How to Be Consistently Accurate on Estimates Landscape Business Q&A

Hey, everyone, it's Mike Andes and you're listening to the landscape business course. Today we're going to be answering your questions. This is part number five. I sent out a text message to our group and they asked questions. And if you're not part of the group, you can join it by just texting the word landscaping to a.

Hey, everybody, this is Josh here. Just editing the podcast. There was a little mix up. The number given in the podcast for the texting line was incorrect. The number that is correct is 360-227-6362. Once again, the correct number is 360-227-6362 for the texting line. Thank you.

This has been a marathon. I've been recording these back to back to back for the past two and a half hours. So just answering these questions, lots of fun, trying to get through as many of these as possible. Let's try to wrap it up though here with this video. But before we start in today's Q and A, make sure you come to to Landscape Summit 2021. It's coming up here. It's only like 70, 80 days away. You're gonna be amazed. It's gonna be awesome. I promise you it'll be better than last year and the year before that. The food's gonna be better. The venue is like five times as big so that we can have social distancing and like we're not crowded in. It's gonna be awesome. So please, please do whatever you do, move, move appointments, move schedules, I don't care, like just, just come. It's gonna be fantastic. I guarantee you it'll change your business. And I know even from last year, the people that implemented P4P based upon what we talked about, change their business. The people who come to this year's conference and implement profit sharing and implement the things that we talk about, culture and all this stuff do with open book management. And we're actually practice open book management so you can get in the habit of how to share your numbers with your team. I promise you, you will change your business. Go to landscapebusinesscourse.com conference and sign up today. All right, let's jump into these questions. Try to knock out the last few here. Hi, Mike, it's Phil Demonte. Most efficient way to schedule estimates. I notice our close rate is insanely higher when meeting in person because most people do driveways but drive bys. But what is most efficient way so you're not backtracking and driving around like a madman. Yeah. So in person Meetings are great. You usually do have a higher close ratio if you have good personality and everything. The problem is if you have 30 estimates in a day, you're not gonna be able to do them all in person, especially if you're scheduling them. And so we schedule, when we do in person visits, we give an hour window, Command center gives an hour window for estimators to meet with the client. And so you're only gonna get like maybe 12 or 13 of those in a day if you're doing in person meetings. So traditionally we do, if it's just really simple services like mowing, we'll do those as drive by estimates, whereas projects we're gonna do as in person meetings. Obviously. However, if you are just getting started, you have one or two estimates a day. I would recommend trying to get those set up as in person visits if you can. And it is tough, especially if you're working in the field, to be able to do estimates based on time. I get it, but it is obviously better in terms of close ratio. Hi, Mike, Vlad from Sacramento. Is there a difference between freebies and going the extra step? You've talked about dropping a client over scattered toys or dog waste. And I'm tracking with you there. And I'm tracking with you there. On the other side of that, I think you shared that on your properties. You guys are always looking out for things that need to be done. I'm in agreement there also. How do you distinguish between the two? Okay, this has to do with the wow effect. The wow effect is where during the summer, especially when the lawn isn't really growing much, our guys are expected to look for the extra little things that they can do, spend 30 seconds an extra minute, like weed whacking the weeds out of the cracks of the driveway, or blowing an extra area off, or trimming like a branch that fell down into the lawn and just doing it for free. So that's a good question. Like when do you do that versus when are you like, oh, there's toys in the lawn. So usually with toys, dog droppings, we'll give them one time where like we'll take care of it. But then we let them know, we give them an automation that tells them that we're coming before we get there. So they can, they have no excuse not to take care of those things. And if it continues, we usually let it go. This is the bottom line is the reason we do that is because it frustrate crew. There's a difference between, hey, can you guys do a little extra? Because you're killing budgeted hours and making a killing on this job. Can you spend an extra two minutes and do extra something little for the customer? They're usually pretty happy to do that. They want to keep the customer because they're really good paying client. On the other hand, you have someone else who is spending 10 minutes picking up dog droppings or worse yet, hitting them and getting speckled all over or moving all their trash throughout the day that they've created and having liability of breaking something. They're not gonna enjoy that. So on our part, if it's gonna put misery on the crew, then we're a little bit harder on it, I guess you would say. And if it's a really good paying customer, usually the crew is willing and wanting to make sure we retain them and willing to go the extra mile and do extra little things for the customer. And when I say that, I am talking about like recurring job, recurring maintenance, mowing for example, or weeding or something like that. I'm not talking about projects doing extra little things for them. Those are work change orders. But kind of the same thing applies. If you have a 60 budget hour job and they're wrapping up after 30, they're probably gonna do a couple extra things for the customer. Cause they want that customer to be happy and they know they're making a lot of money. So that's kind of how we look at it from a P4P perspective. Hey Mike, from research you have done, what have you learned about the markets in California? I never really did. I never really hear you talk about this area. Thanks, Diego. Great pickup there. Great pickup. I don't talk about California much because we don't have any franchisees there. We have franchisees all over the US Now. We have not had any in California mostly due to the fact that franchising there is very difficult. It takes us a long time to register. It's very, very expensive for us to register in that state. We spend most of the initial fee just trying to get set up there legally. And so there's different laws around franchising. And so we don't have a franchisee in California. I would do it even though we don't make money on it because it's such a loss and it takes a lot more time, a lot more work on our part to get a franchisee in California. That being said.

I know California is very similar to Florida in that in most markets you do maintenance year round. Florida, where we have one and now two franchisees, is killing it. We kill it in Florida. If anyone's in Florida and wants to join Augusta, you should do it. The amount of leads and work that's over there is ridiculous. And you don't have any issues with having any lapse of work in the winter. So we're crushing it there. I know that, Mark. I've got to know that market really well in the past four or five months. California, I just don't have any franchisees there. And until I have any, I'm not gonna look at it really deeply. So I know the south really well. I know the Midwest. I know the Pacific Northwest, obviously. Cause we're there. We have several franchisees in Oregon and Washington State and Victoria is. But no one in California yet. When I do or when we have a prospective person, I will be diving deep into that. Those of you who have called me for franchises, you know that we do a very in depth detail analysis when, before or after I talk to you in your market. And that's when I get my data. All right, next question. Hi, Mike. Me and my brother just started a lawn and landscape business. We want to split everything 50 50. Got any tips for us? The plan is to scale the business past $1 million. The services we offer are weekly and bi weekly lawn maintenance, basic lawn care like seeding and fertilizer and landscape enhancements like mulch, gravel, installing plants, flower and trees. Also, what percentage of the income should be going to us and how much should be going towards the business. Thank you. Okay, so I would, if I was you, if your brother and you were getting into business, I would split the equity 5050 and then determine how much each of you need to make in order to just get by and have a. If you both have equal amounts of contribution to the business. If one of you has a part time job and is only gonna be working part time on the business, you should get a part time salary and vice versa. If someone's working twice as much as someone else, they should make more money. Give yourselves a salary though and then distribution should be split 50, 50 based upon your equity. And if someone is gonna be a part time person in the business, maybe they only get 40% of the business in terms of equity. And I would have your distributions match your equity. So if you have $100,000 in profit, 50,000 would go to one, 50,000 would go to the other. If you're doing a 5050 split in equity. And so my biggest thing is give yourself a salary. And as you scale the business, you need to know the biggest thing is you both need to Be on the same page in terms of where you want the business to go. If you both want it to go past a million dollars, great. But you gotta be very careful because one of you might get married and now all of a sudden wants to take a little bit larger distribution, take a little more business, and that's fine. But now you got a partner involved, and you've got to make those calculations. You've got to determine before you get into business what happens when one of you decide that you'd rather stay at 800,000 in revenue and the other one wants to go to 2 million. What does that look like? What are the ramifications? What are you going to do when that time comes? What are you going to do when you disagree? That's what you need to nail down. When you disagree on where the business should go, how big the business should be, how much you should invest in marketing, what type of truck you should buy, all of those things are decisions that you might disagree on. You need to just make sure you both know who makes the final call. Or is there some method of arbitration between the two of you? And what happens if one of you wants to leave the business because you decide you wanted to move to Mexico? Just saying it happens. You need to have all of those things figured out. That's why I'm personally against partnerships. Stuff happens in life. Not bad things, just stuff happens and people change, and now they're deciding to do something different. But that puts the business in a lurch because, for example, you might build a business that's worth a million dollars on paper, but only has $200,000 in the bank. And now that person wants to leave the business because, like, oh, I have 50, 50 I want to leave, though. Now you owe me $500,000. Now you're going into debt to buy out your partner and putting the business in a really bad spot. Tucking all the cash in debt. Not a good spot to be. So just my bottom line. I'm not against partnerships. I just think that you really got to think through the downsides and protect against the potential risk of disagreements. And how is that going to be resolved? Next question. Best ways to work on your business in the off season. Oh, this is a good one. Come to The Landscape Summit 2021, January 14th to 16th in Bellingham, Washington. One hour, one and a half hours away from Seattle. That is what the best way to work on your business in the off season is. What's the best way to effectively do estimates consistently? Each time I struggle with knowing if I'm doing them accurately, especially when I move from a small property to big property estimate like an HOA or condo. Ben. Okay, very simply, I'm not going to get into details here. I'm just going to very simple. I'm going to say look, track how many budget hours you think the job is going to take and then how long the job actually takes and consistently track that and see if you're consistently above or consistently below. And then you will very quickly start determining if you are accurate and if you are consistent each time. All right. And you'll get a better understanding of like, okay, I was way off on that job. Why look at the variables that changed and then be able to calibrate later on when you do another estimate to make sure you account for those variables and you can use software to do that. But if you're just getting started, just like how many budget hours I think this was gonna take, how many yards of material did I think it was gonna take? And then looking at the job afterwards, how long did it take, how many yards of material did it take? And just comparing yourself and doing that on every single job so that you can come really up with good data. Are you consistently above or below? Hey Mike, I'm a medium sized commercial and high end residential maintenance company here in Arizona. I get lots of calls and requests for residential landscape install and hardscape work, but have recently or have typically referred out other companies. We've done that kind of work in the past with existing clients on both the commercial and residential side in regards to landscape refresh and updating work. What kind of margin is there in landscape install construction and does it make sense to add this to our business model? Thanks Chad. In Arizona, honestly I've seen very profitable hardscaping companies and I've seen very low profit margin, you know, hardscape design build type of companies. If you're doing commercial, it's usually a race to the bottom because mostly having to do with labor. If you're doing residential, it's gonna be more high touch, more work, change orders, things like that. But you are gonna be able to consistently have a higher margin because people are willing to pay for a premium product. And I like that.

In terms of margin, I've seen people do 25%, I've seen will do 3%. It's really how you run the business. You can still run p for P on landscape installations and that's the only way to do it. I really like small landscape installs. That's the only type of landscaping we will do and most of our franchisees do in terms of property cleanups, mulch installations, planting trees, basic landscaping, sometimes hardscaping, small hardscaping jobs. But I like those. Like my. Our sweet spot. I'd say like it's five to ten grand. Like those we can still be 30% profitable on. Like, they're great. How do you transfer the systems you come up with from your mind to your employees? Computer files, binders, emails. I have it all in my mind, but I am not sure what the best way to pass it on would be when I begin hiring next spring. Thanks, Thomas. Okay, this is a big topic. I'm just gonna say in terms of hardscaping and things, we usually do a one day every spring. We teach everyone that's there. In terms of mowing, we have it where they learn mostly on the job because we've tried with videos and laborers do not like it. They get very bored. And so we basically incrementally try to train them on mowing and maintenance where they start off with very basic things. And as they pass those things, they are then given more responsibilities until finally they are able to run their own crew. And we basically have an accountability partner or a mentor that is assigned to them and is responsible for them to go through each step. How does P4P work for hardscaping, especially when you, the owner, still work in the field? Great question. It's in the course when it talks about if you are in the field, if you're working on a job, a big hardscaping job, your hours should just be allocated towards the product as if you were another employee. Same thing.

And then you're just gonna like you're gonna have a number. And even if you don't pay yourself that number, you just need to treat yourself. Like when I'm on the job and I'm clocked in, those hours are being allocated towards that job. And on the P4P section of the course, talk a lot about that. Have you ever considered letting managers have equity even in just one location as an alternative to a franchise? Maybe them buy it or as a bonus incentive. I haven't heard ever heard you talk about doing it, so I assume you don't. I'm just wondering if you have any thought about it and what your reasoning is one way or the other. Okay, good question. So I like the idea of giving equity. I like the idea the same way that I love profit sharing. The thing is this, when it comes to equity, they now have a say in what goes on, which I know it sounds like I'm a power hungry control freak. But when it comes to the business and the business being successful, having two masters on the ship is tough. And that's why I just talked about all the things you gotta think about if you're gonna have a partner applies to this. Cause if you give someone equity, they have a say in the business. They might not have majority stake ownership, they might only have 10 or 15%, but they still have say in the business. And there's legal stuff that can be brought up in issues too. And what happens if they want to leave after five years but they have 15% equity? Do you have to buy them out? These are all things that I feel hindered the business and hindered the employees that would be employed by that branch. I much rather do profit sharing and increase that as time goes on to the point where even maybe they're making most of the profits going to them if they're running the business on a day to day basis and taking everything off your plate. But in terms of owning equity, I would rather them go own the franchise. And that's why you asked us specifically. I would rather do a bonus based upon profit. And then down the road, if they want to open their own franchise, that's up to them. I want them to own 100% of it though. I don't not want to. This is a big thing with me. I do not want to own even a piece of any of our local employees locations. I want them to own it as a franchisee because I want them to have the pride of ownership as well as the responsibility of ownership. There's nothing that will change a young man, young woman's life than owning a business and having ownership and feeling like, hey, 100% of this is on me. There's no one else that they can pass the buck to. And even as part of the franchise, obviously there's a lot of support that's involved there. But from an equity standpoint, I like to be 100% in charge or 100% not in charge. So that way someone has to stop. The bill stops with somebody, it stops on somebody's table. They make the decision, they make the shots. There's not a bunch of debate. And I feel like a, a company that has one owner in the small business world has a lot more ability to be agile and nimble and make faster decisions instead of having to bounce things off of everyone that has a piece of the business. For Arizona, Phoenix metro area, there's mowing, but not a whole lot like in other areas of the country, how would you adjust pricing set up for the franchise model? Also, why paint the trucks instead of wrapping them? Thank you for all you do, Miguel. All right, so we paint our trucks instead of wrapping them because in our market we it would cost four times as much to wrap them. And after a few years of dings, scratches, dents, et cetera, vinyl wraps usually don't look that great. But in our market they cost four times as much. Now some places it's weird as all get out but some places they cost less to do a vinyl wrap than paint. And yeah, then maybe go vinyl paint or vinyl wrap but in our market it's like $1,000 versus $4,000 paint versus vinyl. And so it's cheaper as well as when there's a ding on a painted truck you can paint over it. When there's a ding on vinyl, it scratches, rips, tears and becomes bigger and bigger issue as water and moisture and things like that get behind it. In terms of Arizona, Phoenix, it's very similar to our El Paso, Texas location. Not a ton of mowing there. It's mostly improvements, blowing things off, weeding, spraying, bush trimming. Those are the things you're going to be focusing on. And I really actually like that model because mowing has been so commoditized in this industry. Whereas those other services that are more high touch people are willing to pay a premium price for because they want things done a certain way. Next question. I can see how the mow and go jobs P4P is easy to track but multi day jobs where there is a lot of material used, drive time varies and one employee might have two hours on the job while another has 30 and another has 15 et cetera. It seems very difficult to arrive at a payment P4P system for me unless there is someone spending tons of time keeping track. I am talking about 10 to $40,000 job jobs, little one day cleanups are easy to figure out. Great question. This is why I did not implement P4P for years. Because I thought it would take a longer time to calculate than it would be to just the saving the cost. I felt like the time savings would be less than the time it spent on just tracking everything. Not true. On the course P4P, the training, literally it will take you For Lonnie, she runs our P4P locally and let's say there's 15, 20 employees. She probably spends between 10 and 15 minutes a day doing P4P. It could even be less honestly because now we have the software but if you go onto the course, we talk about this, you're gonna keep track of how many hours. Like you said, 30, 15. Two hours on the job. Let's say it's 40. If you add up all the hours on job, it's 40. And then they had budgeted for 60 hours on the job. Everyone's basically gonna make, you know, 1.5 times that. I'm not going too much in numbers. Anyways.

It'S not that difficult. In the course, we have the Excel document and the version one of our software that will run your P4P. And I know that there's several people that even the past week have contacted me that are using the Excel document that are using that software in the course to run P4P on big landscaping hardscaping jobs. Very possible. We have done 30, 40, 50, $70,000 projects using P4P. Absolutely possible. It's a matter of keeping track of it every day to know our allocation. And at the end of the job is when you actually run P4P, that's when you actually like, okay, what were the actual hours versus the budgeted hours? Okay. And you'll see there's One part in P4P that says if a job goes over a pay period, like two weeks, for example, then you pay the job out as if they were gonna hit budgeted hours. So that way, if they're way ahead of budget hours until they actually finish the job, then they'd get their big payday again. That's all explained in P4P of landscapebusinesscourse.com. check that out. We'll talk a lot more about the stuff at conference. Please come to conference. You will regret it if you don't. I really, I really do believe that. Even if you see a recording after, like, it's not going to get the stuff that we're going to be doing with other owners and where the camera's not going to be recording because it's going to be like group sessions and workshops where you need the practice on some of this stuff. Anyways, that's mostly in the course. That's covered there. All right, I got a franchise call coming up here, so I'm gonna have to rush through these last ones. All right. Last few. Here, let me open these up. Okay.

See here? How do you handle storm cleanups? Do you give your customer breakdown on price or is it business? Business.

Oklahoma just got hit hard with freak ice storm. Want to take care of our people?

Not sure what we're talking about here. Oh, do you give People a price break if there's a big storm. Yeah, this is a great question. If you don't have a lot of work and there's a big storm that comes in your area, use it as an opportunity to get your name out there. Go from door to door with a tree chipper and help people out and use that as a way to get your name out there. But if you're crazy busy, don't do that. Like, take the money as it's coming in. But if you have a big storm that comes in and you don't have a lot of work or you're trying to keep your employees busy, then go out and do stuff for free and get that. Use that as a way to get your name out and do some good in the world, too. While you're at it.

What'S your marketing Strategy going to 2021? Going to talk about this for an entire hour and a half at conference. New marketing strategy that are just coming out in. And I have a really cool thing at conference. I get to have a what's it called? I told you so moment at conference. Because last conference we talked about something and it has happened exactly the way I predicted. So, yeah, a conference. We're gonna talk about 2021 marketing stuff. Hey, Mike, what's your take on difficult clients? I have a mowing customer, and she's just always seemed to have a problem with something. It's to the point where I'm uneasy about going there because she comes out with something and I basically expect it every time. For example, yesterday was her day, and when I showed up, she said, I wasn't expecting you. My friend. My friend is cleaning up leaves right now. She's. Because he's staying with us and has nothing to do. So you better go in the backyard shop. Stop. He. So he's not working for nothing. I don't even have a contract with anything other than mowing. So when I said, would you like to add leaf cleanup into a fall package for future? She said, why would I pay you to do that when you can, when you just suck it up with the mower? That's a waste of money. I've only kept it because it's in a tight route and I make $40 in a half hour. So it's a nice price, but the hassle is just getting old. Any thoughts? Much appreciated.

Yeah, just drop her. That's how I would say if someone's not going to abide by, you know, and they don't. If there's leaves and they don't think that's gonna cost more unless it's literally a few leaves in their lawn, then you should just do it. But, like, if they're gonna be a hassle every single time, like, we kind of are like, hey, we'll deal with someone who's having a bad day, not their meds aren't lined up, didn't have a good rest, having a bad hair day, whatever. But after, if it happens every time it starts discouraging our crew, that's when they're out. And if you're on the crew, just wait until you have employees that are not going to be as patient. Get rid of her. That's what I would say. Hey, Mike, just wondering is wondering, as you are a big proponent on systems, do you have a system for questioning potential clients to eliminate tire kickers?

Yeah, like, command center is looking for certain things, but usually we want to get in front of the customer because usually they. Especially if we have a paid campaign and we're getting leads. Sometimes you're gonna get tire kickers to weed them out, though. Especially when you're really busy. You can tell them how far you're booked out. Like, hey, just a heads up, I know you want a landscape job, but we're six weeks booked out. Would you still like to do your estimate? If they say yes, there's a really good chance that person's buying. If they say no, there's a good chance they're shopping around, they need something done right away and there's no point in going to their place. You can also ask what their budget is and if they don't have an established budget, just say, hey, establish a budget and then come back to us. Things like that would help weed people out. Best way to track the profitability in your lawn care business. Weekly, monthly, then yearly. How do you do this? Oh, this is a good question. We're going to be talking about scoreboards at the conference. Again, this is not something I can cover here in a Q and A. We're going to be talking about scoreboards. How you can show your team where you're at on a daily basis and weekly basis at your team meetings. There's a whole bunch of things you want to track in terms of certain KPIs, key performance indicators like revenue over labor and budget versus actual hours on projects, things like that. Do you include the money you have in accounts receivable in order to have an accurate profit margin or how does that work? I answered that, I think, on my last video. Basically, we do not include accounts receivable on our profit and loss statements because we have not collected it yet.

What is the earliest you would hire an office person? I am smaller now with two employees and two trucks, but next spring we will probably be around four to five employees and three trucks. I am considering hiring an office person in the spring to help deal with leads and help create estimates so I can manage jobs and sell all day. Any thoughts? Yeah, I would definitely try to get someone part time if you can. It's hard to find a good part time office person. Usually a good office person can go get a full time job and they're really good. So part time usually doesn't work out very good. This is again exactly why we have Command center for Augusta because finding a good office person is tough and when you're in that three, four, five employees, it's a big suck on your profit margin by having a full time office person. And yet a good office person pays for themselves in leaps and bounds. And so it's a hard spot to be in financially. And that's why I always say that's a part in the business where you want to speed through is because it's a weird spot where you can't afford not to have an office person, but yet you really can't afford 40, $50,000 a year just in sunk overhead. And so that's a tough spot to be in. That's why I usually say you kind of got to speed through that 3 to 5 employee marker and kind of get beyond that or stay below it in order to be most profitable. In between that is just you're not going to see a whole lot of increase in margin because you are going to have to get that office person and add to your overhead. All right, last question folks. I got to run this call in two minutes. Hi Mike, how do you handle possible damage that can occur to a client's property, such as broken house window from a trimmer, scratches to a fence, from equipment, et cetera? Excellent podcast and thanks for everything you do. Mike from Vancouver, British Columbia yes, so on P4P, if there's anything above base pay that can be taken off if they have damage cases. And so that definitely helps because they think twice about throwing that weed whacker, revving it up, max capacity, right when a window's behind them, they think about that twice. That's the biggest thing we've ever done to reduce damages and then also making sure that when they make a damage, they're the ones who are responsible. They go back to the customer, not you trying to fix everything and pick up all their slack. Yellow slip system is where they take responsibility for those mistakes. They gotta go talk to the customer, make sure it's taken care of, et cetera. So accountability, both from a financial standpoint with pay for performance, as well as accountability in front of the team at team meetings with the yellow slip system with where they gotta talk about their mistake, how they have to resolve it with the customer and letting them be responsible. I think that's all I'm gonna be able to cover today. I think that's it. There's one more. Oh, no, there's more questions.

I'll get to these next time. If I missed your question. Oh, there's just one more. I live paycheck to paycheck. Want to start small business this year, but couldn't do to what's happening with COVID My question is to you have. Have a course that I could start with $5,000. I couldn't afford a franchise. Okay. This is having to do with franchise in the course, and let's not worry about that. I got to get in this call. Thanks so much, everyone. Listening to landscape business course. I'm Mike Andes. We'll see you next time.