How I Turned my OFFSEASON into Being PROFITABLE! [Mike Andes]

Hey, everyone, it's Mike Andes. And today I want to talk about why seasonal businesses fail. And it makes me really, really mad that so many home service businesses close up shop within a matter of five years. And the numbers are always different. And because of what happened with COVID 19, the numbers are skewed dramatically. However, the vast majority of home service businesses will fail in the next five years. Like, it's just this constant churn. And I hate it. It makes me super mad. It's one of the reasons why I make all the content. So today I want to talk about the three major reasons why that happens. The hard part about seasonality. In any business and home service, there is almost always some sort of seasonality. A lot of it has to do with spring rush. Then we also have the cold season. If you're outdoors, then you have the time when people actually think about cleaning their house. Like, again, usually around spring, there's usually some sort of seasonality. Now I'm going to tell you about what happened back when I first started Augusta Lawn Care 10 years ago. And so as we begin to grow the business and get employees, I thought the only way that could possibly keep them busy or keep the business alive is and keep my team is keep them busy throughout the off season. And we would mow lawns from March 1 to the end of November. And then we had about four months where. Three to four months where it was snowing or it was cold enough, it wouldn't snow, but just be really cold. And we couldn't do any sort of landscaping. Our lawn care is always wet. We're in the Pacific Northwest. It was difficult. And so I would literally have to save up $70,000 to burn for four months just to keep my crew busy and make sure that everything went smoothly. And so I would literally take. Take it, take me to like, usually June, July, even sometimes in the beginning of August to actually break even because I would have dug myself in such a massive hole in profitability. And then the rest of the, like, six months into the year, I'd fall, finally get to where I make a dollar. That's brutal. And so I would. I would usually save up at the worst of times, $70,000 just to be able to spend on my crew. And we would do everything from bake cookies for property managers. We would do free pressure washing. And it was very difficult from a cash flow perspective. And I would eventually lean towards buying a bunch of snowplowing equipment to be able to keep them busy, at least when the snow was on the ground. Because that was really the most challenging part is I can't do anything if there's snow on the ground. And I was very afraid that, hey, if I let them not do any work for two or three weeks, they're going to leave me. So here are the three major reasons and things I had to learn the hard way over the past 10 years. And I hope that by learning from this, you can make sure that during your off season you can at least break even so you don't spend all of your profits on just getting through the off season. Like build up all year long your cash reserve and then burn it throughout the off season. It's extremely demoralizing and why a lot of home service business owners will quit. So the first reason thing that I had to learn and the first reason why so many small businesses in the home service industries go out of business is unproductive labor during the off season. Super unproductive. Like literally, I had people delivering cookies to property managers. We were doing free services for our regular mowing customers simply because I was trying to keep them busy. And so all of a sudden, what could have been done in like half a day of shop work all of a sudden took one full day. Instead of it taking, you know, 20 minutes to go do an oil change, it all of a sudden took an hour. Because there was no reason to have to go quick. There was no reason they couldn't make any money on pay for performance. It was just like everything was slow and everything took longer and ultimately the team was super unproductive. There was days where I have three or four guys working around the shop or doing like marketing activities, which I was just doing to keep them busy. And all of a sudden I wake up and realize I spent $800 in labor and didn't make a single dollar that day. That's brutal from a cash flow perspective. And so what I learned is that instead of having unproductive labor and trying to keep my team members on all year long and throughout the off season is simply just tell them, hey, you're either going to have reduced hours or go get another full time job and I'll guarantee you a start time in the spring. And I was amazed. The first year that I did this, I thought for sure I wouldn't get anyone to come back. But because I had instituted pay for performance and we had a good base pay, almost every single team member that left in the fall and got something else to kind of tie them over in the, in the off season came back in the spring and it blew my mind. I was like, this whole time I've been spending tens of thousands of dollars to try to keep them busy. When, if I just take that, you know, if you take, let's say you burned $50,000, if you took two or $3 more per hour and paid that to your team, you'd spend a whole lot less than $50,000. And you'd be able to increase their wages so that when they are there, they're incentivized to be there more. And they'll want to make sure they come back to your place of work. And after spending the off season working someplace else. And a lot of times, if you're doing outdoor services, your crew actually would rather work inside. And it's not hard to get a retail job or delivery job during the winter when there is the retail rush. And so they can work for a FedEx or USPS or seasonal position there or at a retail spot. And they're typically not going to make as much money as if they come work for you. So instead of spending all this gobs of money, unproductive labor during the winter, the off season, just raise their wages, increase benefits, do something else so that they want to come back when the time is right. So what I would do is say, hey, look, I guarantee you you can have a spot, come back on February 15th. That'd give me two weeks before the really busy mowing season starts. I could get them all trained up, get any new team members trained up, and be ready to go for the spring rush. And that's perfect because that's right when retail is, like, slowing down, they get through the holidays and everything's good to go. So I just wish I would have known this three to four years earlier. And that is a lot of team members don't want to work outside. They don't mind working three to four months someplace else. At the very worst, they go on unemployment for three or four months. It's still going to cost you way less than them sitting on the books and doing having unproductive labor all off season. All right. The second reason that seasonal businesses fail because of the off season is they spend money on ads at the wrong time. And this just frustrates me so much. I did the same thing, and I hope by making this video, you prevent this from happening in your own business. Because when you spend a whole bunch of money on advertising during the off season to stay busy at a time when you have unproductive labor and the guys aren't moving quickly, you're Just losing money hand over fist. Because your customer acquisition cost is inverse of your demand, which means if demand is low during your off season, your customer acquisition cost is at its highest point because no one needs your services, no one's organically coming to you. The opposite is true during your spring rush or when you're really busy, and that is when you're really busy, demand is through the roof for your services. Therefore, your customer acquisition cost is very, very low. Think of it like if you had snow plowing services, and if it snows, everyone needs your service, like tons of demand. You could literally, it's like fishing in a barrel. It's super easy to find customers. Whereas in the middle of summer, good luck trying to advertise for snow services. It's gonna be very difficult. Your spend to get one customer's gonna be through the roof probably 10 to 15 times more than if you just spend that same money during the time when there's actually snow on the ground. And so demand is opposite or inverse of customer acquisition cost. So during your off season, if you're spending a bunch of money on advertising, you're gonna get the least number of customers for that marketing spend. The goal, the goal is we'll spend as much of your marketing budget as possible when customer acquisition cost is at its lowest point and demand is at its highest point. That's the goal. So I see so many people just pouring money into unproductive labor and advertising during the off season. The goal is that you get so many customers, especially on a recurring basis, that during this off season, you can switch them over into a different type of service and be able to keep the business afloat and not go into, you know, huge amounts of cash flow negativity. All right, now that kind of leads me to the third reason why small businesses that are seasonal so often fail. And that is that the fallacy and the mentality that is your slow season and that, oh, like, we just have four months of the year where we just don't make any money. Like, that's just kind of how it is. And I see this so often the times. And I fell into this trap and I was like, well, I'm just going to lose money for four months out of the year, like, and I got to make up for it and start hopefully making money by July or August because I got to dig myself out of this hole. And it frustrates me so much that we as home service business owners have come to accept this and accept the seasonality. I really do believe, like, if you have the mindset that, what if the only services you offered were the ones that you offered during the off season? What if that was your business? I was talking to the owners at Augusta Nation the other day. We have over 150 locations in Augusta Lawn Care. I was talking to them, I said, look, what if instead of Augusta Lawn Care Services, we were called Augusta Winter Services? And that was like your go time. Like, you'd actually be looking forward to the end of mowing season. Because if Augusta Winter Services was your business, you'd be going all in on winter services, which for us is like trimming the bushes, edging, blowing off the walkways, picking up branches, checking the gutters. A whole lot of other services that we can do during the winter. What if that was your main thing? What if that was your primary service? You'd treat your off season completely differently. You'd probably advertise for it, you'd create marketing around it. And so ask yourself, what services can be done during the off season? And then, what if that was my primary business? How would I attack this? You'd literally be looking forward to it. You'd be priming for it, just like you do currently for your current go time, your current spring rush. And so it's amazing to me, once that switch in your brain goes off, it's like, oh, I can actually sell customers during the off season. I can actually grow my business. I can actually increase revenue at a time when otherwise everyone else is contracting. No one else is spending money on advertising, no one else is hiring. I can actually be on the offensive during that time if I just simply take the services that I can perform during that time and think of them as my primary service. And so I, I saw this even this past year at Augusta Lawn Care when people actually adopted the mentality, they started selling new customers winter services. And typically the only people that we get on winter services is our existing mowing customers that carry on through to the winter services, but instead they just changed their mentality to, I'm actually going to go out and pitch this service as if it's my main product. And people were selling these to, to new customers, like, oh, like this is a lawn care service. I don't need them until spring. Yeah, but what if winter services is your thing? What if that's the thing you're able to actually pitch and increase the business and go on the offensive during that time. A massive advantage. If you can go on the offensive when everyone else in your industry, every one of your competitors, is on the defensive not spending money on ads, they're not hiring. And you say, well, you just said not to hire people during the off season. You're right. But what if, what if we were on the offensive for, for services that can be done and I was able to actually go accelerate, hire more people and go on the offensive in terms of advertising now all of a sudden, if I can actually just adopt the mentality of switching in the off season to a different service and then going on the offensive now all of a sudden, number one, unproductive labor and number two, spending money at the wrong time of the year, like during the off season, I can actually switch those to being positives by hiring and spending money on ads at a time when none of my competition is and I can go pick up everyone else that was laid off because by their, by their business because they went into off season. I can go in now and get a lower customer acquisition cost and lower cost per click on ads because I'm pitching a service as needed during an off season when none of my competition is hiring and none of my competition is advertising. These are the things to think about. It's been game changer for my business. And it frustrates me to no end to see so many home service businesses go out of business every single year. Just a small fraction of home service businesses will last 10 years. And in my opinion, it takes five to 10 years to build. The business that is profitable, has a high enough revenue and is able to allow the business owner to be able to not be in daily operations and it still operate and still run without them and they're working on the business. It takes five to 10 years and the vast majority of people, because they go out of business in years one, two and three, never even see that. And that's why we get a bad rap in this industry for oh, it's like bad industry and doesn't make any money is because so many of us fail in the first few years before we actually get to the promised land in years five to 10. And why do we fail? Because we're seasonal. Because we dig ourselves in these massive holes. So follow those three principles. Eliminate unproductive labor. Make sure you spend money on your advertise and your marketing budget during the go time, the spring rush when the demand is high. And thirdly, try to switch the mentality from this is my off season to what services can be done during this time so I can actually do go on the offensive.