Getting Your Business to $200K, Larger Businesses, Charging $100/hr to Mow Lawns

Welcome back to the Mike Andes Podcast where we discuss ins and outs of owning a small business. If you're new here, the Mike Andes Podcast is all about taking your business to the next level. We're going back to back to back with what you need to know to jumpstart your business. First off, we have a step by step guide from Mike on how to get your business to 200k in revenue. It's a super important step on your journey and there are some mistakes you don't want to make. Next up, if you have an existing large business you might be surprised at, becoming an Augusta franchisee can be a very good fit for you. More on the math behind that later. And finally, how is Mike able to charge $100 per hour to mow grass and get away with it? As always, you can find all this and more over at the MikeAndYs YouTube channel. Let's get right into it. Here's Mike with what you can do to get to 200k.

Hey everyone, it's Mike Andes. Today I'm going to walk you step through step. How to build a $200,000 in annual revenue business when it comes to lawn care and landscaping. Now this applies for most every home service business, but specifically lawn care and landscaping is what I want to focus on today. I'm going to go over the six different things that I think you must know in order to go from maybe by yourself working to getting that first employee and being able to go to 200,000 plus in annual revenue. Now, I've made videos about 100,000 and I made videos about a million, but I want to go over 200,000 because that's where a lot of people make some big mistakes. And if you follow these six rules, I think you'll be able to get through them. Number one is budget for your second truck. You have to realize that if you go past $200,000 in annual revenue, you will need a second truck. Budget for it. What's the truck value gonna be? What's the amount of the price you're gonna have to pay? And then make sure you budget for it. Don't do it too soon. I see too many people going on their second truck and then bringing their cash balance down to like zero and then they run out of money. Cause in the middle of winter and they don't have much work. Focus on budgeting for that second truck. No. Okay, if I need 15, $20,000, whatever that dollar amount is, make sure you have extra an excess of working capital on top of that amount. Once you pull it from the bank. Cause if you starve the money from cash, you run out of cash. It's like running out of oxygen. You die. Number two, track your close ratio and your customer acquisition cost. Your close ratio is simply the number of estimates that are accepted divided by the total number of estimates that you send out to customers. That's your close ratio. Track that number like crazy. Because if it's 30% and you are closing 30 out of every 100 estimates, if you can just get that to 60%, you'll grow twice as fast. And so you gotta make sure that your close ratio is being tracked. I would track it every week and just look at, okay, how many estimates were accepted this week divided by how many estimates did I send out to customers. This is gonna give you a great way of tracking. How good are you at selling? How good is your system for selling? How quickly do you get to customer's houses? Are you good at talking with them? And is your estimate template that you send to them via email or text message, or even if you do it in paper, whatever it is, you've gotta make sure that looks buttoned down and professional. Cause that will affect your close ratio. There's so many different elements of changing your sales process that can affect that. It's very important to track. The next thing is your customer acquisition cost. This is the cost you have to pay to get one new customer. What do you have to spend in marketing in order to get one new customer? If you spend $1,000 on marketing and you get 20 new customers, that would assume you have a $50 customer acquisition cost. That's $1,000 divided by the total number of new customers I get from that marketing campaign. It would equal $50 customer acquisition cost. Because if you know that number, you can literally predict exactly how much you'll need to spend in the future to be able to get more revenue growth. Now remember, as a seasonal business, your customer acquisition cost might be $40, $50 in the spring. And if you spend the same, do the same exact marketing campaign at the. Because now there's no one needing your services. It's seasonal. You can literally be spending 3, $400 customer acquisition cost. So seasonality is extremely important in the lawn care landscaping industry. If you're thinking about tracking that number, number three is build a database of emails. You have to have a good CRM, a customer relationship management tool where you're gonna be able to build a database of emails. Cause down the road, the real value to your business is going to be found in this database because you'll be able to send an email out to people like 3, 400 people you have inside your database and get 5, 10 estimates based upon sending them a well timed email at the right time of year. Now I personally would recommend copilotcrm.com, but I'm biased. I'm the CEO of that company. But you've got to have a CRM that's going to have a database of emails to allow you to be able to down the road. Because at the beginning you're like, oh, I only have 20 emails, I only have 15 people in my database. Right? You might not get a lot of recurring traffic and people asking for an estimate from that database. But down the road, if you just keep adding to it and keeping those customers warm, when you have 100, 200, 300 leads and 300 people in your database, you send an email and you get multiple estimates immediately. And guess what? You don't have to spend any money on marketing. There's no customer acquisition cost to people already in your database. At my very first Augusta lawn care location, we keep people warm. I send them emails and in our database. And now when we send an email out to people and ask if they need service, we have over 10,000 people in our database and we're able to get hundreds of quotes by sending out one single email. Very, very valuable as you begin to grow the business past 100,000. Because at 100,000, hey, you can keep it in your head, you have 10, 15, 20 customers. It's not super difficult. But when you want to go to 200,000, you better make sure you have a database of customers that you can begin to continually keep in touch with. Number four, overpay and over train your first employee. Why would I overpay them? The reason for this is because if your goal is to get to 200,000 and that's it, 200,000, 250,000, you only need one really good employee. If you're going to scale to a million plus, maybe don't overpay someone. You're going to need to create a system like P4P pay for performance in order to be able to scale. However, if you're just needing one employee to get 200,000, just overpay them and, and I mean like maybe three or four dollars an hour. Because look, if you look at them working, let's call it 1500 hours in the year, if you pay them an extra $4.00 per hour, that's $6,000. So $4.00 per hour multiplied by 1,500 hours that they work in the year, that's $6000. Ask yourself, is paying $6,000 for the whole year of them working with you? Is it worth $6,000 to get a really good employee that is like the best of the best for $6,000 a year? The answer to that when you're running a $200,000 business is yes, that's 3%. $6,000 is 3% of your $200,000 in annual revenue. You should want to do that. It's better to have a good employee that you can depend on and you're not burning through them. Because if you try to make this really low pay, you're gonna burn through people every couple weeks, every month, and you're gonna get super discouraged. Quality's gonna erode. You're not gonna be able to have confidence in them. They're not gonna help you take on projects and, and so overpay them by four or five dollars per hour. Just so that way you're able to trust on someone being there and you don't have a bunch of churn in that specific that first employee. As well as over train them, spend some real quality 3, 4, 5 days really training them on the systems. Because since you've overpaid them, they're going to be with you for a while and they're going to not leave. Well, over train them. Make sure they know exactly what they're doing and they can take more things off their plate. Number five is direct marketing needs to start becoming your brand. So when you first get started, 100,000, $150,000 in annual revenue, you're focusing mostly on direct marketing, which is you're sending them a door hanger or your flyer, and you're telling them, call now. Click here. If you're doing Google or Facebook ads, click here. You're telling them to do a direct marketing action. Take action now. If you have this pain, I have the solution. That's what direct marketing is. But as time goes on, as you pass 100,000, 150,000, you get to 200,000. If you're willing to get to 200,000 plus, you need a brand. Now, this brand is gonna come in the form of doing a lot of direct marketing, people becoming aware of you. But now they're starting to see two trucks rolling around. Now they're starting to see one of your employees. Now it's like, oh, this company is growing. And furthermore, you have a brand. People are talking about you. They understand and they recognize your logo. Your trucks. Your trucks are painted. Your trucks that maybe have decals or a wrap on them. That allows you to have a brand in the marketplace where you're recognized for a certain color truck, for a certain color uniform. At Augusta Lawn Care, our brand is yellow uniforms, yellow trucks, and dog on the truck. Max. Max is our mascot. That's what we're known for. That's our brand, and that's what you'll need to go past 100,000 and get to 200,000. And one of the best ways to create a brand is have a great website, because people will immediately judge your brand based upon your website and your trucks. It's the number one thing in the home service industry. In person. They're going to judge your trucks and your uniforms and online, which more and more people are shifting that way. It's going to be your website. I highly recommend lawncarewebdesign.com if you need a great website. Now, when it comes to number six, very important, we need to focus on the fact that if you have a decrease in your personal expenses and how much you're paying yourself, that's going to allow you to grow faster. It's very basic math. If I have a $200,000 business, but I'm pulling out a lot of money because I have a massive house, several fancy trucks, I take four vacations a year in a really nice boathouse, and I do all these crazy, exciting buying really fancy watches and all the rest of it. If I do that, it's simply going to lead to the business growing less. So if you're at 50, $60,000 in annual revenue, like, I want to grow my company, fantastic. But if you're taking out a bunch of money from the business and siphoning off the cash, it's going to lead the business not to be able to grow, because you're not going to spend money on your second truck, on the ability to be able to overpay. Where is it? Overpay Your first employee. You're not gonna have the money to be able to build the website and create a great brand. And furthermore, you're not gonna be able to have the money to spend on marketing, to be able to go out and get new customers, and you're gonna be like, oh, no, I can't spend the $200 a month on my CRM and my database. You're gonna do all those things because you're siphoning up all this cash for your personal expenses, and you're living some lavish lifestyle and driving a lamborghini trying to be something that you're not because that is going to hurt the business. I promise you, you will not grow the business fast if you're siphoning off cash for personal expenses. Otherwise that money could be spent on growing the business. So These are the six things you've got to do to get to $200,000 in annual revenue. Watch this video here if you're not at $100,000 in annual revenue yet, because this video will get you to that first step, then come back. Watch this video again. And don't forget the gentleman's agreement. And that is give a penny, take a penny. I give all of these great videos for you to watch for free. I expect you in return to hit the subscribe button. Thank you so much.

Thank you so much for making landscape summit 2023 an amazing experience for all of us. We had such a good time. We can't wait another year for the next one, so you don't have to either. Coming this October 16th, we're holding a whole new Landscape Summit. We've outgrown our hometown and we need a much bigger and better location to host the largest business conference the green industry has ever seen. So for the first time, we're holding Landscape Summit in Louisville, Kentucky. Start your week out with great talks from industry experts and keynotes from Mikandys that will completely change how you do business. And when you're done with that, head over to Equip Expo just down the street at the Kentucky Expo Center. This isn't like any event we've held before, but we need your help to make it happen. So go get your tickets now@mikandys.com summit. That's mycandys.com summit. Next up, Mike's gonna do the math on why your larger business could do great as part of a gustination.

Now admittedly, this is not the type of video I really enjoy making. Typically I talk about numbers and the business. Today I'm talking about Augusta Lawn Care because this was the most upvoted comment on a recent post I made asking what type of video you wanted me to make on the whiteboard. And I said I would make the video for the person that had the most up comments. And Brent the Great had a great comment because he's Brent the Great. So he made a great comment and the comment was why should someone join Augusta Lawn Care that already has a big business? And so first and foremost, let me just say right up front, I am extremely biased by you doing what I'm going to Talk about in this video, I have financial incentive for you to join Augusta Lawn care. I own 100% of the company, so that's the first thing. Second thing is the best thing, the best way to figure this out is talk to other franchisees because a lot of them had businesses before joining Augusta and some of them had million dollar businesses before joining Augusta Lawn Care. So talk to them. Now. I would typically say names but I don't want to overburden them with calls and things like they got to run their own business too. So if you're going to reach out to franchisees, please just be respectful of their time. They're all very, very kind, but they're trying to run their business too. But let's go ahead and jump through the five things that I thought of really quickly this morning, like two seconds ago of why someone would join if they already have an existing business that's doing 5, 600,000 in revenue or even millions in annual revenue. Why would you join Augusta Lawn Care? Alright, number one, again, I don't like talking about this stuff because it just makes me, I feel like I'm selling stuff. I promise you I'm answering the question to the best of my ability and I feel like I have a good understanding because I have eight locations, I have big locations, I have small locations. But please talk to other franchisees. Number one is the valuation and financing. From a valuation perspective, your business is going to have a higher valuation being part of a franchise. The bottom line is until you get about to 10 to $15 million in annual revenue, your valuation will be better with a franchise. The reason for that is because it really takes 10 to 15 million dollars in annual revenue to build systems out in terms of the office and admin and the back end systems for marketing. To be able to actually present this to someone who is wanting to buy your business and say, oh, it's worth a lot of money. Until then it's usually not worth much more than the assets of the trucks and vehicles. Honestly, if you look at how many small businesses are sold, it's usually for about asset value, maybe for a touch above that for goodwill and, and for branding or a client list or a contact list. But valuation is higher for franchising because the potential buyer has more confidence that number one, the systems are in place and that when the owner is removed from the business that the business can still operate. They're not as concerned about, okay, if it's Larry's Lawn Care and Larry leave, what happens to the business or what is Larry not telling me because he has the advantage of knowing all the information, whereas the potential buyer doesn't have the information. As a franchisor, we're able to give the buyer a lot of just peace of mind knowing, hey, we can vet these numbers, we can validate these numbers as a third party and give you all the information. Because we don't have any financial incentive. Whether you join as a franchisee or if the current franchisee continues their term, we simply can validate the numbers for a potential buyer and give a huge amount of trust. I personally bought into a franchise Anytime Fitness before I started Augusta Lawn Care. And the number one reason was because the franchisor could validate all the numbers. The number of members, the number of members, the number of training clients, all the revenues for the past three years, they could validate all of that for me. So it put me at ease. And I was willing to pay a top dollar back then, top dollar to be able to buy and do a gym franchise. We've now doubled that revenue. And if I was to ever go sell the business, the same thing would apply. I would be asking for probably the top half percent of valuations of gyms in America. But I would be able to get that because my franchisor would be able to validate all the numbers and be able to show it to the potential buyer. The financing is the same exact thing is true when you have an operating agreement and a franchise agreement to be able to show to a bank, they are much more likely to give you financing because it improves the confidence level of them. Just knowing that you're following systems, you have procedures, there's back end systems in place, and that if you get hit by a bus, their financing, the loan that they give to you is more secure because there is back end systems in place to help support the business. It's also when you have the sba, Small Business Administration is much more friendly to franchising when it comes to SBA loans. For S7A or 504 loans, mostly 7As are micro loans. There's a micro loan, there's a 7A program. They're much more lenient to give financing to a franchise business. And I know this for a fact because I applied for the locations that I am starting just to see how the process went. And as soon as I was able to say, look, if I sign all these franchise agreements, is this gonna help me? They say, yes, please sign them. I never got the loan, but I went through the process and trust me, when they saw the franchise agreement they made sure that it was in my financing packet because it definitely helps me in the whole process of finding financing. So it's much simpler, I would say. Simpler. It gives the financing team and the underwriters a lot of confidence knowing that you have dozens of legal papers, you have things in place and systems behind you and you're not just making things up on the fly. Number two is for multiple locations. I have eight locations. We have several owners that have multiple locations inside of Augusta Lawn Care. I think next year will probably be the first time we get three plus locations, but there's quite a few that already have two. But if you're joining, you already have a million dollar business. Multiple locations is what I would be. The main reason I personally, from a financial perspective, would be joining Augusta Lawn Care. And that's the ability to be able to have like a regional chain of 10, 15 locations and being able to have not have to go buy a shop space and an office. You can literally buy or rent some land behind a store that you can park your stuff because you don't need an office with utilities and computers and phones and finding an office team and training an office team. You have command center on the back end to be able to help with all of that. And we can do everything from emails to payroll to estimates to literally manage everything. And so when I go out and get my general managers, I don't have to worry about them understanding backend systems and advertising and how to put their website together and anything like that, because that's all handled by command center in the back end. And so I can scale much faster. It'd be very difficult to start two or three locations independently by yourself. With regards to lawn care, I'm starting four new locations in like the same couple weeks, right. I just did right now. And the reason that's possible is because I just gotta find the GMs and plug them into the system. And that leads me to number three. And that's training for your general managers. So as you get multiple locations, you can just send your general managers to training and in one week they're gonna get caught up on everything that an owner would otherwise, a regular franchisee would otherwise be trained at for our initial training. So you can literally just send them here and if they work out, great. If not, you find a new gm, you throw them here for another week of training and they come back and they're ready to go. So it's way better than you having to find somebody and then train them up for three, four weeks. Trying to kind of put things together and then they don't work out and you're like, oh man, I'll just wait until next year. It's easier to find a GM and then just send them to training. And then they have to pass certain tests at training just to be qualified to run your location. So they have to pass a software test as well as a overall systems test. And if they don't do those things, they can't ever actually start a location. So it's a great way to vet your GMs and make sure they're caught up to a certain level to be able to actually run the location efficiently. Number four, if you're joining and you already have an existing business that's pretty established, teaching other people and being part of the community is probably very important, I would say. And a reason why you would join Augusta is when you start teaching the guys who are new, there's definitely a level of number one, just fulfillment because you're able to help other people do what you've done. And number two, there is definitely you iron out the systems and understand the systems more when you teach other people. And the advantage we have inside of August to Lawn Cares, we're all using the same systems, we're all using the same email templates and automations and we use all command center because we use all the same stuff as P4P and we use all that. The language that we use is all the same. So when you're teaching other people, you actually begin to understand and learn these systems much more. And you're better at then training your crew and your team because you are constantly training new owners on how to do these systems. I know this for a fact because when I was really young I skipped grades in school. And the reason I attribute that to is because I did kindergarten three times. And by doing that I got the fundamentals down so much that from grade one and on, I was always the one that would be training and teaching my peers. And when I was finished my math, I would then help everyone else do their math. And what actually happened is I ingrained the skills and the fundamentals of Common Core, English and math and all these other things that it became much more part of me. Cause teaching it just takes the system that you learn to a whole other level instead of just doing it yourself. Teaching you have to figure out, okay, they come back with certain objections or problems that you didn't think of. And then you gotta kinda think on your feet and come up with a solution by doing that and teaching other owners and being part of the community, that's what really unlocks a lot of learning in my opinion. And honestly, the community Gusta Lawn Care is nothing to do with me. It's simply the greatest community, in my opinion, in the lawn care and landscaping industry. There's a great group of people and we weed people out simply if they are not good community members. And we've closed two locations because they were not embodying the values of Augusta Nation. They were paying their fees. They're actually growing their business, but they weren't good people in the community and we went ahead and let them go regardless with our life. Number five is the financial sense. It makes a lot of sense to join Augusta Lawn Care if you're making a million dollars in annual revenue and it's a $1,200 per month commitment, that's all it is. If you want to use Command center, you can, and that's an extra cost. But the actual monthly fee, the $1,200 that you're going to pay, makes a lot of sense. When you're doing a million plus, it makes more and more sense the bigger you get, because at a million dollars in annual revenue, you're going to spend $14,400, that right, $14,400 in a year on franchise fees, which is like 1.4% of your revenue. So it makes a lot of sense. And for that 1.4%, you're getting your website, you're getting access to Command center, you're getting all these different tools and trainings in terms of the academy, all of your marketing material, all this stuff is done for you, and the ability to send people to training, all that stuff for like 1.4% of your revenue. It's a great royalty. Okay, the bet, the math makes more and more sense the bigger you get, because we don't charge a royalty, we don't charge 5, 6% plus a marketing spend. We don't do that. We charge $1,200 a month and that's it. So makes more sense, especially if you're using like p4psoftware.com because you get that for free. Everyone inside of Augusta Nation gets P4P for free. That's $200 a month right there. And so if you do that and then like even lawn care web design, that's $400 a month. So $400 plus $200 for P4P, just the software and the website, immediately you save yourself $600 a month. If you would just go get those services elsewhere. So it just makes more and more financial sense, honestly. And that leads me in the vertical integration part of things. As Augusta grows over the next several years, you're gonna see more and more vertical integration. Whether it be the tax side of things that we offer at home service cpa, whether it be the media side and the marketing side, Whether it be p4psoftware.com or copilot CRM.com, these are all things I'm building out to vertically integrate for our franchisees. Down the road, we'll have a bank. Down the road, we'll have a whole bunch of other services. But being part of Augusta will always give you the vertical integration where everything fits together the most seamless. For example, with P4Psoftware.com, the majority of users are still Augusta lawn care franchisees. Why? Because all aspects of our business model is built around P4P, so it makes it easier for them to adopt things like pay for performance, because our whole business model is built around it. And so it's easier for them to use our tax because command center runs all their invoices and they run all of their books and their expense categorization and their P&Ls and their quarterly reports. They do all of that. So it's really easy to run their taxes. We can give them a discount. They don't have to pay what we have to charge at home service CPA because they're vertically integrated. Everything is being done inside the system. And as we begin to scale up Augusta Nation and we begin to have more and more services that we can offer, the bulk of those discounts and the bulk of the efficiencies gained will come through Augusta Nation because they're vertically integrated. So copilot CRM.com will vertically integrate with P4P. P4P will integrate with the website. All these things will integrate. But I guarantee you that less than a quarter percent of people outside of Augusta Nation are going to actually get all these services. And if they did, if they did, it would make absolutely no financial sense. They should just join as being a part of Augusta nation for the 1,200 bucks a month. But from a vertical integration standpoint, I. I truly believe that all of these pieces that we put together, whether it be the CRM, whether it be P4P, all these things that we're building, I believe putting it all together is what is gonna make an incredible business model that in five years will be looked at as, like, mm, that's unique. And furthermore, it's very hard to compete with because putting it all together is the magic. Taking one piece out, taking one part of the system out, like Profit sharing or P4P, taking one part of that out is gonna break the whole thing, in my opinion. And so vertical integration of all these different things that we're building with software and the systems that we have at Augusta Nation together is where the power is at. And we'll always offer these to the public for a premium that we can fund these sort of developments. But it makes a lot more financial sense the bigger you get to be able to just tap into the program, pay the $1,200 a month, be part of the community, have the training, the resources, all the marketing material, website being taken care of. That's really what Augusta Nation's all about. And I hope they answer your question. So that was the highest ranked question I got through it. Comment below if you have any more questions about that specifically. But going forward we can go to the other questions that were asked on that post that aren't about Augusta. So if y' all are really boring to you, I apologize if it wasn't boring to you, Watch this video here talks more about why you might want to join Augusta. And until then, we'll see ya.

It is harder than ever to find good employees, but even harder to keep them. That's why we implemented Pay For Performance Performance P4P promotes efficiency in your business by design by splitting the labor revenue for the job so you can pay your team more based on their hard work and stop employee turnover in its tracks. With the new P4P software, you'll get automatic updating efficiency numbers, real time project tracking, and individual employee metrics on a day to day basis. If you want to learn more about P4P, book a call with Brad, our in house CPA at P4Psoftware.com training. That's P the number 4P software.com training last one for today. Mike is able to charge $100 per hour to mow lawns and it all depends on your stage of growth.

Hey everyone, I'm Mike Gandies. 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. 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. I'm going to show what that means for the growth of your business. It's going to 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. Cause 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 because 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 because 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 gonna 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 gonna hire someone. I've gotta be able to cover their wages and still make some profit here. Well, in order to do that, I've gotta charge $60 per hour. So I went from $40 per hour to. To $60 per hour while 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. Cause 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't 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 all 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, the very first one, we are now at $90 per hour for basic services. We don't do construction or hardscaping. We do basic projects like mulch installation, trimming bushes, mowing, weeding services, etc. 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 growth is, 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 growth rate 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.

The board.

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 the store and you see on the counter like next to the register, they have 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 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. Alright, 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 your 5, 6, 7, etc. 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 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 growth rate 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 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. Okay, 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 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 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've got to 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 really fast 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, and we'll see you tomorrow.

This has been the Mike Andes Podcast. Now you have some ideas on how to take your business to the next level. And if you like what you heard, we have tons of lectures, interviews, and more over at the Mikeandis YouTube channel. Be right up your alley. That's all we have for you today. We'll see you next time.