From $40/hr to $100/hr: How I Grew My Lawn Care Business

Hey everyone, I'm Mike Candies. Today I'm going to be talking about how I can charge $100 per hour to mow grass. You don't need a complicated degree. You don't need massive amounts of experience. You can mow grass, pull weeds and trim bushes and make $100 per hour. I'm going to walk you through the actual numbers that I used over the course of the past 10 years as I've grown my lawn care business and show that I didn't start at 100, but I am at 100 now. And I'm going to show what that means for the growth of your business. Gonna be very interesting once I flip this whiteboard. So stick around. So let's go ahead and start with my first year as Augusta Lawn Care. Now I started mowing grass when I was 11, but at 18 years old I started Augusta Lawn Care and really started to scale it up. In year one, I was charging $40 per hour. Now keep in mind this is nine years ago almost and I would not Recommend anyone charging $40 per hour if you're gonna be trying to hire people and have a high premium type service that's going after a high end client. But I charge $40 per hour and I was able to get a lot of customers. I was getting 80, 90% of my jobs accepted. Because the vast majority of the time I was the lowest price in the market or close to it, anyone that was legal. I was pretty much the lowest price out there. And that's why I closed so many of my jobs. Because ultimately price and time are the two things that your customers are most evaluating. How fast can you get things done? How efficient are you with communication? That's time and then price. I was the best at price. And I literally was like, if there was an email or a phone call, it was coming right to my cell phone. I was right on it. So I crushed it. High close ratio grew very quickly. From the first to my second year I had like a 500% rate of growth. Cause my first year I did like 28, $29,000 in annual revenue. Year number two, I went full time and I made almost 200,000. So more than 500% year over year, massive growth, Right. But the reason for that is cause I had a low price dollar per hour. And I also had a really, really high close ratio. Remember, close ratio is just the number of estimates that were accepted divided by the total estimates that you sent out to the customers. That's going to give you a percentage. And I was closing 70, 80, 90% of them. So check this out though. In year two, I realized, you know what, I'm going to hire someone. I've got to be able to cover their wages and still make some profit here. Well, in order to do that, I've got to charge $60 per hour. So I went from $40 per hour to $60 per hour what I was charging the customer per budget hour on the job. But in year number two, my growth rate slowed down. I didn't grow by 500% anymore. I only grew by 100% going into year number three because I went from like almost 200,000 in annual revenue to almost 400,000 in annual revenue. So I basically doubled. That's 100% year over year growth. So my growth rate slowed because my price was going up. And if you're out there right now and you're starting your business, like I can never charge $100 per hour. You're probably right. I wouldn' recommend someone that's just getting started to charge that really high price because you're not going to have a very high close ratio because your prices are going to be so high that not a lot of estimates are going to get accepted. So let's go ahead and cut to year number nine. Let's fast forward where now we're charging $90 per hour. I think my goal is in year 10 just to move it to $100 per hour, just to be able to say in 10 years we went to $100 per hour. But right now at our first location, very first one, we are now at $90 per hour. For, for basic services, we don't do construction or hardscaping. We do basic projects like molten solution, trimming bushes, mowing, weeding services, et cetera. However, however, my growth rate for this year is expected to be around 0%. We're not trying to grow top line revenue. We're around that 1.5 to $1.7 million in annual revenue at this first location. And I don't want to keep growing it. And you're like, oh, that's bad, that's bad. That's a bad thing that you have zero percent growth. Not necessarily. Because if you're trying to make a more profitable business having a lower but a higher price, dollar per hour is actually exactly what you want. And this is what determines in my mind, in part, someone that is in growth mode versus in profit mode. And we talk a lot about this at Landscape Business course and we talked about a lot at Landscape Summit. So I'M gonna flip this board and show what this looks like on a graph. But before I do, before I do, there's a gentleman's agreement. And the gentleman's agreement is that you push the subscribe button. Because when you go to this store and you see on the counter like next to the register, a little bowl there, it says give a penny, take a penny. Now it's just common courtesy and societal norms that hey, look, when you need a penny, you grab one and then when you have an extra one, you throw the penny inside. Now I do all this work and make these videos and right now it is 11:30pm And I'm making videos for all of you for free. And I'm putting that penny in there with the expectation that you in return will. Will also put a penny in when you have the ability and right now you have the ability to push subscribe on the channel. And I really appreciate it. Alright, let's move ahead and talk about how this is actually looking like on a graph. All right, so the growth rate as you look over the course of years in your business, this is a lot of times that I see as businesses grow, they start becoming most profitable in year five, six, seven, et cetera. Now, over the course of time, as we go through the years of the business, we have dollars per hour rising. I'm raising my prices in this case. In my previous example, I would have been at 40 dol per hour here and then something like $90 or $100 per hour over here. Now as I raise my prices, my growth rate is coming down. As time goes on, my prices are going up, but my growth rate is going down. And over here, growth rate hit zero. And that is what we call revenue plateau. We're not growing the business anymore, we're not in growth mode, we're in profit mode. And what I want you to really see here is two KPIs or key performance indicators in your business. They're going to correlate with your and with this other pricing mechanism here. So check this out. Your growth rate, if it's really, really high, probably means your prices are pretty low. And that's why as you begin to grow the business and you get more overhead and you want to keep being able to actually make profit, you're gonna have to raise your prices. But check this out. This also correlates directly with close ratio. Close ratio again is the number of estimates that are accepted divided by the total loan number of estimates that are sent, what percentage of the quotes that you send out are Being accepted, that is typically really, really high because your prices are low. But as you begin to raise your prices, your close ratio comes down. So your close ratio is directly correlated with your growth rate. If you're closing a lot of your jobs and you're at 90, 95, you're like, I close. Every single estimate that I give out is accepted. Probably means you're in growth mode. You're probably growing very quickly. And so the same is true, though, if we look at our pricing here, if we look at dollars per hour as our price goes up, this is the other deal that goes up. And this is typically why I see profit margin. Profit margin is simply the total number of the amount of income minus your expenses. You have a percentage of that as profit. That number goes up as we increase our prices. And at the same time, that means our growth is going down. This is why I see most home service business owners, it's after year five, they really start to see the fruit of their labor. Because in this period of time, the other thing we didn't mention is this entire time we got cash being required, we got profits being sucked out of the business in the form of growth because we need more trucks, more equipment, we got to hire more people, we got to get an office staff, we have to get a shop space. And all of this is overhead, and it costs a lot of money. So what happens in the first three, four, five years of the business is you're growing really fast, but you're raising your prices. And it's not until you actually slow down growth. So you don't need more trucks and more equipment and more employees, and you can just have more of a growth plateau, a revenue plateau, where you're only growing 5, 10, 15% a year. It's much more manageable and it's much more stable to where your profitability is also much higher because you raised your prices to the point where, where you don't have a massive close ratio. You might only close 30 or 40% of your jobs because your prices are higher, but because your prices are higher, your margins are much better. Now, I know this chart might confuse some people. Watch the second half of this video again because you gotta understand that growth rate equals your close ratio. If you have a high close ratio typically means you're gonna grow really fast. If you have a really, really high dollar prices. If you have really high prices, you typically have a really high margin, but you're not growing very much. You've gotta determine in your business, is this a year that you want to grow, and you're going to be high close ratio. You're going to be probably a little bit cheaper. You're going to really crush it and grow the business a lot. Or do you want to be more in profit mode, a higher profit margin with higher prices, but your revenue isn't going to grow as much. This doesn't mean you're declining. It doesn't mean you're losing business. But you're not going to be growing, doubling and tripling year over year. There's no business that's doubling and tripling year over year that's super profitable because growth sucks cash. And trust me, watching some of the other videos on the channel, check this one out right here. It's one of the things that I see all the time with businesses that are growing really quickly, but they're losing money. I'm Mike Andes. I'll see you tomorrow.