting to get gray hair just thinking about this. All right, this is hilarious. Look at this. Just the caption on this thing. I'm going to show it to you. Extreme stress. And you can see the little video here of this cat. Like, it's just hilarious. Starting a law maintenance business can be extremely stressful. You have to deal with bad customers, difficult employees, legal barriers and everything else that comes with the territory. We're going into battle because we are starting a long care business. The stress that comes with owning your own business can far exceed a regular day job. Well then yeah, of course, but my goodness, like being your own boss sounds nice, but in reality your customers are your boss. Yeah, that's true for every single industry. If you don't make the customers happy and they don't buy from you, you don't make any money and you go out of business, they determine your pay, your hours, and your livelihood. Mercy. Okay, let's move on. Fourth one, time consuming. If in case you think I'm making this up, this is an actual article that someone wrote and spent their good time, their daytime, their limited time on this earth was spent writing this article, next one is time consuming. Starting a long care business is time consuming. If you're starting on your own, you wear a thousand different hats. Okay, news flash. If you start any business by yourself, you are going to wear a thousand hats. You're going to do marketing, you have to do sales. You're going to do administrative. You're going to have to perform the work itself. You're gonna have to do marketing and figure out web design. You have to figure out how to do design of your print marketing material. It's unending. All right, so if you think it was going to be easy, then you should just go get a job. It's going to be time consuming. Mercy. Here we go. Let's keep writing. Before I lose all my brain cells, my IQ drops to negative territory. You're in charge of sales, you're in charge of accounting. You're the service tech, and you're an office manager. It becomes a balancing act that inevitably eats into a whole lot of your day. Like this is the reality of it. And if you don't believe these things, then you're not going to stick around entrepreneurship very long. You're going to eventually hit a recession and you're going to have a bad day. You're going to have a bad day. You have to work longer than 9 to 5 and you're probably going to quit. A regular 9 to 5 is not going to cut it. If you're just starting out, you essentially live in your business in the first few months. And if you make it through the first few seasons, there are busy seasons that require seemingly round the clock attention. So, so long vacations, goodbye weekends, forget about breaks. To say this is about lawn care maintenance. It's basically just about entrepreneurship. And honestly, all these things are really up to you. The coolest thing about having your own business is the fact that you get to determine your rate of growth and you get to determine how many hours you work. If you don't want to work on weekends and if you want to have long vacations, you can. It probably is just going to lead to a slightly less growing business and potentially slightly less Profitable business. And you might take you longer to get to profitability. It might take you longer to get employees that want to stick around if you're taking a month long vacation. But eventually you can figure it out. All right, failure rate is high. This is the fifth one in case you, you stick with me for the past eight minutes listening to this craziness. Failure rate is high. You should not start a long care business because failure rate is high. And here they take the stat that was said by Forbes. 80% of businesses fail within their first 18 months. Read that again. The failure rate of starting your own business is incredibly high. Why is your lawn care business going to be the one out of the five small businesses that actually make it past half a year? Past a year and a half. Even if you feel you have the know how and skills to run a business, the statistics are against you. So we should all just go to the average, we should all just focus on what everyone else is doing. We should all go to high school, then we should go to college, go into massive amount of debt. Then we should just wait until we're in our 40s to buy a house, wait until we're in our 50s to start thinking about retirement, wait until we're in our 60s to get our first real estate property. We should wait until we're in our 70s before ever we own a business. Like it's, it's just hurting my head. Oh yeah. If you think, if think of all those things, you probably shouldn't start your own business but you think about starting a long term business. My opinion, it's like every other business. It's stressful, it's very hard to ramp up. You're going to wear a different, a million different hats. You're going to work crazy hours. If you want to grow fast and at the end of the day you choose to do it because you want to have the flexibility and you're willing to put in the work for 5, 10 years in order to build something that's going to build generational wealth. It's going to provide for you and your family for 40, 50, 60 years. You want to create jobs in your local community. You want to be able to create wealth that isn't taxed at 30 and 40% by the government. You want to create a future for your family to be able to work inside the business and for to change what potentially was poverty in your family for your family family. Your brothers, your sisters, your family.

Like I think all of us here are well aware that starting a long care business is an amazing way to build generational wealth and support your local community at the same time. So hopefully you guys found all of those super helpful and entertaining. But if you guys want to check out the video versions of these, head over to Mike Andes on YouTube. And if you want to see anything else, Mike Andes, head over to our new website, mikeandys.com we'll see you there.