How to Scale a Home Service Business From $0 to $500k Fast (Without Breaking It)

Most people think that growing a home service business fast is the goal. It's not. I've seen a lot of companies scale quickly and actually break because they don't have the right systems in place. In this video, I'm gonna show you exactly how I'd take a business from $0 to $500,000 as fast as possible without losing control or profitability. There is one secret code and three steps you must know. I've done this across hundreds of locations and built it into the Augusta Lawn lawn care model. So this isn't just theory. And if you're thinking fast growth just means more jobs and more chaos, I'm going to show you where most owners go wrong and how to avoid it. Let's get into it. So first off, let's go over the secret code. The secret code is the 70-30-20 rule. A lot of times people say it takes money to make money, but in reality, most of us inside of our pocket have access to free money every single day. Assuming you have a credit card and you pay it off within 30 days, you have interest-free to be able to use that money to grow your business. So we've got 30 days. That's what this one is, 30 days to be able to make this work. And if we can figure this infinite money glitch out using this code, we can grow very fast. Now, the 70 is going to be 70% close rate. I want you to target about a 70% close rate. Now, in the Copy and Paste Millionaire book, we talk about that if you are in growth mode, in other words, you're trying to grow the business and maximize how fast you're growing. I want you usually between a 50% and 70% close rate. If you're below that, we've got to fix your sales process. If you're above 70%, I still don't like it. Why? Because if you're a 90% close rate, you're like, oh no, it's good. I'm closing 9 out of 10 jobs. The problem is if you just raise prices enough to get down to 70% close rate, you could spend the extra money, usually 20 to 30% extra profit that you would make, and spend that money on ads to get more leads, even though your close rate is slightly lower. And so a lot of times I see especially solo operators bragging about how pretty much everyone says yes to my estimates, 90, 95%, or some of you will be like, ah, basically everyone says yes. And they take a lot of pride in how many people are accepting their jobs. I want it to be 70% because if it's higher than that, you're leaving money on the table that could otherwise be spent on marketing to keep more leads coming in the top of the funnel. So 70% close rate is the moneymaker. If you're at 20, 30%, we have a huge problem in the business, usually around automations, text and email follow-up with the estimate once it's been sent. Giving them a phone call, making sure that your estimate is actually a good template, making sure that you have speed to lead, getting back to the customer. There's so many problems that come in if you have a 20-30% close rate. But a lot of times when I see people starting from $0 to $500,000, their close rate is actually way too high. And the reason is because their prices are way too low. And if they just raise their prices, they'd be able to afford the growth. But instead, they're so wrapped up in everyone saying yes, and their feelings get wrapped up and their emotions get wrapped up in customers that say no, that they constantly are just digging themselves into a deeper hole when it comes to cash flow. Okay, so we're gonna assume that we're trying to get a 70% close rate. That's the sweet spot if I'm trying to maximize growth. If you're like, hey, I'm trying to make more profit this year, I'm not trying to maximize growth, I want you in that 30 to 50% close rate. That's where I know what your prices are high enough to be able to make more profit and you're not necessarily maximizing how fast you're growing or how many new customers you're taking on. But the next part of, we're assuming you're fast growth, within 30 days, we wanna recoup your customer acquisition cost. So customer acquisition cost is how much do I have to spend to acquire one new customer? And you're like, well, I'm getting $50 cost per lead. Well, if your close rate is 50% or you're closing one out of two, leads, that would then mean that your customer acquisition cost is $100. How much do you have to spend in advertising to get one new customer? Let's assume it's $100. I want to be able to make $100 of profit in the first 30 days because that way I'm able to recoup the money that I spent on ads on my credit card before that credit card statement is even due. And that's where the money glitch happens. If I'm able to abide by these rules. But everyone knows this in theory, like, "Oh man, if I can just get that money back as fast as possible." Makes sense. But most people don't know how much revenue they actually need to make to make it work. And that's where the 20% comes in. Because I want to assume a 20% profit margin. And you might be saying, "Well, I'm higher than that or I'm lower than that." I don't really care. I want you to use this as a rule of thumb to be able to know how much revenue you need to make in the first 30 days. Because if I have a customer acquisition cost of $100, I need to make $100 of profit in the first 30 days to recoup this customer acquisition cost. Well, how much revenue is that? Like, I don't know how much, like, profit, I don't know. Great, let's just use the rule of thumb of 20%. And that means that I've got to make $500 of revenue in the first 30 days. At a 20% margin, that's $100 of profit. And if I can get that within the first 30 days of acquiring the customer, I can literally basically get free money on my credit card, $100 to Facebook. And within a couple of weeks later, I'm getting $500 revenue, $100 of profit. I'm able to pay off my credit card, have no interest, because I don't think you should be racking up your credit card to be able to get more customers. But if I can get this money glitch, if I can get this code figured out, I don't need to rack up credit card debt. I'm simply paying off the credit card using the profit from the customer I've already purchased in the past couple weeks. If you can do this, you're able to grow very quickly. This is why at Augusta Lawn Care, we focus so much on upselling. This is why inside of HomeWorks, we have the upsell feature where your crew is able to just tap a button, when they're on the job site and say, hey, this customer needs this service and immediately fire a text or an email off to the customer or even just notify the general manager. And actually just this past week, we bought a house, my wife and I, Brianna, and she got a text message from the Augusta Lawn Care crew and it said, hey, here's a video of your property. We noticed on your first lawn mowing service, 'cause we just purchased the house, their first mowing was last week. We got a text from them saying, hey, "We did the lawn mowing, but we also see that there are a bunch of weeds in the flower beds and in the rocked areas. Here's what we can do to solve it. Let us know if you'd like a quote." And the general manager didn't have to visit the property, and more importantly, the crew was doing it themselves, taking the video, and they're incentivized around upselling. And creating this upselling culture inside of your business allows your crews to make more money, 'cause I'd rather give them $50 than Facebook or Google, for crying out loud, and more importantly, It allows us to be able to get this money recouped back from that customer acquisition cost. Because if I paid the $100, mowing weekly might get you $150, $200 a month. That could mean— let's do the math. If you have a customer that's paying you $200 per month, that's their revenue that you're getting from that customer. So $200 in revenue. Well, if we have a 20% profit margin, because that's what we're using, That would mean $40 is the profit that you're making on that customer per month. Alright, so per month. If I am trying to get $100 of customer acquisition cost back to me, that would take 2.5 months just to recoup the $100 customer acquisition cost. What this means is that if you ever lose a customer on recurring services, and don't worry, we'll get to projects in a minute, but if you ever lose a customer within the first 3 months, you're actually losing money because you paid Facebook or Google or door hangers or yard signs. You paid $100 to get that customer. And if you're getting $40 per month and then they leave after a month or two because of bad service, bad communication, you didn't respond back to an email for 5 days, you never returned back their voicemail, you didn't pick up the phone, whatever reason it might have been, poor quality service. If you lose them before this time, You have actually lost money on the customer. It would have been better off for you to have not got the customer than to get the customer, pay for customer acquisition costs, and then they churn out. So there's two ways to solve this. Number one is to reduce churn. In other words, customers stay longer. They don't churn after a month or two. You make sure you follow up with them and check in with them about their first service. Make sure you add to the job notes. Make sure if it's a recurring service, when you come back to the property, that you're doing the service right, the customer satisfied. The second way we've already mentioned is to upsell the customer. And this is why at Augusta Lawn Care, we're going so deep on treatments in the next 24 months is because a lot of times when we get mowing customers, we can get them for really cheap. We might get a customer for, let's just call it $30 to $40 customer acquisition cost. Great. The problem is most people for mowing specifically, they want to pay on a weekly or monthly basis. They're not usually going to pay their whole year of mowing upfront. But for treatments, I can upsell that customer that I just got for $30 or $40. I can sell them a $500 treatment package upfront for the entire year and then use that $500 to go get 5, 6, 7, 8 other customers by buying them for mowing. And so I'm always looking for your gateway service where I can get customers for cheap and then greasing the gears of upselling by sending season-specific offers for season-specific services. That's the upsell that I'm gonna text or email to my customers as soon as possible. A lot of times people hear me talk about upselling and like, "Oh, that's a great idea to fill in my off-season." And we talk about the off-season and how important it is to get leads during that time and to sell to your existing database. However, if you can upsell customers in the first 30 days, this allows you to grow much faster because you don't have to cash flow your growth. If I'm only getting $40 per month in profit and I got to get $100 just to be able to break even on the customer, I am cash flowing for 2.5 months. The code breaks apart. I no longer have the money glitch of using my credit card and within a matter of a couple of weeks being able to pay it off. I've got to cash flow this. And that's when you open up lines of credit, you get a bunch of debt, you start going into credit card debt. Is because you're cash flowing this growth. And so if you want to grow fast, we're going to focus on a 70% close rate. We're going to, within 30 days, pay back the customer acquisition cost. And to figure out how much revenue we need to get in the first 30 days, we're going to assume a 20% profit margin. Now, recently, like I talked about, Brianna got this text message from Augusta, and I knew that we were probably paying $150 to $200 per month. For mowing, if they're able to sell a $600 or $700 property cleanup or an extra $500 on top of that for mulch install, they just took what would otherwise have been $150 or $200 in the first month and they turned it into over $1,000. Because alternative one, so option one is I pay $200 per month. All right. Assuming a 20% margin, I'm making $40 of profit in month 1. Alternative number 2, where we have, we use video inside the Field Force mobile app. The general manager sends that text to the customer and says, hey, if you want a quote, let us know. Like, we were so inclined to just say yes, even though we're about to remove the entire landscape and get it all redone. We're like, I almost just want to say yes to make sure that the person, the technician doing the video gets an a bonus. But the second option is they send the upsell and now we get the $200 for mowing. We get $600 for a property cleanup. And we get $500 for the mulch install. We have a small yard. However, now all of a sudden, what was a $200 per month customer has now become a $1,300 per month or first month customer. Now, in the first month, this customer has now made us $260 of profit, assuming a 20% close rate. In scenario number 2, this customer has netted us $260 of profit, assuming the 20% rule. Over here, we've only got $40 of profit. So we had more than a 6x of profit by just upselling the customer. And this is what everyone's sleeping on. They're focused on getting the next new customer that's going to pay them $40 of profit a month instead of just looking at the existing customer and saying, "I can 6x." That's crazy. "6x my profit in the first month and then more importantly, use this $260 to go get 5, to 6 new customers. You're like, well, I'm not trying to be in profit mode. I'm not trying to put this in my pocket. I want to go get more customers. Great. That will fund more customers. So the fastest growing home service businesses take the 70% close rate, take it, they have the leads, they come in, they close them, they follow up with them. They then recoup the customer acquisition costs within 30 days, assuming a 20% margin. And then they go spend that profit on buying new leads. Customers. Now, if you are in projects, you're like, well, I don't do recurring work and I don't ever have the option of getting a customer on a recurring basis, weekly, monthly, biweekly, or anything like that. There is other ways to make sure that you don't have to fund the growth of your business. If you're doing project-based jobs, they're $5,000, $10,000, $15,000, $20,000. I'm still going to use prepayments. And deposits. The reason so many people lose money in home services is because they are funding their growth, meaning the bigger you get, the bigger jobs you have, the more revenue you do, the less money you make. And the reason for that is because a lot of times they are paying for materials, labor, and subcontracted direct costs that are going into big projects. For example, you say, "Well, if I'm doing a $10,000 job, let's just say $10,000 is what we're making on this project." And you say, "Okay, if you give me $2,000 upfront and that will be your down payment, your deposit, great. And then at the end of the job, once you're very satisfied, then you'll pay us the $8,000." Okay, that's great. Great. $8,000 at the end of the job equals our $10,000 job. Okay, great. The problem is in this period of time when you're actually doing the job, you've got to pay— let's just make up some numbers. Let's say you got to pay $3,000 in materials and you've got to pay $4,000 of labor. Now, most people would look at this and be like, oh, great. You paid $7,000 of cost of goods sold and you made $10,000. You made a 30% profit. The problem is this. You made $2,000. Then you spent $3,000. Then you spent $4,000 and then you got paid $8,000. Meaning there is a period of time where you were negative $5,000 because you've got $2,000 as a deposit, but you paid out $7,000 in direct costs and you are at negative $5,000. $5,000. This is why you have negative cash flow. You are funding this. You are giving interest-free loan to your customers and you are funding the growth of your business. So the bigger this job gets, the less money you have, 'cause you are actually funding this growth. You are having a negative cash flow on this job and let's hope and pray they pay us and then yes, you're 30% profitable. But the problem is you had to go get a credit line, you had to go get a credit card, you had to get a loan to fund this size of job where you're not getting enough deposit and money up front. In this case, I would want to make sure that there is no point in a project where I am funding the growth of my business. There is no point in time on this job where the customer hasn't first paid for the work that's going to be done. So in my opinion, I would rather, instead of $2,000, I'd probably collect $5,000 upfront, and then I'd probably have a progress payment of another $3,000 halfway through the job so that I would never actually go into negative cash flow territory because the $7,000 of materials and labor would be covered by the $5,000 deposit and the $3,000 that I make in the middle of the job, these progress payments. So by getting prepayments, money upfront, or making sure my deposits are locked in, I can make sure the same thing is true as recurring work, which is when I put money on a credit card, I know I get that money back within 30 days. I can't afford to be paying out money for my crew, for labor, for fuel, for materials, and then hoping and praying that within 30 or 60 or 90 days, if it's a commercial contract, they pay me. And everyone's bragging about the 30% profit margin and then wondering why when they look at their P&L, it's like, "We made a bunch of money, but we have no money in the bank account." This is the problem they're going through, and yet they just wonder why they don't see any money in the bank account. Now, I said that there was one secret code and three steps. So now we're gonna go through the three steps that you will need to be able to get to $500,000. The very first step is from $0 to $100,000 in annual revenue. This is when you're gonna be solo, and really the only thing you need here is hustle. And for everyone that's sitting on their couch saying, well, I'm figuring out systems and procedures, it's like, no, the only thing you need to go from $0 to $100,000 is taking action, knocking on doors. You don't need branding. You don't need fancy advertising. You don't need a big shop space. You just need customers. And the beautiful thing about home service is we always have demand. Everyone needs your service. It's just a matter of whether or not they choose you to do it. And so you need customers at this stage. And people that are so maniacal about these little tiny details in their business, I see on Facebook groups, a lot of times they're solo operators and they're stuck at this size because they're focused on everything but the thing that actually grows their business, which is getting more customers. And so I don't care if you got to do door hangers, knock on doors, go into Facebook groups in your local area and mention your services, show before and after things of what you're working on, going to Nextdoor, whatever is required. To hustle, pound pavement, and get new jobs and use the code of 70-30-20 to be able to grow fast. Now, I don't care if during this stage of hustle, $0 to $100,000, if you got to discount jobs, I don't care about your profit margins at this size. I just want you to get momentum and get reviews. Those are the two things I need here. Momentum being jobs sold. 70% close rate is good momentum. Not too high, not too low. I'm getting good momentum. 7 out of 10 jobs I'm getting accepted. That way I know my pricing is good enough. And if it's lower, I'm adjusting my process of sales, my follow-up process. But ultimately, I'm trying to get more jobs. And by getting more jobs on the schedule, I get momentum. I fill my schedule with recurring work. I fill any gaps with one-time jobs. I need momentum and I need online reviews. I need proof that I am doing this right. I need proof that when customers have a problem, I am able to be their solution. And when you're small at this size, there's a lot of inherent risk when customers accept your service. You're like, "Oh no, I'm gonna do the great job. I'm low priced. I'm the best competition in the whole industry." People don't care. Your best customers, the risk that they have when they purchase from you is not whether or not you do the service. It's whether or not you're gonna be professional whether or not you're gonna show up, whether or not you're going to be smoking inside their living room when you're doing their fireplace. These are the little things that they actually care about. Are you gonna have a professional uniform? Are you gonna park your truck on their driveway and leak a whole bunch of oil? There's more risk associated than just the price that you're giving the customer when it comes to them accepting the job. And so I need reviews to prove that I do a good service, that I solve problems for my customer, And so at this stage, the only thing I need is momentum and reviews. And I want you to stack the schedule and not be so worried about your 70%, 80% profit margins. No one cares about your profit margins. I don't care about your profit at all at this stage. I just care about you filling your schedule, using your close rate, getting upsells as fast as possible, because you could very well get to this stage in a matter of a couple of days or weeks if you actually implement the code, if you actually upsell customers and you only got 10 or 15 customers, but all of them you sold $1,000, $2,000, $3,000 worth of services. You could immediately be booked out for 4 to 6 weeks and be hiring and moving past stage 1. The only thing I need you to do is focus on getting more customers. And for this stage, you can use the free version of HomeWorks for your first 50 customers. Now, I actually went a couple of years ago to North Carolina and started a location from scratch. And we were there for 30 days. And the whole goal was to get to over $1,000 of daily revenue. And I think we got it to about 15 to 20 recurring customers in that time. And we had filled the schedule for about 4 to 6 weeks with other projects. The first 2 weeks, we did not do good. I was running ads on Facebook and Google, just wasn't really landing, in part because we were halfway through the season. Then I started standing on the side of the road with a sign and it just said, "Pull over for a free mowing quote. Takes 2 minutes." And I stood on the top of the dash of my truck on the front and I stood on the back. I would wave the sign right inside of like a mall area and I'd get customers that way. About 1 per hour is what I would get from just standing, holding a sign, waving at people and having a good time. Also, doing door hangers worked really well. Fantastic. But more importantly, what I started doing was when I'd get an estimate, when I'd get a lead, I would make sure I always closed them no matter what. 70%, 80% close rate right in there. And then I would ask for referrals and I would upsell them so I could book my schedule out and I wouldn't have to be spending money on every single new lead because the challenging part at this stage No one knows you. You don't have a bunch of trucks rolling around. You don't have a whole bunch of trailers that say your name. Your website's not ranking on top one on Google. And so the only way to be able to get customers at this size is usually to go knock on their door, talk to them, or pay for them. And that gets very expensive if every single customer you get, you have to pay for. And so at this stage, I'm trying to put in systems to be able to get referrals. So I would knock on the person's door. So, "Hey, Mr. Jones, I got your quote. Here it is for the property cleanup. Fantastic. I'm going to give you a discount today. In exchange for that discount, I just ask that you introduce me to 2 of your neighbors." And that is how I was able to get the momentum using referrals and then asking for a review at this first stage. Again, if you are sitting at home and you're like building systems and you're at $0 in revenue, you're actually just procrastinating. And you can lie to yourself all day long and say you're trying to build this foundation of a really successful business using systems and use all the right vernacular and all the fancy words. But at this stage, the only thing that you need is to take action and hustle your way to getting your first 50 customers. Okay. The second step, because remember, we got one secret code up here and we got 3 steps. The second is from $100,000 in annual revenue to $200,000 in annual revenue. At this stage is where most people get stuck because this, this stage is actually pretty comfortable because you have like one employee or one helper. And this is also where growing scary fast creates a lot of tension because you start to realize that you're the bottleneck. You start to realize that leads are inconsistent. There's times where you have tons of them and the phone's ringing off the hook and you can hardly get back to anybody. And then there's times where a whole week goes by and no one's calling you. No leads are coming in and it becomes very difficult to hire someone and actually keep them busy on a consistent basis because your leads are up and down. You're off season for 3 or 4 months out of the year. You're losing money. I can't go hire someone and be able to offer them a reliable job if I'm losing money for 3 or 4 months out of the year. And at this stage, a lot of times your pricing is still emotional. It's still like, well, if I'm really busy, I'll go hire. If I'm not really busy, then I'm going to have a really cheap discount and try to close the deal. Maybe do a cash deal right there on the job site. They pay me a little extra, then I'll, I'll do these other little things on the side if they pay me cash. Like a lot of emotional pricing is happening here and you have no systems and you're very reactive. Not only reactive to things like the weather, your trucks breaking down, equipment, your employee, one employee not showing up. You're reactive in those measures, but you also have reactive scheduling, meaning that when someone comes and asks for an estimate and you give it to them, if they accept, you just put them on the next available spot instead of Figuring out, okay, I know I'm going into spring rush. I know I'm going to get super busy. I'm only going to accept recurring work for the next 2 months. And then any one-time jobs will have to get scheduled out later. Why? Because I've now determined that I am not going to have a first-come, first-served scheduling. I'm not going to be reactive. I'm just simply like, 'cause someone calling like, 'If you don't get over here within the next 24 hours, I'm going to hire somebody else.' That's reactive scheduling. And if you're reacting to that at this size, You'll usually be stunted here. And these problems got masked because back here you just hustled. You just worked harder when there was a lot of leads coming. You just work on Saturday and on Sunday and on the weekend. But now at this size, you start hitting up against the max of that your body can take and you start hiring a helper. And that person's not going to be okay with 60 hours of work this week and then no work next week. This up and down inconsistency is not going to fly when it comes to having an employee, and it's creating a huge physical toll on you. So at this stage, you start feeling stuck. A lot of times at this stage, the thing to focus on is your speed to lead. How fast can you get back to a customer once they say, hey, I need a job, I have a problem, does anyone have a solution? I want to get to that customer as fast as possible because the most valuable customers value their time. And if I can save them time by them not waiting on my estimate, Usually they'll accept my job. In fact, Angie and Invoca did a study and 70% of estimates that were accepted by homeowners was the first estimate they received. So a lot of times the majority of the battle is just getting to the customer first, whether it be instant quote forms, over-the-phone estimates, drive-by estimates. I want to get to the customer as fast as possible and get a price in front of them. So at this stage, like, just start with basic pricing. In other words, if I'm going to have one budget hour or I think the job is going to take one hour to do, how much am I going I'm going to charge per hour of labor. If you know that, then I just need to know how much am I going to charge for materials? Because I have labor and I have materials. And just use a simple method of like, okay, I'm going to take everything on my materials and I'm just going to mark it up 50%, for example. So if I get charged $20 for this yard of mulch, I'm going to charge $30 to the customer. Great. Now I know that if it's going to be 5 hours at $100 each, that's $500 of labor. And if it's going to be 3 yards of bark mulch, that's going to be an extra $90. There's my quote, $590. Very basic pricing system, but this scales and allows you to be less emotional about your prices. At this stage, I'm also going to make sure I increase my close rate by having text and emails when I send out my estimates. If you're just sending it via email, hey, it's better than sticking a note underneath someone's mat or just calling them and giving them the quote. But if you can text and email the customer, allows you to be able to get a much better response rate because text messages get opened up 90% of the time in less than 3 minutes, whereas an email, the response time is usually between 1 and 5 hours. And so if I can email it and text it to the customer, my response rate will go up and I'll get more jobs accepted. I'm also going to make sure I have an automated follow-up sequence that after I send the estimate, it's going to send texts and emails to the customer. But I'm also going to remind my office to make sure I do a follow-up phone call, that I might even do a Loom recording of my screen showing the quote, breaking it down for the customer and sending that to them via iMessage. These are all things that I can do at this stage to get past the stage of being stuck. Because a lot of times at this stage, you're getting just enough leads to replace churn. You're getting just enough leads to keep you plus one employee busy. And this is also a stage that's very comfortable because you're able to manage because you have your hands on everything. You're still on every job. You're still making sure that every time your employee is working with you, next to you, you can manage what they're doing. It's an easy way to be able to manage the business this size. But we're trying to grow and we've got to get to step 3. But this, the problem here is you have now entered the profit wilderness. At this stage, if you start going past $200,000 in annual revenue and you start needing a second employee, you enter what I call the profit wilderness. And— Really, we are now going from $200,000. This is step 3 to $500,000. This is what I call the wilderness. This is why we want to grow as fast as possible through this third phase. This is where it gets dangerous. You run the risk of being unprofitable because now you have a second employee, a third employee usually starting to join the team. And when you do that, all of a sudden you start realizing, I'm underpriced. I was profitable when I was doing the work myself. I was profitable when I was working out in the field 90%, 95% of my day. But now when I get multiple employees, all of a sudden I'm not making any more money. And what happens? Not only is the risk of being unprofitable, the risk is that you get disillusioned and you're like, I made more money when I was just working by myself. And it could very well be true because at this stage you're probably 70% profitable and making $70,000 of profit. Down here, now you have extra equipment, You have a shop space, you have extra insurance, extra liability, more fuel. You have multiple employees, a bunch of wages you got to spend. And all of a sudden, like, my goodness, I made $70,000 in profit and you have more headache, employees calling out, more customer problems, quality is going down. I'm frustrated all of the time. And you just are making the exact same amount of money as you were as being a solo operator. And a lot of times people just think like, If you have more jobs, you'll make more money. And in reality, you're getting through this phase of what I call the wilderness to where you actually don't make any more profit in Phase 2 and Phase 3 compared to Phase 1. So what actually happens is growth sucks cash. You have to acquire trucks, equipment, a shop space. You have to double or triple your insurance. You now need a software system. You got to stay organized. This is growth and it sucks cash. And that's why your profit looks the same at stage 1 compared to stage 2. You also start to see your quality drop because I don't care what you say, no one's ever going to care like you do for your business or for your customers. Even if you pay them like you, like with Pay for Performance, even if you do that, you're never going to be able to find someone that does the same quality that you did, especially if you just came out of being a solo operator where you knew every customer, you knew every single property, and you could— do it in your sleep by yourself without ever making a mistake. And you very likely got through stage 1 and 2 without ever having a complaint, without ever having a damage case, without ever having a bad customer review. And now all of a sudden they're pouring in and you start to get burnt out because no longer are you just managing the physical stress of managing the business at this size. You now have the financial stress that comes along with the fact that you got a $5,000 damage case. Someone's threatening to sue you because of a job that went bad, a customer complaining online and freaking out on Facebook group, one of your employees not showing up for work, and you start to feel like you're losing control and you start to burn out because of the stress physically, financially, and psychologically that happens as you begin to grow the business. I remember very acutely what this feels like. I'd actually grown even past this phase. It was like $800,000-$900,000 in annual revenue, and I was working 80, 90, 100 hours a week. No profit in the business. And it took an accident where I got caught in the PTO of a dump truck to realize the business had no systems. I had scaled the business. I had grown. I didn't see much more— much in profit, honestly. But I needed systems for the business to be able to run without me. And this is the wake-up call that I really hope you never have to have, where it doesn't take you getting caught underneath the dump truck. It doesn't require a divorce or relationship problem. Or a family emergency or a health crisis for you to realize, I have no systems in the business. And so at this stage, stage 3, because there's danger, I need you to mitigate the danger. I need to create defenses. These defenses come in the form of systems. And so if you start hiring a whole bunch of people before having systems, that's where this danger becomes a disaster. Is where quality spirals, reviews spiral. Your health spirals. You burn out. That danger becomes a disaster if you start hiring a bunch of people before having systems. And I was well on my way to doing that. $800,000 in annual revenue, which sounds great. I only had like 4 or 5 employees. I was working crazy hours. We had bought a bunch of trucks, a bunch of equipment. I had a lot of danger and it turned into a disaster when all of a sudden I couldn't do the work because I was inside of an emergency room FaceTiming my crew, figuring out how they can do the next job. I didn't have a system for making sure that when I wasn't there, the job could still get done. So how do I fix that? You simplify and you standardize. That's what a system is. I'm going to simplify and standardize everything. I'm going to simplify and standardize my pricing. We've talked about that. I'm going to simplify and standardize my scheduling. We've talked about that. I'm going to simplify and standardize my communication. It's all in one place. I can't be like texting every customer and then calling every customer. I'm going to make sure I have an admin person. I'm going to start thinking in terms of Sales, getting the work. Operations, doing the work. And admin, getting paid for the work. And I've got to start thinking about the fact that I can't do all 3 of these things well. I can't be calling customers and answering the phone 20 times in a day while also trying to sell jobs, while also trying to manage the crew and make sure that all the equipment's being ran well. And constantly juggling between sales, operations, and admin will cause many people to turn this dangerous period into a disaster. And to prevent that, we create systems. Systems for sales, systems for operations, and systems for admin. And if you're in this stage, what you can do is just simply have a line across the top, sales, operations, admin, and categorize it. What are you doing every day that's sales-oriented? Getting more work. What are you doing every single day when it comes to operations that has to do with doing the work? Sharpening blades, putting in air in the pressure, filling up the trucks, running payroll, talking to the crew. All these things are doing the work. Delivering materials, the job, delivering equipment. All this is getting the work done. Admin is going to be answering the phone, doing email, making sure that QuickBooks are categorized, sending out the quotes and proposals. All of that's admin. I want you to write down every single thing that you do every day and break it into those three categories. And this is the turning point. Once you realize that there are three different departments in the business— sales, operations, and admin— this is the part where businesses either break or they become real right around this $500,000 stage. Because now we're going to try to introduce systems. We're going to delegate admin 100% because there's no reason to be doing a $20 or $30 per hour task in admin when you can just go out and do the work for $100 an hour and just like do the work yourself. And there's no reason to go do the work yourself if you could go get more jobs that could keep your entire crew busy. And allow you to keep growing. And so at this stage, $500,000, I've got to get rid of all my admin tasks. Recently at Augusta Lawn Care, one of our owners, Mike Cooper, I'm super proud of him. He's in his 60s and he just realized that he's grown now past $500,000 in annual revenue and he's got to delegate everything to, to Command Center. And we answer phones, we do texts, we do all his payroll, everything on the back end so that he can focus on operations, building his team and being able to grow the business using sales. As you begin to pass $500,000, you've got to have these systems in place so you can remove yourself from project management. So we talked about delegating your admin 100%. You are answering the phone in the truck anymore. As time goes on, you pass $500,000, it's not even going to be possible for you to be able to be at every single project and walk the crew through it and make sure that they got the materials in the right spot and they got the right equipment rented. You'll have to step out of project management and have systems like estimate videos that we talk about inside of Field Force. You take a video when you're at the estimate that goes to the crew when they're on the job site. So I want to go back to the property and become the project manager. You as the estimator, sales should stay in sales, not come constantly back into operations or constantly back into admin. I've got to create systems to prevent that from happening so I can focus on the highest leverage things. Now, what are some of the specific levers The things that you're going to do in the business at this size. You've got to have a CRM. I don't care if you use HomeWorks. I don't care if you use Jobber or Service Autopilot or Housecall Pro. Just use a software that is going to keep everything organized and you're tracking everything, allowing you to have a card on file so you stop chasing money. I don't want to be out trying to figure out from Mr. Jones whether or not he can pay with check today or whether they have got enough cash in his account last week after paycheck. I need money right after I've earned it, or better yet, before I've earned it. I need a card on file. I'm going to have templates for my quotes, for my follow-ups, all my communication. It's no longer just one-off me responding to a message. There should be templates of how I respond to specific scenarios. When a customer complains, here's what we say. When a customer has a work order change, here's what we say. When a customer is asking about a new service that we don't offer, Here's what we say. When there's a customer that's out of our service area, here's what we say. Trying to grow faster without systems is like flooring the gas on a Mustang with no steering wheel. There's no steering wheel whatsoever. You're just flooring it. And so many people will listen to the first half of this video and be like, "Yeah, I'm gonna grow, grow, grow. I'm gonna use the 70%. I'm gonna get money. I'm gonna upsell people like crazy." But if you do that without systems, you'll get through Stage 3 and you'll have a collapse. And this is where mental breakdowns happen. Marriages collapse. Businesses go bankrupt is because they got through stage 3 without systems, without a steering wheel to keep them on track. Growth is not the goal. The reason you got into business was to make profit. The reason you got into business was not to have a bunch of shiny trucks, a bunch of metal and equipment, have a whole bunch of employees. Those are required as a tool to be able to build a business that makes profit. So growth is not the goal. Even as though we talk about growing really fast, it's not the goal. Profit is the goal because profit is what pays for your kid's tuition. It's what pays for unexpected medical bills. Profit is what pays for your family vacation or for your parents' assisted living. These are the things why you got started, why your business, why you got it off the ground, why you entered the first stage was to have a profitable business that paid for these things in your life. And so don't get distracted or on the treadmill of growth and just keep growing and growing and growing. Growing and then you wake up one day and you're burnt out and you never even got profitable. And so the framework that I like to use and we use at Augusta Lawn Care is once you pass this third step, we hit $500,000 in annual revenue, we raise prices and we focus on recurring services. If you do that for a couple of years where you start raising prices and now maybe your close rate goes down to 60%, you raise prices again next year, it goes down to 50%. You raise prices again, it goes down to 40%. I want my prices to be so high that customers have to look at me like, "There must be something different about this business." And I can do that now that I'm in profit mode. I focused on recurring services. I've focused on raising my prices to my existing customers. And now this business that did $500,000 or $600,000 in annual revenue is doing $800,000 to $1 million in annual revenue, but it's kicking off $200,000 in profit because I went into profit mode. And that is the objective. The profit is the objective, not continuing to grow. Not constantly burning out our tires and constantly spending more and more money on ads and constantly trying to get to $1.5 million, then $2 million, when there's no profit and you're digging deeper and deeper in credit card debt and lines of credit and home equity lines of credit and actually risking the whole reason you got into business, which is many times to provide for your family, to provide for the people that you love, provide for your community. And all of that is in jeopardy if you stay in this growth engine and just constantly trying to grow. And now you're adding managers and you're trying to figure out big shop space and you're getting lawsuits and all of a sudden you start realizing I'm not making any more profit. And so my objective here is for you to grow through stages 1, 2, and 3 using the secret code, the 70-30-20 rule. Once you get there, you go into profit mode. You raise prices when you hit capacity. You don't buy more trucks. You don't hire more people. You don't spend gobs of money on more advertising just to replace the churn of your existing customers. You go into profit mode. You upsell customers using texts and emails from homeworks. And this is the Augusta model. That we use at over 100 locations. This profit mode enforces discipline and focus. You're like, "Well, why is this needed?" Because I see time and time again, a lot of million-dollar home service businesses are actually just a messy 10 $100,000 businesses glued together. They started adding services and all of a sudden— I did the same thing. We were doing $1.7 million doing tree trimming and artificial turf and putting greens and retaining walls and patios and pergolas and all sorts of stuff. $1.7, $1.8 million in revenue. But I was stressed. I had no systems. I didn't make any profit. And so by going into profit mode, this forces you to have discipline around recurring services, discipline around services, discipline around the focus around what you're actually going to do well in the business and what other things you're just going to have to say no to. But by having a million-dollar business that has 20%, 30% in profit, you are likely in the top 1 or 2% in home services. Now, if you want to grow fast, you can. That's not really the hard part. Ultimately, if you use the 70-30-20 rule, you'll grow really fast. The hard part is not breaking the business while you grow fast. So once you use the code and you follow these 3 steps, go into profit mode, implement systems, and allow your business to be profitable, not just kicking off a bunch of top-line revenue numbers that look really good on Instagram. Now, you might have watched this video and you're still confused because you're like, well, you glanced over the fact that we need Marketing, like doing ads. We need sales. I need to be able to pitch people and I need to hire new employees to scale the business. And if that seems confusing, watch this video here where I give you the full playbook of exactly how we do marketing, sales, and hiring at Augusta Lawn Care.