How to Grow a BIG Lawn Care Business FAST! (From Scratch)

Hey, everyone, it's Mike Andes here. And every single day I get asked on this channel via email, how do I grow a big lawn care business, how do I build a big landscape business? How do I scale? How do I get my first 10 customers, first hundred customers, first thousand customers? Guess what? It really comes down to one thing, and that's knowing two numbers. So I'm going to talk about those two numbers today. And the reason I'm talking about this is because people always ask me how to grow their business, how to get more customers, how I get started. And it's very, very predictive. It's all about the numbers. With Augusta Lawn Care, we now have 50 locations. And so I've been able to see what works, what doesn't, and what numbers you need to know to actually scale the business predictively. And this is why when I start a corporately owned location, I know exactly how much I'm gonna spend before we're profitable. I know exactly how much we're gonna spend in terms of advertising before we're gonna become profitable. It's all about the numbers. So these are the numbers you must know. And I know this from scaling Augusta Lawn Care, we.

Of our locations that get over 10,000 per month in revenue within the first 60 days of starting from nothing. And this is because we focus on knowing our numbers. So let me go ahead and just let the cat out of the bag right off the bat and tell you the two numbers you need to know. The first one is customer acquisition cost, and the second one is lifetime value of the customer. So let me explain this now, though, in more layman's terms, because most of us as landscapers, this is a bunch of Chinese to us. So customer acquisition costs, this is the amount of money it takes in advertising in order to get a new customer to join your business. Now, the thing that we don't need to talk about here is the fact that there is other cost to getting a customer acquired. The estimator going to the property, perhaps you spending time with the customer, selling them, calling them, getting the sale, all those other things are going to get wrapped up in the actual cost of the acquisition. Because it's not just your advertising cost, but for the sake of today's example, that's the majority of the cost. Typically, because we sell a service that doesn't take hours and days to sell somebody, it's usually pretty quickly, right? The lifetime value is the gross profit that comes from the customer over the course of their entire life. Now, in our business, most of us are going to have a 20% attrition rate when it comes to mowing customers. That's pretty common in this industry. What that means is that if I have five customers, Trishan, if I have five customers, one of them is going to either sell their house, move away, cancel service, or potentially pass away. One out of five is going to that every single year. But my goal is to be able to keep these customers as long as possible. So let's go ahead and just assume, using the fact that we have a 20% attrition rate, the average life span or how long we can keep a customer is five years. Now, this is important, but we're going to go ahead and assume that is the lifetime of the customer. What's the lifetime value? Now you might say, well, I have. I sell them all these mowing service and I sell them a leaf cleanup and a molten stall, and every single year I sell them $2,000 worth of services. That's great, but that's not the lifetime value of the customer. Because first of all, we have the fact that, hey, we did it for five years. So actually the value of that customer is $10,000. However, again, when it comes to lifetime value, I'm not looking at the gross revenue, I'm looking at the. So let's assume now that we have, let's just be conservative, a 15% profit margin. Okay? So that means that for every $100 I make in revenue, $15 that is in my pocket in the bank at the end of the day, net profit in the bank account. So if I use that analogy, that 15% is profit, that would mean that in terms of profit, profit, I would then get $1,500.

So now the lifetime value of this customer is $1,500. Why? Because I'm going to keep them for five years. Every year I'm going to get an average of $2,000 in annual revenue. That means that I'm going to get $10,000 in revenue over the course of those five years. And if I have a 15% profit margin, which I'm going to have a higher profit margin if you're small, if you're a solo operator, there's a really good chance you're at 40, 50, 60% profit margin. But we're just going to be very, very conservative today's numbers because I'm trying to convince spend more money on marketing and scale your business using advertising. The biggest reason people don't grow is they're afraid to spend money on advertising because they don't know these Numbers. If you know these numbers, I can almost guarantee you you'll spend more on advertising if your goal is to grow your business. So we're going very conservative here. 15% profit margin. Our lifetime value of this customer is going to be $1,500. Now back to our customer acquisition costs. Now you might have a really simple way of getting your customer acquisition cost. Like for example, you might have a Google Ads campaign. You spend $300 on Google Ads and you get six customers. All right, well let's see what the customer acquisition cost is going to be. $300 in ads and we got six customers. That's going to mean that we have a customer acquisition cost of $50. So our customer acquisition cost equals $50. Now this would be for Google Ads. It's very easy to see how much you spent. It's very, very transactional. What's a little more difficult is if we start throwing in things like labor into this. Because let's say we do door hangers. Alright, same thing. Let's go ahead and do a door hanger example here. So instead of running Google Ads or Facebook ads or something that's very easy to measure your ad spend, we're gonna do door hangers. So we're gonna go ahead and spend eight hours knocking on doors and let's just assume $20 per hour. $20 per hour. So our cost on labor is $160. Let's assume that in that eight hours we're going to go ahead and distribute 400, 400 door hangers. And again, you should probably get those door hangers from lawncaremedia.com of course.

400 door hangers. That's gonna literally cost you probably about. Let's just round up and let's just say like 80 bucks. Let's do $90. Okay, so $90 is gonna be the cost for these door hangers. Alright? So now with our labor and the cost of the door hangers, it's gonna cost us a total of $250 to get all these door hangers put out in maybe an entire day. Now let's go ahead and assume then that we're gonna get 10 people that are interested in our services. So 10 leads.

Now again, customer acquisition cost doesn't mean lead acquisition cost. This is not cost per lead or CPL. This is CAC, which is customer acquisition cost. So just by getting 10 leads, I cannot say that my customer acquisition cost is $25. I can't say that that would be my cost per lead. So my CPL would equal $25 cost per lead would be $250 divided by 10. But let's say, for example, that I have a 50% close ratio, which means that half of those leads, I'm gonna go and actually sell them from becoming leads into paying customers. Maybe I mow their lawn, et cetera. So now I'm gonna get five. So I'm gonna have a 50% close ratio close, which means I'm gonna have five customers. And if I do $250 that I spent on labor and the cost of the door hangers, that is gonna mean that I have a $50 customer acquisition cost. That's $250 divided by five customers equals $50 customer acquisition cost. Now, this is so, so important, because at the end of the day, you know what I just made? I just made a money machine. If I spend $50 acquiring a customer, I can dependably make $1,500. This is the beautiful thing about small business. Like, there's very few industries where you can literally times your money by 30. We're going to $50 customer acquisition cost. We put $50 in, and I get out 1,500 over the course of five years. This is the beautiful thing about small business, and this is how you should be looking at growing your company, because this is what happens. Everyone gets really discouraged when they do eight hours worth of door hangers and knocking on doors and talking to people. They spend a bunch of money on door hangers. They spent $250, and you only talk to 10 people. And I only closed five customers at the end of the day. But that's a $50 customer. I paid $50 for every customer. That's crazy. That's actually really, really, really good. Now, some of you might be saying, well, it's impossible that you get 10 leads in a day from just doing door hangers, knocking on doors, talking to 400 people in a day. Okay, well, let's just make the numbers even more. Even more conservative. Let's say that you only get.

You only get two leads in the day. Okay? So now this is becoming. You did eight hours worth of door knocking, giving out door hangers. Now our cost per lead is gonna be $125. Not very good. But then we still have the same 50% close ratio. But now we're only gonna get one customer because we got two leads. We have half of them. We're gonna close. We only get one customer, which means our customer acquisition cost actually $250. That's crazy. $250, customer acquisition cost. Now, if you were doing this, I would say you were doing a bad job. But it still makes sense from a mathematical standpoint. And the bottom line is why people don't grow their business is they spend $250, or I should say they do an entire day's worth of door knocking, door hangers, talking to 400 people, printing these all off, get only two leads and one one customer, and they just, this is a horrible business. I'm not going to do lawn care anymore. I'm going to go do big projects or I'm going to do something else. Forget the whole green industry is just a scam. I had to pay $250 just to get one customer. But if you actually zoomed out and knew your numbers and knew that you were going to keep that customer for five years, every year you'd average $2,000 in revenue. And with a 15% profit margin over the course of five years, you make $1,500. You basically took this and you 6X'd it. You multiply this by six, you turn $250 into $1,500 worth of profit over the course of five years. That's a really good return on investment. You get a 6x return in five years. And so the bottom line is people don't want to wait five years. And they're not willing to keep putting money in and staying committed to the process. Because at the end of the day, if I told you, hey, you're going to spend $5,000 on marketing and you're only gonna get 20 customers, most people wouldn't want to do that. But that $5,000 with 20 customers implies a $250 customer acquisition cost. But again, you've got to stay committed to the numbers. You've got to know, I know what my customer acquisition cost is. I've tracked it. I know what that is. And by the way, you should be shooting for under 100. That's the goal for customer acquisition cost. My lifetime value. I know that I can keep my customers. I don't lose my customers every year. If you have bad customer service, you're not going to have five years. You're going to have like one year, two years. You're going to turn your customer base every single year. And $2,000, that's depending on, hey, I can't just sell them mowing. I'm going to have to sell them some treatments. I might have to sell them a multi job or a leaf cleanup or bush trimming, because I'VE got to get them to $2,000 in annual revenue that I extract from them. And I've got to keep them for those five years to make that $10,000 in revenue. And I've got to keep my margin at 15%. These, this is the importance of knowing your numbers. And I say all of this to say, one of our franchisees. I was talking to them last week and they said, do you think I'm on track? Do you think I can hit my numbers? Can I make a million dollar business in the next two years? I said, look, whether or not you can or can't, I can't judge that. All I can judge is the numbers. I said, when I look at your customer acquisition cost, it's just fine. It's whether or not someone's committed to running these numbers and constantly investing, investing in their customer acquisition cost and then pumping out a solid LTV lifetime value. That's what builds a great big business. So if your goal is to build a big business, you need to know your customer acquisition cost. You need to know what your lifetime value is. And then start tweaking how you can improve each of those areas. Can you tweak how many of these door hangers you can put out in an hour? Can you tweak your close ratio and improve that? Can you tweak how long you keep the average customer? Can you tweak how can you make this $3,000 by selling them extra services and getting more upsells? Can you improve your profit margin? Instead of being 15%, can you change that to 20, 25%? These are the little things that you start moving around in your business. And once you figure out that your customer acquisition cost is so much lower than your lifetime value, you should confidently be able to put money into your business and see it grow. Most people don't let their, their business doesn't grow as fast as they want it to because they're not committed to, to the numbers. You've gotta have faith in those numbers, though. So when you put $250 in, which you shouldn't, you should only spend like 100, maybe $150 on customer acquisition cost. But if you know that the numbers are working out, you should be able to keep investing into your business not in the form of big trucks, not in the form of big equipment, but in the form of advertising. It's gonna be the thing that gets you more customers, gets you more customers for a longer period of time with good customer service, improves your margins and allow you to to predictably keep growing the business. Numbers make the world go round and they make your business more profitable. I'm Mike Andes. Check out landscapebusinesscourse. Com, lawncaremedia. Com and lawncarewebdesign.com if you would like to grow your lawn care landscaping business. We'll see you tomorrow.