He Makes $800K… But Still Can’t Step Away

Hey, everyone, it's Mike Andes. Today we're on the road, and we're visiting with an owner from Augusta Lawn Care. His name is Garrett. He's been at this location for a couple years now. We've gotten married recently. He's having a kid on the way, and he's just going from growth mode into profit mode. So he passed the $500,000 annual revenue marker. He's actually more on the $800,000 in annual revenue marker this year. But now he needs to make it profitable. He's been in the business working as the gm. How do we systematize and simplify things so he can hand this off to a general manager and focus on his family as he has a K coming up in just a few months? Let's go ahead and jump in with Garrett Smith from Colorado in Augusta Nation. All right, Glendale, let's go. Profit mode. 31k in the banks. $570,000 in revenue last year, $800,000 this year for employees. Very efficient. Okay. Do you have a lot of debt? Yeah. Got it.

Again, it's like 130.

Oh, that's not bad.

So. And then it's 3,000amonth payments.

Okay. That's not horrible. Okay. That's not bad at all. Cool. Snow removal. You don't do any Christmas lights.

We do like, 15 to 20 a year for the last three years. Might drop it this year. Might not.

Okay, cool, cool, cool, cool. Like, this is your third year in Augusta.

Before started, like, three and a half years.

Yeah. I still remember when you came to training.

Well, the second time.

Oh, yeah.

The first time.

That's right. Okay, good stuff. Awesome. Anything I can help with?

A lot.

This is your first year in profit mode because you crossed 500 last year.

I would say I'm in a constant cycle of, wow, we should really go into profit mode.

Yeah.

And then this spring, you grew by.

40%.

But we drew a bunch. Okay.

I think we got to, like, the place where we had, like, we had 47,000 in the bank, and I've never seen that kind of money. And I was like, okay, I could go buy a nice truck, which I really want to do, or at the start of the business, and I chose the latter. And I was like, what? I mean, what are you gonna do with money besides grow your business? Right, right. So I feel like anytime that we've had, like, excess cash, I've thought, like, let's go back into growth mode, kind of.

Okay, cool. Are you gonna keep growing to the, like, 1.5 DGM plus model or what's your plans?

So I think in the short term, we need to make some profit. We have a baby coming in January.

That moves things around. Let's go. Congratulations.

Thank you. And, yeah, we were obviously, like, a little low on cash in the bank right now, and we're on the. We're improving that metric. But it was, like, super bad to the point in July where we, like, almost didn't make a payroll. And I was like, okay, this is. This is a problem. We did, like, 90,000 and, like, almost didn't make that.

So this profit mode is the new initiative.

This is the new initiative.

Okay. This wasn't this whole year in profit mode. This is like, we need to. Got it. No.

Um. So, yeah, and honestly, this, like, format of group coaching, I was, like, not sure, but I feel like I've learned enough that I can just go home and implement already, which is crazy. My first question was basically answered with DJ with, like, tiering admin ops and then sales. Cause I have. I have a gm, but he's transitioning out. So right now he's pretty much just a technician. And me. And he's been with me since the start, like three and a half years ago.

When you say that, is he actually leaving or is he just like, hey, I'm not gm, Cole.

Like, I leave, he's leaving.

Got it. Cool. All right.

So I.

For, like, kind of the first time in three and a half years, like, it's pretty much just me. She does all the office work, so we don't have command center due. They'll, like, sometimes if we get behind, they'll do calls or whatever.

It's the reactive task. Maybe to them, but everything else. Okay, got it. What's your name again? I apologize. Malia. Malia?

Yes.

How do you spell it?

M A, L, I, A. Oh, that's easy.

Great.

And she's a little older, has a. Much better.

Lock him in.

He's super nice too.

But yeah, so that was kind of my first question is, like, it's really been, like, the last, like, three weeks where my GMs like, hey, I'm moving on. Right now. He's pretty much just like a technician, which is great.

Has he been good?

Yeah, he's been really good. I think in hindsight, I've really realized how poor of a job I did, like, training him, if that makes sense.

And what was poor about that training?

Well, we weren't doing the weekly scorecards, so, like, he didn't really know the numbers. We weren't Going over this sounds. This is embarrassing. We weren't going over the P and L. Yeah.

Yeah.

Like, you didn't really, like, have goals. Like, he did a really, really great job. And like, I didn't show up to the shop in the morning for like two months straight. Quality was good, but I think it was really just like, we weren't profitable, if that makes sense. And I failed to emphasize, like, what KPIs we need to be profitable. And like, Alice kind of talks about, like, your job is not to, like, keep our employees happy. Like, you want to have the employees, obviously, but you need to drive margin.

Yep.

Or at least like, be able to break even. And I think that was like the biggest single failure that I had in training him since because the employees, like, all super happy. Quality was good. Like, everything else was good.

So, yeah, that was kind of my first question, which you answered is, how do I prioritize my time? It sounds like I need to be basically doing no admin at this size. Like, the only thing I'm doing is like, if she has a question or command center has a question question, I'm quickly answering it, but not actually calling the customer.

Do you still have the email on your phone?

Yes.

Start there.

It's the best decision ever.

Delete it. I never even logged in. Do not have the mail app on your phone or like the email inbox. Okay. It'll force you to let them do their job without jumping in. Because the thing that's causing a lot of problems even at command center right now is people that have delegated the inbox. I asked the emails environment, like, why do you guys. Some people cost five times more than other people. They're like, well. Cause some people still jump and do it half the time. Which means every single single email we have to ask them, did you contact this person? What was that email on the weekend about? And I get up to speed with them. And so the biggest thing you can do to get out of admin is delete your inbox.

And empower them to be able to just do their thing.

And then do I delete Connect Team as well?

No, no. Because they'll still have questions. And then kind of how I look at it is like at your size, you're still like the gm kind of acting gm. Most of your day is manager time. Right. So if you think about like worker time, manager time, architect time, as a manager, most of your day is manager time, which is you are reactive. Things that go wrong. The crew's reaching out to. You have to Reach out from the admin. They have questions, et cetera. What you do during your 5, 10% of your week, that is architect time, is you look at the times everyone reached out to you and try to solve it with a system. So every time the admin person reach out to you, you ask yourself, okay, they keep asking about this one service. Is it worth keeping 4% of revenue for this one service? Every single time an email comes, they have to reach out to me. And so even at your size, everyone thinks about architect time as, like, once you're above 1.5 million, once you have multiple locations, I still think everyone needs at least an hour a week of architect time. I. E. Like, you step away from the building, you assess the weak points, and you create solutions for those. And then everyone's like, well, then what problems do I assess? Like, what do I fix? You go back throughout your week and ask every single time someone from admin had to get in my way or operations have to reach out to me. Those are all the problems that, if you systematize them as the architect, make the business go smoother. And really, that's the best way to set up your next GM for success, is to get all those things firing in all cylinders and streamlined so they don't ever get those contacts through connecting.

That makes sense. And then I guess, like, the other question, so profit's the goal. Like, in times where I'm way behind, like, on everything, what are the things that I'm prioritizing during those times, like, to drive profits? And in times where it's like, oh, everything's caught up, like, I don't have anything super pressing. What are the other things that I'm like? Like, is it sales?

I talked about this a little bit a few weeks ago, but when you have a bajillion things, you got to get done. The first thing I'm looking at, is there a deadline?

If there's a deadline, it kind of takes priority. If you, like, next week, you got to get something done. Like, okay, we've got to get all the trucks wrapped by this date, and it's a week from now, that's gonna take priority. Most things don't have a deadline, though. So that's always the first question in terms of prioritization, is there a deadline? Next thing I'm asking is, what are the pros or the positive things that are gonna happen if I do this task? Cause, like, you're gonna have a bajillion things that are gonna be put on your plate throughout the month. Or you get ideas. You listen to the mastermind. Come things like this. I got all these ideas. I'm gonna win Christmas lights. There's a bajillion things you could be doing. This is the synthesis for, like, which one do I focus on? Because you can only focus on a couple things at the same time at one time. And then the next thing is, if I do nothing, what are the cons of this decision? And if you ask these three questions, it'll be very clear in terms of what should I focus on next? Because that's what most of us get paralyzed by. You have 50 things you know need to get done. You're in the middle of spring rush. You got 10 people calling you. Like, if someone sows, just broke the waterline, there's a deadline. Like, you gotta get it done right away. It is the most important thing. The thing that becomes more challenging if you don't use this as a synthesis is when you don't have a lot. Like, there is no immediate fires. What are you working on? That's when you go to your list of 30 things that you've put on the back burner as, like, things you want to get done. And you ask yourself, hey, none of these have a deadline. Okay, so if this was to be accomplished in the next few weeks and I focused my time, what would it do to the business? Oh, it could double it. Ooh, that's a big pro. What would be the cons if I do nothing? Well, I'd be just profitable. I'd stay the same size. Okay. And I would just very easily be able to assess what's the next thing to focus on.

That makes a lot of sense.

The deadline one is, as a manager, most of your time is spent being reactive. Like, when you hire a gm, what you're doing is you're hiring someone to take on fires. So at this size, and you're acting as the gm, you are mostly in manager mode. So if you think about, like, architect time, there you go again.

Breaking things.

Architect time. Architect. Something like that.

Manager.

And then we have our labor. The next big move for you after a year of profit, is you're gonna go pay to take 70, 80% of your day that's currently spent doing manager and cash that didn't pay someone else to be the manager so you can spend more time in architecting. That's what Bryce and the movie will make me next year. It's like you're basically paying for a manager to take all the fires off your plate. And if there's fires coming on your plate. As an architect, that's a problem. And that is the thing I can then fix. Like, okay, we are cutting out this service so that I don't get interrupted anymore. My manager should be able to handle all operations. And if they can't, that's a problem.

And so, you know, as you grow the business and like next year, if you. Are you going to get a general manager, is that plan ideally.

So I feel like, I guess, correct me if I'm wrong, we need to get like two months of payroll in the bank or like one month of revenue. Yeah, one month of revenue in the bank. And then I would like to get a general manager and probably start to grow again.

Yeah, I think you're in a perfect spot to go into profit mode, like legit profit mode. Raise prices, have a lower close rate. Probably do 850 to 900,000 next year. But this time next year of 150,000 in the bank. Right. I think from a business perspective, you're in a better spot. I think from a mindset perspective, you're in a better spot. And I think like from a leader of the family, probably the wise decision. Right. And so I would only focus on that. Don't even think about GMs. You are the GM of the business.

So you're saying me run it for the next 15.

I would recommend that you also get really, really good at what metrics need to be hit. So when you hand it off, you'll know exactly what the recipe looks like. So I would do weekly scorecards for yourself. If you don't, what's gonna happen is you're hired a general manager and just like the last one, you won't do them. So give yourself a scorecard on the weekly side of things. Like now you'll know what a GM is supposed to like, what that's supposed to look like.

So my question is about snow removal. Pretty much the like a summary of the question is we're at capacity. How much do we raise prices, if that makes sense.

For snow specifically.

For snow specifically. We did snow for the first time, I guess two weeks. This is our third season of snow. First season we did like maybe 40,000 in revenue. Last year we did like 200, 220 somewhere in there with what we have. And. But we did a mid season price increase like in February. Well, we sent out January, when in effect like February. Ish. And then we've signed some up like maybe another like 10%.

Okay.

So we maybe have 10% more.

So 240, 250 this year. So what?

We're on track. We had a below average snow year last year in terms of, like, pushes. So basically, if it doesn't snow at all, we'll do 24,000 because we have, like, monthly unlimited clients. And then if we have average snowfall, we'll do another.

Or.

Sorry, that's 27. And then it's 24 in per push. If it's average snowfall. So it's like, no snow. 24,000. Average snow. 51,000amonth.

Oh, per month. Per month.

And then double the average. We do, like, 75,000.

Okay, cool.

So somewhere between 24 and 75.

That is to know. That's how it is to know.

We.

Yeah. Last.

We had nine events in January last year and none in April, which is the second snowiest month. There was a lot of really big snow events, but not. Oh, sorry.

Yeah.

Same amount of inches but less events. So, you know, it's interesting. But we should be hedge our bet low or high. We should be kind of decent. Where we're at right now is like. We're, like, probably a little over capacity. Like.

I don't even know if we could fulfill everything that we have.

That makes sense. Okay.

But it's, like, about break even, so we definitely need to raise prices because we need to make money this winter.

Yeah. So.

I did, like, a full price analysis of all of our accounts. About 31% of our revenue is about half the price it should be.

Oh, wow.

Yeah, we have a big, like, range.

That means you're losing money on them.

Yes.

Okay.

And then the other.

So why would we not cut them tomorrow?

Well, so should I double their price? Should I, like, try to. Should I raise it by 50%?

Like we were in business to make money.

Yeah.

If we're losing money, we should cut the customer, raise the price.

Yeah. So my question is how much? And then also on the other 70%, those are anywhere from 2x the price that they should be to, like, maybe, like, 20% under. There's kind of still. There's a. I found we're super inconsistent in how we bid stuff, apparently.

Yeah.

So how much do I raise on the 30% and do I raise on the 70%? The other factor is, compared to last year's data, like, 92% of the people that sign up for snow come after, like, today. So, like, the bulk of the new signups are, like, between now and January 1st. So I don't want to, like.

So 31% is way under bid. Yeah. What percentage is Slightly underbid.

It's maybe like another like 20%.

Cool. All right. So half your customers you're under bid on, I would raise on all of them. I would have two tiers. One is you're going to double price. One is gonna be 20% increase.

Okay.

I would just bucket all of them and do it now. The reason, Cause you have so many leads about to come in. You're already at capacity, and you're at capacity, raise prices. So do it now so that you have all the leads to be able to come in before the winter and backfill, and those are gonna be the higher price. Okay. Like you're at capacity. You have all the flexibility in the world. Yeah. I would do it in two stages. I would first do the ones where I got double. You're gonna lose by 50 to 70% of them. And then I would do another one as you. Cause you're gonna get some leads coming in. You're like, okay, where? Okay, we're almost back to capacity. Okay, great. Now let's go raise the people that are 15, 20% under bid. We'll raise them all by 20%.

Okay.

And if you lose some of them, who cares? Because you're about in the snow season, and as soon as you get first snow, you got a whole bunch of leads falling in your plate. What you don't want is going into this spring, into this snow season getting all these calls and you can't even take them on because you're busy doing customers that are half the price they should be. That's crazy. Crazy. Are you turning away money?

Well, I just found this out like.

Two days ago, so I was like.

Oh, it's a problem.

Yeah. And then we talked about.

I would batch it just for the sake of, like, you don't want to lose half your customers. You're really nerve wracked. I would probably do that, like just to tear the band aid off, but I would probably do all the ones you got to raise price on, basically by double. You're gonna lose most of them and expect that at least. And then as you get some leads trickling in through October, November, just be ready to switch over the people that are slightly under bid up by 20%, so you're profitable on them. And then you'll lose a few of them and you'll have a couple more leads to be able to fill back up to capacity during November, December.

That makes sense. I guess the only other pushback or factor that would maybe change it, and I'm guessing you're just Going to say no is we do.

Maybe I shouldn't even ask it.

We are like downtown Denver. So we're doing super tiny properties. Like, a lot of times they don't even have driveways and garages. It's like we're clearing the front porch.

Is this the classic density?

Okay, should I stop talking?

Especially with snow, because, like, there's so much liability attached. Like, even though you don't have a lot of fixed costs, like, you show up to a customer's property needs to. You need to be making a certain amount. And if you're half of that you're making, you're losing money so dramatically, you got to raise prices.

In order to be able to make the same revenue, not profit revenue. On these current price jobs versus what's coming in, you have to sell twice as many.

Yeah.

And it's revenue, not profit revenue. So double the prices. Most of them will leave. And who cares? Because you're gonna now replace them. You know what happens? 92% of leads are about to come flowing in October, November. Just wait till the first snowfall. The last thing you want to be doing is saying no to customers willing to pay a higher price while you're servicing someone else that's inside of your capacity at a price that's half of what someone else is willing to pay you. That is the definition of insanity. Right. That's why when you say, like, I try to make it really clear that you hit capacity, you raise prices, period. If you're in profit mode, Period. And that's the thing that's gonna be difficult for you is you just switched to profit mode.

Yeah.

The whole mindset has to change. Last year at Augusta Lawn Care, the average location grew revenue by more than 27%, and we're on track to beat that this year. If you want to see why, go to augustalawncareservices.com/franch and watch over 50 videos and case studies of different owners that took their independent lawn care business and turned it into Augusta Lawn Care. It's not like Dennis. It's like, if I don't make money, I don't want this customer. And if I'm at capacity and I'm saying no to incoming leads that are willing to pay me twice as much. That's crazy.

Makes sense.

Do you have anything you want to add? Questions, Anything like that?

I don't think so. How do we get him out of the field when I have a baby?

Joel just went through that this past year. Let's go. In the middle of spring rush some of the timing, the time. People really need to work on their timing. Well, we tried to get January, February.

It just took a few extra months.

That's right. That's right. That's right.

We were shooting for September.

That's funny.