GROW or DIE... this $1.3M Lawn Care Business is TRAPPED!

Have had a lot of lean years where we have not paid ourselves very much.

Today we're in Canada visiting Matt and Andrew with Augusta Lawn Care. Oh no.

So, okay, so Andrew, what are we doing?

These partners have been in business together for 14 years.

Last year was the first year we actually had dividends still just like it's.

Not enough money coming in to really pay the bills.

They joined Augusta Nation two years ago and have nearly doubled the business since then to almost 1.3 million million in revenue.

We were both in the field at least half time up until like partway through last year.

So they are profitable and continuing to grow.

We're gonna work a lot, work really hard and then as we get through it, as this project kind of finishes, we're gonna start delegating and handing more stuff off and training the next gm.

Their goal is to open up multiple locations locally.

Andrew and I are both trying to expand and maybe add another Augusta location.

And one in Hawaii.

That's a possibility. That's kind of like a dream case.

We can plan for that.

Come on, dude. To do this they're going to have to figure out a way to simp, simplify the structure of the business, cut out massive projects and find great general managers.

I seem to have a little bit more real world knowledge than some of them.

This is the business Breakthrough show. My name is Mike Andes. I'm the founder of Augusta Lawn Care. We have over 175 locations around the world and we travel around the country getting small businesses to the next level. Our goal is to give Andrew and Matt a six week roadmap to creating a multi location empire.

What's up guys? See you man.

Congratulations.

Thanks dude.

I appreciate it.

Good to see you man. Thanks for coming out.

This is your place?

This is my parents house and our office. I'm Matt Baidalla. I'm the general manager of Bayside Lawn and Garden and we started Bayside 14 years ago.

I am Andrew Holt. I am the general manager and owner of Augusta Delta and we joined Augusta two years ago.

Andrew and I are both co owners of Bayside and Augusta Delta. 50 50.

How'd that big project?

Still chugging along on it.

Still chugging along. It's going to be like a year long project.

Basically all 20, 25.

You think?

Well, most of it wrapped sort of end of summer and then it's gonna be tons of maintenance work after that.

So this is like at the end of last year. So we redid this whole garden here. It was completely overgrown. I've got an Overhead shot, it's just like brambles, completely overgrown. Same with this was completely overgrown too.

We're turning this all into grass so it'll be like a grassy like hill going down to the lower section there.

This job is. There's a massive scope of work here and it changes on a day to day basis too. Like we have our landscape designer, Cheryl Clark. She comes out and sees something that, you know, maybe needs to be changed. Now, even though it's one project, it's like there's so many different little aspects to it. Like I get to, you know, kind of do a little bit of everything. Like, you know, we've had issues here with water and irrigation breaking and all sorts of issues come up. So you kind of have to transition from one phase of the project back to another and then over to another. So it's kind of a little bit of different stuff all the time. So it kind of keeps me on my toes too. Right. So it's just, it's a huge scope of work.

It's like almost a little bit like two separate companies. There's the crew that goes out to the big DEVG project and then there's the mowing crew and the maintenance crew. And it's just been a little difficult on that side.

Did that fall on the Augusta side or the Bayside?

Augusta.

Oh really? Okay, so because residential.

Exactly. That's basically our split. It's just residential is all Augusta. HOA or strata up here is all Bayside.

That part hasn't grown a ton the past couple years because you basically have the same strata, like 300, 400 grand.

So it was pretty level for kind of the last two years or so. And then this year it's grown. So just in the last four months I would say it's grown 50%. Yeah. So it's been getting more stratas. We went from kind of 25 to about 32 now. The stratas are good. So Bayside is actually decent in the. In the winter it's profitable because we do level billing. We actually make a little bit of a like smaller profit margin in the spring when we've got all the labor and doing all the work because they pay us the same amount in the spring as they pay us in the winter. So in the winter we're positive. Of those seven additional ones. Two of those are now our biggest contracts. I think we're about 470k recurring revenue on in contracts. All commercial, all commercial.

12 months. All 12 months.

Some of them are nine months. There's a few of them that just do nine months. And we have nine month payment terms for them, but most of them are 12 months.

The new ones coming on are mostly 12.

I'm doing that with all the new ones. Augusta is where we struggle the most because there's more fixed costs, there's more expenses, there's more staff that we're trying to keep on.

And we tried to do snow plowing and salting this year, and we got one snow event basically, so we bought, you know, salt and some equipment for it. And that was another thing that did not help us through the winter. So.

And how many of those people got laid off in the winter?

All of them, except for one. He was doing the winter services and some projects, but still just like, it's not enough money coming in to really pay the bills.

That was our biggest issue coming in. It's in the winter where revenue dropped off the face of the earth. And then we're coming into the spring behind the eight ball with minus $40,000. We're both doing for each of the companies, sales, admin and operations. And we've got some good team members that are helping with the ops, but it's kind of all on us still.

In the Business Breakthrough show, we use the 4L framework to figure where the business is currently constrained and figure out how we can grow it. The 4L framework stands for liquidity, leads, labor, and leadership. These are the four areas of the business that eventually, if you're trying to grow, there's going to be a bottleneck. And we want to identify where we're bottlenecked now and what we can do.

To fix that constraint. Right now, it's like we have Bayside and we have Augusta. We have commercial and residential. You guys kind of split roles of sales, operation, admin between the two.

Exactly, yeah. And so now Andrew's doing all the Augusta estimates. And like we said, I'm doing all of Bayside, everything.

Basically, the general cycle of the four framework starts with money or liquidity. We turn that into leads when we go to get customers. If you get enough customers, what do you need? New, more laborers. Employees to get the jobs done. But then as you get a bunch of laborers, you need more leaders, managers, etc. When you get more managers, you have a collapse of your profit margins because they are overhead to the business. And this causes a liquidity problem. And this is the cycle that every business goes through.

And as they grow, the first step.

In the 400 framework is liquidity.

I know obviously we don't have like, this isn't a turn. This is what we call breakthrough. I think right now, from a liquidity perspective, we have a problem with seasonitis.

Now, seasonitis is a name I made up. It's a disease that comes with seasonal businesses where you have three to four months of the year where you lose money.

And it's mostly on the Augusta side because we don't haven't figured out winter services, that conversion.

They're losing 30 or $40,000 every off season because they don't have enough revenue or leads coming in. By having more recurring revenue, I stabilize my cash flow throughout the year.

A people just don't understand what it is we're trying to do. We have about 180 recurring customers now, and only 30 stayed on. We've really got to up that number to at least 100.

I think only 20% of their customers are actually converting into that winter service.

I see this all the time. For the ones that have just started winter services, it's like they get 25, 30 the first year, then like 16 or 70 the next year. And then finally it starts to become like all the customers expect it. The crew knows what to say to the customer. It's all very expected. You put it in the estimate for your mowing services and just kind of flows a little bit easier. But like, even like Jason Store, he almost gave up the first two years.

Yeah, I saw that.

He just kind of just kept doing it until finally now it's like, okay, 50, 60, 70% of our customers are doing it. Of the. Let's call it like 900,000. That's not this big project. How much of that you think is recurring? Like half? Like 50.

50?

No, it's more than half.

Oh, it is?

Yeah. It's not much. Maybe 60%, you think 70%.

We can do 70% recurring after the big project.

Yeah. So that's the thing. It's like once this project ends, it really changes things a lot.

Right.

Do they pay, like in increments throughout the whole time?

Yeah, it still has been a bit of cash crunch. So we basically did a. We did a 25 or 20% deposit to start, and then. And then installments, and we realized that the schedule was a bit too drawn out. I've got a $30,000 plant invoice here from our designer that I haven't paid yet. Now I've got to go to my client and say, hey, can we get that installment a week early so we can pay it up for all of.

This From a liquidity perspective, we're Also having trouble right now with the fact that we have a $300,000 landscape job that we have to wait on 40, $50,000 chunks of revenue. That causes ups and downs in our cash flow and how much money is sitting in the bank account. That makes it much more difficult to scale the business if I' waiting on people to pay a deposit or the next 10 or 20% of a big job.

Okay. So I think this part we've already kind of determined, but like the cash flow from liquidity has been bad because of projects. So we're essentially, let's not do projects. What mechanism did you use for converting them into Q4 this year?

So I went and knocked on doors and I thought that would kind of be the best method to go. I think just going with the opt out in the future would be better because a lot of people just don't understand what it is we're trying to do. A lot of the projects that we're doing, it's lawn repairs. And it's very time specific. So it's April, May 1st, half of June. We can do these lawn lawn repairs. So we can't really book them out into July, August. So we basically have one crew full time, two guys just doing lawn repairs.

So it's very popular around here.

It's super popular.

It's like people actually know a lawn repair.

Yeah, it's weird and it's high margin, so it's hard to turn away.

And lawns are getting destroyed here by a chafer beetle infestation. I don't know if you've got that down in Bellingham.

It's up the border. Yeah.

What we're trying to do is think about what does the customer actually want? In the perfect world, when we do a lawn repair, it never has a problem again.

Could you try to get those people to convert into mowing?

Yeah, we try to, yeah.

What if you give them a second option for the lawn repair? If they sign up for mowing or do a warranty like, hey, we guarantee the lawn to come back as long as you sign up for a mowing package.

I can offer this to a customer as an upsell, and that is I will warrant it forever. I will fix it for free in the future if I upsell them into another service.

Because I would imagine there's. There's a certain failure rate, like if they don't water, if they don't see it comes in old patchy, you go back again.

We don't guarantee it in writing, but if it doesn't come in like Andrew's going back and reseeding it, you could.

Really build, build us in your winter services, like guarantee that lawn doesn't happen as long as you do winter services and our mowing package. And then you lean into this fact that, that they don't see the patchy lawn until spring. In their mind, it happened during the winter.

The goal is to take all these lawn repair leads that are pouring in and convert those into mowing jobs.

And then I want to take those.

Mowing customers and convert them into winter services. And by doing that, getting recurring revenue throughout the mowing season and all winter.

So what you say is, hey, if.

You sign up for our, our mowing.

Season, which is March through October, but then also no, we come the same bi weekly schedule, we guarantee your lawn will not get patchy from this, what's it called again?

The chafer beetle.

The chafer beetle. Like I would call your chafer beetle special or like your chafer beetle warranty.

To really solve the off season, you've got to get creative about your unique area. And right now there's this beetle issue. The fact of the matter is that this beetle keeps coming back because if.

They got the lawn repair and you've explained why like, oh, this is a beetle like beetle immediately sounds horrible. So it's like great. If you just on our lawn maintenance package, then we guarantee that it's going to be looking good. And then if, if you stay in our winter services package, we will guarantee it will not come back again. And if it does, we will come back and fix it for free.

So I attach an upsell to the benefit of a warranty.

Yeah, it's a good angle. We're one of only a few companies that can deal with it properly too because I went and got my pesticide license which you need to treat for these beetles.

The fact that Andrew is one of the few people that can actually apply this chemical and treat this problem gives us a huge unique selling proposition when it comes to our mowing customers.

It's like a really good product. It's eco friendly, it's not harmful to pets or people.

Is it low cost?

So each bag is like $170 for treatments, but it does 10,000 square feet.

So. Okay, so you're looking at like say three mid sized lawns here.

Yeah.

Okay, so it's 60, $70.

Yeah.

Cost. Can we sell that for free? If someone signs up for mowing and.

Winter services, that's a really good idea actually.

I like that because it's relatively low cost of 40, 50, $60 to apply it on a lawn. I'd rather just take that hit and go get a whole bunch of mowing customers using that as the bait.

And you just know you're going to eat 50 to 60 bucks and apply it to a lawn in spring. Right. Kill all the larvae. I think the bigger pain point, those are people who are doing the lawn repair because they just pay $1,000. Usually is like a thousand bucks.

Yeah. Depending on the size of lawn. Between one and two thousand.

Yeah. Like it is paid a thousand bucks.

Yeah.

They see the the value of paying you $1,000 to mow their lawn for the year and make sure this never comes back again. The most like time sensitive is actually yard repair people now because they have pain and you can fix it for this upcoming year. And this is what kind of protects you from someone joining in like fall. They already have the larva so you can't fix it. Like you say, we you on the whole season and once we have you for a whole season, we treat the lawn, we mow the lawn, then you're covered. There's your warranty. That's perfect.

Now you might be asking yourself, how do I create an offer where I can cure seasonitis and create revenue throughout my off season because you don't have beetles in your market? Well, I have a whole bunch of different ideas of the different ways that you can solve this problem in your business. Own this book called the Off Season and you can now get on Amazon as well as the Audible form. And if you don't want to give Jeff Bezos any of your money, just go to mikeandys.comworkshop and all the video training of the content is for free. Now in Inside of this. One of the ways to solve that seasonitis is through recurring revenue. And that's what we're talking about with Matt and Andrew. But there's a whole bunch of other ways that I share that you might be able to use in your business. And this isn't a boring read. This is a great workbook that you can fill out all the numbers and create a custom plan for your business to solve the off season problem.

I think the other part from a liquidity perspective is just getting to profit mode for Augusta.

One of the questions we have for Mike is should we keep Bayside and Augusta Delta separate? Should we merge them together into one big location? This year combined, we're going to make a little over 1.5 million.

They've been in business for 14 years.

And honestly, after 14 years of growing so much. A lot of times you can just be exhausted of grow, grow, grow and not having as much profit. So they might just want to go into profitability mode and that is raise prices, Keep the location at like 800,000, put a general manager in place and then do it that way. Take the current Augusta model, Keep it almost at its current size, which is like what last year was 950. Let's just say it's like 900. We make it profit by just raising prices and I keep it as is and then just scale up Bayside, or.

You combine their commercial side of the.

Business with the residential side, Augusta, and you build the thing to 1.5 and then you get an admin person, you get an operations person, and you get a salesperson. We delineate roles more around sales and operations and admin inside one company. Which one are you leaning towards? Because, like, I could see either one working out. It's also a matter of like the. The future plans of what you guys want to do. Is it like multiple locations? I hear you want to move to Hawaii.

I think we're leaning more towards keeping them separate.

We're worried that if we did merge them, it would just be complex and tie one of us to the business for a lot longer.

I think getting to the 800 to a million dollar level on both and kind of keeping them separate and having the one GM in place to kind of run things.

Bayside's like 90% recurring. So it's. It's fairly simple in that regard. You know, it's easy to manage, but. But still, adding it into Augusta in its current state would be a huge business.

If we did combine them, I'd probably have to hire an admin person full time.

How many employees do you think is on Augusta? Like seven.

Eight?

Not even five or six, probably.

Good. That's perfect. That's a perfect size because it's Lucas, right? Do you think he could potentially eventually take that one if it's in profit mode with a big project off the books?

Easily. He's got a lot of management experience. He's great. He'll do extra stuff after hours. He'll, you know. Yesterday a belt came off on our zero turn. He came out and fixed it.

I felt bad for the guy because it was his first day on that route. We're gonna do a training session next week, I believe, and I'm gonna jam that belt up in the mower and take it apart and show the guys, hey, this is how you do it. So next time I Don't need to come out from another job. You can fix it or call me.

And I'll walk you through it.

He's still doing these other things as well as full time over there. But that's kind of one reason why we see him as, you know, a great, great future gm, possibly of this location.

The operations side I think he'd be great on. He would have to learn the estimate side and some of the other GM duties, which I think he could learn, no problem.

And if you scale back even on the size of projects you do, he won't have to do as many estimates in person.

Yeah, I'm doing a ton of estimates right now and a lot of it is for landscaping type work, which we're kind of turning away anyway.

Monday I did 16 estimates for example. I kind of ate up my whole day just doing estimates. When we're getting this many estimates, would you encourage us to turn off in person estimates?

Do you estimates every day of the week right now?

Monday through Thursday I do in person estimates.

When you do in person estimates, it's almost always one time work.

Yeah.

And so it's not really where we want to build anyways. I would rather just be like we take all the recurring coming in, instant pricing, et cetera. And that's slowly increasing the percentage of the revenue that is recurring versus one time job. Instead of saying no in person estimates, just say I'm only doing estimates on Monday days. And then you like you just like all day long you're driving around, but you just do it in one day. And then the rest of the week you're able to focus on the other aspects of operations, admin, et cetera. And then you don't have to say customers no, which is a pain in the butt. And, and then what's happening too is when you say like hey, you've got to wait till Monday is are you going to decrease your close ratio? Technically yes. However, the people who want you and you only, they'll still take you on Monday.

You're right. We haven't really completely shifted away from the growth mode. Like you're still doing four days of estimates. We're still putting these, all these jobs on the schedule.

It's a weird thing, dude, when you.

Switch into profit mode.

It's a weird like different world when.

You hit capacity and you can't serve any more customers because all your trucks are going, all your employees are working full time. What you do next determines whether you're in profit mode or in growth mode. If you're in growth mode, you go buy trucks, hire more people and increase the amount of customers that you can serve. If you are in profit mode, I do not buy trucks, I do not hire more employees and rather I increase my prices and therefore make more profit.

Growing, growing, growing, growing. When you switch into profit mode, it's like, okay, we actually turn work away and we raise prices. And so I would say like with that many estimates coming in, one thing I would do, like, have you raised prices this year? We did on recurring. How much?

An average, about 10%.

Oh no.

So okay, so Andrew, what are we doing?

25%.

When I went through it this winter, I'm like, oh, I really like this old lady. She's so nice. Like she's under budget. I got to at least put her up five bucks. Those people I should be raising maybe 10 or $15 and it's tough sometimes.

Now the next Stage of the 4L framework is leads. And the current constraint is the fact that we're getting tons of leads. The volume of leads is a lot. We're booked out months into the future. That's great. He had 16 estimates last Monday. However, we want more recurring jobs.

So what do we need to do?

We need to turn one time jobs, these lawn repairs, into recurring revenue in the form of mowing.

So anyone that's currently on yard repair, I'm trying to upsell them into mowing.

Right.

How are we going to do that? We're going to sell a warran to where these lawns are going to look good year round, including the winter. And by doing that, I'm going to again stabilize cash flow and focus on recurring work.

We got this wonderful yard repair situation. We're going to upsell these people and that's going to be a guarantee for getting rid of this beetle once and for all. I would do kind of a two prong approach. One, I would be emailing everyone that's on the schedule being like, hey, here's your date. Also, by the way, we offer this other thing. I'm trying to upsell them now because they're feeling the pain. It still looks bad. They're also just agreed to pay you $1,500. Great pain point to be like, it's cost you that much just to maintain the property and we'll guarantee this never happens again. I think you may be at 20 or 30% of those. Then I'm going to take my mowing customers and I'm going to do the exact same thing. We're also going to try to upsell them into winter services. So the funnel simply becomes, we get.

People for yard repairs, we put them.

Into mowing, and then we get them for winter services.

And we guarantee they never have this problem again. We're going to fix it, we're going to prevent it.

And the only thing we require is.

We do come year round to make.

Sure when you wake up in the spring, your lawn looks good. And if it doesn't, we will come fix it for free as long as you've been with us for the entire season.

And we were kind of giving like a money back guarantee on the grub treatment itself. So we were saying to help us sell the grub treatments, we're saying, if it doesn't work, we'll give you your money back for the treatment. This is way better.

The next Stage of the 4L framework is labor. And honestly, right now they're not having a problem finding or retaining talent, and they got a really good crew.

The guys hang out on Fridays at the end of the day, like, people are just sitting around hanging out. Like, it's kind of a bit of a family type feel.

We've been in this community for a long time. We want to build the best jobs and we think we're in a great spot.

So we're not going to address that. When it comes to the constraint of.

The business, it really is a place where people like being and that makes us feel good.

The next Stage of the 4L framework is leadership.

This is where it's like defining where we're going with the business.

You know, the first five, six, seven years, we weren't really that focused on growing a business. We really, you know, kind of just owned these jobs and we like doing the work. We really both like doing the work.

We were working hard. It was just like more physically hard, and now it's more mentally difficult in the sense that we're really trying to fix the business, have the systems in place. It's more than just getting the work done.

Once we hit 30, once we found our wives started having kids, like, it really changed. Okay, now it is time to try to work at this really hard.

One of the main things that we have never really done that we're looking forward to doing is trying to get the next sort of wave of managers in.

We were both in the field at least half time up until, like, partway through last year.

We're just so used to kind of running this thing that it's kind of hard to even think about, like, getting somebody else to do it. And, you know, that that whole process is going to be something that's completely new for us.

This year specifically, I've barely been in the field at all. I mentioned those projects that I'm kind of helping a little bit. I'm doing like an hour here, an hour there. It's mostly management and working on the business for me. Now we just want to help help develop them into leaders and delegate more of our responsibilities to and that's something that's hard for us. Andrew and I are both trying to expand and maybe add another Augusta location and I want to elevate myself out of the daily ops here and kind of promote a general manager. And beyond that, there's crew chief roles and future general manager jobs. We were thinking in a perfect world that maybe next year we would have that. A GM of Bayside and a GM.

Of Augusta General manager of Augusta General Manager Bayside side Growth mode profit mode.

Now we're going to raise our prices because we're in profit mode so we can afford these leaders, these general managers. But first.