Home Services Are a Bad Business... (Here’s How to Fix Them)

If you're like me, playing defense and shutting down during the off season, sounds horrible. How do I reduce my customer acquisition cost? I'm actually asking what can I do to make sense of a higher customer acquisition cost? Is it possible we're focusing on the wrong thing?

All right, thank you all for having me. Oh, yeah, thank you. All right, give me lots of volume because we have, like a solid hour and a half of just solid talking. Cool. So for those who are not at lunch, I'll give a quick recap. Just so you know a little bit about me. Who here before today, like, had no idea who I am? Just raise your hand. Hey, fantastic. I'm talking to you. Okay. So I started mowing grass when I was 11 years old up in a little town called Blaine. Washington has like 6,000 people that live there. She lives a couple hours south of us. And so my brother and I started mowing grass. I was 11 years old. I did that because I wanted to go to college. And I wanted to go to college because my family didn't have any money. All throughout time growing up, my dad was a minister. Well, he still is pastor. And, you know, they don't make a lot of money, unfortunately. And we traveled all across the country, especially at the beginning when I was younger and I moved, I think 23 times before I moved out of 18. So we were kind of all over the place. And I kind of figured, hey, I'm going to go to college. I'm going to earn my way out of this by going to College. So at 11 years old, started mowing grass. 13 years old, I started college. To get there, I skipped a couple grades, did a couple at home, and yeah, started College. I was 13 years old. I did that because I didn't really like school, but I knew I needed to get done to become a doctor. Ideally a either a spine surgeon or heart surgeon. That's what I was going for. So I was the kid with the skeletons and the muscle groups all in your room and the posters. That was me watching surgeries. That was my fun thing to do. And then when I was 18 years old, I finished my pre med degree. And before going to get my md, I went over to Africa for a couple months. In Kenya, just south of Nairobi is Kalangari, Tigoni. And I volunteer a bunch in hospitals and different clinics, orphanages. And over there, when you say I'm a medical student, they say, fantastic, you are now a doctor. Go. And so it was pretty cool, though, because I was able to do surgeries, birthing I worked a lot in the pediatric burn unit. I would do injections, the whole nine yards. Very, very fun, especially for the kid that nerded out about this stuff like his whole life and came back to the US and was getting ready for my mcat, which is kind of entrance exam four year medical school, and decided after scattering a bunch of doctors over here that I did not want to be in the medical system over here. Mostly because I was seeing way less patients per day. I was tired of the insurance and the bureaucracy, the paperwork side of things. And more importantly, I didn't want to go to school for the next 10 years, go into a whole bunch of debt, and then do like the same three to five procedures the rest of my career, especially if you're really going to specialize in surgery. So I decided, hey, I'm going to bail. I was 18, so I said, okay, I'm not going to do that. I'm just going to go mow grass because that's all I knew how to do. And so that's when I started Augusta Lawn Care. And so fast forward a few years after that, I was underneath a dump truck at a job site and got sucked up into the PTO from my hoodie. And if you don't know what a PTO is, a power takeoff. It's the thing that operates the dump on the dump truck and you're not going to stop it. And so if you get your hand or your foot or something like that caught in, typically you're losing an appendage or you're going to die. And so I spent a couple of weeks in the hospital and kind of getting through that, fortunately, by the grace of God was able to survive that. But in that couple of weeks, I realized that my business had no systems, had no procedures. It was built on me working 80, 90 hours a week and not making a whole lot of money. And so I had already gone at night, got my mba, master's in Business Administration from Western Washington University. So I already knew like how technically to run a business, but I had not implemented in my home service business at all. And so in those two weeks of sitting on a hospital bed, you start to realize where all the cracks in your business are when you suddenly can't be there. And I was literally on the hospital bed videoing my crew, FaceTiming them for the next project and walking them through it. Hey, so yeah, the rock goes over here, this is what you do, et cetera. And so coming to kind of the harsh conclusion that, hey, I did not have a business. I owned a job. I knew things needed to change and so I created a lot of the systems that today is now part of Augusta Lawn Care. And then I talk about my YouTube channel and the books, et cetera. And by the way, if you're like, is he gonna sell something out? No, I'm not going to go to mikeandys.com everything is free. All the courses, everything on there is free. MBA for entrepreneurs. I took what I learned in my MBA school side of things, condensed it down to a course. There's like 20 hours of content on there. It'll be helpful. It's free 100%, so please use those resources. The book, if you don't want to buy the book, it's also free on my podcast. Just listen to it. So let's go ahead and get started. I have 500 slides. I just did that as a preamble. So you kind of know what's going on. Five years ago, like he mentioned, we did franchise Augusta Lawn Care. I own a couple of locations myself, but then 170 of them are franchised. So I understand what it's like to be a franchisee because I'm an anytime fitness franchisee. I'm also know it's like to be a franchisor with Augusta Lawn Care. And right now, really, a lot of my time is spent on software. So we do a lot of software stuff with pay for performance CRMs, et cetera. So that's a little bit about me before I go on this massive diatribe. The next hour and a half. Ready to go. All right, little nodding, head shaking is very helpful. You know, this is going to be an hour and a half of me yakking in front of you. It's so much less painful if I have nods, shakes hands, woohoos. If you holler and shout, I'll be happy. It'll be great. So if something resonates, just get into it. You know, this can be really boring. And we just hear Mike talk, little guy with a yellow shirt on, like, what in the world are we doing? Or we can just enjoy it. I think it'll be very helpful. I do think it'll help you a lot in your business. And I spent a long time preparing this. So does anyone know Alex Hormozi? Cool. So Alex Hormozi is big influencer when it comes to marketing, business, etc. I went on and traveled to his place in February 2024 out in Las Vegas. Dr. Cash is a guy on the left. He helps Alex Write his books, he's his friend and they have business partners. He's Also my coach, Dr. Cash in the left hand side. So I went out and visited them. I talked to Alex and was talking about Augusta Lawn Care and the franchise and, and ask, hey, like, so what are we supposed to do here? I want to get to a thousand locations. I think that's what we need to do to change the level of professionalism in the landscape industry. How do I do it? Say, hey, make sure they make a lot more money and ideally make $800,000 per year with $200,000 in annual profits. And if you do that, you will have no problem getting people to join the franchise and basically saying, ensure the owners make more money and you'll be set. So I asked myself, what's the problem that we need to solve? And in order to make sure that every single franchisee inside of Augusta Lawn Care makes $200,000 in annual profits every single time, not once off, but every single time. So this led to about six weeks early 2024, going through spreadsheets, diving into reports, and I looked at all the unit economics for Augusta Lawn Care. So all of our locations, I looked at the entire green industry. So landscaping, lawn care, tree removal, etc. And then all home services. I have a unique advantage where every single day I see about 5 to 10 different profit and loss statements from across the country of different home services. We do a turnaround show, I go out and I fly out to all sorts of different home services. We've done fencing companies, roofing companies, handyman companies, pool cleaning companies, you name it. And so I see a lot of The P&LS people applying to be on the show so I can go out and hopefully turn their business around. And so I analyze every single one of those does 250 different home service businesses. Now what I recognize that revenue leads and profit drop for three to four months of every year. It might be more for you, but ultimately this seasonality is a thing that really kills every home service business. The average profit increased. When I looked across these 250 business businesses, the average profit increased by 72%. If you remove just 1/4 from their 4/4 analysis, their 4/4 report, if you just removed it, just took it right out, their profit percentage increase increased by 72%. So if they made $50,000 in annual profits, that number jumped almost to $100,000 in profits just by taking out one quarter of the year. So for example, in a lawn care business, this is one actual example. I pulled Their numbers, the lead count for Q1, 79. Q2, Spring Rush, 490, Q3, 311, Q4, 200. These are the actual number of leads they were getting for their lawn care business. Now the revenue, very similarly all over the place. Q1 is their winter time. January, February, March. Then you go into spring rush, jumps up, then throughout the summer, usually collect on that revenue from spring rush. You do big projects. 420,000. That's a big, big quarter. And then slows down during the winter. There's their profit again. Massive negative number in Q1. Now look at the Christmas light company. Very similarly. We had the number of leads that came in the massively spike, crazily, you might think October, November, December, obviously towards the Christmas light season. I think they did a little bit of ice and snow removal as well. So there's a little bit of that mixed in there also.

All right, for revenue this Christmas light ice snow removal company, this is their revenue over the course of four quarters in the year. So you can see here, obviously massive increase in revenue in Q4 when they're installing the lights. Profit, you can see these are actual numbers. I stripped out the names of the company. Q1, 10,000, massive negative in Q2. There's a lot of times you have all sorts of expenses that still need to be paid regardless of whether or not the lights being put up. And so when I look at the lawn care business and I can see here my quarter one's profit is negative. Q2 is 50,000, Q3 is 60, 20, etc. I had $70,000 of profit on a $1.1 million business. Now what I want to do is take the worst profit quarter, which in this case is Q1, and replace it with the middle or the median of the other 3/4. So what happens when I remove that 1/4 from the year? Well, if I do that, this would be the median number, 50,000. It's the middle of these three. 20, 50, 60. I take that middle number and I replace it over the Q1 worst quarter of the year. If I do that now, all of a sudden my profit went from $70,000 to. To 180,000 by simply taking my worst quarter of the year and replacing with the average of the other three quarters in terms of profitability, same thing. Let's look at the lights and snow business. Same thing. So $50,000 negative. Negative $50,000 in profit is what we made in Q2. I take that quarter out, I replace with the median of the other three quarters, which in this case is $30,000 and what do we get? We have a doubling of the profit from $80,000 to $160,000 in thousand four profit. Now I call this Q4 collapse. Q4 collapse is when revenue and leads drop for one calendar quarter, killing your profit margin. When I, when I step back seeing all what we call Q4 collapse, I like to think of this as a virus. It's a virus that is killing many home service businesses, including the pool fencing industry, lawn care, landscaping, you name it, any home service business, this is affecting it and I call it seasonitis. So I playfully name this term and I'll use this throughout the entire keynote as to how we are going to cure seasonitis. But the symptoms of seasonitis are this number one revenue drops by 50% or more for any one month of the year compared to your best month. So if you had $100,000 in monthly revenue in your best month, if you ever drop lower than $50,000 in monthly revenue, you have contracted seasonitis. The second way to be able to contract seasonitis in this disease is to have negative cash flow for any month of the year. So if at any point throughout the year, any one month you have a negative cash flow or you lose money, you've contracted a case of seasonitis. In the home service industry, we have come to accept that our revenue and lead flow will be seasonal. We were like, oh, I guess part of it. Like this is part of the industry. Many home service businesses, especially if your Q1 is when you don't have a lot of leads, takes until summer to break even. I've seen some businesses, July and August and maybe September, they actually break even and actually start to make a profit for their business. I realize this is really ultimately what makes home services a lousy industry. And this is why the keynote is mentioned is titled the Way it Is. This is why home service businesses stink, right? Is because of the seasonality. And I'll hopefully convince you of that and then we'll fix it throughout the keynote. Recently I was at another home service conference out in Louisville and there's a whole bunch of keynotes going on and there's a lot of really good information about marketing and hiring and leadership and sales. And those skills are important. It is important to learn those. They're going to help you in your business, you're going to be able to grow, etc. But is it possible we're focusing on the wrong thing? Is it possible that all those things, although they are important in our business, that we hire the right People that we do great marketing, do great advertising, run Facebook ads, we send email, we have software, we track things. Is that all important? But are we really focusing on the correct thing in the business? We neglect the most obvious gaping hole in our business model, which is Q4 collapse. So why do we do this? Why do we focus on all these little things and the type of truck that we drive and the wheels that are on the car and we what color we paint the vehicle and what kind of vehicle is and how we do our advertising, the brochures and our uniforms and all these other things that are important.

Why is it that Q4 clubs is the most important problem to solve and yet we replace it with urgent tasks? Every day, customer calls and they're freaking out at you. They leave a bad review. You get to the shop site or the shop and the truck tire's flat. All of a sudden, our entire day is just spent fighting these little fires that are urgent. A customer freaking out on the phone immediately. You're spending all of your time and energy on them instead of focusing on the most important thing, which is Q4 collapse. The objective of today's talk is to recognize seasonitis will make you poor. And then we're gonna fix it once and for all. So back to story with Alex Hormozi. What did I do after talking to Alex in Las Vegas? What did I do after that? And realizing what's the real problem in this industry? I spent eight months creating a plan to cure seasonitis for Augusta Nation. That's what we call Augusta lawn care in 170 locations. So. And it's going to take me 24 months to fully roll that program out. So I'm saying this to mostly say if you recognize seasonitis in your business and today you get the cures, don't think it's going to just happen overnight. It could take you a couple years to actually solve it. Because remember, seasonitis is what, one revenue declining by more than 50% for any one month of the year or having negative cash flow for any one month of the year. I'm guessing. Is this the computer I'm pointing at? Can I keep pushing? It's not working. Okay, cool. All right, today I'm going to share that plan that I made with Augusta Lawn Care. And then we're going to create a custom plan for your business to ensure that you can also solve Q4 collapse. Let's firstly define, when is your business actually sick? When does it actually contract? Seasonitis sick is again when you have revenue drops by more than 50% for any month of the year or, or you have negative cash flow for any month of the year. There are five ways to cure seasonitis over the next 400 and some odd slides. I'm going to go through these four different ways and then you'll be able to choose which one's going to work best for your business. So throughout we're going to choose one cure or mix and match a couple of them. So there are some of our owners that are using two or three of these different cures to ensure that they do not have seasonitis anymore inside of their business. Now I didn't have time today, I did have a whole bunch of slides of actually owners that showing their numbers of once they institute this what the first year, second year, third year looked like when it came to implementing these cures. I'm going to show you, I think one at the end. The goal today is to make sure that no revenue, not a single month of revenue inside of your business is less than 50% of your best month. I understand there's seasonality, I understand that there'll be times when jobs come in more, etc. But we do not want revenue to drop by more than 50% for any one month of the year. Second goal is to never, ever lose money. If you talk to Warren Buffett, his business partner Charlie Munger, he always said three rules in business, never lose money, never lose money, never lose money. So if we just make sure that we do not lose any money in our business, I can guarantee you the business will be better.

All right, cure number one. If you're taking notes, this is number one lockdown mode. So who this cure serves, if you want to take a long vacation and time off distraction free lockdown mode will work well for you. If you run another business or you have a seasonal job like a firefighter or a teacher, lockdown mode will also serve you well. Here we're essentially shutting down the business. You have paid off all your trucks and equipment and the business is debt free. In other words, you don't have a lot of fixed expenses, but if you have a bunch of debt, this is not going to work for you. Lastly, if you have year round level billing contracts with all your customers, I know in this room most of you have one time jobs, so you probably don't have a lot of year round contracts, but if you did, you might be able to get away with a lockdown mode. All right, lockdown mode gets harder the higher your fixed expenses are. We'll come back to the moment. Let me just point out the fact in the bottom right hand corner, if you ever get lost for a minute, I kind of lose you on some numbers. Come back. This will be telling you which cure we're currently on. Right now we're in cure number one, which is lockdown mode. Now, lockdown mode, if you're going to use this where I'm basically shut the business down during the off season, it gets harder the higher your fixed expenses are. Lockdown mode is impossible if your fixed expenses for Q4. And remember, when I say Q4, I do not mean October, November, December, I mean any three months of the year that are your worst performing. Okay? So if your fixed expenses for that quarter are greater than your profits the rest of the year, you cannot do lockdown mode. Like I'm just going to shut down for that quarter because it's not very good. Well, great. But if it costs you $10,000 a month to stay open because of fixed expenses and loan payments and rent and insurance and franchise fees, and the rest of the year you only make $20,000 in profit, we got a problem.

So, for example, from April to December, you make $100,000 in profit. You're still considering tier number one, which is lockdown mode. But your monthly fixed expenses are 40,000. Your off season is January through March. This will not work. Reason why? Because three times 40,000, $120,000, you only made $100,000 the rest of the year, you're going to dig a bigger hole in that one Q in Q4 than all the profit of your other three quarters. Make sense? All right.

So monthly break even revenue. Knowing what this number is is very important. This is the amount of money I need to make in order to be able to make sure that I do not lose money. Because remember, we're trying to avoid losing money and thereby avoid seasonitis. If there are months that you make less revenue than your break even point, you lose money and the business contracts. Seasonitis like this is so simple. Trust me, this is all going to build on top of itself and eventually it'll make a lot of sense. Okay? So your monthly break even is really dictated by all your monthly expenses that don't change regardless of how much revenue you do. This is your fixed expenses. Think rent, insurance, franchise fees, your cost of your software, the cost of anything like loans or leases. You're not going to call your bank and hey, Mr. Banker, we're going to be not making as much money here in the off season. So I'd like to just make sure I pause my payments for next few months. Not happening. Those are fixed expenses. Okay?

Yeah, that's right. All right. The number one concern with lockdown mode if you have employees is, well, what happens if I shut the business down? I thought I wanted to keep someone busy full time. And so if I let them off, like, how's that going to work? My team is now I'm not going to have any work. Seasonal work demands seasonal labor.

What that means when it comes to seasonal labor is there's a few things you can, you can focus on. If we're going to have revenue be seasonal. The demand, the labor that performs the work that we should be giving to customers will also be seasonal. It should be. So to think that I'm going to keep someone full time, but then my work is going to be part time at some points in the year. You're asking for seasonalities, you're asking to lose money. So when it comes to seasonal labor, what you can do is advertise short term positions. Because again, we are assuming right now we're going to shut down during the off season. So what we can do is advertise short term positions. There are people that want short term positions. We all just assume because we are type A, want to make more money, that everyone wants full time work. That is not true. There are people that need three months, There are people that need nine months. There are people that are gone for two to three months and love to travel for that period of time. And they'd be dying to have a job that they only work six to eight months a year. H2B program is basically, we're going to fly people from other countries to be able to come in the US and work as a seasonal worker temporarily. But what if instead of thinking about getting the HP program and leaning on the government for basically your labor, which I don't recommend, what if we just thought about in slightly different ways, why not hiring from outside of your state or your city? For example, if you live in a high income area, it might cost you $25 or $35 per hour to hire someone versus if from two hours away outside of town, the cost of living is much lower. You might be okay with $18 or $20 per hour. What if you ran ads in that market and then gave them a stipend to come live in your market for a period of time throughout the very busy season?

All right, really the main point here is like, if you're going to have seasonal labor, you're going to lay people off you're going to have to lay people off in order to meet the full time employee demand. So how many full time employees do we actually need? But what if no one comes back to work after I lay them off? Because this is the big fear. It's like, well, if I don't give them full time work and I don't keep them busy during the off season, that means they're not going to come back during the spring rush. That means they're not going to come back when I really need them. Because ultimately we need experienced team members to ensure that we can train the newbies when they come along. So it gets really busy in the spring. For example, I need those people that worked here last year to be here to train the new employees. Valid point. So the labor strategy for care number one is to have a comeback bonus. We offer $2,000 for our team. If we lay them off during, before the off season, we, when they come back, they get $2,000. Now some people will do that after say 90 days of being back. Some people do that on a kind of a continuous basis throughout the spring rush. But the goal is we will get that employee to come back and give them a bonus to do so. So I can't afford $2,000. Okay, let me convince you otherwise. Let's calculate the cost of replacing that employee. So if they actually don't come back and you've got to replace them with a new employee, what does that actually cost the business? Well. Well, let's look at the cost of finding a new employee just from an interview perspective. If your Scheduled interviews are 30 minutes long, half of the people show up, a third of the people that do show up, you give them a job offer. And then half of the people you give a job offer accept. Let's assume this math for a moment. That means six hours you're going to spend per new employee. Now, if you're charging $120 per hour, that's what you value your time at to your customer. If you're charging approximately that to the customer, that would mean it cost you $720 just to find a new employee. Now let's look at the cost of training a new employee. Let's assume you just spent $720 of your time to go find a new person. Let's assume it takes 60 hours worth of training. And I think in this room it's probably double or triple this. But I'm assuming for a simpler service. So 60 hours of training assume that half of the efficiency, so they Only produce like half as efficient as they should be. When they're training, they're actually on a job site doing work. But they're like half as efficient cause they're brand new. Also, we're going to assume that it reduces the efficiency of the trainer by half as well. Because there, instead of just them doing their regular job, they now have to train this new person. It's going to slow them down. So we're gonna assume that for those 60 hours also is slowing them down. And honestly, if you're looking at frontline team members, half of them aren't gonna make it a month. So if we assume all of this, we can assume that 120 hours were spent training a new team member between their inefficiency and the trainer that had to train them. If we're charging $80 per hour to the customer, I know you had to do linear feet. You usually don't figure out what your labor rate is. However, if you are charging approximately $80 per hour to the customer, which in this industry, you guys are double or triple this sometimes. Let's assume that's $96,000 it costs to train a new employee. All of a sudden I'm paying over ten grand because I lost somebody to find and and train a new employee. All of a sudden that $2,000 comeback bonus doesn't sound so bad. Now, we talked about this earlier and we talked about more at the lunch break. This is the 4L framework. The 4L framework is basic premise is this. Every single business, if you are growing, goes in this framework. Whether you're a Fortune 500 company or you're just getting started. Your business constrained somewhere on this diagram, 4L's first being liquidity. I have money. I'm going to start a business. What did I do? I go spend on advertising. I got flyers, I get door hangers, I spend Facebook ads. Why? Because I need leads. And then when I get a ton of leads, leads are just dumping on me. I get so many customers, eventually I'm going to need more laborers. I'm going to need employees to perform on the work that I have now have sold. And then as I get more laborers, I got 6, 7, 8, 10, 12 employees. All of a sudden I need management. I need leaders inside the business. And then once I get those leaders, all of a sudden they're now straight overhead to the business because they're not performing labor, they're managing. And that's straight overhead. And what happens, My margins, my profit margins dramatically decrease because I now have all these Overhead. So what happens? I have a constraint of liquidity. I need to raise my prices. I need to think about being able to get more money from my customers and continue to grow the business. So if you're growing a business, you are at some point here on this graph. The vast majority of people in this room, based upon the date, feel like they are constrained by leads. But once you get enough leads, labor would then in turn become the bottleneck because you would need more employees to get the work done.

Now, the goal when it comes to the 4L framework is to increase the number of times we cycle through this. Because every single time we cycle through this, this is when you go to the next level in business. If you cycle through this, you will likely have gotten a manager. You begin working on another department, another service. You have 10, 12 employees. If you go through this one time. So if you're solo right now, you've taken enough of your time and energy to have the liquidity to start the business, you're probably on the leads constraint. We'll talk more about getting leads down the road, because the vast majority of us think that we have a leads problem, and I think that vast majority of you do not. And I'll tell you why. But the game of whack a mole is exhausting because what happens is every single day, you're constantly trying to. In the 40 framework, I need leads. Oh, my goodness. Now I have so many leads I need. Now I got all these labors. Okay, let's see what happens here. The constraint to growing your business constantly is moving from one to the next. In the 4O framework, let's assume we have Q4 collapse. We've contracted seasonitis. We have a bad off season. Well, what happens during the winter? We have no leads. So what happens? A whole bunch of laborers, we have to lay them off. That's a problem. Spring all of a sudden, because we laid everyone off and they all left and got other jobs. Now what? We have no labor. So we have an excess of leads. We have all these leads building up, but no labors. And then because my laborers left last year, I wasn't able to keep them. So when it comes to the summer and the fall, I have no one to actually promote into becoming a leader. And so the business stops growing. You have no money, and the business stops growing. So if you still feel stalled out, it is likely that you have not conquered the next constraint in the 4L framework. And if you have seasonitis, it makes it very, very difficult. If every single winter you're losing your employees, leads are dropping off. You're never gonna be able to constantly go to the next stage of growth in the 4L framework. All right, Whoa, whoa. I'm going backwards. What have we happened? One second. Okay, I gotta stay over here. Off seasons will keep you poor. So let's go ahead and fix the off season. If we fix the off season, we'll get steady leads throughout the winter. If we fix the off season during the spring, our laborers will be ready to take on the rush of new leads. And furthermore, if we have spring and fall come around, our leaders are trained and ready to go because they were here last year all throughout the off season. They conquered the spring rush, and now they're ready to be promoted. Move into management, estimator roles, etc. And if you are at the constraint of leads, for example, or if you're at the constraint of labor, thinking about a manager and estimator seems completely foreign to you. And it should, because the only thing you got to focus on is solving the current constraint in the 4L framework that you're at. So you can't get to the next level in your business if you run out of cash during the off season because you have negative cash flow. You cannot get to the next level in your business if you have no leads during the off season.

You are absolutely going to lose your best employees and leaders if you have an off season, have to lay everybody off. Okay? You didn't come to this conference. You didn't come today. You didn't join a franchise or become a dealer. For me to tell you to shut down your business for a few months a year. It's a pretty lousy business strategy. Okay? In my opinion, cure one that we just talked about for seasonitis is a packed job. All right? It's like wearing a mask during COVID You can still get sick and die.

If you're like me, playing defense and shutting down during the off season. Sounds horrible. If you can keep costs down during the off season and shut the business down for the three or four months, awesome. If you can lay off your entire team and get them all to come back using the comeback bonus, awesome. Great. All power to you. But for me personally, all gas, no brakes. I default aggressive. I do not have an off season, and I never lose money. Cure number one concedes victory to the offseason. I basically throw my hands up and say, I can't get leads. I can't keep my employees. I'm just going to shut down for three to four months. It will be very hard to build anything more than a lifestyle business using cure number one. So if you're going to shut down for three, four, five months out of the year because it's just so hard to get leads and you're going to use the strategy I talked about, it'd be very difficult to build anything more than a lifestyle business. A lifestyle business is where you continually. The business is serving your lifestyle, but you never actually build a business that can live without you.

If you use cure number one, your revenue drops off a cliff for some period of time. If you close down the business, enterprise value or the valuation of business drops dramatically. It's very difficult to sell a business that for three, four months of the year it's closed down because it's just very. No one wants to buy that business. It's a horrible business to buy. The off season, in my opinion, is the time to go all in. The goal of the next four cures after now, we covered cure number one, which is lockdown. The goal of the next four cures to cure seasonitis is to step on the gas when your competition is slowing down, is to figure out a way to hire employees when your competition cannot afford it. They're literally laying everyone off and you're hiring them. You're gonna figure out a way to be able to buy equipment when your competition can't afford it because everyone's laying people off. Everyone's selling their trucks and equipment because they overspent, they're in debt, they have fixed expenses, they have seasonitis, they have negative cash flow. They're now selling off their trucks and equipment. We gotta figure out a way to advertise when your competition can't afford it, because right now you're spending ads when everything is good and lots of leads are coming in. But if you figure out a way to be able to run ads when your competition is all closed down, they say leads aren't coming in and no one wants a pool fence. If you can figure out a way to still run ads when they're not, you'll be able to dominate the market. All right, cure number two, you're writing notes is more and better. So this also comes from Alex Hormozi. He talks about more and better before new. So before I'm going to focus on something new in the business, I'm going to focus on doing more and better of what I'm currently doing. Ideally, I want to use cure number two to fix seasonitis and avoid all the other ones. Number two is the best strategy. To solve Q4 collapse. Who this might serve if your leads dip, but your core services are possible year round. Also. If you don't want to start another service or complicate the business, Cure2 is also very effective. So at Augusta Lawn Care, our core gateway service is mowing. We mow grass. We make tall grass short. For cure number two, selling more mowing services is our solution. I will make this tie this into the full fencing side of things towards the end before we get super crazy, let's review a couple layup wins if you choose Cure two. Alright, where we're gonna do more and we're gonna do it better. Layup number one is switching to a level billing or subscription model. I'm not gonna talk a lot about this one because most of you don't have this, but I'm going to spend a little bit of time on it because I do think you can actually add this to your business model. For many markets, subscription model or level billing does not work if you're doing it year round because none of your competition does it. Because it adds a lot of friction to the sales. Like I got to explain how this was like a 12 month agreement and how the payments work. It can be adding friction to the sale also. By the way, if you just take a $3,000 fence and divide it by 12 months across the year and just divide into 12 payments, it doesn't make you any more money. It just spreads out the payments so it doesn't really actually make you any more money. And it can actually accentuate the cash flow problems. If you're starting to give people payments because you have all this labor and all the materials required during the spring rush, but you didn't get all the revenue, then you just spread out all the payments throughout the rest of the year and that can actually really hurt cash flow. Also this doesn't work for one time jobs. You can't like convince someone, hey, you're going to go on a recurring subscription now for the next every 12 months for this one time job. So layup number two. So these are the things that if you're gonna use cure two, I would do these first. That one for most of the people in this room doesn't apply. But layup number two is interesting I think for all of you. And that's selling time insensitive jobs into the off season. If you're super busy and you're getting someone to say that price is a problem for you, for them to be able to accept the job for their pool fence in the middle of. Let's call it April. Is that like a busy scene? May. May for you all. May super busy. Great. Too expensive. Mr. Jones, I can bring down your price. How am I going to do that? I'm going to schedule that job for five months from now in my off season. So do we actually have a down sell? Hey, we will reduce the price, but you're going to move off into my off season. I'm going to move time insensitive jobs. Putting up a pool fence is not time sensitive. Unless they're like, it must be done tomorrow. Great. This is the price. That's why it's here. If you're willing to work with me on timing, I'm willing to schedule it a little further.

Time insensitive and recurring jobs get priority during the spring rush. When I say spring rush, think busy season. Okay? For us it's spring. I know for a lot of you it's late spring, but spring rush. I'm focusing on jobs that got to be done tomorrow and recurring jobs. I know right now a lot of you don't do recurring work. I hope by the end of the day I'll convince you otherwise. Time insensitive jobs and one time jobs get scheduled for the off season. So if you have a massive amount of demand that comes in for your service, a whole bunch of leads, I'm trying to schedule jobs off into the off season as much as possible. And if that means giving different prices based upon when you install, I would recommend it's like surge pricing, the impact of revenue on a calendar year. So if you're scheduling people currently based on a first come, first serve basis, this is what your revenue might look like. I'm just using this as an example. A whole bunch of revenue comes in, it kind of dies off and a little bit of a bump again goes off during the off season. If you prioritize the recurring and time sensitive jobs, you now are going to reduce the amount of work that's in this year or in this quarter and you'll push jobs off in the off season.

What that does is total revenue does not change. You're scheduling the same amount of jobs. But it's going to lead to better scheduling, which means better asset utilization and employee utilization. Because see, I do not need to, right? I do not need to hire as many people because now I don't go as high during the spring rush. I don't need to buy as many trucks, I don't need as much equipment that I would usually need. If I try to schedule everyone Based upon a first come, first serve basis, less trucks, employees and equipment is required. Also, the likelihood of quitting is lower when the roller coaster of revenue is less steep. So if you have months where you're making 50,000amonth in revenue and months where you're making 5,000amonth in revenue, the chances of you quitting very, very high. You have seasonitis. You drop more than 50% in revenue from your top month to another month. But when you have a roller coaster revenue, the likelihood of quitting in this industry is dramatically higher. Let's assume first, because we're talking about cure number two. Let's assume that you can't do level billing and you don't get enough time insensitive jobs to fill the off season because you're like, well, everyone wants it done today. Okay, let's assume that. What can we do? Well, that leads us to cure number two, which is more and better accepted jobs. And you'll see why I call it accepted jobs and not leads later on. So more accepted jobs is we're going to advertise. Okay, so we're going to talk about more and we're talking about better. Let's first talk about more accepted jobs. How do we get more accepted jobs? We're going to advertise like, okay, well, duh. All right, hold with me for a minute. My off season when I first started Augusta lawn care was costing me between 70 and $100,000 every single winter. We would spend nine months of the year making profit. The last quarter of the year, leads dropped off, revenue dropped off, and I would take the 70 or $100,000 in profit I made and burn it. I was trying to keep my crew busy doing stupid stuff. What was stupid stuff? We would go pressure wash all of our lawn care customers property for free. We would take cookies, literally their house. We would bake cookies and take them to the house. We would take them to property manager. We just do all these random networking things. We would organize the shop and then reorganize the organization at the shop just to keep the team busy and full time. Because I felt I had to keep them busy year round. I couldn't lay them off and have them come back with a return to work bonus.

700,000 across the system.

Yeah, 100% seasonitis. I would have been better off spending $500 per day on ads, which over the course of those 90 days would have been $45,000 if those ads. Spending $500 in ads per day could have just got me to break even by getting enough leads to keep my crew busy. I would have been better off just spending $500 per day on ads for 90 solid days and losing 45 grand if I was able to generate just enough leads to to keep my crew busy and break even on the work.

So we can solve Q4 collapse by advertising more to get more customers. But how much do we need to spend? Well, in order to find this, our goal here is to find how much do I need to spend to solve this problem? If I just told you like, hey, if you spent this much.