From Break‑Even to $71K in 90 Days: Here’s the P&L

Everyone, it's Mike Andes. And today I'm showing a profit and loss statement from one of my locations. And then compare it from last year to this year and what happened when they went from growth mode into profit mode. This is the spring rush. This is Q2 in my market. April, May and June is quarter two. And it's the busiest time of our year when it comes to mowing grass. Now over here I have 2024, quarter two, and right here I have quarter two for 2025. Now in quarter two of 2024, we are still growing this location. We're, we are trying to get more recurring customers. We are actively marketing, hiring and expanding the business. But then we switched into profit mode. Instead of buying more trucks and hiring more people, we actually sold some of the trucks that we didn't want anymore, consolidated the number of trucks we had, and instead of hiring more people, actually hired less people. But we raised prices to all of our customers, some by more than 28 to 30%. And again, they're raising prices this year also because they're in profit mode. Now, over the past year I've talked a lot about, about growth mode versus profit mode. Growth mode is when I get more, more work than I can handle. I go buy more trucks, hire more people and extend the capacity of the business. When I'm in profit mode, I am going to not buy more trucks, not hire more people and just raise prices in order to be able to keep the number of customers down to my capacity. By doing this, I make much more profit. Cause if I can raise my prices by 25%, 30%, I'm doubling my profit on the bottom line. And when we did that, we lost less than 10% of our customers when we raised prices by why it all comes back to if you're a service business, you better be doing a good job. You better be having good customer service, communication with the customer, high quality work. And assuming those things are true, you probably have a stickier service than you think. You probably would lose less customers than you think if you were to raise prices, assuming you're doing a great job for the customer. Now let's look back at 2024, when we were actively growing the business, spending a good chunk on marketing. This was the profit and loss statement for quarter two. You'll notice 320,000 in revenue. And if you look at the amount that we spent on wages, 164,000 plus all the taxes, it was well above 50% of revenue going out the door to direct labor, that is employees, wages out in the field. And as soon as you go above 50%, it's just unlikely that you're going to be profitable. And the reason why is because we had a whole bunch of new employees, we had to hire more people. We, half of the team members were just getting trained. Half the other team members that were long tenant employees were training other people. So it slowed them down. Look at next year. So this is this past quarter, we have $304,000 in revenue. So actually less revenue. However, way less in wages. And when you add it up now, it's well below 50% of the revenue is going out the door to wages. Now, we do wrap up the actual wages of the general manager into direct labor because they do go out in the field during the off season, actually produce revenue. But even still, if I can get all my wages under 50% of revenue in most home service businesses, that's a good thing. Now, if you have a whole bunch of materials and material markup and fees, that number should be a lot lower, chemicals, etc. That you should be more like 20, 25%. But in a business where most of our revenue, almost 100% of our revenue comes from labor revenue, I want less than 50% of that revenue spent on the wages to my team. And that includes all the taxes and workers comp. And everything else that goes into it. So first things first. We notice it's way more efficient going from growth mode in 2024 into profit mode in 2025. How do I know it's more efficient? Because I'm spending way less percent of my revenue on wages. And yes, the price increase helps, but also we had less employees in the field because everyone had been there for a long time. We weren't training a whole bunch of new people this past year instead of the year before. We're training new people. All of our trainers are slower, the new employees are slower, they just churn. People quit. All of that slows down. The team, reduces the amount of budget hours complete every week, and ultimately makes us less profitable. You also notice that the marketing is dramatically decreased. You also notice that our revenue actually went down year over year. Why? We actually sold off 40% of the trucks. I believe they went from about 12, 13 trucks in the field down to about seven. And so by reducing the amount of trucks, what they did is they got us to asset capacity, meaning all the trucks now are being used every single day. And by doing that, I'm able to reduce my insurance cost, my storage costs, the maintenance costs on all those extra vehicles. And so now this location is able to have six, seven, eight employees and be able to produce almost a million dollars in revenue because they've raised their prices from $80 an hour to $100 an hour over the past couple years. Now everyone wants to know about profit. So in 2024, we can see in quarter two, during April, May, and June, we basically broke even. In 2024. This is when we had. We were in growth mode. We were spending a lot of marketing, hiring a bunch of people, getting a bunch of new trucks. In 2025, once we consolidated, trucks stopped hiring as many people consolidated down to our core team. We didn't have to train as many people. All of a sudden, our profit went to $71,000. That is about 23%, 24% profit margin on the $304,000 of revenue. Keep in mind all of the general managers, their profit sharing, the team on the field, all of that is we consider cost of goods sold and up at the top here. So this is the actual net operating income of the business. And this is really showing the power of going into profit mode. The Augusta model is that we grow the business using recurring revenue and simple services to $500,000 in annual revenue. And then we stop buying trucks, we stop hiring more people, and we go into profit mode. We raise prices. We do not buy trucks, we do not hire more people. We simply raise prices whenever we get overwhelmed with work. Now, this location is unique because it used to do almost 1.5, 1.6, even $1.7 million in revenue. And it's actually going the opposite way it was in growth, trying to keep growing, growing, and started realizing, look, I actually make more profit if I just did 800-900-A million dollars in revenue, but raised my prices, brought my core team down to a smaller size, and was able to operate the entire team with one general manager. And that's what this location has done. Over the past 12 months, they've switched from growth mode, where you constantly are chasing more revenue from spending more money on marketing, and just started making more profit by raising prices, focusing on the core team. And the core team makes a lot more money on pay for performance. Why? Because when you raise prices and you're giving a percentage of that revenue to your team members, you're effectively giving them a raise. And so the team morale is much higher, their retention is much higher, and they're much more happy making more money. Now, how is this possible? You'll see here we have command center fees totaling $16,000 this past quarter. In three months. So that's like 5,000, $6,000 a month spent at command Center. But what this allows us to do is not have an extra person in the office, like over five or six thousand dollars a month. You could just hire an office person. You're right. But here's the thing. During the slower season, that number goes way down by 60, 70, 80% because I'm not getting all these new customers and leads and people calling in. And so instead of having a fixed expense or the salary of an office manager and then having a fancy office, I'm able to say, hey, command center, you answer the phones, you do all the admin work, and we'll pay you when we get really busy. Yeah, it's going to be five or six thousand dollars a month. But I know that in September, October, as things slow down a little bit now, I might be paying 1,000, 2,000, $3,000 to command center to handle all my admin, and I don't have to worry about managing that person. That's why me as the owner, I have not set foot on this, at this property for over a year and a half. So both of these quarters, 2024 and 2025, I never showed up one single time to the shop. And the reason that I, as the owner, don't have to be in the operations is, is because we have simplified services. We have the compensation for the general manager, the regional manager, and the team out in the field to get a piece of the action when it comes to profit sharing. And we've simplified the services so that I don't need to be dragged into these massive projects that are going wrong. Cataclysmic events of equipment falling off trailers and accidents and damage cases to keep people's property. I don't want to be dragged into that. So we simplify the services. And that is what the Augusta business model is all about. Switching from growth mode, the first few years of business into profit mode. So the business can run without me as the owner. My team members can make more money. The customers serve better because the trained team members have been with us for a much longer period of time. And that is what growth mode versus profit mode looks like. More money in your pocket. And so I encourage you, get off of the treadmill of grow, grow, grow. Get more equipment, get more trucks, get in a bigger office space, hire more people in the office, get an estimator. And just ask yourself if doing that is actually going to make you more profit. Yes, we all want a million,$5 million, $10 million business. But if you burn out on your way to growing that size of business simply because you're not never setting aside enough profit and you never have enough cash on hand and what is it worth, you're going to burn out with a whole bunch of debt that you have to pay off over the course of years or go into bankruptcy. I'd rather build a business that is a little smaller, is profitable, and can run without me as the owner and and be handled by a general manager and a well compensated manager at that. If you have questions or you want to see more profit and loss statements from one of the locations, comment below and we'll see in the next video.